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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 or
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 or
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the
transition period from to
 Commission file number 001-04192
 
 KHD Humboldt Wedag International Ltd.
 (Exact name of registrant as specified in its charter)
 Not Applicable
 (Translation of Registrants Name into English)
 British Columbia, Canada
 (Jurisdiction of incorporation or organization)
 Suite 702,7/F, Ruttonjee House, Ruttonjee Centre, 11 Duddell Street, Central, Hong Kong SAR, China
 (Address of principal executive office)
 Alan Hartslief
Fax: 011-43-1-240-25-310
Millennium Tower, 21st Floor
Handelskai 94-96
1200 Vienna Austria
 with a copy to:
 Virgil Z. Hlus
Clark Wilson LLP
800-885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3H1
Facsimile: 604-687-6314
 (Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
 Securities registered or to be registered pursuant to Section 12(b) of the Act.
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Shares, Without Par Value
    
    New York Stock Exchange
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
 Not Applicable  (Title of Class)
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
 Not Applicable  (Title of Class)
  There were 30,522,645 common shares, without par value, issued and outstanding as of December 31,
2008.
 o þ
 o þ
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
  U.S. GAAP  o
    
    International Financial Reporting Standards as issuedby the International Accounting Standards Board  o
    Other
    þ
 þ o
 o þ
  o o




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ORDER BACKLOG BY REGION 2008
 ORDER INTAKE BY REGION 2008
    4




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(BAR GRAPH)
    
    (BAR GRAPH)
    
    (BAR GRAPH)
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SUMMARY OF MAJOR BACKLOG PROJECTS AT DECEMBER 31, 2008
 PROJECT
    
    PROJECT LOCATION
    
    SUBJECTRaysut Cement
    
    Middle East
    
    Cement production line 2,000 t/dGrasim Kotpuli
    
    Asia
    
    Preheater, kiln and pyrofloorGrasim Aditya
    
    Asia
    
    Pyro line 8,000 t/d, cement grindingUltratech Tadapatri
    
    Asia
    
    8,000 t/d cement plant, pyro section, cement grindingBuzzi Unicem, River 7000
    
    N/S America
    
    Kiln lineMordow 3
    
    Russia
    
    Engineering and partsLafarge Mejia
    
    Asia
    
    Clinker uploading, grindingLafarge Ind (SA)
    
    Asia
    
    Gear and pinionSouth Valley
    
    Middle East
    
    Spares kiln line 5,000 t/dLCC Benghazi 3
    
    Africa
    
    Rehabilitation of kiln sectionUltratech (Awarpur)
    
    Asia
    
    Coal washery with batac jig and cyclonesUltratech (Hirmi)
    
    Asia
    
    Coal washery with cyclonesJaypee Cement
    
    Asia
    
    Pyro process and grindingChettinad Cement  Orient
    
    Asia
    
    Grinding line with roller press and upgrade coolerCemex Bayano
    
    N/S America
    
    Kiln line 3,500 t/d preheater tertiary airduct systemBhusan Power & Steel
    
    Asia
    
    Coal washery plantS.V. Power Coal Washery
    
    Asia
    
    Coal washery plantAdanac
    
    N/S America
    
    2 Roller pressesAKCC Al Katrana
    
    Middle East
    
    Cement production line 5,000 t/dHasanoglan
    
    Middle East
    
    Clinker production line 2,500 t/dHimachal II
    
    Asia
    
    Kiln line 6,000 t/dSengilej
    
    Russia
    
    Cement production line 3,000 t/dShree Cement
    
    Asia
    
    Grinding line, roller pressRP Vasilkovka
    
    Russia
    
    2 Roller pressesSibirski
    
    Russia
    
    2 Roller presses, automationSangwon
    
    Middle East
    
    Cement plant 2 linesBhusan IV
    
    Asia
    
    Coal washery plantSichuan Yadong II
    
    Asia
    
    Kiln line 4,200 t/dNovotroizk 2
    
    Russia
    
    Pyro process and grindingNovotroizk
    
    Russia
    
    FabricationKrasnoyarsk Cement
    
    Russia
    
    AutomationAkmenes
    
    Russia
    
    Pyro process and grindingStar Cement
    
    Asia
    
    GrindingPerwomaiskij
    
    Russia
    
    Cement production line 6,000 t/dSijiaying Tanggang
    
    Asia
    
    2 Roller pressesNovi Popovac Petrus
    
    Eastern Europe
    
    Rotary kiln and clinker coolerBearwar, RAS Suratgarh
    
    Asia
    
    3 Roller pressesMordow 5 Opoka Trockner
    
    Russia
    
    Opoka dryingProsper
    
    Europe
    
    Batac
  8




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SUMMARY OF MAJOR BACKLOG PROJECTS AT DECEMBER 31, 2008
 PROJECT
    
    PROJECT LOCATION
    
    SUBJECTSpecturm Coal and Power
    
    Asia
    
    Coal washeryGlobal Coal Washery
    
    Asia
    
    Coal washeryAryan Coal Wash
    
    Asia
    
    Coal washeryCarbossulcis
    
    Europe
    
    PneuflotEagle Mountain
    
    N/S America
    
    New line expansionBmic Assiut
    
    Middle East
    
    New kiln line 5,000 t/dPatnaik Mineral
    
    Asia
    
    Iron ore benefication plantBeeshoek BKM
    
    S. Africa
    
    4 Batac, 4 bucket conveyorAdaro
    
    Asia
    
    Coal beneficationJui Shin
    
    Asia
    
    Roller pressComilog Gabon
    
    Africa
    
    Jones, permosUtkal Alumina Int
    
    Asia
    
    Disc filtersVedanta Aluminum
    
    Asia
    
    3 Dynamic units, washers and filtersAssmang Ltd
    
    S. Africa
    
    Plant modificationDebswana
    
    S. Africa
    
    Plant modificationArgyle
    
    Australia
    
    Roller press refurbishmentMordow 6
    
    Russia
    
    Opoka
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President and Chief Executive Officer
    13




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD.
  Form 20-F
  TABLE OF
    CONTENTS
   
 Page No.PART 1ITEM 1.


IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS


16ITEM 2.


OFFER STATISTICS AND EXPECTED TIMETABLE


16ITEM 3.


KEY INFORMATION


16Selected Financial Data


16Capitalization and Indebtedness


18Reasons for the Offer and Use of Proceeds


18Risk Factors


18ITEM 4.


INFORMATION ON THE COMPANY


24History and Development of the Company


24Business Overview


25Organizational Structure


33Property, Plant and Equipment


33ITEM 4A.


UNRESOLVED STAFF COMMENTS


35ITEM 5.


OPERATING AND FINANCIAL REVIEW AND PROSPECTS


35Operating Results


35Liquidity and Capital Resources


43Research and Development, Patents and Licenses,
    Etc.


50Trend Information


50Off-balance Sheet Arrangements


50Tabular Disclosure of Contractual Obligations


51Safe Harbor


51ITEM 6.


DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


51Directors and Senior Management


51Compensation


53Board Practices


55Employees


56Share Ownership


56ITEM 7.


MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


58Major Shareholders


58Related Party Transactions


58ITEM 8.


FINANCIAL INFORMATION


60Consolidated States and Other Financial
    Information


60Significant Changes


61ITEM 9.


THE OFFER AND LISTING


62Offer and Listing Details


62Plan of Distribution


62Markets


62Selling Shareholders


63Dilution


63Expenses of the Issue


63ITEM 10.


ADDITIONAL INFORMATION


63Share Capital


63Notice of Articles and Articles


63Material Contracts


64 14




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Page No.Exchange Controls


65Taxation


66Dividends and paying agents


68Statement by Experts


68Documents on Display


68Subsidiary Information


68ITEM 11.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


68ITEM 12.


DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


71PART IIITEM 13.


DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


71ITEM 14.


MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS


71ITEM 15.


CONTROLS AND PROCEDURES


71ITEM 16.


RESERVED


72ITEM 16A.


AUDIT COMMITTEE FINANCIAL EXPERT


72ITEM 16B.


CODE OF ETHICS


72ITEM 16C.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


73ITEM 16D.


EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


74ITEM 16E.


PURCHASES OF EQUITY SECURITIES BY OUR COMPANY AND
    AFFILIATED PURCHASERS


74PART IIIITEM 17.


FINANCIAL STATEMENTS


74ITEM 18.


FINANCIAL STATEMENTS


126ITEM 19.


EXHIBITS


127SIGNATURES


129Ex-12.1 Section 302 Certification CEOEx-12.2 Section 302 Certification CFOEx-13.1 Section 906 Certification CEOEx-13.2 Section 906 Certification CFOEx-15.1 Consent of Deloitte & Touche LLP   15




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PART I  and/or
          ITEM 1
    Identity
    of Directors, Senior Management and Advisers    ITEM 2
    Offer
    Statistics and Expected Timetable    ITEM 3
    Key
    Information  A.
    Selected
    Financial Data   16




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Selected
    Financial Data
    (Stated in United States dollars in accordance with Canadian
    GAAP)
    (in thousands, other than per share amounts)
  Fiscal Years Ended December 312008


2007


2006


2005


2004Revenues

$
638,354


$
580,391


$
404,324


$
316,978


$
144,039Operating income


56,385



53,010



40,555



25,551



8,206Income (loss) from continuing operations


(6,952
)


50,980



34,152



22,864



6,270Income (loss) from discontinued operations






(9,351
)


(2,874
)


5,361



22,121Extraordinary gain






513











Income (loss) from continuing operations, per shareBasic


(0.23
)


1.71



1.13



0.84



0.23Diluted


(0.23
)


1.68



1.12



0.84



0.23Income (loss) from discontinued operations, per shareBasic






(0.31
)


(0.10
)


0.20



0.82Diluted






(0.31
)


(0.09
)


0.19



0.82Extraordinary gain per shareBasic






0.02











Diluted






0.02











Net income (loss)


(6,952
)


42,142



31,278



28,225



28,391Net income (loss) per shareBasic


(0.23
)


1.42



1.03



1.04



1.05Diluted


(0.23
)


1.39



1.03



1.03



1.05Total assets


765,658



789,311



641,920



523,056



501,578Net assets


265,623



313,120



295,754



262,347



248,196Long-term debt


11,313



13,920



10,725



2,920



3,320Shareholders equity


261,914



307,194



273,288



244,259



223,844Capital stock, net of treasury stock


50,033



44,566



44,212



53,574



52,478Weighted average common stock outstanding, diluted


30,401



30,402



30,415



27,509



27,040  17




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Selected
    Financial Data
    (Stated in United States dollars in accordance with U.S.
    GAAP)
    (in thousands, other than per share amounts)
  Fiscal Years Ended December 312008


2007


2006


2005


2004Revenues

$
638,354


$
580,391


$
404,324


$
316,978


$
144,039Operating income (loss)


58,455



45,046



38,596



25,551



8,206Income (loss) from continuing operations


(4,882
)


43,031



32,220



22,843



6,287Income (loss) from discontinued operations






(9,351
)


(2,874
)


(1,950
)


22,121Extraordinary gain






513











Income (loss) from continuing operations, per shareBasic


(0.16
)


1.44



1.07



0.84



0.23Diluted


(0.16
)


1.42



1.06



0.84



0.23Income (loss) from discontinued operations, per shareBasic






(0.31
)


(0.10
)


(0.07
)


0.82Diluted






(0.31
)


(0.10
)


(0.07
)


0.82Extraordinary gain per shareBasic






0.02











Diluted






0.02











Net income (loss)


(4,882
)


34,193



29,346



20,893



28,408Net income (loss) per shareBasic


(0.16
)


1.15



0.97



0.77



1.05Diluted


(0.16
)


1.13



0.96



0.77



1.05Total assets


765,676



789,541



641,920



523,401



501,995Net assets


262,982



306,854



291,567



253,843



247,416Long-term debt


11,313



13,920



10,725



2,920



3,320Shareholders equity


259,274



300,939



269,101



235,755



223,064Capital stock, net of treasury stock


57,214



50,162



44,174



53,574



52,478Weighted average common stock outstanding, diluted


30,401



30,402



30,415



27,509



27,040   Reconciliation
    to United States Generally Accepted Accounting
    Principles
    B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the Offer and Use of Proceeds    D.
    Risk
    Factors   18




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Risk
    Factors Relating to Our Business
  The
    worldwide macroeconomic downturn has reduced and could continue
    to reduce the demand for our industrial plant engineering and
    equipment supply business, the amount of royalty we receive from
    the Wabush iron ore mine and the value of our financial assets,
    and therefore may have a continuing material adverse effect on
    our financial results. The recent industry trends of demand
    growth, consolidation and capital expenditures have moderated.
    Many of our customers are facing liquidity problems and some are
    revisiting their capital expenditure plans. As a result, the
    market price of our common shares has declined and may continue
    to decline.
   19




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The
    worldwide macroeconomic downturn has resulted in the prolonging
    or cancellation of some of our customers projects and may
    negatively affect our customers ability to make timely
    payment to us. Further, it may result in a further decrease in
    the demand for our products or services. Any of these may have a
    material adverse effect on our operating results and financial
    condition.
      Due to
    the worldwide economic downturn, we have developed a
    restructuring program to improve the profitability,
    competitiveness and efficiency of our business. We may not be
    able to effectively implement our restructuring program and our
    restructuring program may not result in the expected benefits,
    which may have a material adverse effect on our operating
    results.
    Our
    annual and quarterly operating results vary from period to
    period and therefore may have a material adverse effect on our
    financial results.
   20




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Any
    significant disruption of our operations may harm our business
    reputation and cause an adverse effect on our financial
    results.
    We are
    exposed to political, economic, legal, operational and other
    risks as a result of our global operations, which may negatively
    effect our business, results of operations, financial condition
    and cash flow.
    Transactions
    with parties in countries designated by the United States State
    Department as state sponsors of terrorism may lead some
    potential customers and investors in the United States and other
    countries to avoid doing business with us or investing in our
    shares.
     21




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Changes
    in the cost of raw materials could have a material adverse
    effect on our financial condition and results of
    operations.
  and/or
  We are
    subject to risks associated with changing technology and
    manufacturing techniques, which could place us at a competitive
    disadvantage.
    Our
    competitors include firms traditionally engaged in the
    industrial plant engineering and equipment supply
    business.
  and/or
  We are
    exposed to unidentified or unanticipated risks which could
    impact our risk management strategies in the future and could
    negatively affect our results of operations and financial
    condition.
    Any
    significant inflation or deflation may negatively affect our
    business, results of operations and financial
    condition.
     22




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We are
    exposed to legal risks in our business which are often difficult
    to assess or quantify. We may incur significant legal expenses
    in defending against any litigation.
    Some of
    our subsidiaries operating in the industrial plant engineering
    and equipment supply business are staffed by a unionized
    workforce, and union disputes and other employee relations
    issues may materially and adversely affect our financial
    results.
    We may
    not be able to protect the confidential or unique aspects of our
    technology, which would reduce our competitive
    advantage.
    We are
    exposed to various counterparty risks which may adversely impact
    our financial position, results of operations, cash flows and
    liquidity.
        and/or
 23




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General
    Risks Faced by Our Company
  Investors
    interests will be diluted and investors may suffer dilution in
    their net book value per share if we issue additional shares or
    raise funds through the sale of equity securities.
    Our
    constating documents contain indemnification provisions and we
    have entered into agreements indemnifying our officers and
    directors against all costs, charges and expenses incurred by
    them.
    Certain
    factors may inhibit, delay or prevent a takeover of our company
    which may adversely affect the price of our common
    stock.
  Investment Canada Act
  Fluctuations
    in interest rates and foreign currency exchange rates may affect
    our results of operations and financial condition.
  Form 20-F
  Form 20-F
  ITEM 4
    Information
    on the Company  A.
    History
    and Development of the Company  Companies
    Act of 1934 Canada
    Business Corporations Act Business Corporations Act Business Corporations Act
 24




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B.
    Business
    Overview          2008


2007


2006(In thousands)Africa

$
7,596


$
21,393


$
10,488Americas


60,556



118,417



75,723Asia


145,636



196,348



106,336Russia & Eastern Europe


213,708



83,592



41,548Europe


57,577



35,502



29,764Middle East


150,856



123,283



135,759Australia


2,425



1,856



4,706Total

$
638,354


$
580,391


$
404,324   Description
    of Our Industrial Plant Engineering and Equipment Supply
    Segment
    scale-up
 25




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Business
    Activities  Cement
            and/or and/or
  Business
    Activities  Coal and Minerals
          Recent
    Developments
   26




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Global
    Risk Control
    Joint
    Venture in Russia
      Research
    and Development
      2 2 2
    2 2
      Order
    Intake and Backlog
   27




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Industry
    Description
    Competition
      
    complete line competitors which are companies providing either a
    similar, or even broader range of equipment services to the
    cement industry; and
    part line competitors which are companies focusing on a smaller
    range of equipment and technologies.   28




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Sales
    and Distribution Channels
        Patents
    and Licenses
      Description
    of Our Royalty Interest
    Discontinued
    Operations
  Disposition
    of Financial Services Operations
   29




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2 3
    15-year
     30




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dividend-in-kind.
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Real
    Estate and Other Interests
  Business Corporations Act
   32




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C.
    Organizational
    Structure    Name of Wholly-Owned Subsidiary

Jurisdiction of Incorporation or OrganizationKHD Holding AG

SwitzerlandKHD Humboldt Wedag International Holding GmbH

AustriaKHD Humboldt Wedag International GmbH

AustriaHumboldt Wedag Inc.

USAHumboldt Wedag India Ltd.

IndiaHumboldt Wedag Australia Pty Ltd.

AustraliaKHD Investments Ltd.

Marshall IslandsNew Image Investment Company Limited

USAInverness Enterprises Ltd.

CanadaKHD Humboldt Wedag (Cyprus) Limited

CyprusMFC & KHD International Industries Limited

SamoaKHD Humboldt Wedag (Shanghai) International Industries Limited

ChinaKHD Sales and Marketing Ltd.

Hong KongKHD Humboldt Wedag International (UAE) FEZ

UAEKHD Humboldt Wedag International Insurance Ltd.

BarbadosEKOF Flotation GmbH

GermanyKHD Humboldt Wedag Machinery Equipment (Beijing) Co. Ltd.

ChinaSasamat Capital Corporation

Canada     Jurisdiction of



OurName of

Incorporation or

Owner

BeneficialNon-Wholly-Owned Subsidiary

Organization

of Interests

ShareholdingKHD Humboldt Wedag International
    (Deutschland) AG

Germany

KHD Humboldt Wedag International Ltd.

98.1%(1)KHD Humboldt Wedag GmbH

Germany

KHD Humboldt Wedag International
    (Deutschland) AG

98.1%Humboldt Wedag Coal & Minerals Technology GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG

98.1%ZAB Zementanlagenbau GmbH Dessau

Germany

KHD Humboldt Wedag GmbH

98.1%ZAB Industrietechnik & Service GmbH

Germany

ZAB Zementanlagenbau GmbH Dessau

98.1%Humboldt Wedag (SA) (Pty) Ltd.

South Africa

KHD Humboldt Wedag International GmbH

73.5%Humboldt Wedag GmbH

Germany

KHD Humboldt Wedag GmbH

98.1%Blake International Limited

British Virgin
    Islands

KHD Humboldt Wedag GmbH

98.0%HIT International Trading AG

Germany

Blake International Limited

87.7%     (1)
    
    Held by our company and/or our subsidiaries.  D.
    Property,
    Plant and Equipment  Office
    Space
   33




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Royalty
    Interest  Wabush Iron Ore Mine
           34




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ITEM 4A
    Unresolved Staff Comments    ITEM 5
    Operating
    and Financial Review and Prospects    A.
    Operating
    Results      Impact
    of the Current Economic Conditions
       35




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
    several of our customers have approached us to discuss
    renegotiating projects and contracts, including extensions of
    credit terms
    and/or
    delays in the completion of such projects;
    we expect that some of our customers will cancel all or a
    portion of their projects; and
    we expect that there will be a continued decrease in order
    intake and a decrease in the number of new project opportunities
    primarily as a result of our customers decisions to delay
    new projects.        Provisions
    for Supplier Commitments on Terminated Customer
    Contracts
      Provisions:Supplier commitments

$
17,027Penalty for cancellation of purchase orders


3,401Inventories
    (contracts-in-progress)


2,60623,034Inventories (raw materials and finished goods)


2,637Inventories
    (contracts-in-progress)


6,037Customer receivables


258Losses on terminated customer contracts for the year

$
31,966  36




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Balance at beginning of year

$
Costs recognized


23,034Paid


Reversal


Currency translation adjustments


695Balance, at end of year

$
23,729     Restructuring
    Activity
            Fair
    Value Loss on Preferred Shares of Mass Financial and its Former
    Subsidiary
     37




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Discontinued
    Operations
   38




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Summary
    of Quarterly Results
    December 31,


September 30,


June 30,


March 31,2008


2008


2008


2008(United States dollars in thousands, except per share
    amounts, in accordance with Canadian GAAP)Revenues

$
163,682


$
193,596


$
144,240


$
136,836Gross profit (loss)


(356
)


36,574



28,332



25,207Operating income (loss)


(14,582
)


31,923



23,779



15,265Income (loss) from continuing operations


(64,857
)


30,804



19,670



7,431Income (loss) from continuing operations,
    per shareBasic


(2.12
)


1.01



0.65



0.25Diluted


(2.12
)


1.01



0.64



0.24Net income
    (loss)(2)


(64,857
)


30,804



19,670



7,431Net income (loss) per
    share(2)Basic


(2.12
)


1.01



0.65



0.25Diluted


(2.12
)


1.01



0.64



0.24   December 31,


September 30,


June 30,


March 31,2007


2007


2007


2007(United States dollars in thousands, except per share
    amounts, in accordance with Canadian GAAP)Revenues

$
163,498


$
150,441


$
159,544


$
106,908Gross profit


25,875



20,551



19,405



20,128Operating income (loss)


14,495



14,513



12,191



11,811Income from continuing operations


12,854



19,727



10,284



8,115Income from continuing operations,
    per shareBasic


0.43



0.65



0.35



0.28Diluted


0.42



0.64



0.34



0.27Net
    income(1)


11,611
(2)


11,782



10,269



8,480Net income per
    share(1)Basic


0.39
(2)


0.39



0.35



0.29Diluted


0.38
(2)


0.38



0.34



0.28     (1)
    
    Including both continuing and discontinued operations.(2)
    
    Including extraordinary gain.  Acquisitions
    and Divestitures
       39




---



##### Table of Contents



Overview
    of 2008 Results
    Year Ended December 312008


2007


2006(United States dollars in millions, except per share
    amounts)Revenues

$
638.4


$
580.4


$
404.3Cost of revenues


516.6



494.4



338.5Other operating income  resource property


27.2



18.1



6.7General and administrative expenses (including stock based
    compensation)


60.6



51.1



31.9Operating income


56.4



53.0



40.6Income (loss) from continuing operations


(7.0
)


51.0



34.2Basic earnings (loss) per share, continuing operations


(0.23
)


1.71



1.13Diluted earnings (loss) per share, continuing operations


(0.23
)


1.68



1.12     Summary
    of Three-Month and Twelve-Month Results
    Three Months Ended


Twelve Months EndedDecember 31,


December 31,


December 31,


December 31,2008


2007


2008


2007(United States dollars in thousands, except per share
    amounts)Revenues

$
163,682


$
163,498


$
638,354


$
580,391Gross profit (loss)


(356
)


25,875



89,757



85,959Operating income (loss)


(14,582
)


14,495



56,385



53,010Income (loss) from continuing operations


(64,857
)


12,854



(6,952
)


50,980Income (loss) from continuing operations, per shareBasic


(2.12
)


0.43



(0.23
)


1.71Diluted


(2.12
)


0.42



(0.23
)


1.68Net income
    (loss)(1)


(64,857
)


11,611



(6,952
)


42,142Net income (loss) per
    share(1)Basic


(2.12
)


0.39



(0.23
)


1.42Diluted


(2.12
)


0.38



(0.23
)


1.39     (1)
    
    Including both continuing and discontinued operations.  Year
    Ended December 31, 2008 Compared to the Year Ended
    December 31, 2007
     40




---



##### Table of Contents



2005-2008
               41




---



##### Table of Contents



Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2006
                 42




---



##### Table of Contents



B.
    Liquidity
    and Capital Resources    December 31,2008


2007(In millions)Cash and cash equivalents

$
409.1


$
354.4Total assets


765.7



789.3Long-term debt


11.3



13.9Shareholders equity


261.9



307.2        43




---



##### Table of Contents



Changes
    in Financing and Capital Structure
    Operating
    Activities
          Investing
    Activities
      Financing
    Activities
     44




---



##### Table of Contents



Discontinued
    Operations
    Foreign
    Currency
            Derivative
    Instruments
    Inflation
   45




---



##### Table of Contents



Application
    of Critical Accounting Policies
      Revenue
    Recognition
  and/or contract-in-progress
  Inventories
  work-in-progress
  work-in-progress contracts-in-progress,
  Receivables
      Valuation
    of Securities
     46




---



##### Table of Contents



and/or
        Warranty
    Costs
    Pension
    Benefits
     47




---



##### Table of Contents



Income
    Taxes
        
    the history of the tax loss carryforwards and their expiry dates;
    future reversals of temporary differences;
    our projected earnings; and
    tax planning opportunities.      Provisions
    for Supplier Commitments on Terminated Customer
    Contracts
      Changes
    in Accounting Policies including Initial Adoption
    International
    Financial Reporting Standards
     48




---



##### Table of Contents



Adoption
    of New GAAP in 2008
  Financial Instruments 
    Disclosures, Financial
    Instruments  Presentation, Inventories General Standards of Financial Statement Presentation.
  Financial Instruments 
    Recognition and Measurement Financial
    Instruments  Disclosure and Presentation Financial Instruments 
    Disclosure
  Goodwill
    and Intangible Assets
  Goodwill and
    Intangible Assets, Business
    Combination.
  Business
    Combinations
  Business
    Combinations Consolidated Financial
    Statements, Non-controlling Interests,
 49




---



##### Table of Contents



C.
    Research
    and Development, Patents and Licenses, Etc.    D.
    Trend
    Information              E.
    Off-balance
    Sheet Arrangements    Disclosure of Guarantees
   50




---



##### Table of Contents



F.
    Tabular
    Disclosure of Contractual Obligations  Payments
    Due by Period
    (United States dollars in thousands)
  Contractual Obligations as

Less than


1-3


3-5


More thanat December 31, 2008

1 Year


Years


Years


5 Years


TotalLong-term debt obligations

$
277


$
11,728


$



$



$
12,005Operating lease obligations


3,772



2,694



2,580



828



9,874Purchase
    obligations(1)


293,547















293,547Other long-term liabilities reflected on our balance sheet under
    Canadian
    GAAP(2)






8,344











8,344Total

$
297,596


$
22,766


$
2,580


$
828


$
323,770     (1)
    
    Purchases to complete our industrial plant engineering and
    equipment supply contracts which are accounted for by the
    percentage-of-completion accounting method.(2)
    
    Not including pension obligations.  G.
    Safe
    Harbor    ITEM 6
    Directors,
    Senior Management and Employees  A.
    Directors
    and Senior Management    Date ofCommencement of


Expiration of TermOffice with our


of Office with ourName and Age

Present Position with our Company

Company


CompanyMichael J. Smith (60)

Chairman and Director


1986



2011James Busche (50)

President and Chief Executive Officer


2006



N/AAlan Hartslief (50)

Chief Financial Officer and Secretary


2007



N/AJouni Salo (50)

Chief Operating Officer


2008



N/ADr. Shuming
    Zhao(1)(2)(3)(54)

Director


2004



2010Dr. Kelvin K.
    Yao(1)(2)(3)(56)

Director


2004



2010Silke
    Stenger(1)(2)(3)(40)

Director


2003



2011Indrajit
    Chatterjee(1)(2)(3)(63)

Director


2005



2009     (1)
    
    Member of our audit committee.(2)
    
    Member of our compensation committee.(3)
    
    Member of our nominating and corporate governance committee.  Michael
    J. Smith  Chairman and Director
     51




---



##### Table of Contents



James
    Busche  President and Chief Executive
    Officer
    Alan
    Hartslief  Chief Financial Officer and
    Secretary
    Jouni
    Salo  Chief Operating Officer
    Dr. Shuming
    Zhao  Director
    Dr. Kelvin
    K. Yao  Director
    Silke
    Stenger  Director
   52




---



##### Table of Contents



Indrajit
    Chatterjee  Director
    Family
    Relationships
    B.
    Compensation    Executive
    Compensation
    SUMMARY
    COMPENSATION TABLE
  Long-








TotalShare-


Option-


Annual


Term





All Other


Cash


TotalBased


Based


Incentive


Incentive


Pension


Compen-


Compen-


Compen-Salary


Awards


Awards


Plans


Plans


Value


sation


sation


sationName and Principal Position

Year


($)


($)


($)(1)


($)


($)


($)


($)


($)


($)Michael J.
    Smith(2)


2008



30,046











140,000











393,534
(3)


563,580



563,580Chairman and DirectorJames
    Busche(4)


2008



310,000











120,000











90,067



520,067



520,067
(5)Chief Executive Officer and PresidentAlan
    Hartslief(6)


2008



314,127























222,912



537,039



537,039Chief Financial Officer and SecretaryJouni
    Salo(7)


2008



141,345







242,550
(8)














243,576



384,921



627,471Chief Operating OfficerGeorge Zimmerman


2008



250,948







552,500
(9)






87,744







10,389



349,081



901,581Senior Vice PresidentRudolf Pich


2008



228,251







552,500
(10)






58,496







15,640



302,387



854,887Vice President  Sales and MarketingHermann
    Kroger(11)


2008



224,098







552,500
(12)


43,872



43,872







11,773



323,615



876,115Vice President  Engineering     (1)
    
    The fair value of the stock-based compensation is determined by
    using the Black-Scholes model, with the following assumptions: a
    weighted average expected life of 3.0 years, expected
    volatility of 47.48% to 48.24%, risk-free interest rates of
    3.09% to 3.24% and expected dividend yield of 0%.(2)
    
    Mr. Smith resigned as our President and Chief Executive
    Officer effective March 7, 2006, our Chief Financial
    Officer effective October 16, 2007 and our Secretary
    effective March 1, 2008.(3)
    
    Including a consultant fee of $230,000.(4)
    
    Mr. Busche was appointed our Chief Executive Officer
    effective March 7, 2006.(5)
    
    Includes $180,000 paid to Montgomery Partners.(6)
    
    Mr. Hartslief was appointed our Chief Financial Officer
    effective October 16, 2007 and our Secretary effective
    March 1, 2008.(7)
    
    Mr. Salo was appointed as the President of our Cement
    Division effective May 1, 2008 and was named our Chief
    Operating Officer effective November 1, 2008. 53




---



##### Table of Contents



(8)
    
    22,500 stock options were granted to Mr. Salo on
    May 15, 2008. The options have an exercise price of $30.89
    per share and a grant date fair value of $10.78 per share.(9)
    
    50,000 stock options were granted to Mr. Zimmerman on
    May 19, 2008. The options have an exercise price of $31.81
    per share and a grant date fair value of $11.05 per share.(10)
    
    50,000 stock options were granted to Mr. Pich on
    May 19, 2008. The options have an exercise price of $31.81
    per share and a grant date fair value of $11.05 per share.(11)
    
    Mr. Kroger ceased to hold this position effective
    December 4, 2008.(12)
    
    50,000 stock options were granted to Mr. Kroger on
    May 19, 2008. The options have an exercise price of $31.81
    per share and a grant date fair value of $11.05 per share.  Directors
    Compensation
    Share-


Option-


Non-EquityBased


Based


Incentive Plan





All OtherFees Earned


Awards


Awards


Compensation


Pension


Compensation


TotalName(1)

($)(2)


($)


($)


($)


Value ($)


($)


($)Silke Stenger


101,125























101,125Indrajit Chatterjee


79,500























79,500Dr. Shuming Zhao


42,000























42,000Dr. Kelvin K. Yao


36,000























36,000     (1)
    
    Compensation provided to our director and Chairman, Michael
    Smith, is disclosed in the table above under the heading
    Executive Compensation.(2)
    
    Our directors are each paid an annual fee of $30,000 and $750
    for each directors meeting attended as well as additional
    fees, as applicable, for their respective participation on our
    Audit and Compensation Committees.    Employment
    Agreements and Termination of Employment or Change of
    Control
       54




---



##### Table of Contents



C.
    Board
    Practices  Business Corporations Act
       55




---



##### Table of Contents



D.
    Employees    E.
    Share
    Ownership    Number of



Number ofName

Common Shares



Stock Options to PurchaseOffice Held

Beneficially Owned

Percentage(1)

Common SharesMichael J.
    Smith(2)Chairman and Director

Nil

Nil

NilJames
    Busche(3)Chief Executive Officer and President

Nil

Nil

NilAlan
    Hartslief(4)Chief Financial Officer and Secretary

Nil

Nil

50,000, exercise price of $31.28, expiry date of December 4, 2017Jouni
    Salo(5)
    Chief Operating Officer

Nil

Nil

22,500, exercise price of $30.89 per share, expiry date of May
    15, 2018George Zimmerman Senior Vice President

Nil

Nil

16,668, exercise price of $13.06 per share, expiry date of May
    17, 2016;33,334, exercise price of $26.85 per share, expiry date of May
    17, 201750,000, exercise price of $31.81 per share, expiry date of May
    19, 2018Rudolf Pich 
    Vice President, Sales and Marketing

Nil

Nil

16,668, exercise price of $13.06 per share, expiry date of May
    17, 2016;33,334, exercise price of $26.85 per share, expiry date of May
    17, 201750,000, exercise price of $31.81 per share, expiry date of May
    19, 2018 56




---



##### Table of Contents



Number of



Number ofName

Common Shares



Stock Options to PurchaseOffice Held

Beneficially Owned

Percentage(1)

Common SharesHermann Kroger 
    Vice President
    Engineering(6)

Nil

Nil

16,668, exercise price of $13.06 per share, expiry date of May
    17, 2016;50,000, exercise price of $26.85 per share, expiry date of May
    17, 201750,000, exercise price of $31.81 per share, expiry date of May
    19, 2018Dr. Shuming Zhao Director

Nil

Nil

NilDr. Kelvin K. Yao Director

Nil

Nil

NilSilke Stenger 
    Director

Nil

Nil

NilIndrajit Chatterjee Director

Nil

Nil

Nil     (1)
    
    Based on 30,522,645 common shares issued and outstanding as at
    March 16, 2009.(2)
    
    Mr. Smith resigned as our President and Chief Executive
    Officer effective March 7, 2006, our Chief Financial
    Officer effective October 16, 2007 and our Secretary
    effective March 1, 2008.(3)
    
    James Busche was appointed our Chief Executive Officer and
    President effective March 7, 2006. Does not include options
    that were granted to Montgomery Partners Limited, a company in
    which James Busche has an ownership interest.(4)
    
    Alan Hartslief was appointed our Chief Financial Officer
    effective October 16, 2007 and our Secretary effective
    March 1, 2008.(5)
    
    Jouni Salo was appointed as the President of our Cement Division
    effective May 1, 2008 and was named our Chief Operating
    Officer effective November 1, 2008.(6)
    
    Mr. Kroger ceased to hold this position effective
    December 4, 2008 and is no longer employed with our company
    as of March 16, 2009.  Stock
    Option Plan
    Equity
    Incentive Plan
   57




---



##### Table of Contents



ITEM 7
    Major
    Shareholders and Related Party Transactions  A.
    Major
    Shareholders    Name

Amount Owned

Percent of
    Class(1)Peter Kellogg


6,283,100
(2)


20.6
%Apis Capital, LP and
    Others(3)


1,584,194



5.2
%     (1)
    
    Based on 30,522,645 common shares issued and outstanding on
    March 16, 2009.(2)
    
    In his public filings, Mr. Kellogg disclaims beneficial
    ownership of 5,643,100 of the shares, or approximately 18.7% of
    our issued and outstanding common shares.(3)
    
    A Schedule 13G was filed by (i) Apis Capital, LP,
    (ii) Apis Capital (QP), LP, (iii) Apis Capital
    Offshore, Ltd., (iv) Apis Global Deep Value, LP,
    (v) Apis Global Deep Value Offshore, Ltd., (vi) Apis
    Capital Advisors, LLC, (vii) Steven A. Werber, Jr. and
    (viii) Daniel J. Barker.          B.
    Related
    Party Transactions    and/or
 58




---



##### Table of Contents



Continuing
    Operations
    2008


2007


2006Dividend income on preferred shares*

$



$



$
3,727Dividend income on common shares*






238



173Royalty expense paid and payable*


(815
)


(1,025
)


(164
)Fee income


94







1,527Fee expense for managing resource property


(1,707
)


(1,118
)


(169
)Fee expense for management services, including expense
    reimbursements


(4,303
)


(1,308
)


(1,053
)Interest income  net investment income on preferred
    shares of former subsidiaries


3,782



3,751



Interest income  other






(48
)


46Interest expense


(21
)


(530
)


(230
)Research and development expense paid to an equity investee










(1,000
)Impairment charge on a receivable






(238
)


     *
    
    included in income from interest in resource property    2008


2007Other receivables

Investment income

$
21


$
Other receivables

Due from affiliates


1,957



693Other receivables

Income on the preferred shares of former subsidiaries


9,265



4,080Equity method investments




325



654Investment in preferred shares of former subsidiaries




19,125



91,960Accounts payable and accrued expenses

Due to affiliates


844



2,171Accounts payable and accrued expenses

Interest due to a former subsidiary


2,681



       Revenues

$
340Cost of revenues


1,051     Trades receivable

$
139Advanced payments


4         Discontinued
    Operations
   59




---



##### Table of Contents



Business Corporations Act
  C.
    Interests
    of Experts and Counsel    ITEM 8
    Financial
    Information  A.
    Consolidated
    Statements and Other Financial Information    Financial
    Statements Filed as Part of the Annual Report:
     60




---



##### Table of Contents



Legal
    Proceedings
    Dividend
    Distributions
    B.
    Significant
    Changes   61




---



##### Table of Contents



ITEM 9
    The
    Offer and Listing A Offer
    and Listing Details    Exchange(1)High
    (U.S.$)(2)


Low
    (U.S.$)(2)Annual Highs and Lows2004


13.83



7.632005


13.26



7.752006


22.10



10.342007


45.74



18.002008


35.79



6.50Quarterly Highs and Lows2007First Quarter


20.53



18.00Second Quarter


32.25



20.46Third Quarter


34.60



25.38Fourth Quarter


45.74



25.372008First Quarter


32.43



20.85Second Quarter


35.79



23.61Third Quarter


31.47



18.11Fourth Quarter


21.00



6.50Monthly Highs and Lows2008September


27.33



18.11October


21.00



12.96November


18.40



6.50December


11.38



8.132009January


13.59



9.80February


10.98



7.72March (to March 16, 2009)


8.54



6.65     (1)
    
    Shares were traded on the Nasdaq Global Select Market up to and
    including June 15, 2007 and then on the NYSE on and after
    June 18, 2007.(2)
    
    All numbers have been adjusted to reflect the two (2) for
    one (1) stock split effective September 10, 2007.  201-680-5258; 201-680-4604).
  B.
    Plan
    of Distribution    C.
    Markets   62




---



##### Table of Contents



D.
    Selling
    Shareholders    E.
    Dilution    F.
    Expenses
    of the Issue    ITEM 10
    Additional
    Information  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Association            winding-up
    Business
    Corporations Act
   63




---



##### Table of Contents



Investment Canada Act Investment Canada Act
      C.
    Material
    Contracts              and/or and/or
               64




---



##### Table of Contents



D.
    Exchange
    Controls    Investment Canada Act Investment Canada
    Act
  This summary is of a general nature only and is not intended
    to be, and should not be construed to be, legal advice to any
    holder or prospective holder of our common shares, and no
    opinion or representation to any holder or prospective holder of
    our common shares is hereby made. Accordingly, holders and
    prospective holders of our common shares should consult with
    their own legal advisors with respect to the consequences of
    purchasing and owning our common shares.
  Investment Canada Act Investment
    Canada Act Investment Canada
    Act Investment Canada Act Investment Canada Act Investment Canada Act
  Investment Canada
    Act Investment Canada Act
  Investment Canada Act
  (a)
    the acquisition of our common shares by a person in the ordinary
    course of that persons business as a trader or dealer in
    securities;  (b)
    the acquisition of control of our company in connection with the
    realization of security granted for a loan or other financial
    assistance and not for a purpose related to the provisions of
    the Investment Canada Act; and 65




---



##### Table of Contents



(c)
    the acquisition of control of our company by reason of an
    amalgamation, merger, consolidation or corporate reorganization
    following which the ultimate direct or indirect control in fact
    of our company, through ownership of our common shares, remains
    unchanged.  E.
    Taxation  Material
    Canadian Federal Income Tax Consequences
  Income
    Tax Act
  Income Tax Act Income Tax Act
  This summary is of a general nature only and is not intended
    to be, and should not be construed to be, legal, business or tax
    advice to any particular holder or prospective holder of our
    common shares, and no opinion or representation with respect to
    the tax consequences to any holder or prospective holder of our
    common shares is made. Accordingly, holders and prospective
    holders of our common shares should consult their own tax
    advisors with respect to the income tax consequences of
    purchasing, owning and disposing of our common shares in their
    particular circumstances.
  Dividends
  Income Tax Act Income
    Tax Act
  Capital
    Gains
  Income
    Tax Act Income Tax Act
  Material
    United States Federal Income Tax Consequences
   66




---



##### Table of Contents



The following discussion is for general information only and
    is not intended to be, nor should it be construed to be, legal,
    business or tax advice to any holder or prospective holder of
    our common shares, and no opinion or representation with respect
    to the United States Federal income tax consequences to any such
    holder or prospective holder is made. Accordingly, holders and
    prospective holders of common shares are urged to consult their
    own tax advisors with respect to Federal, state, local, and
    foreign tax consequences of purchasing, owning and disposing of
    our common shares.
  U.S.
    Holders
    Distributions
    Capital
    Gains
    Foreign
    Tax Credit
  year-by-year
 67




---



##### Table of Contents



Passive
    Foreign Investment Corporation
      U.S. Holders and prospective holders should consult
    their own tax advisors regarding the potential application of
    the PFIC rules to their ownership of our common shares.
  F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Suite 800-885 West
  I.
    Subsidiary
    Information    ITEM 11
    Quantitative
    and Qualitative Disclosures About Market Risk       68




---



##### Table of Contents



Derivatives
    Interest
    Rate Risk
    As at December 31, 2008(In thousands)Expected Cash
    Flow(1)Carrying Value

Fair Value

2009

2010

2011

2012

2013

ThereafterDebt obligations

$
11,313


$
11,313


$
277


$
277


$
11,451











     (1)
    
    Including interest and dividends where applicable.  As at December 31, 2007(In thousands)Expected Cash
    Flow(1)Carrying Value

Fair Value

2008

2009

2010

2011

2012

ThereafterDebt obligations

$
13,920


$
13,088


$
414


$
2,466


$
291


$
11,926







     (1)
    
    Including interest and dividends where applicable.   69




---



##### Table of Contents



Foreign
    Currency Exchange Rate Risk
    As at December 31, 2008(In thousands)Fair

Expected Cash
    Flow(1)Carrying Value

Value

2009

2010

2011

2012

2013

ThereafterInvestments(2)

$
2,777


$
2,777


$2,777


















Debt
    obligations(3)

$
11,313


$
11,313


$277

$
277


$
11,451











     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities which are denominated
    in either Canadian dollars or Euros.(3)
    
    Debt obligations are denominated in Euros.  As at December 31, 2007(In thousands)Fair

Expected Cash
    Flow(1)Carrying Value

Value

2008

2009

2010

2011

2012

ThereafterInvestments(2)

$
14,274


$
14,274


$14,274


















Debt
    obligations(3)

$
13,920


$
13,088


$414

$
2,466


$
291


$
11,916







     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities which are denominated
    in Canadian dollars and Euros.(3)
    
    Debt obligations are denominated in Euros.  Equity
    Price Risk
   70




---



##### Table of Contents



As at December 31, 2008(In thousands)Expected Cash
    Flow(1)Carrying Value

Fair Value

2009

2010

2011

2012

2013

ThereafterInvestments(2)

$
2,987


$
2,987


$
2,987



















     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities.  As at December 31, 2007(In thousands)Expected Cash
    Flow(1)Carrying Value


Fair Value


2008


2009


2010


2011


2012


ThereafterInvestments(2)

$
15,510


$
15,510


$
15,510



















     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities.  ITEM 12
    Description
    of Securities Other than Equity Securities   PART II  ITEM 13
    Defaults,
    Dividend Arrearages and Delinquencies    ITEM 14
    Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds    ITEM 15
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Rule 13a-15
  Report
    of Management on Internal Control over Financial
    Reporting
  Rule 13a-15(f) 13d-15(f)
 71




---



##### Table of Contents



1.
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of our assets and our consolidated entities;2.
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of the consolidated financial
    statements in accordance with generally accepted accounting
    principles, and that receipts and expenditures of our company
    are being made only in accordance with authorizations of
    management and our directors; and3.
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    our assets that could have a material effect on the consolidated
    financial statements.  Internal Control  Integrated Framework
    Form 20-F.
  Changes
    in Internal Control Over Financial Reporting
    Inherent
    Limitations on Effectiveness of Controls
    ITEM 16
    [Reserved]  ITEM 16A
    Audit Committee Financial Expert    ITEM 16B
    Code
    of Ethics  Code
    of Ethics
   72




---



##### Table of Contents



(a)
    honest and ethical conduct, including the ethical handling of
    actual or apparent conflicts of interest between personal and
    professional relationships;  (b)
    full, fair, accurate, timely, and understandable disclosure in
    reports and documents that we file with, or submit to, the
    Securities and Exchange Commission and in other public
    communications made by us;  (c)
    compliance with applicable governmental laws, rules and
    regulations;  (d)
    the prompt internal reporting of violations of the Code of
    Business Conduct and Ethics to an appropriate person or persons
    identified in the Code of Business Conduct and Ethics; and  (e)
    accountability for adherence to the Code of Business Conduct and
    Ethics.    and/or
    ITEM 16C
    Principal
    Accountant Fees and Services  Audit
    Fees
    Audit
    Related Fees
    Tax
    Fees
    All
    Other Fees
   73




---



##### Table of Contents



Audit
    Committee Pre-approval Policies and Procedures
  Rule 2-01 Regulation S-X.
    ITEM 16D
    Exemptions from the Listing Standards for Audit
    Committees    ITEM 16E
    Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers    ITEM 16F
    Change in Registrants Certifying Accountant    ITEM 16G
    Corporate Governance    
    Section 303A.03 of the NYSEs Listed Company Manual
    requires the non-management directors of a listed company to
    meet at regularly scheduled executive sessions without
    management.    
    Section 303A.08 of the NYSEs Listed Company Manual
    requires shareholder approval of all equity compensation plans
    and material revisions to such plans.    ITEM 17
    Financial
    Statements  Financial
    Statements Filed as Part of the Annual Report:
 Report of Independent Registered Chartered Accountants,
    Deloitte & Touche LLP, dated March   ,
    2009 on the Consolidated Financial Statements of our company as
    at December 31, 2008, 2007 and 2006 Report of Independent Registered Chartered Accountants,
    Deloitte & Touche LLP, on the effectiveness of
    internal controls over financial reporting as of
    December 31, 2008   Consolidated Balance Sheets as at December 31, 2008 and 2007 Consolidated Statements of Income (Loss) for the years ended
    December 31, 2008, 2007 and 2006 Consolidated Statements of Changes in Shareholders Equity
    for the years ended December 31, 2008, 2007 and 2006 Consolidated Statements of Comprehensive Income (Loss) for the
    years ended December 31, 2008, 2007 and 2006 Consolidated Statements of Cash Flows for the years ended
    December 31, 2008, 2007 and 2006 Notes to Consolidated Financial Statements 74




---



##### Table of Contents



REPORT OF
    MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING  Rule 13a-15(f) 15d-15(f)
        /s/ James Busche 
    James Busche 
    Chief Executive Officer

/s/ Alan Hartslief
    Alan Hartslief 
    Chief Financial Officer     75




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS           Internal Control  Integrated Framework
               76




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
             Internal Control  Integrated Framework
        77




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
 CONSOLIDATED
    BALANCE SHEETS
    December 31, 2008 and 2007
    (United States Dollars in Thousands)  Notes


2008


2007ASSETSCurrent AssetsCash and cash equivalents





$
409,087


$
354,397Securities


5



2,987



15,510Restricted cash






32,008



24,116Accounts receivable, trade


6



62,760



62,074Other receivables


7



28,313



18,585Inventories


8



110,161



124,980Contract deposits, prepaid and other


9



58,694



33,775Future income tax assets


10



7,679



825Total current assets






711,689



634,262Non-current AssetsProperty, plant and equipment


11



2,489



2,957Interest in resource property






24,861



32,865Equity method investments






325



654Future income tax assets


10



6,339



24,658Investment in preferred shares of former subsidiaries


12



19,125



91,960Other non-current assets






830



1,955Total non-current assets






53,969



155,049$
765,658


$
789,311LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable and accrued expenses


13


$
178,582


$
147,869Progress billings above costs and estimated earnings on
    uncompleted contracts


8



171,843



184,830Advance payments received from customers






11,331



9,190Income tax liabilities






9,112



20,658Deferred credit, future income tax assets


10



4,212



Accrued pension liabilities, current portion


14



2,158



2,205Provision for warranty costs, current portion


15



30,856



31,503Provision for supplier commitments on terminated customer
    contracts


16



23,729



Total current liabilities






431,823



396,255Long-term LiabilitiesLong-term debt


17



11,313



13,920Accrued pension liabilities, less current portion


14



29,209



30,981Provision for warranty costs, less current portion


15



7,524



11,799Deferred credit, future income tax assets


10



4,176



15,712Future income tax liability


10



7,646



2,593Other long-term liabilities


18



8,344



4,931Total long-term liabilities






68,212



79,936Total liabilities






500,035



476,191Minority Interests






3,709



5,926Shareholders Equity


19Common stock, without par value; authorized unlimited number






143,826



138,359Treasury stock






(93,793
)


(93,793
)Contributed surplus






7,623



4,319Retained earnings






155,681



162,633Accumulated other comprehensive income






48,577



95,676Total shareholders equity






261,914



307,194$
765,658


$
789,311    78




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME (LOSS)
    For the Years Ended December 31, 2008, 2007 and 2006
    (United States Dollars in Thousands, Except Earnings per
    Share)
  Notes


2008


2007


2006Revenues





$
638,354


$
580,391


$
404,324Cost of revenues






516,631



494,432



338,495Loss on terminated customer contracts


16



31,966







Gross profit






89,757



85,959



65,829Income from interest in resource property






27,185



18,132



6,660General and administrative expense






56,156



46,700



29,802Stock-based compensation  general and administrative


20



4,401



4,381



2,132Operating income






56,385



53,010



40,555Interest income






21,449



13,155



5,044Interest expense






(2,291
)


(2,668
)


(2,238
)Foreign currency transaction gains (losses), net






2,149



(2,003
)


2,046Fair value loss on investment in preferred shares in former
    subsidiaries


12



(55,076
)






Share of profit (loss) of equity method investees






(272
)


142



563Other income (expense), net


21



(9,912
)


4,169



5,154Income before income taxes and minority interests from
    continuing operations






12,432



65,805



51,124Provision for income taxes:Income taxes


22



(12,800
)


(8,278
)


(9,658
)Resource property revenue taxes


22



(5,864
)


(4,161
)


(644
)(18,664
)


(12,439
)


(10,302
)Income (loss) before minority interests from continuing
    operations






(6,232
)


53,366



40,822Minority interests






(720
)


(2,386
)


(6,670
)Income (loss) from continuing operations






(6,952
)


50,980



34,152Loss from discontinued operations, net of tax










(9,351
)


(2,874
)Extraordinary gain, net of tax










513



Net income (loss)





$
(6,952
)

$
42,142


$
31,278Basic earnings (loss) per share


23 from continuing operations





$
(0.23
)

$
1.71


$
1.13 from discontinued operations






0.00



(0.31
)


(0.10
) extraordinary gain






0.00



0.02



0.00$
(0.23
)

$
1.42


$
1.03Diluted earnings (loss) per share


23 from continuing operations





$
(0.23
)

$
1.68


$
1.12 from discontinued operations






0.00



(0.31
)


(0.09
) extraordinary gain






0.00



0.02



0.00$
(0.23
)

$
1.39


$
1.03Weighted average number of common shares outstanding


23 basic






30,401,018



29,895,468



30,162,412 diluted






30,401,018



30,402,130



30,415,452    79




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 For the
    Years Ended December 31, 2008, 2007 and 2006
  AccumulatedOtherCompre-Equity





hensiveComponent





IncomeCommon Stock


Treasury Stock





of





CurrencyNumber of





Number of





Contributed


Convertible


Retained


TranslationShares


Amount


Shares


Amount


Surplus


Debt


Earnings


Adjustment


TotalBalance at December 31, 2005


32,292,522


$
71,512



(5,021,754
)

$
(17,938
)

$



$
113


$
169,288


$
21,284


$
244,259Net income


























31,278







31,278Distribution of Mass Financial Corp.










3,142,256



8,356











(22,662
)


22,662



8,356Disposition of MFC Merchant Bank S.A.


























(1,162
)






(1,162
)Shares received as a partial consideration on disposition of MFC
    Merchant Bank S.A.


1,562,256



27,246



(3,142,256
)


(54,801
)


















(27,555
)Shares issued for conversion of bonds


292,602



3,603















(113
)










3,490Shares issued for increase of equity interest in a
    non-wholly-owned Canadian subsidiary


170,000



3,083



























3,083Shares issued for increase of equity interest in an equity
    method investee


26,210



402



























402Shares issued to extinguish debt


144,546



2,749



























2,749Stock-based compensation


















2,131















2,131Translation adjustment






























6,257



6,257Balance at December 31, 2006


34,488,136



108,595



(5,021,754
)


(64,383
)


2,131







176,742



50,203



273,288Net income


























42,142







42,142Distribution of SWA Reit and Investments Ltd.


























(56,251
)






(56,251
)Shares issued for increase of equity interest in
    non-wholly-owned subsidiaries


676,766



18,749



























18,749Exercise of stock options


672,218



11,015











(2,193
)














8,822Price adjustment for shares received in connection with
    disposition of MFC Merchant Bank S.A. in 2006














(10,073
)


















(10,073
)Shares received on settlements of receivables










(371,921
)


(11,174
)


















(11,174
)Shares received as consideration for disposition of MFC Merchant
    Bank S.A.










(219,208
)


(8,163
)


















(8,163
)Stock-based compensation


















4,381















4,381Translation adjustment






























45,473



45,473Balance at December 31, 2007


35,837,120



138,359



(5,612,883
)


(93,793
)


4,319







162,633



95,676



307,194Net loss


























(6,952
)






(6,952
)Exercise of stock options


299,438



5,467











(1,097
)














4,370Cancellation of shares by transfer agent


(1,030
)






























Stock-based compensation


















4,401















4,401Translation adjustment






























(47,099
)


(47,099
)Balance at December 31, 2008


36,135,528


$
143,826



(5,612,883
)

$
(93,793
)

$
7,623


$



$
155,681


$
48,577


$
261,914Total of retained earnings and accumulated other comprehensive
    incomeDecember 31, 2006

































$
226,945December 31, 2007

































$
258,309December 31, 2008

































$
204,258    80




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (LOSS)
    For the Years Ended December 31, 2008, 2007 and 2006
    (United States Dollars in Thousands)
  2008


2007


2006Net (loss) income for the year

$
(6,952
)

$
42,142


$
31,278Other comprehensive income (loss), net of tax:Unrealized gains (losses) on translating financial statements of
    self-sustaining foreign operations and adjustments from the
    application of U.S. dollar reporting


(47,099
)


45,473



6,257Unrealized losses on securities:Fair value loss on available-for-sale securities


(55,076
)






Reclassification adjustment for other than temporary decline in
    value


55,076















Other comprehensive income (loss)


(47,099
)


45,473



6,257Comprehensive income (loss)

$
(54,051
)

$
87,615


$
37,535    81




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Years Ended December 31, 2008, 2007 and 2006
    (United States Dollars in Thousands)
  2008


2007


2006Cash flows from continuing operating activities(Loss) income from continuing operations

$
(6,952
)

$
50,980


$
34,152Adjustments for:Amortization and depreciation


4,295



3,279



2,165Foreign currency transaction (gains) losses, net


(2,149
)


2,003



(2,046
)Minority interests


720



2,386



6,670(Gain) loss on short-term securities


11,218



110



(915
)Stock-based compensation


4,401



4,381



2,132Fair value loss on investment in preferred shares of former
    subsidiaries


55,076







Future income taxes


8,621



(2,785
)


755Changes in operating assets and liabilities, net of effects of
    acquisitions and dispositionsShort-term securities


1,176



(2,576
)


(2,166
)Restricted cash


(9,478
)


(5,813
)


7,401Receivables


(15,059
)


11,314



(31,944
)Inventories


9,340



(28,089
)


(44,743
)Contract deposits, prepaid and other


(27,931
)


(6,652
)


(11,100
)Accounts payable and accrued expenses


44,024



6,652



44,669Progress billings above costs and estimated earnings on
    uncompleted contracts


(4,264
)


76,890



51,774Advance payments received from customers


2,355



(595
)


(14,767
)Income tax liabilities


(11,115
)


7,838



7,848Provision for warranty costs


(3,046
)


10,373



1,792Provision for supplier commitments on terminated customer
    contracts


22,413







Other


424



407



(1,665
)Cash flows provided by continuing operating activities


84,069



130,103



50,012Cash flows from continuing investing activitiesPurchases of property, plant and equipment, net


(3,037
)


(3,471
)


(2,532
)Sales (purchases) of long-term securities, net






(456
)


(68
)Disposition of subsidiaries, net of cash disposed










27,228Purchases of subsidiaries, net of cash acquired


(1,547
)


(7,807
)


(7,900
)Other


(1,620
)






(906
)Cash flows (used in) provided by continuing investing activities


(6,204
)


(11,734
)


15,822Cash flows from continuing financing activitiesBorrowings






3,292



28,759Debt repayments


(2,056
)


(6,132
)


(17,304
)Issuance of shares


4,370



8,822



Distribution in connection with SWA Reit and Investments
    Ltd.






(5,399
)


Other










190Cash flows provided by continuing financing activities


2,314



583



11,645Cash flows provided by (used in) operating activities of
    discontinued operations






198



(12,273
)Cash flows provided by (used in) investing activities of
    discontinued operations






58



(88,241
)Cash flows provided by (used in) financing activities of
    discontinued operations






(245
)


15,432Exchange rate effect on cash and cash equivalents


(25,489
)


30,756



17,968Increase in cash and cash equivalents


54,690



149,719



10,365Cash and cash equivalents, beginning of period


354,397



204,678



194,313Cash and cash equivalents, end of period

$
409,087


$
354,397


$
204,678Cash and cash equivalents at end of period consisted of:Continuing operations

$
409,087


$
354,397


$
204,530Discontinued operations










148$
409,087


$
354,397


$
204,678Cash and cash equivalents

$
393,872


$
349,435


$
158,105Money market funds


15,215



4,962



46,573$
409,087


$
354,397


$
204,678    82




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
    31, 2008
  Note 1.
    The
    Company and Summary of Significant Accounting Policies      A.
    Basis of
    Presentation    B.
    Significant
    Accounting Policies  (i)  Principles
    of Consolidation
  Consolidation of Variable Interest
    Entities. Interests in
    Joint Ventures,
    (ii)  Foreign
    Currency Translation
      (iii)  Financial
    Instruments
  Financial Instruments 
    Recognition and Measurement Hedges Financial
    Instruments  Disclosure and Presentation Comprehensive Income
 83




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Equity
  Financial Instruments 
    Disclosures Financial
    Instruments  Presentation
  Financial Instruments 
    Recognition and Measurement Financial
    Instruments  Disclosure and Presentation Financial Instruments 
    Disclosure
  and/or
         84




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        (iv)  Cash
    and Cash Equivalents
    (v)  Short-term
    Cash Deposits
    (vi)  Restricted
    Cash
    (vii)  Securities
         85




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (viii)  Receivables
        (ix)  Allowance
    for Credit Losses
      (x)  Derivative
    Financial Instruments
      (xi)  Inventories
  work-in-progress, contracts-in-progress first-in
  contracts-in-progress
   86




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (xii)  Property,
    Plant and Equipment
      Lives


MethodBuildings


25 years



straight-lineManufacturing plant equipment


3 to 20 years



straight-lineOffice equipment


3 to 10 years



straight-line     (xiii)  Interest
    in Resource Property
    (xiv)  Asset
    Retirement Obligations
  Asset Retirement Obligations
  (xv)  Goodwill
   87




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (xvi)  Provisions
    (xvii)  Revenue
    Recognition and Cost of Revenues
      catch-up and/or
        (xviii)  Warranty
    Costs
      (xix)  Research
    and Development Costs
   88




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (xx)  Stock-Based
    Compensation
  Stock-based Compensation and Other
    Stock-based Payments
  (xxi)  Employee
    Future Benefits
      (xxii)  Taxes
    on Income
            (xxiii)  Earnings
    Per Share
   89




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (xxiv)  Measurement
    Uncertainty
    C.
    Reclassifications    D.
    Future
    Changes to Accounting Standards  International
    Financial Reporting Standards (IFRS)
         90




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Goodwill
    and Intangible Assets
  Goodwill and
    Intangible Assets, Business
    Combination.
  Business
    Combinations
  Business
    Combinations Consolidated Financial
    Statements, Non-controlling Interests,
  Note 2.
    Capital
    Disclosure on the Companys Objective, Policies and
    Processes for Managing Its Capital Structure        2008


2007Total debt

$
11,313


$
13,920Less: cash and cash equivalents


(409,087
)


(354,397
)Net debt (net cash and cash equivalents)

$
(397,774
)

$
(340,477
)Total equity

$
261,914


$
307,194Debt-to-adjusted capital ratio


Not applicable



Not applicable     91




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2008


2007Long-term debt

$
11,313


$
13,920Shareholders equity

$
261,914


$
307,194Long-term debt-to-equity ratio


0.04



0.05       Note 3.
    Acquisitions
    of Subsidiaries  Year
    2008
    Year
    2007
        Year
    2006
     92




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 4.
    Discontinued
    Operations  Financial
    services operations
  Related Party Transactions,
  2 3
 93




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      15-year
             94




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        dividend-in-kind.
    Real
    estate and other interests
   95




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 5.
    Securities  Short-term
    securities

2008


2007Trading securities:Common shares, at fair value

$
2,947


$
15,460Available-for-sale security:Investment in a private company, at cost


40



50$
2,987


$
15,510     Note 6.
    Accounts
    Receivable, Trade  2008


2007Trade receivables, gross amount

$
65,307


$
65,006Less: Allowance for credit losses


(2,547
)


(2,932
)Trade receivables, net amount

$
62,760


$
62,074     Below 30 days

$
4,851Between 31 and 60 days


1,857Between 61 and 90 days


2,448Over 90 days


10,182$
19,338     Below 30 days

$
487Between 31 and 60 days


8Between 61 and 90 days


Over 90 days


2,052$
2,547  96




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Balance at December 31, 2007

$
2,932Additions


1,509Reversals


(944
)Write-offs


(821
)Cumulative translation adjustment


(129
)Balance at December 31, 2008

$
2,547     Note 7.
    Other
    Receivables  2008


2007Investment income (of which $21 and $nil was due from affiliates
    at December 31, 2008 and 2007, respectively)

$
1,235


$
644Government taxes


8,697



3,687Due from affiliates (see Note 27)


1,957



693Income from interest in resource property


3,402



4,748Income on the preferred shares of former subsidiaries (see
    Note 26)


9,265



4,080Derivative assets


1,450



388Other


2,307



4,345$
28,313


$
18,585       Note 8.
    Inventories  2008


2007Raw materials

$
12,317


$
10,114Work-in-progress


483



563Contracts-in-progress


96,876



113,659Finished goods


485



644$
110,161


$
124,980  97




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  contracts-in-progress
  2008


2007Costs incurred to date on uncompleted contracts

$
560,581


$
390,272Estimated earnings recognized to date on these contracts


99,567



93,007660,148



483,279Less: loss contracts (not including loss on the terminated
    customer contracts) (Note 16)


(1,861
)


(3,529
)Less: billings to date


(733,705
)


(548,541
)(75,418
)


(68,791
)Currency translation adjustments


451



(2,380
)$
(74,967
)

$
(71,171
)This amount is included in the consolidated balance sheet as
    follows:Costs and estimated earnings in excess of billings on
    uncompleted contracts (included in inventories 
    contracts-in-process)

$
96,876


$
113,659Progress billings above costs and estimated earnings on
    uncompleted contracts (included in liabilities)


(171,843
)


(184,830
)$
(74,967
)

$
(71,171
)       Note 9.
    Contract
    Deposits, Prepaid and Other  2008


2007Prepayments and deposits for inventories on construction
    contracts

$
58,171


$
33,289Prepaids, deposits and other


523



486$
58,694


$
33,775  98




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 10.
    Future
    Income Tax Assets and Liabilities    2008


2007Non-capital tax loss carryforwards

$
46,752


$
65,692Uncompleted contracts


(23,420
)


(17,700
)Other


5,918



1,03829,250



49,030Valuation allowance


(22,878
)


(26,140
)$
6,372


$
22,890Future income tax assets are included in the consolidated
    balance sheet as follows:Current

$
7,679


$
825Non-current


6,339



24,65814,018



25,483Future income tax liabilities are included in the consolidated
    balance sheet as follows:Non-current


(7,646
)


(2,593
)Net future income tax assets

$
6,372


$
22,890       Country

Amount


Expiration datesCanada

$
41,296



2009-2028Germany


122,732



IndefiniteSwitzerland


103



2009-2010China


2,347



2010-2012U.S.


792



2016    99




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11.
    Property,
    Plant and Equipment  2008


2007Accumulated


Net





Accumulated


NetCost


Depreciation


Book Value


Cost


Depreciation


Book ValueBuildings

$
1,335


$
853


$
482


$
1,435


$
800


$
635Manufacturing plant and equipment


11,722



9,850



1,872



10,111



8,003



2,108Office equipment


240



105



135



278



64



214$
13,297


$
10,808


$
2,489


$
11,824


$
8,867


$
2,957     Note 12.
    Investments
    in Preferred Shares of Former Subsidiaries    2008


2007Preferred shares of former subsidiaries at gross amount of
    Cdn$127,866 at December 31, 2008 and 2007

$
104,415


$
129,406Offset of amount owing to a former subsidiary (Cdn$37,000 at
    December 31, 2008 and 2007) (Note 4)


(30,214
)


(37,446
)Fair value loss (Note 26)


(55,076
)


Preferred shares of former subsidiaries, net

$
19,125


$
91,960   spin-off
  Note 13.
    Accounts
    Payable and Accrued Expenses  2008


2007Accounts payable

$
162,315


$
131,268Value-added and other taxes


3,639



2,710Affiliates


844



2,171Compensation


7,106



8,451Interest


42



44Interest due to a former subsidiary (see Note 4)


2,681



Derivative liabilities


285



543Other


1,670



2,682$
178,582


$
147,869     Note 14.
    Employee
    Future Benefits     100




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007Accrued benefit obligation, beginning of year

$
33,186


$
30,223Current service cost


48



711Interest cost


1,670



1,419Deferred compensation


70



70Net pension cost


1,788



2,200Cash benefit payments


(2,070
)


(2,444
)Currency translation adjustments


(1,537
)


3,207Accrued benefit obligation, end of year

$
31,367


$
33,186Included in the consolidated balance sheet as follows:Current portion

$
2,158


$
2,205Long-term portion


29,209



30,981$
31,367


$
33,186     2008

2007Weighted average discount rate


6.0%



5.3%Rate of increase in future compensation


0.0%



0.0%         Year

Amount2009

$
2,1582010


2,1582011


2,1582012


2,1582013


2,018Thereafter


20,717$
31,367  101




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 15.
    Provision
    for Warranty Costs    2008


2007Balance at beginning of year

$
43,302


$
29,115Costs incurred


(10,013
)


(3,371
)Warranty reserves established on completed contracts


16,554



19,913Reversal of reserves at end of warranty period


(9,630
)


(6,292
)Currency translation adjustments


(1,833
)


3,937Balance, at end of year

$
38,380


$
43,302Included in the consolidated balance sheet as follows:Current portion

$
30,856


$
31,503Long-term portion


7,524



11,799$
38,380


$
43,302   Note 16.
    Provision
    for Supplier Commitments and Loss on Terminated Customer
    Contracts    Provisions:Supplier commitments

$
17,027Penalty for cancellation of purchase orders


3,401Inventories
    (contracts-in-progress)


2,60623,034Inventories (raw materials and finished goods)


2,637Inventories
    (contracts-in-progress)


6,037Customer receivables


258Loss on terminated customer contracts for the year

$
31,966     Balance at beginning of year

$
Costs recognized


23,034Paid


Reversal


Currency translation adjustments


695Balance, at end of year

$
23,729    102




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17.
    Long-term
    Debt  2008


2007Note payable to a bank, 8,127 at both December 31,
    2008 and 2007, interest at 2.45% per annum due quarterly and the
    entire principal balance due February 2011. The Company is in
    compliance with financial covenants stipulated by the bank

$
11,313


$
11,868Note payable to a bank, nil at December 31, 2008 and
    1,405 at December 31, 2007, interest at 6.0% per
    annum due monthly






2,05211,313



13,920Less current portion






$
11,313


$
13,920     Maturity

Principal


Interest


Total2009

$



$
277


$
2772010






277



2772011


11,313



138



11,451$
11,313


$
692


$
12,005     Note 18.
    Other
    Long-term Liabilities    Note 19.
    Share
    Capital, Authorized      Note 20.
    Stock-Based
    Compensation      1997
    Stock Option Plan
   103




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageExercise PriceNumber of Shares


Per ShareOutstanding at December 31, 2005





$
Granted


1,173,336



13.17Outstanding at December 31, 2006


1,173,336



13.17Granted


1,029,994



24.80Exercised


(672,218
)


13.06Forfeited


(22,224
)


13.06Outstanding at December 31, 2007


1,508,888



21.13Granted


425,826



31.67Exercised


(299,438
)


14.60Forfeited


(55,556
)


28.29Outstanding at December 31, 2008


1,579,720


$
24.96     Stock
    options granted in 2008
        Stock
    options granted in 2007
   104




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Stock
    options granted in 2006
     105




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008
    Equity Incentive Plan
      Options Outstanding


Options ExercisableWeighted-AverageRemaining


Weighted-Average





Weighted-AverageNumber


Contractual Life


Exercise Price


Number


Exercise PriceExercise Prices per Share

Outstanding


(In Years)


per Share


Exercisable


per Share$13.06


176,118



7.63


$
13.06



70,554


$
13.06$15.90


31,112



7.96


$
15.90



15,556


$
15.90$21.09


500,000



8.75


$
21.09



333,332


$
21.09$26.85


266,668



8.63


$
26.85



66,662


$
26.85$29.25


66,664



8.50


$
29.25



22,220


$
29.25$30.31


46,666



8.96


$
30.31



31,110


$
30.31$30.89


42,500



9.63


$
30.89







$31.28


83,332



8.91


$
31.28



27,776


$
31.28$31.53


66,664



9.50


$
31.53







$31.81


299,996



9.63


$
31.81







1,579,720



8.81


$
24.96



567,210


$
21.95   Note 21.
    Other
    Income (Expense), Net  2008


2007


2006Gain (loss) on trading securities, net

$
(11,218
)

$
(110
)

$
915Unrealized holding gains (losses) on currency derivative
    contracts, net


1,164



(145
)


Fee income










1,527Other income


1,982



4,666



2,825Other expenses


(1,840
)


(242
)


(113
)Other income (expense), net

$
(9,912
)

$
4,169


$
5,154  106




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 22.
    Income
    Taxes    2008


2007


2006Income before income taxes and minority interests from
    continuing operations

$
12,432


$
65,805


$
51,124Computed provision for income taxes at statutory rates

$
(3,667
)

$
(21,136
)

$
(16,421
)(Increase) decrease in taxes resulting from:Statutory tax rate differences


(758
)


(1,082
)


(4,374
)Non-taxable income


1,702



1,862



1,537Stock-based compensation


(1,287
)


(1,465
)


(673
)Resource property revenue taxes


(5,864
)


(4,161
)


(644
)Permanent differences


(1,297
)


(1,610
)


2,979Change in valuation allowance


(205
)


12,754



9,139Reduction in future tax rate


(239
)


(3,955
)


Amortization of deferred credit, future income tax assets


6,298



6,062



Fair value loss on investment in preferred shares of former
    subsidiaries


(16,248
)






Other, net


2,901



292



(1,845
)Provision for income taxes

$
(18,664
)

$
(12,439
)

$
(10,302
)Consisting of:Resource property revenue taxes

$
(5,864
)

$
(4,161
)

$
(644
)Other income taxes


(12,800
)


(8,278
)


(9,658
)$
(18,664
)

$
(12,439
)

$
(10,302
)   Note 23.
    Earnings
    Per Share    2008


2007


2006Basic earnings (loss) from continuing operations available to
    common shareholders

$
(6,952
)

$
50,980


$
34,152Effect of dilutive securities:Interest on convertible bonds










54Diluted earnings (loss) from operations

$
(6,952
)

$
50,980


$
34,206   Number of Shares2008


2007


2006Weighted average number of common shares outstanding 
    basic


30,401,018



29,895,468



30,162,412Effect of dilutive securities:Convertible bonds










131,478Options






506,662



121,562Weighted average number of common shares outstanding 
    diluted


30,401,018



30,402,130



30,415,452    107




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 24.
    Commitments
    and Contingencies  Leases
    Year

Amount2009

$
3,7722010


1,3552011


1,3392012


1,2902013


1,290Thereafter


828$
9,874     Litigation
    Guarantees
  Disclosure of Guarantees)
  Purchase
    Obligations
    Note 25.
    Business
    Segment Information   108




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31, 2008Industrial PlantEngineering and


Resource


CorporateEquipment Supply


Property


and Other


TotalRevenues from external customers

$
638,354


$



$



$
638,354Income from interest in resource property






27,185







27,185Interest expenseExternal


2,198







93



2,291Internal










1,474



1,474Income (loss) from continuing operations before income taxes and
    minority interests


57,641



22,769



(67,978
)


12,432   Year Ended December 31, 2007Industrial PlantEngineering and


Resource


CorporateEquipment Supply


Property


and Other


TotalRevenues from external customers

$
580,391


$



$



$
580,391Income from interest in resource property






18,132







18,132Interest expenseExternal


2,094







574



2,668Internal


269







498



767Income (loss) from continuing operations before income taxes and
    minority interests


61,277



15,367



(10,839
)


65,805   Year Ended December 31, 2006Industrial PlantEngineering and


Resource


CorporateEquipment Supply


Property


and Other


TotalRevenues from external customers

$
404,324


$



$



$
404,324Income from interest in resource property






6,660







6,660Interest expenseExternal


1,961







277



2,238Internal


387







284



671Income (loss) from continuing operations before income taxes and
    minority interests


48,367



6,177



(3,420
)


51,124     2008


2007


2006Cement

$
547,368


$
518,573


$
340,704Coal and minerals


90,986



61,818



63,620$
638,354


$
580,391


$
404,324   109




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As at December 31, 2008Industrial PlantEngineering and


Resource


CorporateEquipment Supply


Property


and Other


TotalSegment assets

$
698,371


$
28,605


$
89,066


$
816,042Less: intercorporate investment














(50,384
)Consolidated total assets













$
765,658Equity method investments


325











325Cash expenditures for capital assets


3,027







10



3,037   As at December 31, 2007Industrial PlantEngineering and


Resource


CorporateEquipment Supply


Property


and Other


TotalSegment assets

$
643,544


$
37,892


$
158,470


$
839,906Less: intercorporate investment














(50,595
)Consolidated total assets













$
789,311Equity method investments


654











654Cash expenditures for capital assets


3,471











3,471     2008


2007


2006Canada

$
11,720


$
512


$
72Africa


7,596



21,393



10,488Americas


48,836



117,905



75,651Asia


145,636



196,348



106,336Russia & Eastern Europe


213,708



83,592



41,548Europe


57,577



35,502



29,764Middle East


150,856



123,283



135,759Australia


2,425



1,856



4,706$
638,354


$
580,391


$
404,324      110




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007Canada

$
25,047


$
33,161Africa


63



66Americas


200



320Asia


586



837Russia & Eastern Europe


21



Europe


1,411



1,288Middle East


14



Australia


8



150$
27,350


$
35,822   Note 26.
    Financial
    Instruments    2008


2007Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueFinancial Assets:Held-for-trading:Cash and cash equivalents (including restricted cash)

$
441,095


$
441,095


$
378,513


$
378,513Short-term securities


2,947



2,947



15,460



15,460Derivative assets


1,450



1,450



388



388Loans and receivables:Current receivables*


80,926



80,926



76,584



76,584Available-for-sale instruments that do not have a quoted
    market price in an active market:Short-term securities, unlisted


40



40



50



50Investment in preferred shares of former subsidiaries


19,125



19,125



91,960



91,960Total

$
545,583


$
545,583


$
562,955


$
562,955Financial Liabilities:Other financial liabilities:Accounts payable and accrued expenses*

$
174,658


$
174,658


$
144,616


$
144,616Debt


11,313



11,313



13,920



13,088Other long-term liabilities


8,344



8,344



4,931



4,931Held-for-trading:Derivative liabilities


285



285



543



543Total

$
194,600


$
194,600


$
164,010


$
163,178     *
    
    not including derivative financial instruments   111




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             112




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    RisksMarket RisksFinancial Instrument

Credit

Liquidity

Currency

Interest Rate

Other PriceCash and cash equivalents (including restricted cash)


X







X



XTerm deposits


X







X



XShort-term securities










X







XDerivative assets and liabilities


X



X



XInvestment in preferred shares of former subsidiaries


X



X







XCurrent receivables


X







XAccounts payable and accrued expenses






X



XLong-term debt










X



XOther long-term liabilities   Interest
    rate risk
    Sensitivity
    analysis:
      Credit
    risk
  and/or
 113




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Amounts Recognized on the Consolidated Balance Sheet:

2008Cash and cash equivalents (including restricted cash)

$
441,095Derivative assets


1,450Investment in preferred shares of former subsidiaries


19,125Current receivables


80,926542,596Amount of indebtedness offset against investment in preferred
    shares of former subsidiaries (See Note 4)


30,214Guarantee (see Note 24)


Maximum credit risk exposure

$
572,810   Currency
    risk
    Sensitivity
    analysis:
      Other
    price risk
   114




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Sensitivity
    analysis:
    Liquidity
    risk
        Concentration
    risk
      Additional
    disclosure
    2008


2007Interest income on financial assets not classified as held for
    trading*

$
17,820


$
12,146Interest income on financial assets classified as held for
    trading


3,629



1,009Total interest income

$
21,449


$
13,155Interest expense on financial liabilities not classified as held
    for trading

$
(2,280
)

$
(2,667
)Interest expense on financial liabilities classified as held for
    trading


(11
)


(1
)Total interest expense

$
(2,291
)

$
(2,668
)Dividend income on financial assets classified as held for
    trading

$
237


$
302Dividend income on financial assets classified as available for
    sale






238Net losses on financial assets required to be classified as held
    for trading


(9,765
)


(1,714
) including change in fair value of the trading
    securities


(10,929
)


(1,559
)Credit losses


(1,840
)


(238
)     *
    
    including income of $3,782 and $3,751 in 2008 and 2007,
    respectively, on the preferred shares of former subsidiaries 115




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 27.
    Related
    Party Transactions  and/or
  Continuing
    operations
  2008


2007


2006Dividend income on preferred shares*

$



$



$
3,727Dividend income on common shares*






238



173Royalty expense paid and payable*


(815
)


(1,025
)


(164
)Fee income


94







1,527Fee expense for managing resource property


(1,707
)


(1,118
)


(169
)Fee expense for management services, including expense
    reimbursements


(4,303
)


(1,308
)


(1,053
)Interest income  net investment income on preferred
    shares of former subsidiaries


3,782



3,751



Interest income  other






(48
)


46Interest expense


(21
)


(530
)


(230
)Research and development expense paid to an equity investee










(1,000
)Impairment charge on a receivable






(238
)


     *
    
    included in income from interest in resource property      Discontinued
    Operations (See Note 4)
       116




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Note 28.
    Interest
    in Joint Ventures    Current assets

$
7,979Long-term assets


519Current liabilities


7,966Long-term liabilities


Revenues


6,928Cost of revenues


5,606General and administrative expenses


745Interest income


315Other expenses


69Income before taxes


823Net income


619Cash flows resulting from operating activities


1,023Cash flows resulting from financing activities


Cash flows resulting from investing activities


(47
)       Revenues

$
340Cost of revenues


1,051     Trades receivable

$
139Advanced payments


4   Note 29.
    Consolidated
    Statements of Cash Flows  Supplemental
    Disclosure         117




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 30.
    Subsequent
    Events  Restructuring
    activity
       118




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 31.
    Differences
    between Canadian and United States Generally Accepted Accounting
    Principles    Reconciliation of Net Income

2008


2007


2006Income (loss) from continuing operations in accordance with
    Canadian GAAP

$
(6,952
)

$
50,980


$
34,152Interest accretion on convertible bonds










9Change in fair value of guarantees issued






15



18Stock-based compensation recovery (expense)


2,070



(7,964
)


(1,959
)Income (loss) from continuing operations in accordance with U.S.
    GAAP


(4,882
)


43,031



32,220Discontinued operations in accordance with U.S. GAAP, net of tax






(9,351
)


(2,874
)Extraordinary gain






513



Net income (loss) in accordance with U.S. GAAP

$
(4,882
)

$
34,193


$
29,346Basic earnings (loss) per common share: U.S. GAAPContinuing operations

$
(0.16
)

$
1.44


$
1.07Discontinued operations






(0.31
)


(0.10
)Extraordinary gain






0.02



$
(0.16
)

$
1.15


$
0.97Diluted earnings (loss) per common share: U.S. GAAPContinuing operations

$
(0.16
)

$
1.42


$
1.06Discontinued operations






(0.31
)


(0.10
)Extraordinary gain






0.02



$
(0.16
)

$
1.13


$
0.96December 31Reconciliation of Shareholders Equity

2008


2007


2006Shareholders equity in accordance with Canadian GAAP

$
261,914


$
307,194


$
273,288Deferred income taxes


(1,071
)


(1,071
)


(1,071
)Fair value of guarantees issued










(15
)Stock-based compensation expense


(1,527
)


(4,659
)


(3,101
)Unrecognised pension benefit expense, net of tax


(42
)


(525
)


Shareholders equity in accordance with U.S. GAAP

$
259,274


$
300,939


$
269,101   119




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31Comprehensive Income

2008


2007


2006Net income (loss) in accordance with U.S. GAAP

$
(4,882
)

$
34,193


$
29,346Other comprehensive income (loss) , net of taxUnrealised gains and losses on translating financial statements
    of self-sustaining operations and adjustments from the
    application of U.S. dollar reporting


(47,099
)


45,473



6,257Unrealized losses on securities:Fair value loss on available-for-sale securities


(55,076
)






Reclassification adjustment for other than temporary decline in
    value


55,076







Reclassification adjustment for discontinued operations










(3
)Net unrealized losses on securities










(3
)Unrecognised pension recovery (expense), net of tax:Unrecognised actuarial gain (loss) arising during the year


483



(525
)


Net unrecognised pension recovery (expense)


483



(525
)


(46,616
)


44,948



6,254Comprehensive income (loss), net of tax, in accordance with U.S.
    GAAP

$
(51,498
)

$
79,141


$
35,600     Convertible
    Bonds
  Accounting
    for Derivatives and Hedging Activities No. 00-27, Application of Issue
    No. 98-5
    to Certain Convertible Instruments
  Stock-Based
    Compensation
    Share-Based Payment,
    Guarantee
  Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of
 120




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Others, Contingencies,
    Defined
    Benefit Pension
  Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans,
      Investment
    in Jointly Controlled Entities
  Form 20-F
  Future
    Changes to U.S. Accounting Standards
  Business Combinations Business Combinations.
  Noncontrolling Interests in
    Consolidated Financial Statements, an Amendment of ARB
    No. 51
  Disclosures about Derivative
    Instruments and Hedging Activities, an Amendment of FASB
    Statement No. 133,
 121




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    The Hierarchy of Generally Accepted
    Accounting Principles, The Meaning of Present Fairly in Conformity
    With Generally Accepted Accounting Principles
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Settlement), 14-1
  No. FAS 133-1 FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees:
    An Amendment of FASB Statement No. 133 and FASB
    Interpretation No. 45; and Clarification of the Effective
    Date of FASB Statement No. 161, Accounting for Derivative Instruments
    and Hedging Activities, Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others,
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities, Earnings per Share.
  No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase
    Financing Transactions Accounting
    for Transfers and Servicing of Financial Assets and
    Extinguishments of Liabilities.
  06-1, Accounting for Consideration Given by a Service Provider to
    Manufacturers or Resellers of Equipment Necessary for an
    End-Customer to Receive Service from the Service Provider,
 122




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KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  01-9, Accounting for Consideration Given by a Vendor to a Customer
    (Including a Reseller of the Vendors Products). 06-1
  07-1, Accounting for Collaborative Arrangements 07-1 07-1
  08-5, Issuers Accounting for Liabilities Measured at Fair
    Value with a Third-Party Credit Enhancement, 08-05 08-5
  Accounting by Lessees for Nonrefundable
    Maintenance Deposits, 08-3
  Guidance for Conforming Changes
    to Issue
    No. 98-5 Exhibit 08-4A) EITF 98-5, Accounting for Convertible Securities with Beneficial
    Conversion Features or Contingently Adjustable Conversion
    Ratios 00-27, Application of EITF Issue
    98-5 to
    Certain Convertible Instrument Accounting for Certain Financial Instruments with
    Characteristics of both Liabilities and Equity Accounting Changes
    and Error Corrections EITF 08-4
  08-5, Issuers Accounting for Liabilities Measured at Fair
    Value with a Third-Party Credit Enhancement,
 123




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##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  08-05 08-5
  08-6, Equity Method Investment Accounting Considerations 08-6
  08-7, Accounting for Defensive Intangible Assets, addresses the
    accounting issues relating to defensive intangible assets. locked-up 08-7 08-7
 124




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##### Table of Contents



ITEM 18
    Financial
    Statements    ITEM 19
    Exhibits  Exhibits Required
    by
    Form 20-F
  Exhibit Number/Description
  1
.1

Articles of
    Amalgamation.(1)1
.2

By-laws.(1)1
.3

Certificate of
    Continuance(3)1
.4

Notice of
    Articles(3)1
.5

Articles(5)1
.6

Certificate of Change of
    Name(6)1
.7

Vertical Short Form Amalgamation
    Application(7)1
.8

Notice of
    Articles(7)1
.9

Certificate of
    Amalgamation(7)2
.1

Trust Indenture between our company and Computershare
    Trust Company of Canada, dated January 7,
    2004(4)2
.2

Supplemental Indenture between our company and Computershare
    Trust Company of Canada, dated October 27,
    2005.(6)4
.1

Memorandum of Agreement between our company and Wabush Iron Co.
    Limited, Stelco Inc. and Dofasco Inc. dated November 24,
    1987.(2)4
.2

Amendment to Mining Lease between our company and Wabush Iron
    Co. Limited, Stelco Inc. and Dofasco Inc. dated January 1,
    1987.(2)4
.3

First Amendment to Memorandum of Agreement between our company
    and Wabush Iron Co. Limited, Stelco Inc. and Dofasco
    Inc.(2)4
.4

Shareholder Protection Rights Plan Agreement between our company
    and Montreal Trust Company of Canada dated as of
    May 18,
    1993.(1)4
.5

Amended 1997 Stock Option Plan of our
    company.(1)4
.6

Trust Indenture, dated January 7, 2004, between our
    company and Computershare Trust Company of Canada, as
    Trustee, for the issuance of 4.4% Convertible Unsecured
    Subordinated Bonds due December 31,
    2009.(5)4
.7

Variation Agreement dated December 22, 2004 between our
    company and Sutton Park International Limited varying our
    companys interest obligation to Sutton Park International
    Limited in respect of the 4.4% Convertible Unsecured
    Subordinated Bond in the principal amount of 6,786,436,
    maturing December 31,
    2009.(5)4
.8

Arrangement Agreement dated September 11, 2006 between our
    company and Cade Struktur
    Corporation.(7)4
.9

Arrangement Agreement dated March 29, 2007 between our
    company and Sasamat Capital Corporation8
.1

Significant subsidiaries of our company as at March 16,
    2009:KHD Holding AGKHD Humboldt Wedag International Holding GmbHKHD Humboldt Wedag International GmbHHumboldt Wedag Inc.Humboldt Wedag India Ltd.Humboldt Wedag Australia Pty Ltd.KHD Investments Ltd.New Image Investment Company LimitedInverness Enterprises Ltd.KHD Humboldt Wedag (Cyprus) LimitedKHD Humboldt Wedag (Shanghai) International Industries LimitedKHD Humboldt Wedag International (Deutschland) AGKHD Humboldt Wedag GmbHKHD Humboldt Wedag International Insurance Ltd. 125




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##### Table of Contents



EKOF Flotation GmbHKHD Humboldt Wedag Machinery Equipment (Beijing) Co. Ltd.Sasamat Capital CorporationHumboldt Wedag Coal & Minerals Technology GmbHZAB Zementanlagenbau GmbH DessauZAB Industrietechnik & Service GmbHHumboldt Wedag (SA) (Pty) Ltd.MFC & KHD International Industries LimitedKHD Sales and Marketing Ltd.KHD Humboldt Wedag International (UAE) FEZHumboldt Wedag GmbHBlake International LimitedHIT International Trading AG11
.1

Code of
    Ethics(4)12
.1

Section 302 Certification under Sarbanes-Oxley Act of 2002
    for James B.
    Busche.(8)12
.2

Section 302 Certification under Sarbanes-Oxley Act of 2002
    for Alan
    Hartslief.(8)13
.1

Section 906 Certification under Sarbanes-Oxley Act of 2002
    for James B.
    Busche.(8)13
.2

Section 906 Certification under Sarbanes-Oxley Act of 2002
    for Alan
    Hartslief.(8)15
.1

Consent of Deloitte & Touche
    LLP.(8)99
.1

Audit Committee
    Charter(6)99
.2

Compensation Committee
    Charter(7)99
.3

Nominating and Corporate Governance
    Charter(7)     (1)
    
    Incorporated by reference to our
    Form 20-Fs
    filed in prior years.(2)
    
    Incorporated by reference to our
    Form 10-K
    for the year ended December 31, 1989.(3)
    
    Incorporated by reference to our
    Form 6-K
    filed with the Securities and Exchange Commission on
    November 23, 2004.(4)
    
    Incorporated by reference to our
    Form 20-F
    filed with the Securities and Exchange Commission on
    April 26, 2004.(5)
    
    Incorporated by reference to our
    Form 20-F
    filed with the Securities and Exchange Commission on
    April 6, 2005.(6)
    
    Incorporated by reference to our
    Form 20-F
    filed with the Securities and Exchange Commission on
    April 3, 2006.(7)
    
    Incorporated by reference to our
    Form 20-F
    with the Securities and Exchange Commission on April 3,
    2007.(8)
    
    Filed herewith. 126




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##### Table of Contents



SIGNATURES  Form 20-F
  KHD Humboldt Wedag International Ltd.
  
  
    
  
   127