UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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Amendment
  No. 1 to
  Form 20F

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| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | REGISTRATION
          STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
        SECURITIES EXCHANGE ACT OF 1934                           
| | OR                                                                                                                                         
| | ANNUAL REPORT
    PURSUANT TO SECTION 13 OR 15(d) OFTHE
    SECURITIES EXCHANGE ACT OF 1934 For the fiscal
    year ended December 31, 2003
| | OR                                                                                                                                         
| | TRANSITION
        REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 For the transition period from to     

Commission File Number 1-14398

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SGL CARBON AKTIENGESELLSCHAFT(Exact name of Registrant as specified in its charter)

|SGL
          CARBON
CORPORATION(Translation
    of Registrants name into English) | FEDERAL
          REPUBLIC OF GERMANY(Jurisdiction
    of incorporation or organization)
|----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|                                                                                    |                                                                                         

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Rheingaustrasse 182
    D-65203 Wiesbaden
    Germany

(Address of principal executive offices)

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Securities registered or to be registered pursuant to Section 12(b) of the Act.

|Title of each class                         | Name of each exchange on which registered
|------------------------------------------- | -----------------------------------------
|                                            |                                          
|American Depositary Shares,                 | New York Stock Exchange                  
|each representing one-third of one Ordinary |                                          
|Bearer Share, no par value                  |                                          
|Ordinary Bearer Shares, no par value        | New York Stock Exchange*                 

| 
|-
|*

Securities to be registered pursuant to Section 12(g) of the Act: NONE


Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE


Indicate
        the number of outstanding shares of each of the issuers classes
        of capital or common stock as of the close of the period covered by the
        annual
  report:


|Ordinary
    Bearer Shares, no par value | 55,835,290
|---------------------------------------- | ----------

Indicate by check
      mark whether the registrant (1) has filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.


|Yes |  | No
|--- |  | --

Indicate by check mark which financial statement item the registrant has elected to follow


|Item
    17 |  | Item
    18
|----------- |  | -----------



|
|
|
|





SIGNATURES

Pursuant to the
    requirements of Section 12 of the Securities Exchange Act of 1934, the registrant
    certifies that it meets all requirements for filing on Form 20-F and has duly
    caused this annual report to be signed on its behalf by the undersigned, thereunto
    duly authorized.


|                          |                                     |                                           |                            
|------------------------- | ----------------------------------- | ----------------------------------------- | ---------------------------
|                          | SGL
      CARBON Aktiengesellschaft
|                          |                                     |                                           |                            
|                          | By:                                 |                                           | /s/ Robert J.
      Koehler
|                          |                                     |                                          
|                          |                                     | Robert
      J. Koehler                  
|                          |                                     | Chief
      Executive Officer            
|                          |                                     | Chairman
      of the Executive Committee
|                          |                                     |                                           |                            
|                          | By:                                 |                                           | /s/ Dr. Bruno
      Toniolo
|                          |                                     |                                          
|                          |                                     | Dr.
      Bruno Toniolo                  
|                          |                                     | Chief
      Financial Officer            
|                          |                                     | Member
      of the Executive Committee  
|                          |                                     |                                           |                            
|Date: April
      6, 2004 |                                     |                                           |                            



112



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SGL
  CARBON AKTIENGESELLSCHAFT
  INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                            |        
|--------------------------------------------------------------------------------------------------------------------------- | -------
|Independent
      Auditors Reports                                                                                         | F-2/F-3
|                                                                                                                            |        
|Consolidated
      Statements of Operations for the years ended December 31, 2003, 2002 and
      2001                      | F-4    
|                                                                                                                            |        
|Consolidated
      Balance Sheets at December 31, 2003 and 2002                                                             | F-5    
|                                                                                                                            |        
|Consolidated
      Statements of Cash Flows for the years ended December 31, 2003, 2002 and
      2001                      | F-6    
|                                                                                                                            |        
|Consolidated
      Statements of Changes in Shareholders Equity for the years ended December
      31, 2003, 2002 and 2001 | F-7    
|                                                                                                                            |        
|Notes
      to the Consolidated Financial Statements                                                                        | F-8    
|                                                                                                                            |        

F-1

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Independent
  Auditors' Report

To the
  Board of Directors and Shareholders 
  SGL CARBON Aktiengesellschaft

We have audited
  the consolidated balance sheets of SGL CARBON Aktiengesellschaft and subsidiaries
  (,,SGL Group) as of December 31, 2003 and 2002 and the related consolidated
  statements of operations, cash flows and changes in shareholders equity
  for each of the years in the two-year period ended December 31, 2003. These
  consolidated financial statements are the responsibility of SGL Group management.
  Our responsibility is to express an opinion on these consolidated statements
  based on our audit.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,
  the consolidated financial statements referred to above present fairly, in all
  material respects, the financial position of the SGL Group as of December 31,
  2003 and 2002 and the results of their operations and their cash flows for each
  of the years in the two-year period ended December 31, 2003, in conformity with
  International Financial Reporting Standards.

International Financial Reporting Standards vary in certain significant respects from generally accepted accounting principles in the United States. Application of generally accepted accounting principles in the United States would have affected the result of operations for each of the years in the two-year period ended December 31, 2003 and shareholders equity as of December 31, 2003 and 2002 to the extent summarized in notes 34 and 35 to the consolidated financial statements.

Munich, Germany March 1, 2004
  except for notes 34, 35 and 36 as to which the date is April 6, 2004.

BDO Deutsche
  Warentreuhand

Aktiengesellschaft

Wirtschaftsprüfungsgesellschaft



F-2

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Back to Contents

Independent
  Auditors' Report

To the
  Board of Directors and Shareholders 
  SGL CARBON Aktiengesellschaft

We have audited
  the consolidated balance sheets of SGL CARBON Aktiengesellschaft and subsidiaries
  ( ,,SGL Group) as of December 31, 2001 and the related consolidated statements
  of operations, cash flows and changes in shareholders equity for the year
  ended December 31, 2001. These consolidated financial statements are the responsibility
  of SGL Group management. Our responsibility is to express an opinion on these
  consolidated statements based on our audits.

We conducted our audits in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion,
  the consolidated financial statements referred to above present fairly, in all
  material respects, the financial position of the SGL Group as of December 31,
  2001 and the results of their operations and their cash flows for the year ended
  December 31, 2001, in conformity with International Accounting Standards.

International
  Accounting standards vary in certain significant respects from generally accepted
  accounting principles in the United States. Application of generally accepted
  accounting principles in the United States would have affected the results of
  operations for the year ended December 31, 2001 and shareholders equity
  as of December 31, 2001 to the extent summarized in note 34 to the consolidated
  financial statements.

Munich, Germany February 28, 2002

KPMG Deutsche Treuhand-Gesellschaft

Aktiengesellschaft Wirtschaftsprüfungsgesellschaft



F-3

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SGL
  CARBON Aktiengesellschaft
  Consolidated Statements of Operations (in millions,
  except per share data)

|                                                                                                             | Notes |  | 2003     |   | 2003    |   | 2002    |   | 2001    |  
|------------------------------------------------------------------------------------------------------------ | ----- |  | -------- | - | ------- | - | ------- | - | ------- | -
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  | US$      |   | Euro    |   | Euro    |   | Euro    |  
|Sales
      revenue                                                                                          | 28    |  | 1,319.3  |   | 1,046.2 |   | 1,112.3 |   | 1,233.3 |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Cost of
      sales                                                                                          |       |  | (1,007.3 | ) | (798.8  | ) | (886.5  | ) | (941.8  | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Gross
      profit                                                                                           |       |  | 312.0    |   | 247.4   |   | 225.8   |   | 291.5   |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Selling
      expenses                                                                                       |       |  | (178.4   | ) | (141.5  | ) | (139.4  | ) | (154.5  | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Research
      costs                                                                                         |       |  | (26.4    | ) | (20.9   | ) | (25.4   | ) | (31.1   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|General
      and administrative expenses                                                                    | 4     |  | (58.3    | ) | (46.2   | ) | (47.5   | ) | (57.8   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Other
      operating income (net)                                                                           | 5     |  | 0.2      |   | 0.1     |   | 15.1    |   | 10.6    |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Profit
        from operations before costs relating to antitrust proceedings and restructuring,
        net |       |  | 49.1     |   | 38.9    |   | 28.6    |   | 58.7    |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Restructuring
      expenses                                                                                 | 6     |  | (13.2    | ) | (10.4   | ) | (8.3    | ) | (41.0   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Profit
        from operations before costs relating to antitrust proceedings, net                           |       |  | 35.9     |   | 28.5    |   | 20.3    |   | 17.7    |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Costs relating
      to antitrust proceedings                                                                | 6     |  | (24.6    | ) | (19.5   | ) | (22.0   | ) | (35.0   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Profit
      (loss) from operations                                                                          |       |  | 11.3     |   | 9.0     |   | (1.7    | ) | (17.3   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Net financing
      costs                                                                                    | 7     |  | (92.3    | ) | (73.3   | ) | (25.5   | ) | (48.5   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Profit
      (loss) before tax                                                                               |       |  | (81.0    | ) | (64.3   | ) | (27.2   | ) | (65.8   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Income tax
      benefit / (expense)                                                                         | 9     |  | 17.8     |   | 14.1    |   | 3.6     |   | (29.2   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Net
      loss for the period before minority interests                                                      |       |  | (63.2    | ) | (50.2   | ) | (23.6   | ) | (95.0   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Minority
      interests                                                                                     |       |  | (0.1     | ) | (0.1    | ) | 0.0     |   | (0.2    | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Net
      loss for the period                                                                                |       |  | (63.3    | ) | (50.3   | ) | (23.6   | ) | (95.2   | )
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|                                                                                                             |       |  |          |   |         |   |         |   |         |  
|Basic earnings
      per share (EPS) in                                                                     | 10    |  |          |   | (2.27   | ) | (1.08   | ) | (4.42   | )
|Diluted
      earnings per share (EPS) in                                                                   | 10    |  |          |   | (2.27   | ) | (1.08   | ) | (4.42   | )

|  
|--
|  
|1)



The
  accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

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SGL
  CARBON Aktiengesellschaft
  Consolidated Balance Sheets(in
  millions)

|ASSETS                                                   | Note |  | 12/31/2003 |   | 12/31/2003 |   | 12/31/2002 |  
|-------------------------------------------------------- | ---- |  | ---------- | - | ---------- | - | ---------- | -
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | US$        |   | Euro       |   | Euro       |  
|Noncurrent
      assets                                  |      |  |            |   |            |   |            |  
|Intangible
      assets                                  | 11   |  | 124.8      |   | 99.0       |   | 103.8      |  
|Property,
      plant and equipment                      | 12   |  | 515.1      |   | 408.5      |   | 477.3      |  
|Long-term
      investments                              | 13   |  | 36.2       |   | 28.7       |   | 33.2       |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 676.1      |   | 536.2      |   | 614.3      |  
|Current
      assets                                     |      |  |            |   |            |   |            |  
|Inventories                                              | 14   |  | 325.3      |   | 258.0      |   | 288.4      |  
|Trade receivables                                        | 15   |  | 279.1      |   | 221.3      |   | 208.1      |  
|Other receivables
      and other current assets         | 16   |  | 73.3       |   | 58.1       |   | 60.7       |  
|                                                         |      |  |            |   |            |   |            |  
|Receivables
      and other current assets               |      |  | 352.4      |   | 279.4      |   | 268.8      |  
|                                                         |      |  |            |   |            |   |            |  
|Cash and
      cash equivalents                          | 17   |  | 58.1       |   | 46.1       |   | 21.5       |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 735.8      |   | 583.5      |   | 578.7      |  
|Deferred
      tax assets                                |      |  |            |   |            |   |            |  
|                                                         | 18   |  | 160.4      |   | 127.2      |   | 93.4       |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 1,572.3    |   | 1,246.9    |   | 1,286.4    |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  |            |   |            |   |            |  
|EQUITY
      AND LIABILITIES                             |      |  |            |   |            |   |            |  
|                                                         |      |  |            |   |            |   |            |  
|Equity/Minority
      interests                          |      |  |            |   |            |   |            |  
|Issued Capital                                           |      |  | 71.6       |   | 56.8       |   | 56.0       |  
|Share premium                                            |      |  | 140.6      |   | 111.5      |   | 111.3      |  
|Retained
      earnings                                  |      |  | (1.8       | ) | (1.4       | ) | 52.6       |  
|Accumulated
      deficit/surplus                        |      |  | (63.4      | ) | (50.3      | ) | (23.6      | )
|                                                         |      |  |            |   |            |   |            |  
|Equity                                                   | 19   |  | 147.0      |   | 116.6      |   | 196.3      |  
|Minority
      interests                                 |      |  | 0.4        |   | 0.3        |   | 1.4        |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 147.4      |   | 116.9      |   | 197.7      |  
|Provisions                                               |      |  |            |   |            |   |            |  
|Provision
      for pensions and other employee benefits | 20   |  | 237.7      |   | 188.5      |   | 190.6      |  
|Other provisions                                         | 21   |  | 210.1      |   | 166.6      |   | 149.2      |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 447.8      |   | 355.1      |   | 339.8      |  
|Liabilities                                              | 22   |  |            |   |            |   |            |  
|Financial
      liabilities                              |      |  | 623.6      |   | 494.5      |   | 448.5      |  
|Trade payables                                           |      |  | 124.7      |   | 98.9       |   | 110.5      |  
|Other liabilities                                        |      |  | 174.6      |   | 138.5      |   | 151.2      |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 922.9      |   | 731.9      |   | 710.2      |  
|Deferred
      tax liabilities                           | 23   |  | 54.2       |   | 43.0       |   | 38.7       |  
|                                                         |      |  |            |   |            |   |            |  
|                                                         |      |  | 1,572.3    |   | 1,246.9    |   | 1,286.4    |  
|                                                         |      |  |            |   |            |   |            |  

|  
|--
|  
|1)



The
  accompanying notes are an integral part of these Consolidated Financial Statements

F-5

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SGL
  CARBON Aktiengesellschaft
  Consolidated Statements of Cash Flows(in millions)

|                                                                                           | 2003  |   | 2003  |   | 2002  |   | 2001  |  
|------------------------------------------------------------------------------------------ | ----- | - | ----- | - | ----- | - | ----- | -
|                                                                                           |       |   |       |   |       |   |       |  
|                                                                                           | US$   |   | Euro  |   | Euro  |   | Euro  |  
|Cash
      flows from operating activities                                                 |       |   |       |   |       |   |       |  
|Net profit
      (loss) before taxes                                                       | (81.1 | ) | (64.3 | ) | (27.2 | ) | (65.8 | )
|Adjustments
      to reconcile net profit or loss to net cash                              |       |   |       |   |       |   |       |  
|provided
      by operating activities                                                     |       |   |       |   |       |   |       |  
|Loss on
      sale of property, plant and equipment                                        | 0.3   |   | 0.2   |   | (2.8  | ) | 1.0   |  
|Gain/loss
      on sale of equity investments                                              | (4.5  | ) | (3.6  | ) | (1.0  | ) | 0.0   |  
|Depreciation
      and amortization expense                                                | 91.0  |   | 72.2  |   | 81.4  |   | 86.8  |  
|Write-downs
      on noncurrent assets                                                     | 4.7   |   | 3.7   |   | 0.0   |   | 9.8   |  
|Taxes paid                                                                                 | (4.8  | ) | (3.8  | ) | (22.3 | ) | (13.6 | )
|Change in
      provisions, net                                                            | 29.5  |   | 23.4  |   | (2.8  | ) | 16.3  |  
|Change in
      Working capital, net of changes in basis of consolidation:                 |       |   |       |   |       |   |       |  
|Inventories                                                                                | 6.6   |   | 5.2   |   | 82.7  |   | (26.8 | )
|Write-downs
      on inventories                                                           | 0.0   |   | 0.0   |   | 0.0   |   | 15.0  |  
|Trade receivables                                                                          | (28.9 | ) | (22.9 | ) | 44.7  |   | 33.8  |  
|Trade payables                                                                             | (6.9  | ) | (5.5  | ) | 6.8   |   | 6.2   |  
|Other operating
      assets / liabilities                                                 | 16.4  |   | 13.1  |   | (10.4 | ) | 30.0  |  
|                                                                                           |       |   |       |   |       |   |       |  
|Cash provided
      by operating activities before payment of
      antitrust fines        | 22.3  |   | 17.7  |   | 149.1 |   | 92.7  |  
|                                                                                           |       |   |       |   |       |   |       |  
|Payments
      relating to antitrust proceedings                                           | (18.8 | ) | (14.9 | ) | (10.1 | ) | (36.9 | )
|                                                                                           |       |   |       |   |       |   |       |  
|Cash provided
      /used by operating activities                                          | 3.5   |   | 2.8   |   | 139.0 |   | 55.8  |  
|                                                                                           |       |   |       |   |       |   |       |  
|Cash
      flows from investing activities                                                 |       |   |       |   |       |   |       |  
|Acquisition
      of property, plant and equipment, and intangible assets (excl. Goodwill) | (58.4 | ) | (46.3 | ) | (53.6 | ) | (96.1 | )
|Proceeds
      from sale of property, plant and equipment, and
      intangible assets     | 2.8   |   | 2.2   |   | 7.8   |   | 3.8   |  
|Cost of
      aquisitions                                                                  | (2.1  | ) | (1.7  | ) | (0.7  | ) | (5.7  | )
|Proceeds
      from sale of equity investments                                             | 7.2   |   | 5.7   |   | 5.6   |   | 5.5   |  
|                                                                                           |       |   |       |   |       |   |       |  
|Cash used
      in investing activities                                                    | (50.5 | ) | (40.1 | ) | (40.9 | ) | (92.5 | )
|                                                                                           |       |   |       |   |       |   |       |  
|Cash
      flows from financing activities                                                 |       |   |       |   |       |   |       |  
|Net change
      in financial liabilities                                                  | 76.4  |   | 60.6  |   | (87.6 | ) | 36.5  |  
|Dividends
      paid                                                                       | 0.0   |   | 0.0   |   | (0.2  | ) | (0.1  | )
|Net proceeds
      from capital increase                                                   | 1.3   |   | 1.0   |   | 0.8   |   | 2.2   |  
|                                                                                           |       |   |       |   |       |   |       |  
|Cash provided
      by financing activities                                                | 77.7  |   | 61.6  |   | (87.0 | ) | 38.6  |  
|                                                                                           |       |   |       |   |       |   |       |  
|Cash received
      from first-time consolidation                                          | 0.8   |   | 0.6   |   |       |   |       |  
|                                                                                           |       |   |       |   |       |   |       |  
|Effect of
      foreign exchange rate changes                                              | (0.5  | ) | (0.3  | ) | (1.7  | ) | 0.4   |  
|                                                                                           |       |   |       |   |       |   |       |  
|Net increase/decrease
      in cash and cash equivalents                                   | 31.0  |   | 24.6  |   | 9.4   |   | 2.3   |  
|Cash and
      cash equivalents at beginning of year                                       | 27.1  |   | 21.5  |   | 12.1  |   | 9.8   |  
|                                                                                           |       |   |       |   |       |   |       |  
|Cash
      and cash equivalents at end of year                                             | 58.1  |   | 46.1  |   | 21.5  |   | 12.1  |  
|                                                                                           |       |   |       |   |       |   |       |  

|                                                                                                           |                                                                                                                                                                             
|---------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                          
|1)                                                                                                         | The 2003
      financial figures have been translated for the convenience of the reader
      at an exchange rate of $ 1.2610 to  1.00, the rate on December
      31, 2003
|Cash
      flow was adjusted for currency impacts, see Note 24 for additional cash
      flow information.

The
  accompanying notes are an integral part of these Consolidated Financial Statements

F-6

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SGL
  CARBON AktiengesellschaftConsolidated Statements of Changes in Shareholders
  Equity(in Euro millions)

|                                         | Issued  |  | Share   |  | Retained |   | thereof
      from |   | thereof
      other |  | Unappropriate |   | Equity |   | Minority  |   | Total |  
|---------------------------------------- | ------- |  | ------- |  | -------- | - | ------------------ | - | ------------------- |  | ------------- | - | ------ | - | --------- | - | ----- | -
|                                         | Capital |  | Premium |  | Earnings |   | currency           |   | comprehensive       |  | surplus/      |   |        |   | interests |   |       |  
|                                         |         |  |         |  |          |   | translation        |   | income              |  | Accumulated   |   |        |   |           |   |       |  
|                                         |         |  |         |  |          |   |                    |   |                     |  | defizit       |   |        |   |           |   |       |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Balance
      at Jan. 1, 2001            | 54.8    |  | 109.5   |  | 208.7    |   | 15.5               |   |                     |  | (36.0         | ) | 337.0  |   | 2.1       |   | 339.1 |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Appropriation
      of net loss for 2001 |         |  |         |  | (36.0    | ) |                    |   |                     |  | (59.2         | ) | (95.2  | ) | 0.2       |   | (95.0 | )
|Other recognized
      gains and losses  |         |  |         |  | (0.6     | ) |                    |   |                     |  |               |   | (0.6   | ) | (0.7      | ) | (1.3  | )
|Capital
      increase                   | 0.4     |  | 1.8     |  |          |   |                    |   |                     |  |               |   | 2.2    |   |           |   | 2.2   |  
|Exchange
      differences               |         |  |         |  | 11.8     |   | 11.8               |   |                     |  |               |   | 11.8   |   |           |   | 11.8  |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Balance
      at Dec. 31, 2001           | 55.2    |  | 111.3   |  | 183.9    |   | 27.3               |   | 0.0                 |  | (95.2         | ) | 255.2  |   | 1.6       |   | 256.8 |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Balance
      at Jan. 1, 2002            | 55.2    |  | 111.3   |  | 183.9    |   | 27.3               |   | 0.0                 |  | (95.2         | ) | 255.2  |   | 1.6       |   | 256.8 |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Appropriation
      of net loss for 2002 |         |  |         |  | (95.2    | ) |                    |   |                     |  | 71.6          |   | (23.6  | ) | 0.0       |   | (23.6 | )
|Other recognized
      gains and losses  |         |  |         |  |          |   |                    |   |                     |  |               |   | 0.0    |   | (0.2      | ) | (0.2  | )
|Capital
      increase                   | 0.8     |  |         |  |          |   |                    |   |                     |  |               |   | 0.8    |   |           |   | 0.8   |  
|Exchange
      differences               |         |  |         |  | (36.1    | ) | (36.1              | ) |                     |  |               |   | (36.1  | ) |           |   | (36.1 | )
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Balance
      at Dec. 31, 2002           | 56.0    |  | 111.3   |  | 52.6     |   | (8.8               | ) | 0.0                 |  | (23.6         | ) | 196.3  |   | 1.4       |   | 197.7 |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Balance
      at Jan. 1, 2003            | 56.0    |  | 111.3   |  | 52.6     |   | (8.8               | ) | 0.0                 |  | (23.6         | ) | 196.3  |   | 1.4       |   | 197.7 |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Appropriation
      of net loss for 2002 |         |  |         |  | (23.6    | ) |                    |   |                     |  | (26.7         | ) | (50.3  | ) | 0.1       |   | (50.2 | )
|Other recognized
      gains and losses  |         |  |         |  | 2.7      |   |                    |   | 2.7                 |  |               |   | 2.7    |   | (1.2      | ) | 1.5   |  
|Capital
      increase                   | 0.8     |  | 0.2     |  |          |   |                    |   |                     |  |               |   | 1.0    |   |           |   | 1.0   |  
|Exchange
      differences               |         |  |         |  | (33.1    | ) | (33.1              | ) |                     |  |               |   | (33.1  | ) |           |   | (33.1 | )
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  
|Balance
      at Dec. 31, 2003           | 56.8    |  | 111.5   |  | (1.4     | ) | (41.9              | ) | 2.7                 |  | (50.3         | ) | 116.6  |   | 0.3       |   | 116.9 |  
|                                         |         |  |         |  |          |   |                    |   |                     |  |               |   |        |   |           |   |       |  

The
  accompanying notes are an integral part of these Consolidated Financial Statements

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SGL
  CARBON Aktiengesellschaft
  Notes to the Consolidated Financial Statements(in millions)

|1. | Summary
      of Accounting Policies
|-- | ------------------------------------

Description
    of business


SGL CARBON
    Aktiengesellschaft (SGL Carbon or the company) together
    with its subsidiaries (the SGL Carbon Group) is a global manufacturer
    of carbon and graphite products. See note 28 for further information on business
    activities.


Basis
    of presentation


The consolidated
    financial statements of the SGL Carbon Group have been prepared in accordance
    with the International Financial Reporting Standards (IFRSs)  formerly
    known as the International Accounting Standards (IASs)  issued by the
    International Accounting Standards Board (IASs), incorporating the interpretations
    issued by the International Financial Reporting Interpretations Committee
    (IFRIC). All standards to be applied for fiscal year 2003 have been complied
    with. References to IFRSs/IASs relate to the IFRSs/IASs in force, as amended.
    Application of the IFRSs/IASs was possible because consolidated financial
    statements prepared in accordance with internationally accepted accounting
    standards such as the IFRSs/IASs qualify as exempting consolidated financial
    statements as defined by section 292a of the HGB (German Commercial Code)
    introduced in 1998.


As in the previous
    year, the 2003 consolidated financial statements were prepared in euros ()
    and are presented in millions of euros (m), rounded to the nearest  0.1
    million.


Consolidation
    methods


The annual
    financial statements of the companies consolidated were prepared in accordance
    with uniform accounting policies. Interim financial statements are used for
    one subsidiary with a differing balance sheet date. Except for four subholding
    companies and two small companies, all financial statements have been audited
    and certified by independent auditors.


Subsidiaries
    are consolidated using the purchase method of accounting, under which the
    acquisition cost of the interests in the subsidiaries is eliminated against
    the equity of the subsidiaries attributable to the parent company at the date
    of acquisition. Hidden reserves or liabilities are recognized, and any remaining
    excess of cost of acquisition over net assets acquired is recognized as goodwill
    from capital consolidation and reduced by straight-line amortization over
    its expected useful life. In accordance with IAS 22, any negative goodwill
    is deducted from goodwill on the face of the balance sheet and amortized in
    other operating income over the useful life of the amortizable asset. Goodwill
    arising prior to 1994 has been charged directly to reserves.


Companies or
    joint ventures representing an interest of between 20% and 50% and over which
    the parent company has a significant influence are accounted for at equity.


Intercompany
    receivables and liabilities, intercompany profits and losses, as well as intragroup
    sales revenue, expenses and income are eliminated. In accordance with IAS
    12, deferred tax assets and liabilities are recognized for temporary differences
    arising from consolidation.


Foreign
    currency translation


Foreign currency
    receivables and liabilities in the single-entity financial statements are
    translated at the middle rates at the balance sheet date. The associated derivatives
    are measured separately at their fair values at the balance sheet date in
    accordance with IAS 39.


The annual
    financial statements of companies domiciled outside the eurozone are translated
    into euros in accordance with IAS 21. For all SGL Carbon Group companies,
    translation is effected on the basis of the local currency, as the companies
    are classified as foreign entities. Balance sheet items of annual financial
    statements that


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are not prepared
  in euros are translated at the middle rates prevailing at the balance sheet
  date; income statement items are translated at average rates for the year.

Exchange differences
    resulting from the application of different exchange rates in the income statements
    and the balance sheets, as well as differences from the translation of net
    assets at rates differing from those applied in the prior-year period, are
    taken directly to retained earnings. Changes in the exchange rates of currencies
    that are material to the consolidated financial statements are presented below:


|Foreign
      currency | ISO-Code |  | Spot
      rate |  | Spot
      rate |  | Anual
      average rate | 
|---------------------- | -------- |  | --------------- |  | --------------- |  | ------------------------ | 
|1 
      =            |          |  | 12/31/2003      |  | 12/31/2002      |  | 2003                     | 
|                       |          |  |                 |  |                 |  |                          | 
|US-Dollar              | USD      |  | 1.2610          |  | 1.0415          |  | 1.1309                   | 
|British
      Pound    | GBP      |  | 0.7070          |  | 0.6502          |  | 0.6919                   | 
|Canadian-Dollar        | CAD      |  | 1.6290          |  | 1.6385          |  | 1.5818                   | 
|Polish
      Zloty     | PLN      |  | 4.7170          |  | 4.0202          |  | 4.4561                   | 

Financial
    instruments


The SGL Carbon
    Group uses all standard financial instruments such as interest rate swaps,
    interest rate options, forreign currency forwards and foreign currency options
    only for hedging purposes and to reduce risk.


All financial
    derivatives are measured at cost when the transaction is executed. They are
    subsequently remeasured at their fair values at the balance sheet date. The
    hedged balance sheet items are also measured individually at their fair values
    at the balance sheet date. Presentation in the income statement is based on
    the underlying transaction. Cash flows from future US dollar transactions
    were hedged for fiscal year 2004. The gains or losses on the effective portions
    of the hedges are recorded directly in equity after deduction of deferred
    taxes and reported separately under other comprehensive income.


Intangible
    assets


Purchased intangible
    assets are carried at cost and amortized over an expected useful life of three
    years. Purchased goodwill is capitalized and amortized over its expected useful
    life of 20 years. Internally generated intangible assets are capitalized at
    cost and amortized using the straight-line method over their expected useful
    life where future economic benefits are expected to flow to the Company. Development
    costs are only capitalized in individual cases and are generally expensed
    directly when incurred. The costs incurred in adapting the SAP R/3 system
    to produce an integrated Group-wide system will be capitalized and amortized
    over its estimated useful life following completion in 2004.


Property,
    plant and equipment


Property, plant
    and equipment is capitalized at cost depreciated on a straight-line basis.
    Production costs also include an appropriate share of materials and production
    overheads. Borrowing costs are not included in production costs. Repair costs
    are expensed directly when incurred. Contracts in which the lessee bears all
    significant opportunities and risks from the use of the leased asset, and
    which are hence classified as finance leases, are carried at their fair values
    or, if lower, at the net present value of the minimum lease payments. All
    other leases are treated as operating leases and, as a result, the lease payments
    are expensed when incurred. The range of standard useful lives is as follows:
    buildings 10 to 41 years, technical equipment and machinery 4 to 25 years,
    other equipment, operating and office equipment 3 to 15 years.


Additions to
    items of movable plant and equipment in the first half of the year are depreciated
    at the full-year rate; additions in the second half of the year are depreciated
    at half the full-year rate. Low-value assets are written off in full in the
    year of acquisition and reported as disposals in the statement of changes
    in noncurrent assets. The resulting effects on net assets, financial position
    and results of operations are insignificant.


Noncurrent
    financial assets


Noncurrent
    financial assets are carried at cost, net of any write-downs incurred. Significant
    equity investments are carried at equity. Companies no longer consolidated
    are carried at their net book value. Interest-free and low-interest long-term
    receivables are discounted at a standard market rate for risk-free instruments.


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Inventories


Inventories
    are carried at cost using the weighted average cost method and written down
    to the lower net realizable value where required. Net realizable value is
    the estimated selling price less the estimated costs of completion and the
    estimated costs necessary to make the sale. Specific valuation allowances
    are also charged for inventory risks. In addition to directly attributable
    costs, production costs also include appropriate shares of materials and production
    overheads, as well as depreciation and write-downs. Directly attributable
    costs include labor costs, including pensions, amortization and directly attributable
    material costs. Borrowing costs are not capitalized. Construction contracts
    whose outcome can be reliably estimated and which have a material effect are
    measured using the percentage of completion method in accordance with IAS
    11.


Advertising
    and sales promotion expenses as well as other customer-related expenses are
    expensed directly when incurred. Provisions are recognized for the estimated
    cost of product warranties after the date of sale of the product concerned.


Receivables
    and other current assets


Receivables
    and other current assets  trade and other receivables  are carried
    at their principal amount, net of any bad debt allowances calculated on the
    basis of the probable default risk. Bills receivable and other long-term receivables
    are discounted.


The carrying
    amounts of assets are reviewed where there are indications that the carrying
    amount of an asset exceeds its value in use or net selling price (impairment
    test). The carrying amount is written down if it is higher than the recoverable
    amount.


Provisions
    for pensions and other employee benefits


Provisions
    for pensions and other employee benefits from defined benefit plans are measured
    by independent actuaries using the projected unit credit method and reflect
    future salary and pension increases in accordance with IAS 19. The interest
    component of the addition to pension provisions is carried under net financing
    costs. Payments under defined contribution plans are recognized as expenses
    at the time of payment.


Other
    provisions


Other provisions
    are recognized in accordance with IAS 37 for obligations to third parties
    that will probably be required to be settled, and where the amount of the
    obligation can be reliably estimated. Long-term provisions are discounted.
    Restructuring provisions are recognized where a formal restructuring plan
    has been adopted and publicly announced in sufficient detail. The accounting
    for our stock option plans and recognition of provisions for obligations from
    stock option plans are described in note 31.


The SGL Carbon
    Group recognizes provisions for environmental protection obligations where
    it is probable that such an obligation exists and its amount can be reasonably
    estimated. Any possible insurance compensation payments are not deducted when
    recognizing such liabilities.


Liabilities


Liabilities
    are carried at their notional amount or at the higher redemption amount at
    the balance sheet date. Interestfree or low-interest liabilities due after
    more than one year are discounted to the balance sheet date. One-time fees
    for long-term loan agreements are amortized over the term of the loan agreement.


Deferred
    income


Government
    grants are recognized only if there is sufficient certainty that the SGL Carbon
    Group will comply with the conditions attached to them and that the grants
    will be received. The amounts are carried in deferred income and recognized
    as income as the associated expenses are incurred.


Income
    and expenses


Income and
    expenses of the fiscal year are recognized when realized and incurred. Sales
    revenue is recognized at the time of transfer of risk, generally after delivery
    of the products or rendering of the services, net of any discounts and rebates
    granted. The percentage of completion method in accordance with IAS 11 is
    applied to significant construction contracts. Operating expenses are recognized
    when the service is utilized or at the time when


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they are incurred.
  Interest income and expenses are accrued. Dividends are generally recognized
  at the time of distribution.

To enhance the
  quality of presentation of earnings power, costs relating to antitrust proceedings
  and restructuring are disclosed separately on the income statement.


Deferred
  taxes


Deferred income
    taxes are calculated using the balance sheet liability method. Deferred tax
    assets and liabilities are presented separately on the balance sheet to reflect
    the future tax effect of temporary differences between the carrying amounts
    of assets and liabilities in the financial statements and in the tax return.
    Deferred tax assets and liabilities are calculated on the basis of the tax
    rates expected to be enacted when the temporary differences reverse. The effects
    of changes in tax rates are recognized at the time new tax laws are enacted.
    Deferred tax assets are only recognized for tax loss carryforwards where future
    utilization is probable.


Estimates
  and assumptions


Preparation
    of financial statements requires management in certain cases to make estimates
    and assumptions regarding the amounts of receivables, liabilities and provisions,
    the disclosure of contingent liabilities and reported amounts of income and
    expenses. Actual amounts may differ from those estimates.


|2. | Explanation
      of significant differences between German accounting principles and the
      International Accounting Standards in the SGL CARBON Group
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

The
  significant differences between the IFRSs/IASs and the German Commercial Code
  (HGB) that are relevant to the SGL Carbon Group are as follows:


| |  |  | Under the
      HGB, goodwill may be capitalized and amortized over generally 15 years or
      eliminated directly against the reserves (as was the case in the SGL Carbon
      Group until 1994). The IFRSs/IASs require goodwill to be capitalized and
      amortized over a maximum of 20 years. The cost of integrating the company
      acquired is not a component of the cost of acquisition in accordance with
      the IFRSs/IASs. The resulting goodwill and goodwill amortization charges
      are correspondingly lower.                                                                                   
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |  | Under the
      IFRSs/IASs, internally generated intangible assets are capitalized if future
      economic benefits are expected to flow to the enterprise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |  | Depreciation
      of movable items of plant and equipment had to be changed to the straight-line
      method of depreciation. Leased items of property, plant and equipment that
      are attributable to the SGL Carbon Group as the beneficial owner in accordance
      with the criteria set out in IAS 17 are capitalized and depreciated. The
      associated liabilities are expensed.                                                                                                                                                                                                                            
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |  | Leased items
      of property, plant and equipment that are attributable to the SGL Carbon
      Group as the beneficial owner in accordance with the criteria set out in
      IAS 17 are capitalized and depreciated. The associated liabilities are expensed.                                                                                                                                                                                                                                                                                                                                                            
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |  | Foreign
      currency translation under the HGB is based on the imparity principle: foreign
      currency receivables must be translated at the rate prevailing at the transaction
      date or at the lower rate at the balance sheet date. Foreign currency liabilities
      must be translated at the rate prevailing at the transaction date or at
      the higher rate at the balance sheet date. The IFRSs/IASs require all foreign
      currency receivables and liabilities to be translated at the middle rate
      at the balance sheet date. Any resulting gains and losses are recognized
      in income.
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |  | Deferred
      taxes are recognized and measured using the balance sheet liability method
      in accordance with IAS 12, in contrast to the HGB. Under this method, assets
      and liabilities from amounts of future income taxes recoverable or payable
      must be recognized using the future enacted tax rates.                                                                                                                                                                                                                                                                                                   

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| |  |   | This also
      includes the recognition of deferred tax assets from tax loss carryforwards
      if it is probable that taxable profits will be available against which the
      deferred tax asset can be utilized.                                                                                                                                                                                                                                                                         
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |  | Under the
      IFRSs/IASs, pension provisions are calculated to reflect future salary and
      pension increases (projected unit credit method). A corridor approach
      is used for the recognition of actuarial gains and losses. Under German
      law, the provision is calculated using the net present value method in accordance
      with section 6a of the EstG (German Income Tax Act). IFRSs/IASs pension
      provisions are generally higher than HGB pension provisions.
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |  | Recognition
      of provisions under the IFRSs/IASs requires that future utilization of the
      provision is probable. Under the HGB, provisions may also be recognized
      for possible obligations. The IFRSs/IASs do not permit provisions for future
      internal expenses.                                                                                                                                                                                                         
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |  | Under the
      IFRSs/IASs, long-term provisions and liabilities must be discounted, producing
      a lower carrying amount. The accrued interest on the liability relating
      to the North American antitrust proceedings calculated each quarter reduces
      net profit or increases net loss before tax in subsequent years compared
      with the HGB result.                                                                                                                       
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|3. | Acquisitions
      and basis of consolidation
|-- | ---------------------------------------------

As of January
    1, 2001, all shares in SGL ACOTEC Ltda., São Paulo (Brazil) 
    formerly KCH-ANCOBRAS Ltda.  were acquired in exchange for a 38% interest
    in Larrondo Inversiones S.L. at a purchase price of €1.8 million.


In addition, the interest in SGL ACOTEC (Wuhan) Co. Ltd., Wuhan (China), was increased from 70% to 90%. €0.9 million was paid for the acquisition of the 20% interest to the partner continuing to hold the 10% interest.


Tokai Carbon Co. Ltd., Tokyo (Japan), a third-party enterprise, acquired a 49% interest in the joint venture which has been operating under the name SGL Tokai CARBON Ltd., Shanghai (China), since July 2002. The 51% interest remaining in the hands of SGL Carbon is carried at cost and is not consolidated.


All shares in SGL PanTrac Gesellschaft für elektrische Kontakte mbH, Berlin (PanTrac), were sold to E-CARBON S.A., Brussels (Belgium), a third-party enterprise, and were transferred in January 2003. PanTrac was still fully consolidated in the consolidated financial statements for fiscal year 2002.


The electrical contacts (EC) business belonging to SGL Risomesa S.p.A., Milan (Italy), was sold to the Schunk Group by way of a contract in March 2003 and the company was deconsolidated. The business activities retained by SGL had been previously transferred to SGL CARBON Specialties and continue to be consolidated.


SGL ANGRAPH Sp. z o.o, Nowy Sacz (Poland), has been consolidated since the beginning of the fiscal year. Four small Acotec companies are no longer consolidated as they are insignificant in overall for the presentation of net assets, financial position and results of operations of the SGL Carbon Group.


The remaining interests in ZEW Zaklady Elektrod Weglowych S.A., Racibórz (Poland), were acquired in 2003 and the company was then renamed SGL CARBON POLSKA S.A. At the end of fiscal year 2003, SGL CARBON S.A., Nowy Sacz (Poland), was merged with SGL CARBON POLSKA S.A., Racibórz (Poland).


Basis of consolidation


All significant
    subsidiaries under the legal or constructive control of SGL Carbon have been
    consolidated. At December 31, 2003, seven (2002: eight) German and 36 (2002:
    43) foreign subsidiaries were consolidated in addition to SGL Carbon AG. Compared
    with 2002, four foreign subsidiaries were consolidated for the first time,
    and six foreign subsidiaries were merged. In addition, one German and one
    foreign subsidiary were sold, and four foreign subsidiaries were no longer
    consolidated because they were deemed to be insignificant. The two subsidiaries
    consolidated for the first time are companies that were previously unconsolidated.
    26 subsidiaries were not


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consolidated
  because they are insignificant overall for the presentation of net assets, financial
  position and results of operations. One joint venture was carried at equity.
  The significant consolidated subsidiaries are listed on page 96.

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Consolidated income statement and consolidated balance sheet disclosures


Note 28 presents
    a breakdown of sales revenue by Business Area.


|4. | General
      and administrative expenses
|-- | -----------------------------------------

During the
    year under review, general and administrative expenses were reduced further
    compared with the previous year. The savings are primarily due to a reduction
    in variable remuneration components and lower costs at Group companies in
    the United Kingdom and North America resulting from exchange rate effects.


|5. | Other
      operating income/expenses, net
|-- | ------------------------------------------

Other operating
  income is primarily composed of income from the disposal of noncurrent assets
  (€4.0 million) among other things, resulting from the sale of the electrical
  contacts business, income from the reversal of provisions (€2.9 million),
  the amortization of negative goodwill (€2.7 million), exchange rate gains
  (€1.8 million), income from changes in bad debt allowances on receivables
  (€1.2 million), and insurance compensation (€0.4 million).


The major items of other operating expenses are amortization of goodwill (€6.6 million), exchange rate losses (€4.6 million), additions to provisions (€1.5 million), and losses on the disposal of noncurrent assets (€1.0 million).


|6. | Costs
      relating to antitrust proceedings and restructuring expenses
|-- | ------------------------------------------------------------------------
|   |                                                                         

|                                             | 2003 |  | 2002 |  | 2001 | 
|-------------------------------------------- | ---- |  | ---- |  | ---- | 
|                                             |      |  |      |  |      | 
|                                             | €m   |  | €m   |  | €m   | 
|Cost relating
      to antitrust proceedings | 19.5 |  | 22.0 |  | 35.0 | 
|Restructuring
      expenses                 | 10.4 |  | 8.3  |  | 41.0 | 
|                                             |      |  |      |  |      | 
|                                             | 29.9 |  | 30.3 |  | 76.0 | 
|                                             |      |  |      |  |      | 

The costs relating to antitrust proceedings relate primarily to an increase in the provisions for fines of €27.8 million and €23.6 million imposed by the European competition authorities in fiscal years 2002 and 2003, respectively.


The restructuring expenses in fiscal year 2003 relate to workforce reduction expenses of €3.7 million incurred in the CG Business Area in Italy, Germany and Poland, expenses of €2.7 million incurred in the GS Business Area in relation to the closure of a facility in France in particular, as well as expenses totaling €2.0 million in the CP Business Area due to measures implemented in Germany and France, costs of €1.8 million in SGL T for adjustments at HITCO, and other expenses amounting to €0.2 million.


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|7. | Net
      financing costs
|-- | -------------------------
|   |                          

|                                                                              | 2003          |   | 2002  |   | 2001  |  
|----------------------------------------------------------------------------- | ------------- | - | ----- | - | ----- | -
|                                                                              | €m            |   | €m    |   | €m    |  
|                                                                              |               |   |       |   |       |  
|Net investment
      income                                                   | (4.7          | ) | (1.8  | ) | 3.2   |  
|                                                                              |               |   |       |   |       |  
|Interest
      on other securities, other interest and similar income         | 3.4           |   | 2.2   |   | 2.5   |  
|(thereof
      from subsidiaries )                                            | (0
      .0 ) |   | (0.2  | ) | (0.0  | )
|Interest
      on borrowings and other interest expense                       | (26.9         | ) | (27.4 | ) | (28.4 | )
|Interest
      expense relating to the European Commission                    | (5.6          | ) | 0.0   |   | 0.0   |  
|Imputed
      interest on liabilities from antitrust proceedings              | (6.2          | ) | 3.4   |   | (2.7  | )
|Interest
      component of additions to pension provisions                   | (10.5         | ) | (10.4 | ) | (9.9  | )
|                                                                              |               |   |       |   |       |  
|Interest
      expense, net                                                   | (45.8         | ) | (32.2 | ) | (38.5 | )
|                                                                              |               |   |       |   |       |  
|Amortization
      of capitalized financing costs                             | (16.1         | ) | 0.0   |   | 0.0   |  
|Amortization
      of capitalized costs for the convertible bond              | (1.5          | ) | (0.6  | ) | (0.6  | )
|Foreign
      currency translation of North American antitrust liabilities    | 12.4          |   | 16.3  |   | (6.7  | )
|Foreign
      currency hedging costs for North American antitrust liabilities | (12.2         | ) | (11.8 | ) | 1.6   |  
|Expenses
      for guarantees to the European Commission                      | (2.4          | ) | (0.9  | ) | 0.0   |  
|Other financial
      expenses                                                | (3.0          | ) | 5.5   |   | (7.5  | )
|                                                                              |               |   |       |   |       |  
|Other
      financial expenses / net financial incom e                        | (22.8         | ) | 8.5   |   | (13.2 | )
|                                                                              |               |   |       |   |       |  
|Total                                                                         | (73.3         | ) | (25.5 | ) | (48.5 | )
|                                                                              |               |   |       |   |       |  

Net financing
    costs include non-cash expenses amounting to €26.6 million. At the end
    of 2003, we deferred the interest potentially payable in connection with the
    European antitrust fines. Other net financing costs/net financial income relate
    to net exchange rate gains and losses on financial transactions and to write-offs
    of refinancing costs totaling €16.1 million capitalized at the end of
    2002/beginning of 2003. The costs incurred in 2003 for the refinancing in
    2004 of the syndicated loans and the high-yield bond were also deferred and
    will be amortized over the estimated term of the loans.


|8. | Other
      disclosures
|-- | -----------------------
|   |                        

|Costs
      of material                                                 | 2003      |   | 2002      |   | 2001      |  
|----------------------------------------------------------------------- | --------- | - | --------- | - | --------- | -
|                                                                        | €
      m |   | € m       |   | € m       |  
|                                                                        |           |   |           |   |           |  
|Cost of
      raw materials and consumables used and of good purchased  |           |   |           |   |           |  
|and held
      for resale                                               | 240.0     |   | 242.2     |   | 297.1     |  
|Cost of
      purchased services                                        | 58.5      |   | 61.3      |   | 78.2      |  
|                                                                        |           |   |           |   |           |  
|                                                                        | 298.5     |   | 303.5     |   | 375.3     |  
|                                                                        |           |   |           |   |           |  
|                                                                        |           |   |           |   |           |  
|                                                                        |           |   |           |   |           |  
|Staff
      Costs                                                       | 2003      |   | 2002      |   | 2001      |  
|                                                                        | €
      m |   | €
      m |   | €
      m |  
|                                                                        |           |   |           |   |           |  
|W ages and
      salaries                                               | 261.1     |   | 298.1     |   | 326.0     |  
|Social security
      contributions, retirement and other benefit costs | 84.5      |   | 70.1      |   | 77.2      |  
|(thereof
      for pensions)                                            | (20.5     | ) | (18.7     | ) | (17.3     | )
|                                                                        |           |   |           |   |           |  
|                                                                        | 345.6     |   | 368.2     |   | 403.2     |  
|                                                                        |           |   |           |   |           |  

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Other
  taxes

Other taxes
    are reported in the appropriate functional expense. The total expense was
    €6.9 million in 2003 and €9.8 million in 2002.


|Breakdown
      of employees             |       |  |       |  |       | 
|---------------------------------------- | ----- |  | ----- |  | ----- | 
|Annual average
      number of employees | 2003  |  | 2002  |  | 2001  | 
|                                         |       |  |       |  |       | 
|Production
      and auxiliary plants    | 5,034 |  | 5,465 |  | 6,103 | 
|Sales and
      marketing                | 593   |  | 638   |  | 655   | 
|Research                                 | 232   |  | 307   |  | 487   | 
|Administration,
      other functions    | 1,218 |  | 1,294 |  | 1,246 | 
|                                         |       |  |       |  |       | 
|                                         | 7,077 |  | 7,704 |  | 8,491 | 
|                                         |       |  |       |  |       | 

The reduction
    in the average number of employees is due to the additional restructuring
    measures implemented in the year under review, particularly in the CG and
    CP Business Areas, and to changes in the basis of consolidation.


9.    Income
  tax expense

Deferred tax
    assets from tax loss carryforwards are generally recognized in the IFRS/IAS
    consolidated financial statements on the basis of five-year projected earnings
    before taxes of the individual consolidated companies. The projections reflect
    uncertainties about certain assumptions and other general conditions and,
    in exceptional cases, deferred tax assets from tax loss carryforwards have
    not been recognized.


|The
      tax expense is composed as follows |           |   |           |   |           |  
|-------------------------------------------- | --------- | - | --------- | - | --------- | -
|                                             | 2003      |   | 2002      |   | 2001      |  
|                                             |           |   |           |   |           |  
|                                             | 
      m |   | 
      m |   | 
      m |  
|Current
      Income tax expense             |           |   |           |   |           |  
|Germany                                      | 0.1       |   | (2.1      | ) | (5.6      | )
|Rest of
      World                          | (14.4     | ) | (5.7      | ) | (16.8     | )
|                                             |           |   |           |   |           |  
|Deferred
      Taxes                         |           |   |           |   |           |  
|Germany                                      | 22.0      |   | 11.1      |   | (1.6      | )
|Rest of
      World                          | 6.4       |   | 0.3       |   | (5.2      | )
|                                             |           |   |           |   |           |  
|Income tax
      (expense) / income          | 14.1      |   | 3.6       |   | (29.2     | )
|                                             |           |   |           |   |           |  

Deferred
    tax assets from tax loss carryforwards in Scotland were still not recognized
    in the period under review. As a result of the turnaround in our businesses
    in the USA, a portion of the loss carryforwards there were recognized on the
    basis of a conservative estimate. This turnaround was due to the completion
    of our restructuring program in CG and GS in 2003, and the price increases
    in our core graphite electrode business which were successfully implemented
    in the US market. This led to a tax income of €10.0 million in 2003.


German
  corporations are subject to a standard 25% rate of corporation tax for profits
  distributed and retained. In September 2002, the rate of German corporation
  tax for fiscal 2003 was increased to 26.5%. The impact of this tax increase,
  which was limited to one year, was not of material importance and has therefore
  not been included in the calculation of deferred taxes. A solidarity surcharge
  of 5.5% is added to the corporation tax rate, resulting in an aggregate corporate
  tax rate for 2002 and 2003 of 26.4%. German corporations are also subject to
  a


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trade tax. The trade tax rate depends on the municipality in which the company has its operating facilities. Trade tax generally amounts to between approximately 15% and 20% of the taxable trading profit, depending on the municipalitys tax assessment rate. Trade tax is deductible as an operating expense in the calculation of the companys income that is subject to corporation tax. Including the average trade tax burden of 12%, the German income tax rate amounts to a total of 38.4%.

|m                                            | 2003                                                            |      | 2002  |       | 2001  |      
|--------------------------------------------- | --------------------------------------------------------------- | ---- | ----- | ----- | ----- | -----
|                                              |                                                                 |      |       |       |       |      
|Net
      loss before tax                     | (64.3                                                           | )    | (27.2 | )     | (65.8 | )    
|                                              |                                                                 |      |       |       |       |      
|Expected
      tax income at 38.4%            | 24.7                                                            |      | 10.4  |       | 25.3  |      
|                                              |                                                                 |      |       |       |       |      
|Change
      in expected tax expense due to:  |                                                                 |      |       |       |       |      
|-                                             | non-deductable
      expenses                                   |      |       |       |       |      
|                                              | (incl. goowill
      amortization) and tax-exempt income        | (7.3 | )     | (7.6  | )     | (16.4
|-                                             | Taxation
      differences at foreign companies                 | (0.4 | )     | 3.3   |       | (0.5 
|-                                             | Prior-period
      taxes                                        | 0.4  |       | 4.0   |       | (5.2 
|-                                             | Effects
      of change in tax rate                             | 0.0  |       | 0.0   |       | (0.7 
|-                                             | Change in
      valuation allowance against deferred tax assets | 0.7  |       | (11.4 | )     | (31.6
|-                                             | Other                                                           | (4.0 | )     | 4.9   |       | (0.1 
|                                              |                                                                 |      |       |       |       |      
|=
      Effective tax benefit (+) / (expense) | 14.1                                                            |      | 3.6   |       | (29.2 | )    
|                                              |                                                                 |      |       |       |       |      

Since the
    income tax burden differs from country to country, these taxation differences
    are disclosed separately in the reconciliation above. The prior-period taxes
    are the result of refunds for taxes paid in the past due to successful appeals
    to the tax authorities. The valuation allowance charged on deferred tax assets
    relates primarily to the nonrecognition of deferred tax assets in Scotland
    in fiscal years 2002 and 2003 and the loss carryforwards in the USA, which
    were partially recognized for the first time in 2003. The partial recognition
    of loss carryforwards in the USA in the amount of €10.0 million was offset
    against the valuation allowance on deferred tax assets, which was initially
    calculated at €(9.3) million, resulting in the positive balance of €0.7
    million disclosed here.


10.   Earnings
  per share (EPS)

Basic
  earnings per share are calculated by dividing the net profit or loss attributable
  to SGL Carbon shareholders
  (2003: € (50.3) million; 2002: €(23.6) million; 2001: € (95.2)
  million ) by the weighted average number of shares outstanding (2003: 22,148,078;
  2002: 21,813,930 2001: 21,530,563). The weighted average number of shares outstanding
  is calculated from the number of shares outstanding at January 1 plus the new
  shares issued in February 2003 (see note 19).


In both fiscal
    years, share options were outstanding (see note 31). The diluted earnings
    per share in accordance with IAS 33.40 were identical to the basic earnings
    per share; this was due in particular to the net loss recorded in both fiscal
    years.


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11.   Intangible
  assets

|                                       | Dec.
      31,       |   | Dec.
      31, |   | Dec.
      31, |   | Dec.
      31, |   | Dec.
      31,       |   | Dec.
      31, |   | Dec.
      31, |   | Dec.
      31, |  
|-------------------------------------- | -------------------- | - | -------------- | - | -------------- | - | -------------- | - | -------------------- | - | -------------- | - | -------------- | - | -------------- | -
|                                       | 2003                 |   | 2003           |   | 2003           |   | 2003           |   | 2002                 |   | 2002           |   | 2002           |   | 2002           |  
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|                                       | Industrial           |   |                |   |                |   |                |   | Industrial           |   |                |   |                |   |                |  
|                                       | rights,              |   |                |   |                |   |                |   | rights,              |   |                |   |                |   |                |  
|                                       | software
      and   |   |                |   | Negative       |   |                |   | softw
      are and  |   |                |   | Negative       |   |                |  
|m                                     | similar
      rights |   | Goodwill       |   | goodwill       |   | Total          |   | similar
      rights |   | Goodwill       |   | goodwill       |   | Total          |  
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Historical
      cost:                 |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Balance at Jan. 1                      | 34.4                 |   | 132.2          |   | (11.4          | ) | 155.2          |   | 24.0                 |   | 140.6          |   | (8.3           | ) | 156.3          |  
|Change in basis of
      consolidation | (0.3                 | ) | (4.5           | ) | 4.6            |   | (0.2           | ) | 0.0                  |   | 0.0            |   | 0.0            |   | 0.0            |  
|Currency translation                   | (1.2                 | ) | (11.0          | ) | 0.3            |   | (11.9          | ) | (1.0                 | ) | (8.5           | ) | (3.1           | ) | (12.6          | )
|Additions                              | 12.9                 |   | 0.6            |   | 0.0            |   | 13.5           |   | 12.0                 |   | 0.1            |   | 0.0            |   | 12.1           |  
|Disposals                              | (1.5                 | ) | (0.3           | ) | 4.1            |   | 2.3            |   | (0.6                 | ) | 0.0            |   | 0.0            |   | (0.6           | )
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Balance at Dec. 31                     | 44.3                 |   | 117.0          |   | (2.4           | ) | 158.9          |   | 34.4                 |   | 132.2          |   | (11.4          | ) | 155.2          |  
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Cumulative
      am ortization:        |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Balance at Jan. 1                      | 21.5                 |   | 36.9           |   | (7.0           | ) | 51.4           |   | 18.5                 |   | 31.3           |   | (4.7           | ) | 45.1           |  
|Change in basis of
      consolidation | (0.2                 | ) | (0.6           | ) | 2.9            |   | 2.1            |   | 0.0                  |   | 0.0            |   | 0.0            |   | 0.0            |  
|Currency translation                   | (1.2                 | ) | (4.0           | ) | 0.3            |   | (4.9           | ) | (1.2                 | ) | (1.8           | ) | 0.0            |   | (3.0           | )
|Additions                              | 3.8                  |   | 6.6            |   | (2.7           | ) | 7.7            |   | 4.8                  |   | 7.4            |   | (2.3           | ) | 9.9            |  
|Disposals                              | (0.5                 | ) | 0.0            |   | 4.1            |   | 3.6            |   | (0.6                 | ) | 0.0            |   | 0.0            |   | (0.6           | )
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Balance at Dec. 31                     | 23.4                 |   | 38.9           |   | (2.4           | ) | 59.9           |   | 21.5                 |   | 36.9           |   | (7.0           | ) | 51.4           |  
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  
|Carrying amount
      at Dec. 31       | 20.9                 |   | 78.1           |   | 0.0            |   | 99.0           |   | 12.9                 |   | 95.3           |   | (4.4           | ) | 103.8          |  
|                                       |                      |   |                |   |                |   |                |   |                      |   |                |   |                |   |                |  

Industrial
    rights, software and similar rights are mainly comprised of purchased and
    internally developed software. Additions in the year under review relate mainly
    to the development of a standardized Group-wide SAP system (SGL ONE). The
    aim of the SGL ONE project is to replace a large number of legacy systems
    with a single, fully integrated global SAP system. A total of €9.3 million
    was capitalized in 2003 for the SGL ONE project (2002: €4.9 million).
    Negative goodwill is amortized in the income statement over the expected remaining
    useful life. Goodwill amortization is contained in other operating expenses.
    There was no requirement for write-downs from impairment testing.


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12.   Property,
  plant and equipment

|                                       |                  |   |           |   | Other             |   | Advance            |     |         |  
|-------------------------------------- | ---------------- | - | --------- | - | ----------------- | - | ------------------ | --- | ------- | -
|                                       |                  |   | Technical |   | equipm
      ent, |   | payments           |     |         |  
|                                       | Land,
      land |   | equipment |   | operating         |   | and                |     |         |  
|                                       | rights
      and |   | and       |   | and
      office  |   | assets
      under |     |         |  
|m                                     | buildings        |   | machinery |   | equipment         |   | development        |     | Total   |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Historical
      cost:                 |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Jan. 1,
      2003          | 372.0            |   | 1,023.9   |   | 131.4             |   | 29.6               |     | 1,556.9 |  
|Change in basis of
      consolidation | (1.3             | ) | (1.0      | ) | (2.0              | ) | 0.1                |     | (4.2    | )
|Currency translation                   | (16.8            | ) | (53.5     | ) | (2.6              | ) | (1.2               | )   | (74.1   | )
|Reclassifications                      | 0.0              |   | 0.0       |   | 0.0               |   | 0.0                |     | 0.0     |  
|Additions                              | 4.9              |   | 35.4      |   | 3.4               |   | (10.9              | )*  | 32.8    |  
|Disposals                              | (3.3             | ) | (35.9     | ) | (7.4              | ) | (0.1               | )   | (46.7   | )
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Dec. 31,
      2003         | 355.5            |   | 968.9     |   | 122.8             |   | 17.5               |     | 1,464.7 |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Cumulative
      depreciation          |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Jan. 1,
      2003          | 203.7            |   | 764.8     |   | 110.9             |   | 0.2                |     | 1,079.6 |  
|Change in basis of
      consolidation | (0.7             | ) | (1.8      | ) | (1.5              | ) | 0.0                |     | (4.0    | )
|Currency translation                   | (5.3             | ) | (31.0     | ) | (1.9              | ) | 0.0                |     | (38.2   | )
|Reclassifications                      | 0.4              |   | (0.4      | ) | 0.0               |   | 0.0                |     | 0.0     |  
|Additions                              | 9.4              |   | 48.4      |   | 6.7               |   | 0.0                |     | 64.5    |  
|Disposals                              | (3.1             | ) | (35.4     | ) | (7.2              | ) | 0.0                |     | (45.7   | )
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Dec. 31,
      2003         | 204.4            |   | 744.6     |   | 107.0             |   | 0.2                |     | 1,056.2 |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Carrying amount
      at Dec. 31, 2003 | 151.1            |   | 224.3     |   | 15.8              |   | 17.3               |     | 408.5   |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Historical
      cost:                 |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Jan. 1,
      2002          | 395.8            |   | 1,106.6   |   | 142.5             |   | 52.9               |     | 1,697.8 |  
|Change in basis of
      consolidation | (10.9            | ) | (36.4     | ) | (8.5              | ) | 0.0                |     | (55.8   | )
|Currency translation                   | (19.3            | ) | (61.4     | ) | (3.2              | ) | (2.2               | )   | (86.1   | )
|Reclassifications                      | 10.1             |   | 0.0       |   | 0.0               |   | (10.1              | )   | 0.0     |  
|Additions                              | 2.6              |   | 43.7      |   | 6.1               |   | (10.9              | )*) | 41.5    |  
|Disposals                              | (6.3             | ) | (28.6     | ) | (5.5              | ) | (0.1               | )   | (40.5   | )
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Dec. 31,
      2002         | 372.0            |   | 1,023.9   |   | 131.4             |   | 29.6               |     | 1,556.9 |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Cumulative
      depreciation          |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Jan. 1,
      2002          | 214.5            |   | 811.3     |   | 118.3             |   | 0.2                |     | 1,144.3 |  
|Change in basis of
      consolidation | (10.0            | ) | (34.3     | ) | (8.5              | ) | 0.0                |     | (52.8   | )
|Currency translation                   | (7.1             | ) | (38.1     | ) | (2.2              | ) | 0.0                |     | (47.4   | )
|Reclassifications                      | 0.0              |   | 0.0       |   | 0.0               |   | 0.0                |     | 0.0     |  
|Additions                              | 10.3             |   | 52.4      |   | 8.6               |   | 0.0                |     | 71.3    |  
|Disposals                              | (4.0             | ) | (26.5     | ) | (5.3              | ) | 0.0                |     | (35.8   | )
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Balance at Dec. 31,
      2002         | 203.7            |   | 764.8     |   | 110.9             |   | 0.2                |     | 1,079.6 |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  
|Carrying amount
      at Dec. 31, 2002 | 168.3            |   | 259.1     |   | 20.5              |   | 29.4               |     | 477.3   |  
|                                       |                  |   |           |   |                   |   |                    |     |         |  

|* | Balance of additions
      of €19.9 million and reclassifications to operational equipment of €30.8
      million.
|- | ------------------------------------------------------------------------------------------------------------------

Investments
    in property, plant and equipment declined by €8.7 million in the year
    under review, from €41.5 million to €32.8 million. Material additions
    relate to the replacement of capital assets for our plants in Germany, the
    United States, Poland and Italy. Capitalized leased assets relate to land
    and buildings and to technical equipment, and amount to €1.1 million at
    December 31, 2003.


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13.   Noncurrent
  financial assets

|                                       |              |   |             |   | Other      |   |       |  
|-------------------------------------- | ------------ | - | ----------- | - | ---------- | - | ----- | -
|                                       | Investments  |   | Noncurrent  |   | noncurrent |   |       |  
|                                       | in           |   | financial   |   | financial  |   |       |  
|                                       | subsidiaries |   | instruments |   | assets     |   | Total |  
|                                       | m           |   | m          |   | m         |   | m    |  
|                                       |              |   |             |   |            |   |       |  
|Historical
      cost:                 |              |   |             |   |            |   |       |  
|Balance at Jan. 1,
      2003          | 32.8         |   | 2.5         |   | 5.4        |   | 40.7  |  
|Change in basis of
      consolidation | 1.2          |   | 0.0         |   | 0.0        |   | 1.2   |  
|Currency translation                   | (1.5         | ) | 0.0         |   | (0.1       | ) | (1.6  | )
|Reclassifications                      | 0.0          |   | 0.0         |   | 0.0        |   | 0.0   |  
|Additions                              | 1.0          |   | 0.0         |   | 0.7        |   | 1.7   |  
|Disposals                              | (1.7         | ) | 0.0         |   | (0.5       | ) | (2.2  | )
|                                       |              |   |             |   |            |   |       |  
|Balance at Dec. 31,
      2003         | 31.8         |   | 2.5         |   | 5.5        |   | 39.8  |  
|                                       |              |   |             |   |            |   |       |  
|Cumulative
      write-dow ns:         |              |   |             |   |            |   |       |  
|Balance at Jan. 1,
      2003          | 7.2          |   | 0.0         |   | 0.3        |   | 7.5   |  
|Change in basis of
      consolidation | 0.0          |   | 0.0         |   | 0.0        |   | 0.0   |  
|Currency translation                   | 0.0          |   | 0.0         |   | 0.0        |   | 0.0   |  
|Additions                              | 3.7          |   | 0.0         |   | 0.0        |   | 3.7   |  
|Disposals                              | (0.1         | ) | 0.0         |   | 0.0        |   | (0.1  | )
|                                       |              |   |             |   |            |   |       |  
|Balance at Dec. 31,
      2003         | 10.8         |   | 0.0         |   | 0.3        |   | 11.1  |  
|                                       |              |   |             |   |            |   |       |  
|Carrying amount
      at Dec. 31, 2003 | 21.0         |   | 2.5         |   | 5.2        |   | 28.7  |  
|                                       |              |   |             |   |            |   |       |  
|Historical
      cost:                 |              |   |             |   |            |   |       |  
|Balance at Jan. 1,
      2002          | 27.3         |   | 2.7         |   | 5.2        |   | 35.2  |  
|Change in basis of
      consolidation | 11.0         |   | 0.0         |   | 0.0        |   | 11.0  |  
|Currency translation                   | (1.7         | ) | 0.0         |   | 0.1        |   | (1.6  | )
|Reclassifications                      | 0.0          |   | (0.3        | ) | 0.3        |   | 0.0   |  
|Additions                              | 0.6          |   | 0.1         |   | 0.0        |   | 0.7   |  
|Disposals                              | (4.4         | ) | 0.0         |   | (0.2       | ) | (4.6  | )
|                                       |              |   |             |   |            |   |       |  
|Balance at Dec. 31,
      2002         | 32.8         |   | 2.5         |   | 5.4        |   | 40.7  |  
|                                       |              |   |             |   |            |   |       |  
|Cumulative
      write-downs:          |              |   |             |   |            |   |       |  
|Balance at Jan. 1,
      2002          | 1.2          |   | 0.0         |   | 0.0        |   | 1.2   |  
|Change in basis of
      consolidation | 6.0          |   | 0.0         |   | 0.0        |   | 6.0   |  
|Currency translation                   | 0.0          |   | 0.0         |   | 0.1        |   | 0.1   |  
|Additions                              | 0.0          |   | 0.0         |   | 0.2        |   | 0.2   |  
|Disposals                              | 0.0          |   | 0.0         |   | 0.0        |   | 0.0   |  
|                                       |              |   |             |   |            |   |       |  
|Balance at Dec. 31,
      2002         | 7.2          |   | 0.0         |   | 0.3        |   | 7.5   |  
|                                       |              |   |             |   |            |   |       |  
|Carrying amount
      at Dec. 31, 2002 | 25.6         |   | 2.5         |   | 5.1        |   | 33.2  |  
|                                       |              |   |             |   |            |   |       |  

Other noncurrent
    financial assets relate primarily to the capitalized surrender value of reinsurance
    policies. The changes in the basis of consolidation in the year under review
    relate to the carrying amounts of subsidiaries which are no longer consolidated
    due to immateriality. There are no advance payments on noncurrent financial
    assets. In fiscal year 2003, the carrying amount of an unconsolidated subsidiary
    was written down by €3.5 million as the company has streamlined and reorganized
    its activities.


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|14.                                                          | Inventories | Dec.
      31, |       | Dec.
      31, | 
|------------------------------------------------------------ | ----------- | -------------- | ----- | -------------- | 
|                                                             | 2003        |                | 2002  |               
|                                                             |             |                |       |               
|                                                             | m          |                | m    |               
|Raw materials
      and supplies                             | 71.8        |                | 83.1  |               
|Work in
      progress                                       | 137.8       |                | 147.9 |               
|Finished
      goods and goods purchased and held for resale | 47.1        |                | 54.5  |               
|Cost in
      excess of billings                             | 7.7         |                | 9.3   |               
|Advance
      payments                                       | 0.6         |                | 1.1   |               
|less payments
      received                                 | (7.0        | )              | (7.5  | )             
|                                                             |             |                |       |               
|                                                             | 258.0       |                | 288.4 |               
|                                                             |             |                |       |               

Cost in excess
  of billings relates to customer-specific production contracts measured at cost.
  The total amount of inventories carried at net realizable value amounts to €1.9
  million. Reversal of write-downs were only recognised to a limited extent.


|15.                                                                                              | Trade receivables | Dec.
      31, |       | Dec.
      31, | 
|------------------------------------------------------------------------------------------------ | ----------------- | -------------- | ----- | -------------- | 
|                                                                                                 | 2003              |                | 2002  |               
|                                                                                                 |                   |                |       |               
|                                                                                                 | €m                |                | €m    |               
|Customers                                                                                        | 204.2             |                | 198.1 |               
|thereof
      with more than one year to maturity (2003:
      €2.2 million; 2002: €0.3 million) |                   |                |       |               
|Subsidiaries                                                                                     | 17.1              |                | 10.0  |               
|                                                                                                 |                   |                |       |               
|                                                                                                 | 221.3             |                | 208.1 |               
|                                                                                                 |                   |                |       |               

Trade receivables are reported net of specific allowances for doubtful accounts amounting to €7.8 million as of December 31, 2003 and €9.6 million as of December 31, 2002. In the CG segment, valuation allowances in the amount of €4.6 million were charged on receivables from customers in Canada, Switzerland and other receivables. No general valuation allowances were recognized. There were no trade receivables from associates. In fiscal year 2003, the sales of receivables reported in the previous year amounting to €41.2 million were reduced completely.


|16.                                                                                              | Other
      Receivables and other current assets |  |                |  | 
|------------------------------------------------------------------------------------------------ | ------------------------------------------------ |  | -------------- |  | 
|                                                                                                 | Dec.
      31,                                   |  | Dec.
      31, | 
|                                                                                                 | 2003                                             |  | 2002           | 
|                                                                                                 |                                                  |  |                | 
|                                                                                                 | €m                                               |  | €m             | 
|Other
      receivables from subsidiaries                                                        | 11.6                                             |  | 2.9            | 
|Other current
      assets                                                                       | 46.5                                             |  | 57.8           | 
|thereof
      with more than one year to maturity (2003: €0.2 million; 2002: €0.0
      million) |                                                  |  |                | 
|                                                                                                 |                                                  |  |                | 
|                                                                                                 | 58.1                                             |  | 60.7           | 
|                                                                                                 |                                                  |  |                | 

Other current
  assets relate primarily to recoverable taxes amounting to €17.5 million,
  positive fair values of financial derivatives totaling €12.9 million, prepaid
  expenses of €3.3 million, insurance claims, short-term loans


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receivable, purchase price receivables for noncurrent assets sold, and miscellaneous receivables. Due to the new refinancing program approved by the Company in December 2003, the capitalized financing costs for the old syndicated loan were written off at the end of fiscal year 2003. Costs of €0.2 million were deferred as of December 31, 2003 for the refinancing package implemented in 2004.

|17.                          | Cash and cash equivalents |  |            |  | 
|---------------------------- | ------------------------- |  | ---------- |  | 
|                             |                           |  |            | 
|                             | 31.12.2003                |  | 31.12.2002 | 
|                             | €m                        |  | €m         | 
|                             |                           |  |            | 
|                             |                           |  |            | 
|Cash
      and bank balances | 46.1                      |  | 21.4       | 
|Financial
      instruments  | 0.0                       |  | 0.1        | 
|                             |                           |  |            | 
|                             | 46.1                      |  | 21.5       | 
|                             |                           |  |            | 

The increase
    in cash and bank balances as compared to the prior year is primarily due to
    the increase in SGL CARBON AGs cash and cash equivalents.


|18. | Deferred
      tax assets
|--- | -------------------------

Deferred tax
  assets from tax loss carryforwards are recognized in the consolidated IFRS/IAS
  financial statements on the basis of a five-year projection of earnings before
  taxes at the level of the individual consolidated subsidiaries or fiscal entities
  for tax purposes. Uncertainties about certain assumptions and other general
  conditions are reflected in the projection and lead in exceptional cases to
  deferred tax assets from tax loss carryforwards not being recognized.


Tax loss carryforwards relate primarily to accumulated corporation tax loss carryforwards of approx. $199 million in the US and of approx. €139 million in Germany. As the law currently stands, the tax loss carryforwards in Germany can be utilized for an unlimited period. In the US, the tax loss carryforwards expire between 2018 and 2023. These tax loss carryforwards are measured at the expected future tax rates. Valuation allowances are charged on the gross amounts calculated in this way to obtain the amounts likely to be utilized in the future.


Deferred tax assets from loss carryforwards in Scotland were not recognized during preparation of the consolidated IFRS/IAS financial statements. As a result of the turnaround in our businesses in the USA, a portion of the loss carryforwards were recognized on the basis of a conservative estimate. This increased deferred tax assets by €10.0 million in 2003.


Deferred tax
    assets were also recognized for timing differences in profit and loss resulting
    from consolidation adjustments and for temporary differences in carrying amounts
    at the Group subsidiaries resulting from provisions for onerous contracts
    not allowable for tax purposes and for other measurement differences under
    the IFRSs/IASs. In the event of doubts about the tax-deductibility of expenses,
    an equivalent valuation allowance is charged against the calculated deferred
    tax assets. Most deferred tax assets have more than one year to maturity.
    Deferred tax assets and liabilities as of December 31, 2003 are derived from
    tax loss carryforwards or differences between the tax accounts and the IFRS/IAS
    financial statements as follows:


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|                                  | Deferred
      tax |  | Deferred
      tax | 
|--------------------------------- | ------------------ |  | ------------------ | 
|                                  | assets             |  | liabilities        | 
|                                  |                    |  |                    | 
|                                  | €m                 |  | €m                 | 
|Noncurrent
      assets           | 14.7               |  | 18.2               | 
|Inventories                       | 0.9                |  | 7.2                | 
|Receivables/other
      assets    | 3.0                |  | 3.9                | 
|Pension
      provisions          | 9.8                |  | 0.0                | 
|Other provisions                  | 9.6                |  | 5.7                | 
|Liabilities                       | 9.9                |  | 6.7                | 
|Comprehensive
      income        | 0.0                |  | 1.3                | 
|From tax
      loss carryforwards | 79.3               |  | 0.0                | 
|                                  |                    |  |                    | 
|Total                             | 127.2              |  | 43.0               | 
|                                  |                    |  |                    | 

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|19. | Equity
|--- | ------

The classification
  of items of equity is presented in the consolidated statement of changes in
  equity on page F6.


The Companys share capital amounted to €56,793,492.48 as of December 31, 2003 and is composed of 22,184,958 no par-value ordinary bearer shares, each with a notional value of €2.56.


An increase in the share capital of the Company requires a resolution by the Annual General Meeting adopted by a simple majority. Moreover, the Annual General Meeting may authorize the Executive Committee to increase the share capital of the Company with the consent of the Supervisory Board within a period of five years by issuing shares in a certain aggregate amount (authorized capital). Finally, shareholders may approve the creation of conditional capital, but only to issue conversion or subscription rights to holders of convertible bonds, to prepare a merger with another company or to issue stock options to employees and members of the management of the Company or of an affiliated company by way of a consent and authorization resolution. Each of these shareholders resolutions pertaining to the creation of authorized or conditional capital require a majority of three quarters of the share capital represented at the Annual General Meeting when the resolution is passed. The nominal amount of the authorized capital created by the shareholders may not exceed one half of the share capital existing at the time of registration of the authorized capital in the commercial register. The total nominal amount of the conditional capital created by the shareholders, the issuance of which was authorized by the shareholders, may not exceed one half of the share capital existing at the time of the adoption of the resolution relating to the conditional capital increase. The total nominal amount of the conditional capital for the issuance of stock options to employees and members of the management of the Company or of an affiliated company may not exceed 10% of the share capital existing at the time of the adoption of the resolution relating to the conditional capital increase.


Extraordinary General Meeting on January 15, 2004

The Extraordinary General Meeting on January 15, 2004 adopted the following resolutions, among others:


| |                                                                                                                                                                                                                                             | that the
      Companys share capital will be increased from €56,793,492.48
      by €85,190,238.72 to €141,983,731.20 against cash contributions
      by issuing 33,277,437 no-par value bearer shares;                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                             | that an
      underwriting syndicate will subscribe for the new shares at the notional
      amount of €2.56 per share, with the obligation that they offer the
      shares to the existing shareholders at a ratio of three to two (three new
      shares for two existing shares) and at a subscription price of at least
      €6.00 (the indirect pre-emptive right). The subscription period ended
      two weeks after public notification of the subscription offer in the electronic
      version of the German Federal Gazette;
| |                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                             | that the
      new shares shall carry full dividend rights as of fiscal year 2004; and                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                             | that the
      Executive Committee is authorized, with the consent of the Supervisory Board,
      to determine the additional details of the capital increase and its implementation,
      in particular the subscription price. The underwriters are authorized to
      sell those shares that are not subscribed within the subscription period
      to institutional investors as part of a private placement.                                                                                                                       
| |                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The
      resolution relating to the capital increase was registered in the commercial
      register of the Wiesbaden local court on January 16, 2004; the implementation
      of the capital increase was registered on February 3, 2004.

Authorized
  capital

The Executive Committee is authorized, with the approval of the Supervisory Board, to increase the Companys share capital by a total of up to €6,107,691.52 (authorized capital I) by issuing new shares against cash and/or non-cash contributions on one or several occasions until April 29, 2007. The shareholders are to be granted pre-emptive rights. The Executive Committee is authorized, with the approval of the Supervisory Board, to exclude fractional shares from the shareholders pre-emptive rights. Furthermore, the Executive Committee can disapply preemptive rights with the approval of the Supervisory Board


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| | (i)   | to
      the extent necessary to enable the holders of options or convertible bonds
      that have been issued by the Company or by a wholly owned direct or indirect
      subsidiary to be granted subscription rights for shares to the same extent
      to which they would be entitled following the exercise of the options or
      conversion rights or after fulfillment of conversion obligations;                
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (ii)  | if
      the new shares are issued to employees of the Company or affiliated companies
      within the meaning of sections 15 ff. of the Aktiengesetz (German Stock
      Corporation Act  AktG). However, for this purpose the share capital
      can only be increased by a total of no more than €1,664,000.00 by issuing
      a total of up to 650,000 new no-par value shares on one or several occasions;           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (iii) | if the new shares are issued to employees of the Company or affiliated companies
      within the meaning of sections 15 ff. of the AktG who participate in the
      Matching Shares Plan of the Company. However, for this purpose the share
      capital can only be increased by a total of no more than €587,499.52
      by issuing a total of up to 229,492 new no-par value shares on one or several
      occasions;
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (iv)  | if
      the new shares are issued as part of a capital increase against non-cash
      contributions for the acquisition of companies, divisions of companies,
      or equity interests in companies; and                                                                                                                                                                                                                   
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (v)   | for
      a total of no more than €5,597,299.20 if the new shares are issued
      as part of a capital increase against cash contributions at an issue price
      that is not significantly lower than the market price.                                                                                                                                                                                                    

The
  Executive Committee is authorized, with the approval of the Supervisory Board,
  to increase the Companys share capital by a total of up to €21,058,304.00
  (authorized capital Ia) by issuing 8,225,900 new no-par value shares against
  cash contributions and/or non-cash contributions on one or several occasions
  until May 2, 2006. The Executive Committee is authorized, with the approval
  of the Supervisory Board, to exclude fractional shares from shareholders
  pre-emptive rights. In addition, the Executive Committee can disapply pre-emptive
  rights entirely with the approval of the Supervisory Board in order to issue
  new shares against non-cash contributions for the purpose of acquiring companies
  or interests in companies.


The Extraordinary General Meeting on January 15, 2004 adopted a resolution to cancel the authorized capital Ia insofar as it permits a capital increase against cash contributions. As a result, a capital increase from authorized capital Ia will only be possible against non-cash contributions in the future. The shareholders instructed the Companys Executive Committee not to register this change to the Companys Articles of Association until after the completion of the capital increase that was resolved by the January 15, 2004 Extraordinary General Meeting has been registered in the commercial register.


Conditional capital

Based on a resolution of the Annual General Meeting on April 27, 2000, the share capital of the Company was conditionally increased by a further €3,840,000.00, composed of 1,500,000 bearer shares with a notional value of €2.56 per share. The conditional capital increase will only be implemented to the extent that holders of warrants relating to bonds with warrants or holders of conversion rights from convertible bonds, which are issued by the Company or a wholly owned direct or indirect subsidiary of the Company on the basis of the authorizing resolution of the Annual General Meeting on April 27, 2000, exercise their option or conversion rights, or to the extent that holders of convertible bonds with a conversion obligation fulfill their conversion obligation, where those convertible bonds are issued by the Company or a wholly owned direct or indirect subsidiary of the Company on the basis of the authorizing resolution of the Annual General Meeting on April 27, 2000. The new shares carry dividend rights as of the beginning of the fiscal year in which they are created through the exercise of conversion rights or options or through the fulfillment of conversion obligations.


Based on a resolution of the Annual General Meeting on April 27, 2000, the share capital of the Company was conditionally increased by an additional nominal amount of up to €4,096,000.00. The conditional capital increase will be implemented only by issuing up to 1,600,000 new shares carrying dividend rights from the beginning of the fiscal year in which they were issued and will only be implemented insofar as the holders of options issued within the scope of the stock option plan of the Company based on the authorization of April 27, 2000, exercise their rights to purchase shares.


Based on a
    resolution of the Annual General Meeting on May 3, 2001, the share capital
    of the Company was conditionally increased by a further €5,520,499.20,
    composed of 2,156,445 bearer shares. The conditional capital


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increase will
  only be implemented to the extent that holders of bonds with warrants or holders
  of conversion rights from convertible bonds, which are issued by the Company
  or a wholly owned direct or indirect subsidiary of the Company on the basis
  of the authorizing resolution of the Annual General Meeting on May 3, 2001,
  exercise their option or conversion rights, or to the extent that holders of
  convertible bonds with a conversion obligation fulfill their conversion obligation.
  The new shares carry dividend rights as of the beginning of the fiscal year
  in which they are created through the exercise of conversion rights or options
  or through the fulfillment of conversion obligations.

Authorization
  to acquire own shares

By resolution
    of the Annual General Meeting on April 30, 2003, the Executive Committee was
    authorized to acquire, until October 29, 2004, no-par value shares of the
    Company totaling up to 10% of the share capital as of April 30, 2003. The
    purchase price of one no-par value shares (excluding transaction costs) may
    not be more than 10% above or below the average closing price of the Companys
    shares in the XETRA securities trading system (or a comparable successor system)
    on the last five trading days prior to the acquisition or undertaking to acquire
    the shares. If the shares are acquired via a public offering, the purchase
    price per share (excluding transaction costs) may not, as a matter of principle,
    be more than 15% above or below the average closing price of the Companys
    shares in the XETRA securities trading system (or a comparable successor system)
    on the fifth to the ninth trading days prior to the publication of the offering.
    The volume of the public offering can be limited. Where the shares tendered
    to the Company as the result of a public offering exceed the stipulated volume,
    the number of shares accepted must be proportional to the number of shares
    offered. Preferred acceptance of lesser numbers of shares (up to 100 shares
    per shareholder) can be stipulated. Public offerings must comply with the
    regulations of the Wertpapiererwerbs- und Übernahmegesetz (German Securities
    Acquisition and Takeover Act), insofar as and to the extent that these are
    applicable.


In addition,
    the Executive Committee was authorized to sell acquired own shares by means
    other than the stock market or an offering to all shareholders if the shares
    are sold at a cash price that is not significantly less than the market price
    of shares of the Company carrying the same rights at the time of the sale;
    this authorization is limited to a total of no more than 10% of the Companys
    share capital. All shares issued in accordance with Article 3 (6) of the Articles
    of Association for which pre-emptive rights have been disapplied in accordance
    with section 186 (3) sentence 4 of the AktG must be included. Also to be included
    are the shares to be issued as the result of the exercise of options or conversion
    rights arising from convertible bonds or bonds with warrants issued in accordance
    with the disapplication of shareholders pre-emptive rights under section
    186 (3) sentence 4 of the AktG. Furthermore, the Company was authorized to
    make available, on the expiry of the two-year lockup period, the own shares
    it acquired to members of the Executive Committee while disapplying pre-emptive
    rights as part of the Matching Shares Plan resolved by the Annual General
    Meeting on April 27, 2000 under agenda item 8. In this case, the shares must
    be offered and transferred by the Supervisory Board. However, no more than
    20,000 shares may be transferred for this purpose. The Executive Committee
    was authorized to offer the own shares for sale while disapplying pre-emptive
    rights to employees of the Company or a Group company. Moreover, the Executive
    Committee was authorized to retire the own shares without an additional resolution
    by the Annual General Meeting. Each of these authorizations can be exercised
    either in full or in part. The own shares may be acquired for one or several
    of the reasons listed.


The Supervisory
    Board can determine that measures taken by the Executive Committee in reliance
    on this resolution by the Annual General Meeting may only be taken with its
    approval. The Executive Committee may use the authorization to allocate acquired
    shares in the context of the Matching Shares Plan only if and to the extent
    that the Supervisory Board has made such a resolution and has given its approval.
    To date, the Executive Committee has not made use of this authorization.


Convertible
  bonds

The Company
    currently has convertible bonds outstanding in the aggregate principal amount
    of 133,650,000, which it issued on September 18, 2000 at par. The bonds
    bear interest at 3.5% annually. The bonds may be converted into shares at
    any time between October 18, 2000 and September 4, 2005. Each bond in the
    amount of 1,000 can be converted into 11.2233 shares (subject to adjustment
    of the conversion price). The bonds will mature on September 18, 2005 provided
    that they have not been repaid or converted at an earlier date. The conditions
    of the convertible bond provide for protection against dilution. The conditional
    capital described above in the amount


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of up to 3,840.000
  was created in order to collateralize the option rights. The Company plans to
  repurchase the convertible bonds from the bondholders in the context of a public
  tender offer.

Following the
  reclass of retained earnings in the amount of  58,000,000, SGL Carbon
  AGs net accumulated deficit is zero.


On March 10, 2003, the Company bought 300,000 own shares at  2.56 each. These shares resulted from the capital increase approved on January 31, 2003 by the Executive Committee with the consent of the Supervisory Board on February 11, 2003 and were for use by employees. In March 2003, a total of 20,508 new shares were also issued to employees of SGL Carbon AG and its affiliates as a non-cash contribution as part of the 2001 Matching Shares Plan. The employees participating in the 2001 Matching Shares Plan contributed their bonus claims to the value of  249,582.36 to the Company as a non-cash contribution.  52,500.48 of this amount consisted of issued capital, while the remaining  197,081.88 was credited to the share premium. Following the implementation of the Bonus and Matching Shares Plan, the Companys portfolio has comprised of 264 own shares at the balance sheet date.


On February 4, 2004, the Executive Board resolved to increase the share capital by  896,000 by issuing 350,000 new shares using part of the authorized capital (authorized capital I). The new shares are for use by employees and carry dividend rights for fiscal year 2003. In addition, the Company will issue 22,895 new shares as a non-cash contribution to employees of SGL Carbon AG and its affiliates in March 2004 as part of the 2002 Matching Shares Plan. The new shares carry dividend rights for fiscal year 2004.


|20. | Provisions for pensions and other employee benefits
|--- | ---------------------------------------------------
|    |                                                    

|                                                               | Dec.
      31, 2003 |  | Dec.
      31, 2002 | 
|-------------------------------------------------------------- | ------------------- |  | ------------------- | 
|
      m                                                      | 
      m          
|                                                               |                     |  |                     | 
|Pension
      provision for corporate commitments              | 161.0               |  | 158.8               | 
|Pension
      provision for severance and termination benefits | 15.3                |  | 16.4                | 
|Other                                                          | 12.2                |  | 15.4                | 
|                                                               |                     |  |                     | 
|                                                               | 188.5               |  | 190.6               | 
|                                                               |                     |  |                     | 

The employees of the SGL Carbon Group are covered by various worldwide pension plans which provide for the retirement benefit to the employee and their spouse. Some of the arrangements are tied to the remuneration level of the employees, others involve fixed amounts that depend on the classification of the employees (in terms of both salary class and grade level in the corporate hierarchy). Certain arrangements also provide for future increases based on indexed inflation.


The different pension plans covering the employees of SGL Carbon AG, SGL Carbon GmbH and SGL Acotec GmbH (formerly SGL Technik GmbH) were standardized as of April 1, 2000. Retirement benefits for employees that arose prior to April 1, 2000 are not affected, and the financial obligations arising under these pension plans remain within the SGL Carbon Group, where they are covered by provisions. The basis of the amended pension plan is the legally independent pension fund for employees of the Hoechst Group, which is funded by employee and employer contributions.


The contributions of the SGL Carbon Group to this pension fund are determined by a certain formula based upon the contributions paid into this pension fund by the employees. The payments by subsidiaries to such defined contribution pension plans are expensed as incurred in the period concerned.


In the case of defined contribution pension plans, the company pays contributions to pension insurance funds on the basis of statutory or contractual provisions. The company has no obligations other than to pay the contributions. Current contribution payments are recognized as operating expenses in the period concerned.


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The provisions for defined benefit plans are calculated using the projected unit credit method. Measurement is based on the legal, economic and tax circumstances in the country concerned. Most of the obligations from current pensions benefits and entitlements under pension plans in the European companies are covered by the provisions carried on the balance sheet. The North American subsidiaries have country-specific pension plans which are largely covered by pension funds. At certain subsidiaries in the SGL Carbon Group, the provisions also cover amounts for post-employment medical care as well as severance payments. The future benefit obligations are calculated using actuarial methods based on conservative estimates of the relevant parameters. Recognition of actuarial gains and losses uses the 10% corridor rule. Personnel turnover is determined on a company-by-company basis. The actuarial measurements are based on country-specific mortality tables. Pension provisions amounting to around  13 million have a term of less than one year.


The following parameters are applied to the most significant countries, Germany and the USA:


Calculation basis and parameters for pension provisions

|                                             | German
      Plans |   | US-Plans |  
|-------------------------------------------- | ------------------ | - | -------- | -
|                                             |                    |   |          |  
|                                             | 2003               |   | 2002     |  
|                                             |                    |   |          |  
|Discount
      Rate                          | 5.5                | % | 6.0      | %
|Salary growth                                | 2.75               | % | 3.0      | %
|Expected
      rate of return on plan assets |                   |   |         |  

Changes in the present value of funded obligations and in plan assets for pension provisions for direct commitments are presented below:


|Changes
      in present value of funded obligation |  | 2003  |   | 2002  |  
|--------------------------------------------------- |  | ----- | - | ----- | -
|                                                    |  | €m    |   | €m    |  
|                                                    |  |       |   |       |  
|Present
      value at Jan. 1                       |  | 244.8 |   | 234.8 |  
|Current
      service cost                          |  | 4.7   |   | 5.5   |  
|Interest
      cost                                 |  | 13.6  |   | 14.2  |  
|Acturarial
      gains/losses                       |  | 0.0   |   | 6.6   |  
|Benefits
      paid                                 |  | (12.4 | ) | (12.1 | )
|Changes
      in basis of conso lidation            |  | (3.0  | ) | 0.0   |  
|Exchange
      differences                          |  | (13.7 | ) | (4.2  | )
|                                                    |  |       |   |       |  
|Projected
      benefit obligations at Dec. 31      |  | 234.0 |   | 244.8 |  
|                                                    |  |       |   |       |  
|Changes
      in Plan A ssets                       |  |       |   |       |  
|Plan assets
      at Jan. 1                         |  | 45.3  |   | 51.6  |  
|Return on
      plan assets                         |  | 3.2   |   | (5.7  | )
|Contributions
      paid                            |  | 2.9   |   | 2.9   |  
|Benefits
      paid                                 |  | (3.4  | ) | (3.7  | )
|Exchange
      differences                          |  | (7.1  | ) | 0.2   |  
|                                                    |  |       |   |       |  
|Plan assets
      at Dec. 3 1                       |  | 40.9  |   | 45.3  |  
|                                                    |  |       |   |       |  
|Funding
      Status                                |  | 193.1 |   | 199.5 |  
|Unrecognized
      actuarial gains/losses           |  | (32.1 | ) | (40.7 | )
|                                                    |  |       |   |       |  
|Provision
      at Dec. 31                          |  | 161.0 |   | 158.8 |  
|                                                    |  |       |   |       |  

Pension expenses are composed as follows:


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|
      m                                              |  | 2003 |   | 2002 |   | 2001 |  
|------------------------------------------------------ |  | ---- | - | ---- | - | ---- | -
|                                                       |  |      |   |      |   |      |  
|Current
      service costs                            |  | 4.7  |   | 5.5  |   | 5.1  |  
|Interest
      cost                                    |  | 13.6 |   | 14.2 |   | 14.2 |  
|Expected
      return on plan assets                   |  | (3.2 | ) | (4.5 | ) | (5.8 | )
|Amortization
      of actuarial gains/losses           |  | 2.1  |   | 0.7  |   | 0.2  |  
|                                                       |  |      |   |      |   |      |  
|Pension
      expenses from defined benefit plans      |  | 17.2 |   | 15.9 |   | 13.7 |  
|                                                       |  |      |   |      |   |      |  
|Pension
      expenses from defined contribution plans |  | 3.3  |   | 2.8  |   | 3.6  |  
|                                                       |  |      |   |      |   |      |  
|Pension
      expenses                                 |  | 20.5 |   | 18.7 |   | 17.3 |  
|                                                       |  |      |   |      |   |      |  

|    |                 
|--- | ----------------
|21. | Other Provisions
|    |                 

|                                                  |  |       |   |       |   | Restructuring       |   |               |   |        |  
|------------------------------------------------- |  | ----- | - | ----- | - | ------------------- | - | ------------- | - | ------ | -
|                                                  |  |       |   | Staff |   | and
      antitrust |   |               |   |        |  
|m                                                |  | Taxes |   | costs |   | risks               |   | Miscellaneous |   | Total  |  
|                                                  |  |       |   |       |   |                     |   |               |   |        |  
|Balance at Jan. 1, 2003                           |  | 2.3   |   | 43.3  |   | 75.8                |   | 27.8          |   | 149.2  |  
|Changes in basis of
      consolidation           |  | (0.2  | ) | (0.7  | ) | 0.0                 |   | (0.7          | ) | (1.6   | )
|Utilized                                          |  | (1.6  | ) | (24.6 | ) | (1.3                | ) | (16.1         | ) | (43.6  | )
|Released                                          |  | (0.4  | ) | (1.6  | ) | 0.0                 |   | (5.4          | ) | (7.4   | )
|Additions                                         |  | 2.7   |   | 25.9  |   | 19.5                |   | 26.0          |   | 74.1   |  
|Other changes                                     |  | 0.0   |   | (2.1  | ) | (1.8                | ) | (0.2          | ) | (4.1   | )
|                                                  |  |       |   |       |   |                     |   |               |   |        |  
|Balance at Dec. 31,
      2003                    |  | 2.8   |   | 40.2  |   | 92.2                |   | 31.4          |   | 166.6  |  
|                                                  |  |       |   |       |   |                     |   |               |   |        |  
|                                                  |  |       |   |       |   |                     |   |               |   |        |  
|(thereof with a term
      of less than one year) |  | (1.5  | ) | (33.1 | ) | (92.2               | ) | (26.8         | ) | (153.6 | )
|                                                  |  |       |   |       |   |                     |   |               |   |        |  

The provisions for taxes contain amounts for tax risks of fiscal years not yet finally assessed by the tax authorities. Provisions for staff costs relate to provisions for annual bonuses, jubilee benefits, partial retirement and outstanding vacation.


Although we filed an appeal with the European Court in relation to the antitrust fine on our electrical contacts activities levied by the EU in December 2003, we have examined the provisions for antitrust risks in their entirety and increased them by  19.5 million (2002:  22.0 million). At the end of 2003, we deferred the estimated interest to be paid in connection with the European antitrust fine and reported this amount under other provisions.


Miscellaneous other provisions relate to various risks, including provisions for bonuses, rebates and burdensome contracts amounting to  6.1 million (2002:  7.2 million), provisions for interest relating to European antitrust proceedings amounting to  5.6 million (2002:  0.0 million), provisions for warranties amounting to  0.3 million (2002:  2.0 million), provisions for environmental costs amounting to  2.4 million (2002:  3.4 million), and provisions for other risks.


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|22. | Liabilities
|--- | -----------
|    |            

|m                                                                       |  | Dec.
      31, 2003 |  | Dec. 31,
      2002 | 
|------------------------------------------------------------------------ |  | ------------------- |  | ------------------- | 
|                                                                         |  |                     |  |                     | 
|Financial liabilities                                                    |  |                     |  |                     | 
|Bank loans and overdrafts                                                |  | 360.8               |  | 313.5               | 
|Convertible and exchangeable
      bonds                                 |  | 133.7               |  | 135.0               | 
|                                                                         |  |                     |  |                     | 
|                                                                         |  | 494.5               |  | 448.5               | 
|Trade payables                                                           |  | 98.9                |  | 110.5               | 
|thereof due within one
      year  98.9 million (2002:  110.5 million) |  |                     |  |                     | 
|thereof due to subsidiaries
       0.7 million (2002:  0.4 million)    |  |                     |  |                     | 
|Other liabilities                                                        |  |                     |  |                     | 
|Customer advances received                                               |  | 1.8                 |  | 0.8                 | 
|thereof due within one
      year  1.8 million (2002:  0.8 million)    |  |                     |  |                     | 
|Payable to subsidiaries                                                  |  | 5.5                 |  | 6.0                 | 
|thereof due w ithin
      one year  5.5 million (2002:  6.0 million)   |  |                     |  |                     | 
|Miscellaneous other
      liabilities                                    |  | 131.2               |  | 144.4               | 
|                                                                         |  |                     |  |                     | 
|                                                                         |  | 138.5               |  | 151.2               | 
|                                                                         |  |                     |  |                     | 
|Total                                                                    |  | 731.9               |  | 710.2               | 
|                                                                         |  |                     |  |                     | 

133,650 bonds with warrants of  1,000 each were issued as part of a convertible bond on September 18, 2000 at 100% of the principal amount. They bear interest at 3.5% p.a. on their principal amount. The bonds with warrants can be converted at any time into fully paid-up, no-par value bearer shares of SGL Carbon AG in the period from October 18, 2000 to September 4, 2005. Each bond with warrants in the principal amount of  1,000 can be converted into 11.2233 shares subject to adjustment of the conversion price. In accordance with the new loan agreement, a buy-back offer will be made to the holders of the convertible bonds in 2004.


The weighted average rate of interest on financial liabilities was 4.7% for 2003 (previous year: 4.4%).


Bank loans and overdrafts amounting to  153.7 million as of December 31, 2003 bore interest at fixed rates of up to 7.4%. The remaining bank loans relate mainly to short-term   and USD loans at rates of interest of between 3.9% and 4.9%.


In December 2002, SGL Carbon and various of its German and foreign Group subsidiaries entered into a syndicated loan agreement totaling  510 million with a term of two and a half years. This amount included the bank guarantee to the European Commission and a working capital facility. This was repaid in February 2004 via the new refinancing program.


The refinancing
    program of approximately 866 million that the Company approved in December
    2003 and implemented in January and February 2004 comprises in addition to
    the capital increase the issue of high-yield bonds of approx. 270 million
    and the conclusion of new syndicated loans amounting to around 240 million
    and $116 million. The syndicated loans have been granted subject to the condition
    that the Group complies with standard bank covenants, such as the amount of
    equity, fixed charge coverage and the ratio of net debt to EBITDA and EBITDA
    to interest expense. Non-compliance with the covenants or other obligations
    in the loan agreement may result in


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additional expenses
  and, if repeated, the lenders could demand repayment of the loan ahead of schedule.

Various assets,
  in particular property, plant and equipment, inventories and receivables were
  pledged as security for the loan.

Based on the
      credit lines in place at December 31, 2003 within the framework of the
      syndicated loans and the amounts used as of the balance sheet date, the
  SGL Carbon Group had credit lines of 41 million available.


In fiscal year 2003, the advance payments received totaling 7.0 million were offset against the corresponding inventories for each individual project (2002: 7.5 million). The other liabilities primarily relate to discounted liabilities for North American antitrust proceedings amounting to 61.0 million (2002: 80.9 million), wages and salaries amounting to 7.6 million (2002: 16.3 million), negative fair values of financial derivatives of 25.3 million (2002: 12.2 million), and taxes amounting to 9.5 million (2002: 6.4 million). Social security liabilities amounted to  8.2 million (2002: 6.7 million).


The maturity structure of the total amounts of financial and miscellaneous other liabilities due in each of the next five years and the remainder thereafter is presented below; these relate to the syndicated loan entered into at the end of 2002 / start of 2003:


|                                |      |      |       |      |                   |    |     |  |     |  | With more | 
|------------------------------- | ---- | ---- | ----- | ---- | ----------------- | -- | --- |  | --- |  | --------- | 
|                                |      |      |       |      | than five        
|                                |      |      |       |      | years
         to
|2004                            | 2005 | 2006 | 2007  | 2008 | maturity         
|m                              |      |      |       |      |                   | m
|                                |      |      |       |      |                   |    |     |  |     |  |           | 
|Financial
      liabilities     | 83.9 |      | 392.7 |      | 4.8               |    | 8.4 |  | 4.2 |  | 0.5       | 
|Miscellaneous other liabilities | 84.0 |      | 21.0  |      | 20.0              |    | 6.2 |  | 0.0 |  | 0.0       | 

Deferred grants from third parties as defined by IAS 20 amounted to 1.3 million as of December 31, 2003 (2002: 1.6 million). 0.2 million was recognized in income during the year under review. There are no deferred gains on sale and leaseback transactions.


23.   Deferred
tax liabilities

Deferred
        tax liabilities result from differing depreciation and amortization methods
        applied in the tax accounts and in the IFRS/IAS financial statements, from
        capitalized finance leases, and from measurement differences in the carrying
        amounts of inventories between the tax accounts and the IFRS/IAS consolidated
        financial statements. Most deferred tax liabilities have more than one
        year to maturity. Deferred taxes from items consisting of cash flow hedges
        in 2003 charged directly to equity amount to 1.3 million (see also note
        18).


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Consolidated cash flow disclosures

24.   Disclosures
      on the consolidated cash flow statement

The consolidated cash flow statements present changes in the cash and cash equivalents of the SGL Carbon Group through inflows and outflows of cash and cash equivalents over the course of a reporting period. Cash flows are classified by operating, investing and financing activities. The effects of first-time consolidation and deconsolidation were eliminated. The presentation is supplemented by a reconciliation to cash and cash equivalents as reported in the balance sheet. The amounts of foreign subsidiaries whose reporting currency is other than the Euro have generally been translated at average rates for the year in the cash flow statement, while cash and cash equivalents are translated at the closing rate, as in the balance sheet.


Cash provided by
  operating activities includes interest received in the amount of 3.4 million and interest paid in the amount of 26.9 million. Net taxes paid after refunds amounted to 3.8 million. Bank loans and overdrafts were increased by 47.6 million for financing purposes, while Group debt fell by 1.3
  million due to the repayment of commercial paper.


Cash used includes
  payments for the acquisition of companies. A total of 1.7 million was paid for
  the acquisition of noncurrent financial assets.


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Other disclosures

25.   Commitments and contingencies

There were no
    liabilities on bills as of December 31, 2003 or in the previous year. There
    were guarantee
  obligations of 35.5 million at December 31, 2003 (December 31, 2002: 45.0 million). Other financial obligations from orders relating to approved capital expenditures commitments amounted to 3.2 million and 21.1
  million at December 31, 2003 and 2002, respectively. Certain of these capital
projects involve expenses to be incurred after more than one year.


A number of collateral
  agreements were entered into with creditors in conjunction with the refinancing
  project at the start of 2003. These entailed the pledging of equity interests
  in the majority of Group companies. The rights of use for intangible assets have
  been assigned for all German companies, and liens entered for SGL CARBON AG and
  two US companies in the amount of 397.5 million. Inventories and movable plant and equipment amounting to 378.1 million were assigned as collateral. For the above-mentioned companies, trade receivables and receivables from unconsolidated subsidiaries totaling 170.3 million were assigned as collateral. In addition, receivables from subsidiaries included in the consolidated financial statements in the amount of 547.5 million and bank balances amounting to 40.7
  million were pledged as collateral by individual companies. Similar collateral
  agreements will be entered into under the new financing package to be implemented
in 2004.


There were also
    rental and lease obligations for land and buildings, IT equipment, motor vehicles
    and other items of property, plant and equipment amounting to 9.1 million and 12.3
    million at December 31, 2003 and 2002, respectively. At December 31, 2003, the
    minimal annual lease payments are as follows:


|                                  |      |   |      |  |      |  |      |  | 2008 and   | 
|--------------------------------- | ---- | - | ---- |  | ---- |  | ---- |  | ---------- | 
| m                               | 2004 |   | 2005 |  | 2006 |  | 2007 |  | thereafter | 
|                                  |      |   |      |  |      |  |      |  |            | 
|Operating
      leases            | 2.2  |   | 1.3  |  | 0.7  |  | 0.5  |  | 3.3        | 
|Finance leases                    | 0.3  |   | 0.3  |  | 0.2  |  | 0.2  |  | 0.2        | 
|- discounts
      included        | (0.1 | ) |      |  |      |  |      |  |            | 
|= Present value of finance leases | 1.1  |   |      |  |      |  |      |  |            | 

There were no payments received from subleases in the two fiscal years. The finance leases relate solely to leased items of property, plant and equipment that were entered into under standard leasing arrangements without special purchase options. There were provisions for environmental protection obligations at a number of the SGL Carbon Groups production sites, principally in North America, in the amount of 2.4 million and 3.4 million at December 31, 2003 and 2002, respectively.


A number of legal actions, court proceedings and law suits are pending or may be instituted or asserted in the future, including those arising from alleged defects in the products of the SGL Carbon Group, from product warranties and environmental protection matters.


Litigation is subject to many uncertainties, and the outcome of individual cases cannot be predicted with any certainty. There are reasonable indications to suggest that the SGL Carbon Group may be adversely affected by rulings in certain cases. Identifiable risks are adequately covered by the recognition of corresponding provisions.


Pending antitrust proceedings and claims


The antitrust proceedings in the US and in Canada have been concluded. Following negotiations with the US antitrust authorities, we obtained a payment extension in 2002 for our remaining obligations. According to the original repayment schedule, we would have had to pay a total of $65 million in 2002 and 2003. Under the revised plan, a total of $15 million was repaid in these two years. The postponement of payments totaling $50 million to the period 2004  2007 will further improve the Companys financial position.


In December 2002, the European Commission imposed a fine of 27.75 million on SGL Carbon AG for anti-competitive practices in the graphite specialties market. We have filed an appeal with the European Court of


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Justice, citing in particular double jeopardy and gross unreasonableness. Additional provisions of 22 million were recognized in 2002 to cover these antitrust risks.

In December 2003, the European Commission imposed a fine of 23.64 million on SGL Carbon AG for anti-competitive practices in the market for electrical and mechanical carbon and graphite products. We have filed an appeal against this decision as well with the European Court of Justice. The provisions for antitrust proceedings, including legal costs have been increased by 19.5 million in this context in 2003.


26.   Related party disclosures

In the course of its business activities, the SGL Carbon Group renders services to related companies and persons. In turn, these persons and companies deliver goods or render services to the SGL Carbon Group as part of their business. All these transactions are settled on an arms length basis. Receivables from unconsolidated subsidiaries and associates amount to 28.6 million, and the corresponding liabilities amount to 6.2 million. Details are presented in the notes to the relevant balance sheet and income statement items


In August 2001, Paul W. Pendorf was appointed Chief Executive Officer of HITCO CARBON Composites, Inc. Mr. Pendorf has a 6% minority interest in this company. The SGL Carbon Group granted Mr. Pendorf a loan, secured by the proceeds from the future sale of his shares in HITCO, to finance the purchase price. The related shareholders agreement of August 3, 2001, which was replaced and updated by a substantially similar agreement on September 5, 2003, also provides, among other things, for additional options that can be exercised by either side in certain specific cases or (with the exception of HITCO) after no more than three years at a price fixed according to a specific formula. Specifically, SGL CARBON LLC and HITCO hold a call option granting them the right to acquire Mr. Pendorfs
    shares in HITCO, and Mr. Pendorf holds a put option granting him the right
    to sell his HITCO shares to SGL CARBON LLC. Mr. Pendorf may only exercise
his option on or after September 5, 2006.


Mr. Pendorf
    is also a shareholder of AMT II Corp. (AMT II), a company that
    entered into a management services agreement with HITCO in 2001. This agreement
    was amended and replaced in the summer of 2003 by a new agreement that calls
    for a manager to be made available on a temporary basis. In addition, an
    option agreement from August 2001 was terminated, whereby an option of AMT
    II to acquire 43% of the shares of HITCO expired.


At December 31, 2003 and 2002, there were also call-in obligations of $3.8 million and $3.6 million, respectively, for shares in an unconsolidated subsidiary.


27.   Information
  on financial instruments

Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. According to IAS 32, these include primary financial instruments, such as trade receivables, trade payables, financial assets and financial liabilities. They also include derivatives used to hedge interest rate or foreign currency risks.


Primary financial instruments


Primary financial instruments are carried on the balance sheet. Financial instruments carried as assets are reported at cost, net of any valuation allowances required. Financial instruments carried as liabilities are reported at their notional amount or at the higher redemption amount.


The credit or default risk results from the risk that a counterparty is unable to meet its obligations. As we do not generally enter into set-off agreements with our customers, the amounts reported on the balance sheet represent the maximum default risk.


Foreign currency
        risks arise where receivables or liabilities are denominated in a currency
        other than the companys local currency. Hedging occurs firstly as a
        result of naturally closed positions, where a foreign currency receivable
        in the SGL
        Carbon Group is matched by one or more liabilities in the same currency with
        equivalent maturities and amounts. Derivatives are used only for hedging
        purposes for foreign currency risks not covered by natural hedges.


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Derivatives


The SGL Carbon Group may be exposed to risks from changes in interest rates and exchange rates during the course of its business activities. Derivatives are used purely for hedging purposes and to reduce such risks. No financial instruments are held for trading purposes. The use of such instruments is governed by internal instructions. Risk is estimated and monitored continuously.


SGL is exposed to foreign currency risks on account of purchase and sale transactions, intragroup loans and the liability to the US Department of Justice that are not denominated in its functional currency (euros). Although aggregate currency risk effects can be partially offset, SGL hedges against certain material foreign currency risks by way of currency forwards and currency options.


A credit risk may take the form of a decline in value of SGLs assets if a counterparty is unable to meet the contractual obligations agreed when a financial instrument was concluded. The sum of the amounts disclosed as assets constitutes SGLs maximum credit risk. To reduce the credit risk, financial instruments are entered into exclusively with internationally recognized financial institutions. In addition, all transactions are monitored by the Companys central finance department.


SGL hedges against credit risks in relation to customer receivables as far as possible (this is only partially the case in the US, for example). Various instruments such as cash in advance, payment bonds, confirmed documentary credits or loan insurance are used. In Q3 2003, receivables totaling 4.0 million mainly relating to two long-term customers in Canada and Switzerland were written off. Whereas no major bad debt losses had been incurred in the whole of fiscal 2002 and in the first half of 2003, the customers in these two isolated cases have gone into receivership or are the subjects of similar proceedings. SGL will leverage the knowledge it has gained from these bad debt losses to further optimize its risk management system.


Notional amounts


The notional amounts are the aggregate of all underlying purchase and sale amounts involving non-Group third parties. The amounts presented in the following table therefore do not represent the amounts exchanged by the parties and, as a result, are not an indication of the SGL Carbon Groups liabilities under these financial instruments.


The notional amounts and fair values of the financial instruments as of December 31, 2003 and 2002 were as follows:


|                                      | Notional
      amounts |                     | Fair
      values   |                    
|------------------------------------- | ---------------------- | ------------------- | ------------------- | -------------------
|                                      |                        |                     |                     |                    
|Bought                                |                        | Sold                |                     | Total              
|Dec.
      31, 2003                   | Dec.
      31, 2003    | Dec.
      31, 2003 | Dec.
      31, 2002 | Dec.
      31, 2003
|m                                    | m                     | m                  | m                  | m                 
|                                      |                        |                     |                     |                    
|Foreign currency
      contracts:     |                        |                     |                     |                    
|USD
      currency forwards           | 0.0                    |                     | 146.8               |                    
|GBP currency forwards                 | 0.3                    |                     | 46.3                |                    
|Other
      currency forwards         | 11.1                   |                     | 2.2                 |                    
|Currency options                      | 93.2                   |                     | 88.1                |                    
|Participating
      forward contracts | 0.0                    |                     | 0.0                 |                    
|                                      |                        |                     |                     |                    
|Interest rate
      contracts:        |                        |                     |                     |                    
|Interest
      rate swaps             | 0.0                    |                     | 100.0               |                    
|Interest rate options                 | 70.0                   |                     | 0.0                 |                    

Currency forwards and options are primarily used to hedge existing and future foreign currency receivables and liabilities. The objective of hedging transactions in the SGL Carbon Group is to reduce the risks from exchange rate fluctuations inherent in its receivables and liabilities denominated in foreign currency. The underlying transactions in the individual foreign currencies are almost fully hedged on the basis of the net position per currency.


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The maturities are based on the maturities of the underlying transactions and range from several days to several months.

Up to the start
  of December 2003, hedges were entered into to hedge against the US dollar earnings
  risk for fiscal year 2004. As a result, a total of $97 million is hedged at
  a rate of approximately $1.15/  for 2004.


Forecasted US
  dollar transactions in fiscal year 2004 are hedged by a cash flow hedge. The
  gains on the effective portion of these hedges as of December 31, 2003 are recognized
  directly in equity after deduction of deferred taxes and reported separately
  in other comprehensive income.


The fair value of derivatives is the price at which one party would assume the rights and/or obligations from another party. Fair values are measured as follows on the basis of the market information available at the balance sheet date using standard market valuation methods:


| |  | Currency
      hedges are measured on the basis of reference rates and reflect forward
      premiums and discounts. Currency options are measured using recognized option
      pricing models.  
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                   
| |  | Interest
      rate contracts are measured on the basis of discounted expected future cash
      flows, with market rates of interest applied for the remaining maturity
      of the instruments.
| |   |                                                                                                                                                                                                   
| |  | Interest
      rate options are measured using recognized option pricing models (incl.
      Black-Scholes).                                                                                      

The fair values
    are determined by independent financial service providers. In the case of
    derivatives, there is a credit risk in the amount of the positive fair values
    of the derivatives.


A zero cost
    option was entered into to hedge the USD liability from the antitrust fine.
    The premium to be paid for buying the option matches the premium resulting
    from the sale of the option. This USD option had knocked in at
    December 31, 2003, which means that SGL will have to acquire the USD at $0.90/ .


The SGL Carbon
    Group conducts interest rate option and swap transactions to optimize its
    financing costs. In fiscal years 2003 and 2002, the SGL Carbon Group used
    interest rate swaps to convert part of its financial liabilities from fixed-interest
    liabilities into floating rate liabilities.


Other hedging
    instruments are recognized in accordance with IAS 39.103. Hedges are measured
    at cost at inception. Changes in the fair values of derivatives from subsequent
    remeasurement are recognized immediately as income and the carrying amount
    of the hedged item is adjusted. Gains or losses from the remeasurement of
    interest rate hedges designated as fair value hedges of floating bank loans
    are also recognized as income.


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|28. | Segment
      reporting
|--- | -----------------------

The SGL Carbon
    Group operates in the following areas:


| |  | Carbon
      and Graphite [CG]                                                                                                            
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |   | Graphite
      electrodes and carbon products (electrodes, cathodes, furnace linings)                                                     
| |   |                                                                                                                                           
| |  | Graphite
      Specialties [GS]                                                                                                           
| |   | Products
      for industrial applications, mechanical carbons and electrical contacts,
      carbon fibers/composites                    
| |   |                                                                                                                                           
| |  | Corrosion
      Protection [CP]                                                                                                           
| |   | Process
      technology and surface protection                                                                                           
| |   |                                                                                                                                           
| |   | and                                                                                                                                       
| |   |                                                                                                                                           
| |  | SGL
      Technologies [SGL T]                                                                                                            
| |   | Graphite
      foils, carbon fibers, expanded graphite and fabrics, composites, carbon-ceramic
      brake discs and fuel cell components.
| |   |                                                                                                                                           

External sales
    revenue relates almost exclusively to revenue from the supply of products.
    Trading revenues or other revenues are insignificant. Intersegment revenue
    is generally based on market-driven transfer prices, less selling and administrative
    expenses. In exceptional cases, cost-based transfer prices may be used. The
    Other segment relates to companies that primarily render services to the other
    Business Areas, and includes SGL Carbon AG. Consolidation adjustments relate
    to the elimination of intersegment transactions. Non-cash expenses resulted
    primarily from the increase in antitrust provisions in the amount of  19.5
    million in the Other segment. Certain information on the businesses of the
    SGL Carbon Group is presented below (primary segment reporting format in accordance
    with IAS 14.50 ff).


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|                                        |       |  |       |  |       |   |       |   |       |   |               |   | SGL     | 
|--------------------------------------- | ----- |  | ----- |  | ----- | - | ----- | - | ----- | - | ------------- | - | ------- | 
|                                        |       |  |       |  |       |   |       |   |       |   | Consolidation |   | CARBON  | 
|m                                      | CG    |  | GS    |  | CP    |   | SGLT  |   | Other |   | adjustments   |   | Group   | 
|                                        |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|2003                                    |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|Net sales
      revenue                 | 558.0 |  | 174.3 |  | 186.2 |   | 124.9 |   | 2.8   |   | 0.0           |   | 1,046.2 | 
|Inter-segment
      revenue             | 363.0 |  | 46.4  |  | 13.0  |   | 3.9   |   | 47.7  |   | (474.0        | ) | 0.0     | 
|                                        |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|Total net
      sales revenue           | 921.0 |  | 220.7 |  | 199.2 |   | 128.8 |   | 50.5  |   | (474.0        | ) | 1,046.2 | 
|Profit /
      loss from operations *)  | 66.4  |  | 6.7   |  | (4.3  | ) | (12.0 | ) | (17.9 | ) | 0.0           |   | 38.9    | 
|Investment
      in property, plant and |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|equipment                               | 21.2  |  | 5.4   |  | 2.2   |   | 4.0   |   | 0.0   |   | 0.0           |   | 32.8    | 
|Depreciation
      and amortization     |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|expense                                 | 34.4  |  | 13.4  |  | 8.4   |   | 15.8  |   | 0.2   |   | 0.0           |   | 72.2    | 
|Capital
      employed                  | 419   |  | 167   |  | 106   |   | 180   |   | 16    |   | 0             |   | 888     | 
|Debt                                    | 123.0 |  | 48.9  |  | 30.9  |   | 52.7  |   | 239.0 |   | 0.0           |   | 494.5   | 
|                                        |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|2002                                    |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|Net sales
      revenue                 | 550.7 |  | 195.9 |  | 212.4 |   | 150.4 |   | 2.9   |   | 0.0           |   | 1,112.3 | 
|Inter-segment
      revenue             | 396.5 |  | 44.5  |  | 16.3  |   | 4.4   |   | 44.4  |   | (506.1        | ) | 0.0     | 
|                                        |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|Total net
      sales revenue           | 947.2 |  | 240.4 |  | 228.7 |   | 154.8 |   | 47.3  |   | (506.1        | ) | 1,112.3 | 
|Profit /
      loss from operations *)  | 51.9  |  | 1.9   |  | 4.8   |   | (11.7 | ) | (18.3 | ) | 0.0           |   | 28.6    | 
|Investment
      in property, plant and |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|equipment                               | 22.6  |  | 6.3   |  | 2.5   |   | 9.3   |   | 0.8   |   | 0.0           |   | 41.5    | 
|Depreciation
      and amortization     |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|expense                                 | 38.5  |  | 15.6  |  | 9.8   |   | 17.2  |   | 0.1   |   | 0.0           |   | 81.2    | 
|Capital
      employed                  | 462   |  | 199   |  | 135   |   | 202   |   | (31   | ) | 0             |   | 967     | 
|Debt                                    | 103.3 |  | 44.5  |  | 30.1  |   | 45.1  |   | 225.5 |   | 0.0           |   | 448.5   | 
|                                        |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|2001                                    |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|Net sales
      revenue                 | 619.8 |  | 230.7 |  | 235.8 |   | 135.1 |   | 11.9  |   | 0.0           |   | 1,233.3 | 
|Inter-segment
      revenue             | 364.6 |  | 50.9  |  | 19.1  |   | 3.6   |   | 30.3  |   | (468.5        | ) | 0.0     | 
|                                        |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|Total net
      sales revenue           | 984.4 |  | 281.6 |  | 254.9 |   | 138.7 |   | 42.2  |   | (468.5        | ) | 1,233.3 | 
|Profit /
      loss from operations *)  | 78.9  |  | 22.3  |  | 12.6  |   | (33.7 | ) | (21.4 | ) | 0.0           |   | 58.7    | 
|Investment
      in property, plant and |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|equipment                               | 45.1  |  | 12.6  |  | 5.0   |   | 26.3  |   | 1.6   |   | 0.0           |   | 90.6    | 
|Depreciation
      and amortization     |       |  |       |  |       |   |       |   |       |   |               |   |         | 
|expense
      *)                        | 38.4  |  | 19.2  |  | 10.3  |   | 17.7  |   | 0.3   |   | 0.0           |   | 85.9    | 
|Capital
      employed                  | 569   |  | 274   |  | 162   |   | 203   |   | 5     |   | 0             |   | 1,213   | 
|Debt                                    | 152.3 |  | 73.4  |  | 43.4  |   | 54.4  |   | 215.4 |   | 0.0           |   | 538.9   | 

|   |                                                                 
|-- | ----------------------------------------------------------------
|*) | before cost
      of antitrust risks and restructuring expenses.

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|                                         |         |  | Europe  |  |         |  | Central
      and |  |       |  |               |   | SGL     | 
|---------------------------------------- | ------- |  | ------- |  | ------- |  | ----------------- |  | ----- |  | ------------- | - | ------- | 
|                                         |         |  | excl.   |  | North   |  | South             |  |       |  | Consolidation |   | CARBON  | 
|m                                       | Germany |  | Germany |  | America |  | America           |  | Other |  | adjustments   |   | Group   | 
|                                         |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|2003                                     |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Net sales
      revenue (by destination) | 197.7   |  | 352.1   |  | 257.0   |  | 51.5              |  | 187.9 |  | 0.0           |   | 1,046.2 | 
|Net sales
      revenue (by company)     |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Third-party
      customers              | 401.5   |  | 402.7   |  | 234.4   |  | 1.6               |  | 6.0   |  | 0.0           |   | 1,046.2 | 
|Intercompany
      sales revenue         | 162.5   |  | 260.1   |  | 51.1    |  | 0.0               |  | 0.3   |  | (474.0        | ) | 0.0     | 
|                                         |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Total net
      sales revenue            | 564.0   |  | 662.8   |  | 285.5   |  | 1.6               |  | 6.3   |  | (474.0        | ) | 1,046.2 | 
|Export sales
      from Germany          | 384.4   |  | 0.0     |  | 0.0     |  | 0.0               |  | 0.0   |  | 0.0           |   | 384.4   | 
|Capital
      employed                   | 316     |  | 320     |  | 243     |  | 0                 |  | 9     |  | 0             |   | 888     | 
|Investments
      in property, plant and |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|equipment                                | 7.2     |  | 16.3    |  | 9.2     |  | 0.0               |  | 0.1   |  | 0.0           |   | 32.8    | 
|                                         |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|2002                                     |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Net sales
      revenue (by destination) | 216.6   |  | 373.8   |  | 281.6   |  | 63.4              |  | 176.9 |  | 0.0           |   | 1,112.3 | 
|Net sales
      revenue (by company)     |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Third-party
      customers              | 409.5   |  | 422.9   |  | 267.8   |  | 5.1               |  | 7.0   |  | 0.0           |   | 1,112.3 | 
|Intercompany
      sales revenue         | 179.4   |  | 269.5   |  | 56.8    |  | 0.0               |  | 0.4   |  | (506.1        | ) | 0.0     | 
|                                         |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Total net
      sales revenue            | 588.9   |  | 692.4   |  | 324.6   |  | 5.1               |  | 7.4   |  | (506.1        | ) | 1,112.3 | 
|Export sales
      from Germany          | 369.3   |  | 0.0     |  | 0.0     |  | 0.0               |  | 0.0   |  | 0.0           |   | 369.3   | 
|Capital
      employed                   | 304     |  | 338     |  | 312     |  | 4                 |  | 9     |  | 0             |   | 967     | 
|Investments
      in property, plant and |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|equipment                                | 17.1    |  | 12.1    |  | 11.8    |  | 0.1               |  | 0.4   |  | 0.0           |   | 41.5    | 
|                                         |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|2001                                     |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Net sales
      revenue (by destination) | 246.0   |  | 409.2   |  | 315.8   |  | 63.1              |  | 199.2 |  | 0.0           |   | 1,233.3 | 
|Net sales
      revenue (by company)     |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Third-party
      customers              | 457.8   |  | 439.7   |  | 319.1   |  | 8.0               |  | 8.7   |  | 0.0           |   | 1,233.3 | 
|Intercompany
      sales revenue         | 178.3   |  | 237.1   |  | 53.1    |  | 0.0               |  | 0.0   |  | (468.5        | ) | 0.0     | 
|                                         |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|Total net
      sales revenue            | 636.1   |  | 676.8   |  | 372.2   |  | 8.0               |  | 8.7   |  | (468.5        | ) | 1,233.3 | 
|Export sales
      from Germany          | 360.7   |  | 0.0     |  | 0.0     |  | 0.0               |  | 0.0   |  | 0.0           |   | 360.7   | 
|Capital
      employed                   | 404     |  | 386     |  | 410     |  | 4                 |  | 9     |  | 0             |   | 1,213   | 
|Investments
      in property, plant and |         |  |         |  |         |  |                   |  |       |  |               |   |         | 
|equipment                                | 40.0    |  | 23.3    |  | 26.6    |  | 0.0               |  | 0.7   |  | 0.0           |   | 90.6    | 

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|29. | List
      of shareholdings
|--- | ---------------------------

The list of
    shareholdings is filed with the Wiesbaden commercial register. It will also
    be available for inspection at the Annual General Meeting of SGL Carbon Aktiengesellschaft
    on April 30, 2004.


|30. | Remuneration
      of the Supervisory Board and Executive Committee of SGL CARBON AG
|--- | ------------------------------------------------------------------------------------

The remuneration
    for the members of the Executive Committee includes a fixed and a variable
    component. The remuneration of the Executive Committee and the number of shares
    held are as follows:


|                | **Base**   |  | ****      |  | **SGL**    |  | **Stock
      Options**   | 
|--------------- | ---------- |  | --------- |  | ---------- |  | ------------------------- | 
|                | **salary** |  | **Bonus** |  | **Shares** |  | **(2000
      bis 2003)** | 
|                | **T **    |  | **T **   |  | **no.**    |  | **no.**                   | 
|                |            |  |           |  |            |  |                           | 
|R. J. Koehler   | 424        |  | 280       |  | 10,608     |  | 100,000                   | 
|T. H. Breyer    | 294        |  | 200       |  | 13,330     |  | 60,000                    | 
|Dr. H. Kottmann | 284        |  | 170       |  | 5,734      |  | 45,000                    | 
|Dr. B. Toniolo  | 294        |  | 200       |  | 3,558      |  | 60,000                    | 
|Dr. K. Warning  | 294        |  | 200       |  | 11,340     |  | 60,000                    | 
|                |            |  |           |  |            |  |                           | 
|Total           | 1,590      |  | 1,050     |  | 44,570     |  | 325,000                   | 
|                |            |  |           |  |            |  |                           | 

As Mr. T.
    Breyer performs most of this activities in the US, he receives his compensation
    in US-Dollars. His basic contractual salary of  294 thousand and his
    bonus of  200 thousand are expensed in the consolidated financial statements
    at a total of  464 thousand on account of exchange rate effects. Dr.
    H. Kottmanns salary was adjusted to the same base salary as the other
    ordinary Executive Committee members as of April 1, 2003.


The remuneration
    paid to the Executive Committee members in fiscal year 2003, including payments
    in kind, totaled  2,667 thousand.


The members
    of the Executive Committee also receive a variable compensation component
    in the form of rights from management incentive plans. The stock options attributable
    to the members of the Executive Committee include options granted under the
    stock option plan between 2000 and 2003 that have not yet expired (see note
    31).


The total
    remuneration of former members of management and their surviving dependents
    amounts to  0.1 million. Provisions of  1.1 million have been
    recognized for pension obligations to former members of management and their
    surviving dependents. The active members of the Executive Committee hold shares
    in SGL Carbon AG as part of their private assets. At December 31, 2003, these
    totaled 38,690 shares and 17,640 ADRs, corresponding to a total of 44,570
    shares.


The total
    remuneration of the Supervisory Board amounted to  0.3 million. In 2003,
    the following amounts were payable:


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|                                              | Base         |  | Additional   |  |       | 
|--------------------------------------------- | ------------ |  | ------------ |  | ----- | 
|in T                                         | remuneration |  | remuneration |  | Total | 
|                                              |              |  |              |  |       | 
|Prof. Dr.
      rer. nat. Utz-Hellmuth Felcht |              |  |              |  |       | 
|Chairman                                      | 40           |  | 9            |  | 49    | 
|Franz Schaffer                                |              |  |              |  |       | 
|Deputy Chairman
      until April 30, 2003    | 30           |  | 4            |  | 34    | 
|Heinz Schroth                                 |              |  |              |  |       | 
|Deputy Chairman
      since April 30, 2003    | 20           |  | 5            |  | 25    | 
|Hans-Georg
      Bartel (died Nov. 20, 2002)  | 14           |  | 0            |  | 14    | 
|Peter Fischer                                 | 20           |  | 1            |  | 21    | 
|Dr.-Ing.
      Claus Hendricks                | 20           |  | 5            |  | 25    | 
|Hansgeorg
      B. Hofmann                    | 20           |  | 11           |  | 31    | 
|Jürgen
      Kerner                           | 6            |  | 1            |  | 7     | 
|Dr.-Ing.
      Hubert Lienhard                | 20           |  | 5            |  | 25    | 
|Jacques
      Loppion                         | 20           |  | 3            |  | 23    | 
|Lutz Mühring
      (until April 30, 2003)     | 20           |  | 2            |  | 22    | 
|Josef Scherer
      (since April 30, 2003)    | 0            |  | 2            |  | 2     | 
|Bert Schilling
      (since April 30, 2003)   | 0            |  | 2            |  | 2     | 
|Karl-Heinz
      Schneider                    | 9            |  | 0            |  | 9     | 
|Andrew H.
      Simon                         | 20           |  | 3            |  | 23    | 
|Hans-Werner
      Zorn (since Feb. 27, 2003)  | 0            |  | 5            |  | 5     | 
|                                              |              |  |              |  |       | 
|Total                                         | 259          |  | 58           |  | 317   | 
|                                              |              |  |              |  |       | 

Additional remuneration
    consists of meeting attendance and committee membership allowances. The base
    remuneration of Supervisory Board members appointed for the first time in
    2003 will be paid in 2004. Mr. Hansgeorg Hofman received an additional payment
    of 33 thousand in fiscal year 2003 under a temporary consultancy agreement
    concluded with the approval of the Supervisory Board.


|31. | Management
      incentive plans
|--- | --------------------------------

At present,
    SGL has a total of five different management and employee incentive plans.
    The Long-Term Incentive Plan, which was approved in 1996, originally consisted
    of the Stock Appreciation Rights Plan (the SAR Plan)
    and the Long- Term Cash Incentive Plan (the LTCI Plan).
    While the exercise period of the SAR Plan will not end before 2006, the LTCI
    Plan had a maturity of three years and ended on December 31, 1998. The current
    Long-Term Cash Incentive Plan is valid for the period 2002-2004 (the LTCI
    Plan 20022004). Since 1996, a Share Ownership Plan has been
    set up each calendar year for all non-exempt employees of SGL Group. This
    was suspended in the year under review due to the capital increase implemented
    at the beginning of 2004. Furthermore, the Companys Annual General Meeting
    on April 27, 2000 resolved to introduce a Share Plan (also called the Matching
    Shares Plan) and a Stock Option Plan. The Share Plan was introduced in March
    2001. The Stock Option Plan, implemented in July 2000, superseded the SAR
    Plan, whose vesting period ended in 2001, and has a maturity of five years.


Stock
  Appreciation Rights Plan (SAR)

Under the SAR
    Plan, the members of the Executive Committee and certain senior managers of
    the SGL Group have been granted stock appreciation rights (SARs).
    Each SAR represents (i) with respect to a participant who is a member of the
    Executive Committee, the right to receive an amount equal to the difference
    between the average share price as officially quoted on the Frankfurt Stock
    Exchange on March 16 of the year in which the option is exercised and the
    respective exercise price, which, prior to adjustment for dilution, ranges
    from 33.03 to 102.26 and (ii) with respect to a participant who
    is an employee of the SGL Group, the right to purchase one share at the respective
    exercise price.


One SAR is equivalent
    to one share. The total number of shares associated with the SAR Plan is 840,500,
    or approximately 3.79% of all shares outstanding. SARs representing a total
    of 781,200 shares have been allocated to




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the members of
  the Executive Committee and 60 senior managers as of January 1, 2004. Of these
  SARs, 637,350 had been exercised as of December 31, 2003.

Under the SAR Plan, an option representing a specific number of SARs (a SAR Option), as determined by the Executive Committee, or by the Supervisory Board if the beneficiary was a member of the Executive Committee, was allocated to each beneficiary at the beginning of the SAR performance cycle (January 1, 1996 December 31, 2000). The SARs allocated via this SAR Option vested within the vesting period (January 1, 1997 January 1, 2001) on January 1 for the preceding fiscal year in five equal annual tranches of 20% each. Each vested SAR can be exercised during the period from March 1 to March 15 of each year, but no later than March 15, 2006, or upon termination of service (as described below). Executive Committee members exercising SAR Options must utilize a portion of the net proceeds corresponding to 15% of the gross proceeds to purchase shares of the Company via the stock market. To this end, SGL will instruct a financial institution to acquire the shares for the account and in the name of the member of the Executive Committee. SGL or the relevant consolidated subsidiary will provide the financial means to effect the purchase directly to the financial institution and deduct the amounts from the monies due to the beneficiary exercising the SAR. The financial institution will retain these shares on behalf of the member of the Executive Committee for the next twelve months. The remaining net proceeds will be paid to the member of the Executive Committee.


All of the
    shares purchased by a participant who is an employee of the SGL Group upon
    exercise of an SAR must immediately be resold by this employee. An exception
    is made for the number of shares that must be purchased with 15% of the gross
    proceeds from the sale of all the shares. Such retained shares may not be
    sold and are blocked for a period of twelve months.


Long-Term
  Cash Incentive Plan (LTCI)

Under the LTCI
    Plan 2002  2004, the members of the Executive Committee and 36 senior
    managers are granted cash premiums by SGL provided that certain performance
    targets are met during a three-year period. The current plan period is 2002
    through 2004. The maximum total bonus amounts to 7.8 million. The performance
    target that the SGL Group must reach in order for participating senior managers
    and Executive Committee members to be entitled to the maximum bonus under
    the LTCI Plan was set at a 2.3 to 1 ratio of net debt to EBITDA.


The minimum requirement
  for the payment of any bonus is a ratio of 3.6 to 1. The committee that is responsible
  for the administration of the LTCI Plan 2002  2004 may change this performance
  target at the beginning of any year. Beneficiaries under the LTCI Plan 2002
   2004 must use a portion of the net proceeds of the plan corresponding
  to 15% of the gross proceeds to buy shares of SGL. To this end, SGL will instruct
  a financial institution to acquire the shares for the account and in the name
  of the relevant beneficiary. The Company will provide the financial means to
  effect the purchase of the shares directly to the financial institution from
  the beneficiarys bonus payments. These shares will subsequently be deposited
  with the financial institution on behalf of the beneficiary for a period of
  twelve months. The remaining proceeds will become due for payment on April 30,
  2005.


In relation to
  the means of calculation, the Supervisory Board meeting on December 5, 2003
  specified that any capital increase implemented is to be neutralized in the
  calculation of the performance target. The meeting of the Executive Committee
  on December 22, 2003 also approved the same measure for senior management. The
  provisions recognized for the Executive Committee and senior managers in 2002
  were reversed during the year under review.




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Share
  Plan

In March 2001,
    SGL implemented a share plan (the Share Plan) for
    the members of the Executive Committee and the top three levels of management
    below the Executive Committee. Under the plan, participants may invest up
    to 50% of their annual bonus in shares of the Company. If they hold these
    shares for at least two years, they will receive the same number of shares
    (the matching shares) a special bonus.


The Companys
  Share Plan was adopted by its shareholders at the Annual General Meeting held
  on April 27, 2000. The maximum number of shares that may be reserved for the
  issuance of shares under the plan shall not exceed 250,000 new shares provided
  by authorized capital. The Share Plan was implemented effective March 31, 2001.
  At the end of March 2003, for the first time, 20,508 new shares were issued
  from the capital increase from authorized capital to the senior managers and
  officers participating in the Share Plan during 2001; 6,490 already outstanding
  shares, acquired on the stock market, were granted to members of the Executive
  Committee.


In order to
    participate in the plan, the selected employees and members of the Executive
    Committee must acquire shares on the stock market prior to the start of the
    plan in an amount not exceeding 50% of their bonuses under SGLs annual
    bonus plan at the then current price of the shares in the XETRA securities
    trading system on the Frankfurt Stock Exchange. The shares acquired in the
    stock market are held for the beneficiaries in a blocked custody account for
    a two-year lock-up period. The beneficiaries may not dispose of the shares
    during the lock-up period if they wish to retain their entitlements to be
    granted matching shares at the end of the plan (as described below).


After the lock-up
    period, the Company grants each participant a number of new matching shares
    from authorized capital (or, for the members of the Executive Committee, from
    a share buy-back) in an amount equal to the number of shares held for the
    benefit of each beneficiary in the blocked custody account. The contribution
    in kind by the beneficiaries consists of a claim for the bonus payment payable
    at the end of the lock-up period. After the end of the lock-up period, the
    participants receive the released shares and the matching shares.


The 76 members
    of the Executive Committee and senior managers who participated in the 2003
    Share Plan as of March/April 2003 have purchased a total of 58,811 shares
    on the stock market in connection with the Share Plan.


Stock
  Option Plan

SGLs
    shareholders adopted the Stock Option Plan at their Annual General Meeting
    held on April 27, 2000. The maximum number of shares that may be reserved
    for issuance under the Plan may not exceed 1,600,000 shares from conditional
    capital. The options may be granted until the end of the year 2004. The Stock
    Option Plan was implemented effective July 2000.


The Supervisory
    Board administers the plan for the members of the Executive Committee. Under
    the Stock Option Plan, the Supervisory Board is authorized to grant options
    on shares to members of the Executive Committee. The Executive Committee administers
    the Stock Option Plan for approximately 150 senior managers and officers of
    SGL and its consolidated companies. For this purpose, under the Stock Option
    Plan, the Executive Committee is authorized to grant options to those senior
    managers of SGL as it determines, and to members of the management and senior
    managers of its consolidated companies. In both cases, the Supervisory Board
    or the Executive Committee will offer and transfer new shares upon exercise
    of the options from the conditional capital created for that purpose.


|The
      stock options will be allocated as follows:
|-----------------------------------------------------
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     

If any of the
  groups mentioned above is not granted its maximum number of options, the remaining
  options may be distributed to the beneficiaries of the next or previous group
  in addition to the maximum number of options that are distributed to that group,
  so that the total volume of options are exhausted. The Executive Committee or,
  to the

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extent that members
    of the Executive Committee are affected, the Supervisory Board, will decide
    on the allocation of any remaining options. However, no more than 30% of the
    available options may be distributed to the members of the Executive Committee.


The options have a term of ten years starting on the date of grant and will expire, without compensation, if they are not exercised before this period elapses. The options may not be exercised until a two-year lock-up period has elapsed. This period begins on the day following the date of grant, resulting in an exercise period of eight years. During the exercise period, the options can only be exercised on trading days during defined trading windows. For each tranche of options, there will be two trading windows of ten days each in which options may be exercised following our public reporting dates. These trading windows will be determined by the Supervisory Board if members of the Executive Committee are granted options, and by the Executive Committee for options granted to the remaining participants. Options may be exercised only if the SGL Group has met its performance targets at the time the options are exercised. The performance target is the increase in the total shareholder return of SGLs shares. The Stock Option Plan defines total shareholder return as the share price plus reinvested dividends plus the value of the options. Total shareholder return must increase by at least 15% against the exercise price for options to be exercisable.


The exercise
    price to be paid by beneficiaries under the Stock Option Plan will be calculated
    based upon the average closing price of the shares in the XETRA securities
    trading system of the Frankfurt Stock Exchange for the last 20 trading days
    before the relevant options are granted, excluding transaction costs.


The options are subject to certain terms and conditions of sale, namely, beneficiaries must retain a minimum number of shares of SGL equal to 15% of the gross proceeds from the sale of the subscribed shares (which equals the difference between the subscription price and the exercise price of all options exercised by the participants) for an additional twelve months. The conditions of the Stock Option Plan provide for protection against dilution.


The number of options granted, and their respective subscription prices before dilution-related adjustments, are as follows:


| |  | as of July
      3, 2000, 234,500 options were granted to the members of the Executive Committee
      and 151 senior managers at a subscription price of 72.45;       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                         
| |  | as of January
      16, 2001, 257,000 options were granted to the members of the Executive Committee
      and 155 senior managers at a subscription price of 57.82;   
| |   |                                                                                                                                                                         
| |  | as of January
      16, 2002, 261,000 options were granted to the members of the Executive Committee
      and 170 senior managers at a subscription price of 25.00;   
| |   |                                                                                                                                                                         
| |  | as of August
      12, 2002, 247,000 options were granted to the members of the Executive Committee
      and 154 senior managers at a subscription price of 17.65; and
| |   |                                                                                                                                                                         
| |  | as of January
      16, 2003, 258,500 options were granted to the members of the Executive Committee
      and 168 senior managers at a subscription price of 8.35.    

A total of 1,258,000
    options have been granted to participants under the Stock Option Plan. None
    of these options have been exercised to date. Changes in
      the equity compensation plans are as follows:
 Number
        of shares/options
      
      
      Stock
      
      Stock
        OptionSAR
      
      Purchase
        Plan
      
      PlanBalance
        at Jan. 1, 2003
      159,950
      
      74,439
      
      999,500Additions
      
      
      58,811
      
      258,500Expired/Returned
      (16,100
      )
      (2,392
      )Exercised
      
      
      (28,924
      )Balance
        at Dec. 31, 2003
      143,850
      
      101,934
      
      1,258,000Average
        exercise price ()
      45.79
      
      -
      
      35.69Expiration
        dates
      3/15/2006
      
      
      
      2010
        to 2013Fair
        value Dec. 31, 2003/  m
      0.0
      
      0.0
      
      0.0


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The SAR and Stock
  Option Plans are out of the money. This means that the fair value
  is zero, because the exercise price is higher than the current market price.
  The shares issued under the Share Plan were expensed in the consolidated financial
  statements. The various equity compensation programs resulted in a net expense
  of 0.8 million in fiscal year 2003.


|32. | Exemption
      in accordance with section 264 (3) of the HGB
|--- | -------------------------------------------------------------

The following
  companies, which are included in the consolidated financial statements of SGL
  Carbon AG, made use of the provision in section 264 (3) of the HGB: SGL Carbon
  GmbH, Meitingen; SGL Carbon Beteiligung GmbH, Wiesbaden; SGL Technologies GmbH,
  Meitingen; SGL Brakes GmbH, Meitingen; SGL Information-Services GmbH, Augsburg.


|33. | Declaration
      of conformity with the German Corporate Governance Code (section 285 (16)
      of the HGB)
|--- | -------------------------------------------------------------------------------------------------------------

SGL Carbon AGs
    Executive Committee and Supervisory Board approved the following declaration
    of conformity pursuant to section 161 AktG in their meeting on September 18,
    2003: SGL Carbon
    AGs Corporate Governance Principles comply with the recommendations
    of the Government Commission on the German Corporate Governance Code in the
    version dated May 21, 2003 with the following exceptions:


| |  | Section
      2.3.4.: Internet broadcasting is currently not justifiable for cost reasons.                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Section
      3.8. para. 2: The D&O insurance policy taken out by the Company for
      the Executive Committee and the Supervisory Board does not include a deductible.
      As a matter of principle, we believe that the agreement of a deductible
      is not a suitable method of improving responsible conduct by the Executive
      Committee and the Supervisory Board. In addition, such deductibles are not
      customary abroad or in many German companies.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Section
      4.2.3. para. 2 sentence 4: The agreement of a cap on stock options by the
      Supervisory Board is irrelevant at present since the value of the options
      issued is extremely low.                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Section
      4.2.3. para. 3 sentence 2: The value of stock options can only be disclosed
      once a generally valid, uniform measurement method exists.                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Section
      5.4.5. para. 2: SGL Carbon AGs Articles of Association provide for
      fixed compensation for Supervisory Board members and additional remuneration
      for members serving on committees. We believe that this provision is appropriate
      for our Company and that it should not be changed in the foreseeable future.                                                                                                                              

Above and beyond
    this, SGL Carbon AGs Corporate Governance Principles comply with almost
    all of the non-binding suggestions made in the Corporate Governance Code.


Wiesbaden,
    March 1, 2004
    SGL CARBON AG
    The Executive Committee


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|34. | Significant
      Differences between International Financial Reporting Standards (IFRS)
      and United States Generally Accepted Accounting Principles (U.S. GAAP)
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
    SGL Carbon Group prepared the consolidated financial statements in accordance
    with German GAAP (HGB) for the years until Dec. 31, 2000. In 2001 the SGL
    Carbon Group adopted IFRS and has prepared its consolidated financial statements
    in accordance with IFRS for all years presented. International Financial Reporting
    Standards (IFRS) differ in certain significant respects from U.S. GAAP. The
    significant differences that affect the consolidated net income (loss) and
    shareholders' equity of the SGL CARBON Group are set out below.


Reconciliation
    to U.S. GAAP


The
    following is a summary of the significant adjustments to net income and shareholders'
    equity which would be required if U.S. GAAP had been applied instead of IFRS.
    Earnings per share have been presented before Cumulative Change in Accounting
    Principles. The translation of the 2003 amounts from Euro into U.S. Dollars
    has been made using the exchange rate as of Decemb er 31, 2003 (1.261 USD
    = 1 ):


|All
      numbers in million except per share data                       | Note | 2003  |      | 2003  |   | 2002  |   | 2001   |  
|------------------------------------------------------------------------ | ---- | ----- | ---- | ----- | - | ----- | - | ------ | -
|                                                                         | US-$ | Euro  | Euro | Euro 
|                                                                         |      |       |      |       |   |       |   |        |  
|Net loss
      per IFRS as reported in the consolidated income statement |      | (63.4 | )    | (50.3 | ) | (23.6 | ) | (95.2  | )
|Adjustments
      to conform with U.S.-GAAP:                             |      |       |      |       |   |       |   |        |  
|Business
      acquisition and goodwill and its diposition               | (a)  | 4.3   |      | 3.4   |   | 5.1   |   | (2.7   | )
|Internal
      use software and interest capitalization                  | (b)  | (4.5  | )    | (3.6  | ) | (3.0  | ) | (0.9   | )
|Inventory                                                                | (c)  | (0.5  | )    | (0.4  | ) | 5.8   |   | 3.9    |  
|Pension
      provision                                                  | (d)  | 1.6   |      | 1.3   |   | (2.1  | ) | (1.1   | )
|Incentive
      plans                                                    | (e)  | (1.9  | )    | (1.5  | ) | (2.2  | ) | (4.9   | )
|Restructuring
      / Early retirement                                   | (f)  | 2.1   |      | 1.7   |   | (7.1  | ) | 7.9    |  
|First
      time adoption of IFRS                                        | (g)  | 0.0   |      | 0.0   |   | 0.0   |   | (49.3  | )
|Deferred
      Taxes - IFRS to U.S.-GAAP reconciliation                  | (h)  | 1.3   |      | 1.0   |   | 5.1   |   | (5.7   | )
|                                                                         |      |       |      |       |   |       |   |        |  
|Net loss
      in accordance with U.S.-GAAP                              |      | (61.0 | )    | (48.4 | ) | (22.0 | ) | (148.0 | )
|Cumulative
      Change in Accounting Principles                         |      | 0.0   |      | 0.0   |   | 9.4   |   | 0.0    |  
|Net loss
      after Cumulative Change in Accounting Principles          |      | (61.0 | )    | (48.4 | ) | (12.6 | ) | (148.0 | )
|                                                                         |      |       |      |       |   |       |   |        |  
|Basic earnings
      per share in accordance with U.S.-GAAP              |      | (2.75 | )    | (2.18 | ) | (1.01 | ) | (6.87  | )
|Diluted
      earnings per share in accordance with U.S.-GAAP            |      | (2.75 | )    | (2.18 | ) | (1.01 | ) | (6.87  | )
|                                                                         |      |       |      |       |   |       |   |        |  
|Equity per
      IFRS as reported in the consolidated balance sheet      |      | 147.0 |      | 116.6 |   | 196.3 |   | 255.2  |  
|Adjustments
      to conform with U.S.-GAAP:                             |      |       |      |       |   |       |   |        |  
|Business
      acquisition and goodwill and its diposition               | (a)  | 60.1  |      | 47.7  |   | 45.2  |   | 26.9   |  
|Internal
      use software and interest capitalization                  | (b)  | (3.5  | )    | (2.8  | ) | 1.1   |   | 4.3    |  
|Inventory                                                                | (c)  | (0.4  | )    | (0.3  | ) | (0.7  | ) | (7.1   | )
|Pension
      provision                                                  | (d)  | (32.9 | )    | (26.1 | ) | (26.3 | ) | (11.5  | )
|Incentive
      plans                                                    | (e)  | (6.4  | )    | (5.1  | ) | (6.7  | ) | (10.0  | )
|Restructuring
      / Early retirement                                   | (f)  | 3.2   |      | 2.5   |   | 0.8   |   | 7.9    |  
|First
      time adoption of IFRS                                        | (g)  | 0.0   |      | 0.0   |   | 0.0   |   | 0.0    |  
|Deferred
      Taxes - IFRS to U.S.-GAAP reconciliation                  | (h)  | 1.3   |      | 1.0   |   | 0.0   |   | (1.6   | )
|                                                                         |      |       |      |       |   |       |   |        |  
|Equity in
      accordance with U.S.-GAAP                                |      | 168.4 |      | 133.5 |   | 209.7 |   | 264.1  |  
|                                                                         |      |       |      |       |   |       |   |        |  

| | a) | Business Acquisitions and Goodwill and its disposition
| | -- | ------------------------------------------------------

Prior
    to the adoption of IAS 22 (revised 1993) on January 1, 1995, the Group wrote-off
    all goodwill directly to equity in accordance with IFRS existing at that time.
    The adoption of IAS 22 (revised 1993) did not require prior period


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restatement.
  Accordingly, a U.S. GAAP difference exists with respect to the recognition of
  goodwill and its related amortization before January 1, 1995 and for the amortization
  of goodwill after January 1, 2002. For the purpose of the reconciliation to
  U.S. GAAP, the pre-1995 goodwill was amortized through the statement of operations
  over the estimated useful lives between five and 20 years. Since January 1,
  2002 under U.S. GAAP goodwill is no longer being amortized over the estimated
  useful live but an annual impairment test per SFAS 142 (Goodwill and other
  Intangible Assets) must be performed. Under IFRS positive and negative
  goodwill in the amount of 3.9 million were still amortized in 2003 and
  accordingly a reconciliation difference exists.

The
    SGL CARBON Groups U.S. GAAP unamortized positive goodwill at December
    31, 2003 and 2002 was 125.8 and 136.1 million, respectively ( 78.1
    and 95.3 million, respectively, capitalized under IFRS). The Group did
    not have any unamortized negative goodwill as of December 31, 2003 and 2002,
    respectively ( 0.0 and 4.4 million, respectively, capitalized under
    IFRS). The remaining balance of negative Goodwill as of January 1, 2002 under
    U.S.-GAAP was written off and recognized as the effect of a change in accounting
    principle. The Company estimates that such net goodwill would, at December
    31, 2003 and 2002, be allocated among its industry segments as follows: Carbon
    and Graphite: 47.0 million and 47.5 million, respectively, Graphite
    Specialties: 22.3 million and 25.4 million, respectively, Corrosion
    Protection: 18.5 million and 22.4 million, respectively, and SGL
    Technologies: 38.0 million and 40.8 million, respectively.


As
    of December 31, 2003, the Company had under U.S. GAAP unamortized goodwill
    in the amount of 125.8 million, no unamortizable identifiable intangible
    assets and no unamortized negative goodwill, all of which were subject to
    the transition provisions of Statements SFAS 141 and 142. Amortization expense
    related to goodwill and negative goodwill was 0.0, 0.0 and 7.0
    million for the years ended December 31, 2003, 2002 and 2001 respectively.


In
    the first quarter 2003 SGL sold its consolidated subsidiary SGL Risomesa S.p.A.,
    Milan (Italy) and realized the remaining negative goodwill amounting to 1.7
    million under IFRS. Under U.S. GAAP the amount was included as a change in
    accounting principle in 2002.


As
    noted above for U.S. GAAP purposes, in accordance with SFAS 142, starting
    January 1, 2002 goodwill is no longer being amortized but tested annually
    for impairment at the level of reporting units. Goodwill is tested for impairment
    using a two step process that begins with a determination of the fair value
    of the reporting unit. The first step is a preliminary test to determine if
    any potential impairment exists and the second step measures the amount of
    impairment, if any. For estimating future cash flows, we use our internal
    budgets. Thereby, considerable management judgement is necessary to identify
    a triggering event and to estimate future sales and cost of sales which underlie
    the present value of future cash flows. Accordingly, actual outcomes could
    vary significantly from such estimates. Factors such as changes in the planned
    use of assets or closing of facilities or lower than anticipated sales for
    products could result in shortened useful lives or impairments.


If SFAS 142
    had been applied already in 2001, net profit and earnings per share would
    have been as follows:


|                                                      |    | 2003  |   | 2002  |   | 2001   |  
|----------------------------------------------------- | -- | ----- | - | ----- | - | ------ | -
|                                                      |    |      
|Net
      loss *)As
      reported                    | m | (48.4 | ) | (22.0 | ) | (148.0 | )
|Goodwill
      amortization                           | m | 0.0   |   | 0.0   |   | 7.1    |  
|Net
      (loss)/profit *)adjusted                    | m | (48.4 | ) | (22.0 | ) | (140.9 | )
|Earnings
      per share basic (EPS)As
      reported |   | (2.18 | ) | (1.01 | ) | (6.87  | )
|Goodwill
      amortization                           |   | 0.0   |   | 0.0   |   | 0.33   |  
|Earnings
      per share basic (EPS)adjusted          |   | (2.18 | ) | (1.01 | ) | (6.54  | )
|                                                      |    |       |   |       |   |        |  

| | *)        | before
      Cumulative Changes in Accounting Principles                  
| | --------- | --------------------------------------------------------------------------
| |           |                                                                           
| | b
      ) | Internal Use Software and Interest Capitalization on Tangible Fixed Assets

Statement
    of Position (SOP) 98-1 ( Accounting for the Costs fo Computer Software
    developed or obtained for internal use) provides U.S. GAAP guidance
    on accounting for the costs of computer software developed or obtained for
    internal use. Under U.S. GAAP overhead costs should not be capitalized as
    costs of internally developed


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software while
  under IFRS directly allocated overhead costs are allowed to be capitalized.
  During the year ended December 31, 2003 and 2002 the SGL Carbon Group capitalized
  software costs in the amount of 6.5 million and 2.7 million, respectively
  under U.S. GAAP.

U.S.
    GAAP requires the capitalization of interest costs as part of the historical
    cost of fixed assets requiring a period of time to construct. Per IFRS benchmark
    treatment, interest cost (Borrowing Costs) should be recognized
    as an expense in the period in which they occur. The company has elected to
    use the IFRS benchmark treatment, which results in a reconciliation difference
    to U.S. GAAP for the capitalization of borrowing costs. Durin g the years
    ended December 31, 2003, 2002 and 2001 the SGL Carbon Group did not capitalize
    interest under U.S. GAAP. The years 2003, 2002 and 2001 include amortization
    of previous capitalized interest 0.8 million, 0.8 million and 0.9 million
    respectively.


The
    estimated aggregate amortization expense for intangible assets under U.S.
    GAAP for each of the following fiscal years is approximately 7 million, excluding
    goodwill amortization or potential impairments.


| | c) | Inventory
      Valuation
| | -- | -------------------------

IAS
    2 "Inventories" identifies two alternatives as benchmark valuation methods,
    the FIFO method and the weighted-average cost method. The LIFO method is permitted
    as an allowed alternative. In valuing inventories for IFRS reporting, the
    company has elected to apply the benchmark method using the weighted average
    cost method. For certain inventories held in the United States of America,
    for U.S. GAAP and tax reporting purposes we have elected to value inventories
    on the LIFO method until December 31, 2001. As of December 31, 2003 and 2002
    the company has no inventory valued on a LIFO basis for U.S. GAAP. .


Certain
    inventories held by one of our U.S. subsidiaries did not meet the requirements
    as specified under EITF 99-5 (Accounting for Pre-Production Costs Related
    to Long-Term Supply Arrangements). Under EITF 99-5 costs to perform certain
    services related to the design and development of the products it will sell
    under long-term supply arrangements and costs to design and develop molds,
    dies, and other tools that will be used in producing those products should
    be expensed as incurred. Accordingly we recorded an U.S. GAAP adjustment of
    0.3 million in 2003.


| | d) | Pension
      Provisions
| | -- | ------------------------

Under IFRS,
    pension costs and similar obligations are accounted for in accordance with
    IAS 19, Employee Benefits. For purposes of U.S. GAAP,
    pension costs for defined benefit plans are accounted for in accordance with
    SFAS No. 87 Employers Accounting for Pensions
    and the disclosure is presented in accordance with SFAS No. 132 Employers
    Disclosures about Pensions and Other Post-retirement Benefits.
    SFAS 87 requires that companies located outside the United States adopt the
    provisions of SFAS 87 for fiscal years beginning after Dece mber 15, 1988.
    Due to the significant period of time which elapsed between the date when
    SFAS 87 would have been required to be adopted and the time when the SGL Carbon
    Group first prepared its U.S. GAAP financial information, adoption of the
    provisions of SFAS 87 as of January 1, 1989 was not feasible. Accordingly,
    SFAS 87 has been adopted from January 1, 1993. As of the date of adoption,
    the SGL Carbon Groups total transition obligation was 16.1 million.
    Such transition obligation is being amortized over a 15 year period. Accordingly,
    as of December 31, 1993, 5.4 million, representing 5/15 (the elapsed five
    year period between the required adoption date of January 1, 1989 and December
    31, 1993) of the total transition obligation, was recorded directly against
    U.S. GAAP shareholders equity.


IAS
    19 (Employee Benefits) as applied by the Group is substantially
    similar to the methodology required under SFAS No. 87. The transition provisions
    under IAS 19 permit the cumulative effect of an accounting change to be either
    recognized immediately or delayed and recognized on a straight-line basis
    over a period of up to five years from the date of adoption of IAS 19 (its
    transition period ends in 2004 for enterprises adopting IAS 19 as of its effective
    date). SFAS 87 permitted only delayed recognition of the transition obligation
    on a straight-line basis over the average remaining service period of plan
    partic ipants or over 15 years if the average remaining service period is
    less than 15 years (its transition period ends in 2001 for most enterprises).


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Upon
    adoption of IAS 19, the company elected to recognize the cumulative effect
    of an accounting change immediately. Consequently, the amortization of the
    transition obligation in accordance with SFAS 87, creates a reconciliation
    difference to U.S. GAAP in the pension liability valuation and corresponding
    annual pension expense through December 31, 2003. Under IFRS changes in the
    market value of plan assets are recognized in the calculation immediately,
    while they are deferred over 5 years under U.S. GAAP.


Under
    IFRS the interest component of the annual pension expense has been shown as
    an expense in the financial result, which is below operating profit. Under
    U.S. GAAP, the interest component of the pension expense is included in operating
    profit.


The
    Investment Policy and Strategy, as established by the Pension Plan Committee,
    is to provide for growth of capital with a moderate level of volatility by
    investing in assets per the target allocations stated below. The assets will
    be reallocated quarterly to meet those target allocations. The investment
    policy will be reviewed on a regular basis, under the advisement of a certified
    investment advisor, to determine if the policy should be changed.


The
    expected long-term rate of return for the Plans total assets is based
    on the expected return of each of the targeted allocation categories, weighted
    based on the median of the target allocation for each class. Equity securities
    are expected to return 10% to 11% over the long-term, while cash and fixed
    income are expected to return between 4% and 6%. Based on historical experience,
    the Committee expects that the Plans asset managers will provide a modest
    (0.5% to 1.5% over a complete market cycle of three- to five-year periods)
    premium to their respective market benchmark indices.


Under
    IFRS, the Company included 10.5 million, 10.4 million and 9.9 in 2003,
    2002 and 2001, respectively of interest costs associated with the Companys
    provision for pension and similar obligations in interest expense. U.S. GAAP
    does not allow the interest cost associated with the provision for pension
    and similar obligations to be recorded as a component of interest expense.


| | e) | Incentive
      Plans
| | -- | ---------------------

IFRS
    provides that in the absence of a specific International Financial Reporting
    Standard or an Interpretation of the Standing Interpretations Committee interpretation,
    management should use its judgement in developing an accounting policy that
    provides the most useful information to users of the companys financial
    statements. In making this judgement, management should consider, among others,
    pronouncements of other standard setting bodies and accepted industry practices.
    The SGL Carbon Group has elected, for purposes of IFRS reporting, to continue
    the accounting treatment for the incentive plans discussed below, consistent
    with prior practices under the German Commercial Code (German GAAP).


The
    SGL Carbon Group provides a bonus compensation for certain employees meeting
    specified performance targets. The bonus is satisfied in form of cash for
    management and in form of SGL Carbon stock for all other employees. The numbers
    of shares given to the employees is calculated using the market price of the
    shares. Under IFRS the expense in the income statement is recognized using
    the nominal value of the shares. The increase in capital is recognized upon
    issuance of its stock, which generally occurs in the period subsequent to
    the year to which the performance relates. Under U.S. GAAP the total cost
    of the bonus is included as an expense and the increase in capital is matched
    with the period in which the services are rendered.


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|                          | IFRS                                            |  | U.S.
      GAAP                         
|------------------------- | ----------------------------------------------- |  | ----------------------------------------
|                          |                                                 |  |                                         
|Leveraged
      Executive | In 1996, total cost of the plan                 |  | Annually,
      one fifth of the total  
|Asset
      Plan (LEAP)   | of 36.6
      million was accounted for        |  | expenditure
      is accounted for as   
|                          | as extraordinary
      expenses. The contri -   |  | personnel
      expenditure. In 1996,   
|                          | bution
      of Hoechst AG of 25.6 million     |  | the contribution
      of Hoechst AG    
|                          | was accounted
      for as extraordinary        |  | was treated
      as additional paid -in
|                          | income
      in 1996.                           |  | capital
      without effect on income. 
|                          |                                                 |  |                                         
|Stock
      Appreciation  | With respect
      to the SAR rights exercis-   |  | Compensation
      expense is recognized
|Rights
      Plan (SAR)   | able annually
      by the members of the       |  | for all
      participants vested during
|                          | Executive
      Committee, pro rata provisions  |  | the year
      in an amount equal to the
|                          | are made.
      The exercise of SAR rights by   |  | difference
      between the ordinary   
|                          | the remaining
      beneficiaries has no effect |  | share price
      and exercise price.   
|                          | on net
      income as they receive new shares  |  |                                         
|                          | to be
      issued out of authorized capital.   |  |                                         

The
    LEAP plan expired in June 2001. Under IFRS and U.S. GAAP the Long-Term Cash
    Incentive Plan (LTCI) is accounted for using the same accounting principles.


| | f) | Restructuring
      / Early retirement
| | -- | --------------------------------------

One
    of the significant differences between the restructuring guidance under IAS
    37, Commitments and Contingencies and the relevant
    U.S. GAAP standards, is found in the criteria for the initial recognition
    of a restructuring provis ion. The applicable U.S. GAAP standard is SFAS No.
    146 Accounting for Costs Associated with Exit or Disposal Activities
    for the year ended 2003, which supersedes Emerging Issues Task Force (EITF)
    Issue 94-3 Liability Recognition for Certain Employee Termination
    Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
    in a Restructuring) used for all years presented prior to 2003.
    For employee termination benefits, SFAS 146 and EITF 94-3 require that prior
    to the date of the finan cial statements, the benefit arrangement be communicated
    to employees, including sufficient detail to enable employees to determine
    the type and amount of benefits they will receive when they are terminated.
    IAS 37 does not require that the communication to employees be so detailed
    but rather that the communication simply include the main features of the
    plan. As a result, there may be situations in which an enterprise following
    IAS 37 could recognize a restructuring provision before it would be permitted
    to do so if it were following SFAS 146 / EITF 94-3.


Early
    retirement contracts in Germany, in which only incremental costs under IFRS
    are recognized once a binding contractual agreement has been entered into.
    The early retirement contracts in the SGL Group are generally set up according
    to the block model. During the employment phase the employee works full time
    although in this period he or she is only paid according to the part -time
    agreement. By this means, during the employment phase, the employer builds
    up arrears amounting to the as yet unpaid output that must be accounted for
    by accruing a provision. Under U.S. GAAP the complete compensation that the
    employee receives during the released phase are accrued over the employees
    remaining service period. The addition to provisions begins with the commencement
    of the parttime retiree relationship. Until the employment phase ends or the
    employee enters the released phase, the total compensation and the total accrued
    amount that the employee will receive during the released phase must be set
    aside.


| | g) | First
      Time Adoption of IFRS/IAS
| | -- | -------------------------------------

IAS
    12 Income Taxes requires recognition of a deferred tax asset if
    a future realization of a tax benefit is probable. Although the term probable
    is not defined for purposes of applying IAS 12, the SGL Carbon Group has interpreted
    the term to indicate a higher level of likelihood than more likely than
    not (which is the criterion for


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recognition
  of a deferred tax asset under U.S. GAAP) a level of likelihood is defined under
  U.S. GAAP as more than 50%. Thus, the recognition of a valuation allowance under
  IFRS has preceeded the recognition under U.S. GAAP.

Deferred
    tax assets relating to tax loss carryforwards have been recognized in the
    IFRS consolidated financial statements on the basis of a five-year projected
    earnings before taxes of the individual consolidated companies. The projections
    reflect uncertainties about certain assumptions and other general conditions
    and, in certain cases, deferred tax assets for tax loss carryforwards have
    not been recognized.


At
    initial preparation of IFRS annual financial statements, the recognition of
    deferred tax assets relating to tax loss carryforwards in the U.S. was adjusted
    retrospectively for the reporting periods. These adjustments also resulted
    in changes when compared to the IFRS amounts previously reported in the published
    quarterly reports. Deferred tax assets relating to tax loss carryforwards
    in the U.S. were written down in full in the 2001 consolidated financial statements
    as a consequence of the recession in the USA and the economic situation in
    the US steel industry. The remaining portion in 2001 of the reconciling item,
    First time adoption of IFRS/IAS in the amount of 11.7 million
    represents items which are not relat ed to income taxes. Due to the turnaround
    in our business in the United States, we recognized a portion of the loss
    carryforwards and capitalized a deferred tax asset amounting to 10.0 million
    at the end of 2003 on the basis of a cautious estimate.


| | h) | Deferred
      Taxes  IFRS to U.S. GAAP Reconciliation
| | -- | -------------------------------------------------------

The
    items discussed above create reconciliation differences between the book (according
    to U.S. GAAP) and tax basis of the assets and liabilities, requiring the recognition
    of associated deferred tax assets and liabilities. With some exceptions deferred
    tax assets and liabilities are recognized for all timing differences between
    the book and tax basis of the assets and liabilities using future statutory
    tax rates. In addition, a valuation allowance is established when it is more
    likely than not that deferred tax assets will not be realized.


|35. | Additional
      Disclosure Information Required by U.S. GAAP
|--- | -------------------------------------------------------------
|    |                                                              
|    | a.                                                           

For
    purposes of disclosure in accordance with U.S. GAAP, the following information
    for the SGL Carbon Groups significant other postretirement benefit plans
    is provided in accordance with the requirements of SFAS No. 106 Employers
    Accounting for Postretirement Benefits Other Than Pensions.


Certain
    of the SGL Carbon Groups U.S. operations provide health care and other
    benefits to most of their retired employees and their eligible dependents.
    Minimum service under the plan has been defined as ten years.


Net
    annual postretirement benefit expense for the postretirement be nefit plan
    included the following components:


|                                                  | 2003 |    | 2002 |  | 2001 | 
|------------------------------------------------- | ---- | -- | ---- |  | ---- | 
|m                                                | m   | m
|Service
      cost-benefits attributed to service |      |    |      |  |      | 
|during
      the period                           | 0.2  |    | 0.2  |  | 0.2  | 
|Interest
      cost on accumulated postretirement |      |    |      |  |      | 
|benefit
      obligation                          | 1.5  |    | 2.0  |  | 2.3  | 
|Amortization
      and deferral                   | 0.5  |    | 0.0  |  | 0.4  | 
|                                                  |      |    |      |  |      | 
|Net periodic
      postretirement benefit cost    | 2.2  |    | 2.2  |  | 2.9  | 
|                                                  |      |    |      |  |      | 

Following
    is a summary of the changes in the accumulated benefit obligation for postretirement
    benefits:


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|                                                          | 2003  |   | 2002  |  
|--------------------------------------------------------- | ----- | - | ----- | -
|m                                                        | m   
|Benefit
      obligation at the beginning of the year     | 27.0  |   | 30.5  |  
|Foreign
      currency translation                        | (4.7  | ) | (4.7  | )
|Service
      cost                                        | 0.2   |   | 0.2   |  
|Interest
      cost                                       | 1.4   |   | 2.0   |  
|Curtailment/settlement
      and Change in Plan provision | 0.0   |   | (3.0  | )
|Plan participant
      contributions                      | 0.4   |   | 0.5   |  
|Actuarial
      loss                                      | 2.6   |   | 5.5   |  
|Benefits
      paid                                       | (3.8  | ) | (4.0  | )
|                                                          |       |   |       |  
|Benefit
      obligation at the end of the year           | 23.1  |   | 27.0  |  
|                                                          |       |   |       |  
|Unrecognized
      net loss                               | (11.5 | ) | (11.4 | )
|Unrecognized
      prior service cost                     | 0.8   |   | 1.0   |  
|                                                          |       |   |       |  
|Net amount
      recognized                               | 12.4  |   | 16.6  |  
|                                                          |       |   |       |  

The Medicare
    Prescription Drug, Improvement and Modernization Act of 2003 was signed into
    law on December 8, 2003. In accordance with FASB Staff Position FAS 106-1,
    the Company has made a one-time election to defer recognition of the effects
    of the law in the accounting for its plan under FAS 106 and in providing disclosures
    related to the plan until authoritative guidance on the accounting for the
    federal prescription drug subsidy is issued. Any measure of the Accumulated
    Postretirement Benefit Obligation or Net Periodic Postretirement Benefit Cost
    in these financial statements does not reflect the effe cts of the Act on
    the plan. Authoritative guidance is pending and, when issued, could require
    the Company to change previously reported information.


The
    health care cost trends used in determining the accumulated postretirement
    benefit obligation for 2003 and 2002 were 0.0%. The health care cost trend
    rate is expected to remain at 0.0%. This assumption has an effect on the amounts
    reported. For example, increasing the assumed trend by 1% would increase the
    accumulated postretirement benefit obligation and the service and interest
    cost components of net periodic postretirement benefit cost for the years
    ended December 31, 2003 and 2002 by approximately 0.0 million and 0.0 million
    and 0.0 million and 0.2 million, respectively. Decreasing the assumed trend
    by 1% would decrease the accumulated postretirement benefit obligation and
    the service and interest cost components of net periodic postretirement benefit
    cost for the year ended December 31, 2003 by approximately 0.0 and 0.0 million,
    respectively. In determining the accumulated postretirement benefit obligation,
    the weighted average discount rate used was 6.0% and 6.75% for the years ended
    December 31, 2003 and 2002 , respectively.


| | b. | Income
      Taxes
| | -- | ------------------

In
    2000, the German government enacted new tax legislation which, among other
    changes, reduced the Group's statutory corporate tax rate for German companies
    from 40% on retained earnings and 30% on distributed earnings to a uniform
    25%, effective for the Group's year beginning January 1, 2001. Since the new
    tax legislation became effective in January 2001, the net profit of German
    companies has been subject to a s tandard 25% rate of corporation tax. In
    September 2002, the German corporation tax rate for fiscal 2003 was increased
    to 26.5%. The impact of this tax increase, which was limited to one year,
    was not material and has therefore not been included in the calculation of
    deferred taxes. A solidarity surcharge of 5.5% is added to the corporation
    tax rate resulting in an aggregate corporation tax rate for 2001 and 2002
    of 26.4%. Together with the trade tax burden of 12%, the German income tax
    rate amounts to a total of 38.4%.


Since
    January 1, 2004, German tax law imposes a so-called minimum taxation (Mindestbesteuerung)
    in case of existing losses carried forward, a tax of 5% of the domestic dividend
    income and gains on disposition of corporations for purposes of corporate
    and trade tax as well as a tightening of debt financing in cases where guarantees
    are provided by major shareholders. These changes with respect to tax loss
    carry-forwards, or a denial of the deductibility of certain expenses, could
    lead to material tax payments for SGL Group companies in Germany from 2004
    onwards and significantly impair our deferred tax assets. In addition, deferred
    tax assets related to German tax loss carryforwards


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could be impaired
  if the german tax group companies generating these loss carryforwards fail to
  generate sufficient taxable profits in the future.

Under
    U.S. GAAP, the effective income tax rate would approximate 23.8%, 17.3% and
    96.6 % in 2003, 2002 and 2001.


At
    December 31, 2003 and 2002 , the SGL Group had tax loss carryforwards amounting
    to approximately 336.4 million and 315.4 million respectively. Some of the
    tax credit carryforwards have an unlimited carryforward period under local
    tax laws. Under U.S. GAAP, a deferred tax valuation allowance relating to
    deferred tax assets recorded for tax loss carryforward was established. The
    amounts of the tax valuation allowance for the years ended December 2003 and
    2002 were 58.5 million and 79.3 million, respectively. The valuation allowances
    at December 31, 2003 and 2002 are derived primarily from tax loss carryforwards
    in the United States and the United Kingdom (Scotland), the realization of
    which is unlikely, based upon projected tax earnings during the next five
    years. Tax benefits relating to the reductio n of the valuation allowance
    for deferred tax assets will be recognized in the consolidated financial statements
    of the Group in the period in which they occur.


The
    reduction in the valuation allowance between 2002 and 2003 relates to the
    recognition of t he companys ability to utilize a portion of the tax
    loss carryforward in the future (10.0 million) and the differences in the
    year end foreign currency exchange rates.


The
    valuation allowances at December 31, 2003 and 2002 are derived principally
    from tax loss carryforwards in the United States and the United Kingdom, the
    realization of which is unlikely, based on projected tax earnings in the next
    five year period. Tax benefits relating to the valuation allowance for deferred
    tax assets at December 31, 2003 that are subsequently recognized will be reflected
    in the consolidated statement of operations of the period in which the event
    occurs.


Under
    U.S. GAAP, the SGL Carbon Group would have recorded net deferred tax assets
    at December 31, 2003 and 2002 of 85.2 and 54.7 million consisting of deferred
    tax assets relating to tax loss carryforwards at December 31, 2003 and 2002
    of 79.3 million and 39.7, respectively, and other deferred tax assets of
    49.9 and 53.7 million, respectively, and deferred tax liabilities of 44.0
    and 38.7 million, respectively.


In
    assessing the realizability of deferred tax assets, management considers whether
    it is more likely than not that some portion of the deferred tax assets will
    not be realized. The evidence considered in determining the valuation allowance
    includes the scheduled reversal of deferred tax liabilities, projected future
    taxable income and tax planning strategies. The ultimate realization of deferred
    tax assets is dependent upon the generation of future taxable income during
    the periods in which those temporary differences become deductible.


Deferred
    taxes have not been provided on undistributed earnings of foreign subsidiaries
    as these amounts are deemed to be permanently reinvested.


| | c. | SFAS
      No. 130 Reporting Comprehensive Income
| | -- | --------------------------------------------------

SFAS
    No. 130 requires disclosures regarding comprehensive income. These include
    all changes in equity not transacted with owners of the business. Comprehensive
    income is comprised as follows:


|Consolidated
      net loss US GAAP                    | 2003m                                            |       | 2002m |      
|------------------------------------------------------ | ------------------------------------------------- | ----- | ------ | -----
|after
      cumulative change in accounting principles | (48.4                                             | )     | (12.6  | )    
|                                                       |                                                   |       |        |      
|Othercomprehensive income, net of tax                  |                                                   |       |        |      
|                                                       | Change in
      cumulative translation adjustment | (30.4 | )      | (23.7
|                                                       | Cash -Flow
      Hedges                           | 2.7   |        |      
|                                                       | Minimum
      pension liability adjustment        | (0.9  | )      | (18.1
|Other
      comprehensive income                       | (28.6                                             | )     | (41.8  | )    

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|Comprehensive
      income/loss | (77.0 | ) | (54.4 | )
|------------------------------- | ----- | - | ----- | -

The
    other comprehensive income relates to the cumulative translation adjustment,
    a positive impact from cash -flow hedges and an additional minimum pension
    liability.


|d. | Stock
      Compensation Plans
|-- | ------------------------------

The
    costs of the stock compensation plan (for purposes of the calculation of the
    reconciliation from IFRS to US GAAP) have been calculated pursuant to the
    provisions of APB Opinion No. 25. SFAS 123 Accounting for Stock Based
    Compensation (SFAS 123) amended by SFAS 148 requires additional disclosure
    of the pro -forma income statement impact of the effect of the accounting
    treatment.


At
    December 31, 2003, there were a total of 1,258,000 shares (at the end of 2002:
    999,500) available for grant under the stock option plan. The per share weighted-average
    fair value of stock options granted during 2003 was 4.52 and during 2002
    were 10.3 and 14.5 at the date of grant using the Black Scholes
    option -pricing model (excluding a dividend yield assumption) with the following
    assumptions: 2003 and 2002 - volatility 40%, risk-free interest rate of 5.0%,
    and an expected life of 6 years.


Had
    the Company determined compensation cost based on the fair value at the grant
    date for its stock options under SFAS No. 123 amended by SFAS 148, the Companys
    net loss would have been increased to the pro forma amounts indicated below:


|                                     |                        |    |  | 2003  |   | 2002  |  
|------------------------------------ | ---------------------- | -- |  | ----- | - | ----- | -
|                                     |                        |    |  |       |   |       |  
|Net
      loss *)                    | As
      reported      | m |  | (48.4 | ) | (22.0 | )
|Add:                                 | APB 25 result          | m |  | (0.0  | ) | (0.2  | )
|Deduct:                              | SFAS 123
      expense | m |  | (3.6  | ) | (3.7  | )
|Net
      loss *)                    | Pro forma              | m |  | (52.0 | ) | (25.9 | )
|Earnings
      per share basic (EPS) | As reported            |   |  | (2.18 | ) | (1.01 | )
|Earnings
      per share basic (EPS) | Pro forma              |   |  | (2.35 | ) | (1.18 | )

|  
|--
|*)
|  
|e.

Accounts
    receivable trade due after one year at December 31, 2003 and 2002 amounting
    to 2.2 million and  0.3 million, respectively and other assets due
    after one ye ar at December 31, 2003 amounting to 0.2 million would be
    classified as non-current assets under U.S. GAAP. There were no other receivables
    or other assets due after one year at December 31, 2003 and 2002 that would
    be classified as non-current assets under U.S. GAAP.


|f. | New
      Accounting Pronouncements
|-- | -----------------------------------

On
    December 31, 2002 the Financial Accounting Standards Board issued SFAS 148
    Accounting for Stock-Based Compensation  Transition and Disclosure
    , which amends the disclosure requirements relating to stock-based employee
    compensation previously contained in SFAS No. 123. The amendments in SFAS
    148 relevant to the SGL Group are effective for all fiscal years ending after
    December 15, 2002. The disclosure requirements have been included in the additional
    i nformation provided on U.S. GAAP, see Note 35d to our consolidated financial
    statements.


In
    November 2002, FASB Interpretation No. 45 (FIN 45), Guarantors Accounting
    and Disclosure Requirements for Guarantees, Including Indirect Guarantees
    of Indebted ness of Others  was issued. FIN 45 elaborates on the disclosures
    to be made by a guarantor in its interim and annual financial statements about
    its


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obligations
  under certain guarantees that it has issued. It also clarifies that a guarantor
  is required to recognize, at the inception of a guarantee, a liability for the
  fair value of the obligation undertaken in issuing the guarantee. The initial
  recognition and initial measurement provisions of this Interpretation are applicable
  on a prospective basis to gua rantees issued or modified after December 31,
  2002. The required disclosures and a roll-forward of product warranty liabilities
  are effective for financial statements of interim or annual periods ending after
  December 15, 2002. The adoption of FIN 45 did not have a material impact on
  the group`s financial statements.

In
    January 2003, the FASB issued Interpretation No. 46 ( FIN 46 ), Consolidation
    of Variable Interest Entities, an interpretation of ARB 51. The primary objectives
    of FIN 46 are to provide guidance on the identification of entities for which
    control is achieved through means other than through voting rights ( variable
    interest entities  or VIEs ) and how to determine when and which business
    enterprise should consolidate the VIE (the primary beneficiary ). This new
    model for consolidation applies to an entity in which either (1) the equity
    investors (if any) do not have a controlling financial interest or (2) the
    equity investment at risk is insufficient to finance that entitys activities
    without receiving additional subordinated financial support from other parties.
    In addition, FIN 46 requires that both the primary beneficiary and all other
    enterprises with a significant variable interest in a VIE make additional
    disclosures. The adoption of FIN 46 had no impact on the groups financial
    statements.


On
    April 30, 2003, the Financial Accounting Standards Board issued SFAS 149 Amendment
    of Statement 133 on Derivative Instruments and Hedging Activities. This
    standard amends and clarifies financial accounting and reporting for derivative
    instruments, including certain derivative instruments and derivative instruments
    embedded in other contracts and for hedging activities. SFAS 149 is effective
    for contracts entered into or modified after June 30, 2003. The adoption of
    this standard did not have a material impact on the groups financial
    statements.


On
    May 15, 2003, the Financial Accounting Standards Board issued SFAS 150 Accounting
    for Certain Financial Instruments with Characteristics of both Liabilities
    and Equity. Under SFAS 150, certain financial instruments, previously
    classified as equity are now required to be classified as liability by the
    issuer. SFAS 150 primarily affects accounting for financial instruments that
    embody an obligation to repurchase equity instruments that have been issued
    by the company. SFAS 150 is effective for transactions entered into or modified
    after May 31, 2003. The adoption of SFAS 150 had no impact on the groups
    financial statements.


In
    December 2003 the FASB issued FAS 132 (Revised) (FAS 132-R), Employer's
    Disclosure about Pensions and Other Postretirement Benefits. FAS 132-R retains
    disclosure requirements of the original FAS 132 and requires additional disclosures
    relating to assets, obligations, cash flows, and net periodic pension cost.
    FAS 132 -R is effective for fiscal years ending after December 15, 2003 except
    that certain disclosures are effective for fiscal years ending after June
    15, 2004.


The
    Medicare Prescription Drug, Improvement and Modernization Act of 2003 was
    signed into law on December 8, 2003. In accordance with FASB Staff Position
    FAS 106-1, the Company has made a one-time election to defer recognition of
    the effects of the law in the accounting for its plan under FAS 106 and in
    providing disclosures related to the plan until authoritative guidance on
    the accounting for the federal prescription drug subsidy is issued. Any measure
    of the Accumulated Postretirement Benefit Obligation or Net Periodic Postretirement
    Benefit Cost in this report do not reflect the effects of the Act on the plan.
    Authoritative guidance is pending and, when issued, could require the Company
    to change previously reported information.


In
    January 2004 the Financial Accounting Standards Board (FASB) issued FASB Staff
    Position (FSP) FAS 106-1, Accounting and Disclosure Requirements related to
    the Medicare Prescription Drug, Improvement and Modernization Act of 2003
    which permits a sponsor of a postretirement health care plan that provides
    a presciption drug benefit to make a one-time election to defer accounting
    for the effects of the Medicare Prescription Drug, Improvement and Modernization
    Act of 2003. Regardless of whether a sponsor elects that deferral, FSP FAS
    106-1 requires certain disclosures pending further consideration of the underlying
    accounting issues. The guidance in FSP FAS 106-1 is effective for interim
    or annual financial statements of fiscal years ending after December 7, 2003.
    The adoption of FSP FAS 106-1 had no material impact on the company's consolidated
    financial statements.


In
    December 2003, the IASB released revised IAS 32, Financial Instrument:
    Disclosure and Presentation and IAS 39, Financial Instruments:
    Recognition and Measurement. These statements replace IAS 32 (revised
    2000),


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and supersede
  IAS 39 (revised 2000), and should be applied for annual periods beginning on
  or after January 1, 2005. The amendments are not expected to have a material
  impact on the Companys consolidated financial statements.

In December
    2003, as part of the IASBs project to improve International Accounting
    Standards, the IASB released revisions to the following standards that supersede
    the previously released version of those standards: IAS 1,
    Presentation of Financial Statements, IAS 2, Inventory,
    IAS 8, Accounting Policy, Changes in Accounting Estimates and Errors,
    IAS 10, Events after Balance Sheet Date, IAS 16, Property,
    Plant and Equipment, IAS 17, Leases, IAS 21, The Effects
    of Changes in Foreign Exchange Rates, IAS 24, Related Party Disclosures,
    IAS 27, Consolidation and Separate Financial Statements, IAS 28,
    Investments in Associates, IAS 31, Interests in Joint Ventures,
    IAS 33, Earnings per Share and IAS 40, Investment Property.
    The revised standards should be applied for annual periods beginning on or
    after January 1, 2005. The amendments are not expected to have a significant
    impact on the Companys consolidated financial statements.


On March 31,
    2004 the IASB issued International Financial Reporting Standard 3 Business
    Combinations (IFRS 3), and revised Standards IAS 36 Impairment
    of Assets and IAS 38 Intangible Assets. Under the new and
    revised standards all business combinations within the scope of IFRS 3 must
    be accounted for using the purchase method. The pooling of interests method
    is prohibited. Costs expected to be incurred to restructure an acquired entitys
    (or the acquirers) activities must be treated as post-combination expenses,
    unless the acquired entity has a pre-existing liability for restructuring
    its activities. Intangible items acquired in a business combination must be
    recognised as assets separately from goodwill if they meet the definition
    of an asset, are either separable or arise from contractual or other legal
    rights, and their fair value can be measure reliably. Identifiable assets
    acquired, and liabilities and contingent liabilities incurred or assumed,
    must be initially measured at fair value. The amortisation of goodwill and
    intangible assets with indefinite useful lives is prohibited. Instead they
    must be tested for impairment annually, or more frequently if events or changes
    in circumstances indicate a possible impairment. IFRS is similar to the SFAS
    141 and 142. We are currently evaluating the impact of IFRS 3 on our consolidated
    financial statements.


On March 31,
    2004 the IASB issued requirements relating to asset disposals and discontinued
    operations. The requirements are set out in International Financial Reporting
    Standard (IFRS) 5 Non -current Assets Held for Sale and Discontinued
    Operations. IFRS 5 requires assets that are expected to be sold and
    meet specific criteria to be measured at the lower of carrying amount and
    fair value less costs to sell. Such assets should not be depreciated and should
    be presented separately in th e balance sheet. It also requires operations
    that form a major line of business or area of geographical operations to be
    classified as discontinued when the assets in the operations are classified
    as held for sale. These requirements relating to assets held for sale and
    the timing of the classification of discontinued operations are substantially
    the same as the equivalent requirements in SFAS 144 Accounting for the
    Impairment or Disposal of Long-Lived Assets, which was issued in 2001.
    The type of operation that can be classified as discontinued under IFRS is
    narrower than under U.S. GAAP. We are currently evaluating the impact of IFRS
    5 on our consolidated financial statements.


On March 31,
    2004 the IASB issued an Amendment to IAS 39 Financial Instruments : Recognition
    and Measurement on Fair Value Hedge Accounting for a Portfolio Hedge of Interest
    Rate Risk. The amendments simplify the implementation of IAS 39 by enabling
    fair value hedge accounting to be used more readily for a portfolio hedge
    of interest rate risk (sometimes referred to as a macro hedge) than under
    previous versions of IAS 39. We are currently evaluating the impact of the
    amendments on our consolidated financial statements.


We did not
    consider any other IAS/IFRS pronouncements that are scheduled for adoption
    after December 31, 2003 to be applicable to the activities of SGL covered
    by this annual report.


|g. | Earnings
      (Loss) per Share
|-- | -------------------------------

Under
    U.S. GAAP, earnings per share are calculated and presented in accordance with
    the provisions of Statement of Financial Accounting Standards No. 128, Earnings
    per Share, which requires the presentation of both basic and diluted
    earnings per share information for all periods presented. Basic net income/(loss)
    per share is computed by dividing net income/(loss), as calculated in accordance
    with U.S. GAAP, by the weighted average number of shares outstanding of 22,148,078
    in 2003, 21,813,930 in 2002 and 21,530,563 in 2001. Diluted net profit /(loss)


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per share includes
  the effect of incremental shares, if any, that would have been outstanding under
  the share option plans or other obligations to issue such shares. Due to the
  fact that there was a loss in all reported periods there was no difference between
  basic and diluted (loss) per share.

| | h. | Cash
      Flow Statements - Changes in Corporate Debt
| | -- | ------------------------------------------------------
| |    |                                                       

| |                                    |  | Year
      ended December 31, |  
| | ---------------------------------- |  | ----------------------------- | -
| |                                    |  | 2003
      Euro               |  
| |                                    |  |                               |  
| | Proceeds
      from corporate debt |  | 330.0                         |  
| | Repayment
      of corporate debt  |  | (284.0                        | )
| |                                    |  | 46.0                          |  
| |                                    |  |                               |  

| | i. | Derivative
      financial instruments and fair value of financial instruments
| | -- | ------------------------------------------------------------------------------

The
    Company is a limited user of derivative financial instruments. It primarily
    utilize interest rate swap and cap agreements and forward exchange contracts
    to manage exposures to interest rate and foreign currency fluctuations. The
    Company is not party to leveraged derivatives and does not hold or issue derivative
    instruments for speculative purposes.


The
    notional/contract amount of derivatives do not represent the amount exchanged
    by the parties and thus are not a measure of the exposure of the Company through
    its use of derivatives. The amounts exchanged during the term of the derivatives
    are calculated on the basis of the notional/contract amounts and the other
    contractual conditions of the derivatives.


Management
    actively evaluates the credit worthiness of the financial institutions which
    are counter parties to derivative instruments, and it does not expect any
    counter parties to default in meeting their obligations under these instruments.
    The credit exposure of derivative instruments is represented by the unrealized
    gain in the underlying instrument.


The
    estimated fair value of on-balance sheet financial instruments (cash, receivables,
    payables, accrued expenses, other liabilities and long -term debt) are considered
    to approximate their carrying value because such instruments, except for long-term
    debt, have short maturity. In the case of long -term debt, interest may be
    revised periodically to current market rates. At December 31, 2003 and 2002
    the estimated fair value of derivative financial instruments has been disclosed
    in note 27 to the financial statements.


The SGL Group
    adopted SFAS 133 effective January 1, 2001.


| | j. | Concentration
      of credit risks
| | -- | -----------------------------------

Financial
    instruments which potentially subject the SGL Group to concentrations of credit
    risk consist principally of cash and accounts receivable. Management believes,
    however, that the loss due to credit risk to be incurred by the Company if
    parties to these financial instruments fail completely to perform according
    to the terms of the contracts is not material. Due to the refinancing of the
    Company encumbrances have been installed, please refer to Item 10 C (Material
    Contracts). The Company estimates an allowance for doubtful accounts based
    on the credit worthiness of its customers as well as general economic conditions.
    Consequently, an adverse change in those factors could affect estimates of
    bad debts.


| | k. | Warranty
      Obligations
| | -- | --------------------------

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The
    Company warrants to the purchasers of its line of products that the product
    will be free of defects in material and workmanship. The Company records the
    estimated cost that may be incurred under its warranties at the time the product
    revenue is recognized based upon the relationship between historical and anticipated
    warranty costs and sales volumes. The Company periodically assesses the adequacy
    of its recorded warranty liability and adjusts the amounts as necessary. While
    the Company believes that its estimated liability for product warranties is
    adequate and that the judgment applied is appropriate, the estimated liability
    for product warranties could differ materially from actual future warranty
    costs.


| | l. | Other
| | -- | -----

No loans to
    executive committee or supervisory board members were granted as of December
    31, 2003.


|36. | Subsequent
      Events
|--- | -----------------------

In
    connection with the restructuring and reorganization in the Corrosion Protection
    business area a new senior management team has been appointed after three
    Acotec managing directors left the company at the beginning of 2004.


On
    February 9, 2004 the Company completed a new major financing. Cash received
    from the capital increase and the other refinancing instruments was used to
    repay the existing financial debt. The Companys new financing agreements
    contain provisions requiring, among other things, that it meet certain financial
    covenants at specified dates. Details to these financing agreements including
    the covenants are explained in Item 10 C Material Contracts and
    in the exhibit 2 of this annual report.


In
    accordance with the new loan agreement, a tender offer to the holders of the
    convertible bond started in February 2004 with an acceptance period until
    April 5, 2004. The funds for the tender offer are already cash escrowed as
    part of the new loan agreement.


The
    successful completion of our refinancing and placement of our capital increase
    had an impact on our Management Incentive Plans:


| |  | The Stock
      Option Plan provides a dilution protection clause in its terms and conditions.
      This reduces the strike price of all options by the amount calculated from
      the average price of the subscription rights for new shares on all trading
      days during the subscription rights trading period on the Frankfurt Stock
      Exchange. The average price of the subscription rights was 4,74.Accordingly the strike
      prices of all options granted between July 2000 and January 2003 have been
      reduced by €4.74. The Supervisory Board has decided that the 2004 stock
      options will be granted at a strike price of €8,69. Day of grant is
      January 16, 2004.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | The formula
      for the reduction of the strike price of stock options is equally applicable
      to all remaining SARs still outstanding, regardless of whether these entitle
      to the payment of a difference or to the purchase of a share at the exercise
      price. This means for example that the strike price of the SARs granted
      in 1996 is reduced from €33,03 (=DM 64,60) to €28,29.                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | All participants
      in the current Matching Shares Plans 2002 and 2003 who invested in SGL Carbon
      shares out of their annual bonus have participated in the capital increase
      as all existing shareholders by either exercising their subscription rights
      and purchasing new shares or selling their subscription rights. Due to the
      dilution of their entitlement in these Matching Shares, each participant
      will receive cash compensation in the amount of €4,74 for each matching
      share when the matching shares are granted (end of March 2004 and end of
      March 2005).                                                                                        

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