##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 
 FORM 20-F
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005  Commission file number 001-14264
 PFEIFFER VACUUM TECHNOLOGY AG
 FEDERAL REPUBLIC OF GERMANY
 BERLINER STRASSE 43, D-35614 ASSLAR, GERMANY
  Name of each exchangeTitle of each class
    
    on which registeredAmerican Depositary Shares, each representing oneOrdinary Share
    
    New York Stock ExchangeOrdinary Shares, without nominal value
    
    Frankfurt Stock Exchange
  
 
 
 
 
  
  Yes o
    
    No þ
 
  Yes o
    
    No þ
 
  Yes þ
    
    No o
 
  þ
 
  Item 17 o
    
    Item 18 þ
 
  Yes o
    
    No þ




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##### 



TABLE OF CONTENTS
 PagePreliminary Remarks
    
    
    7Forward-Looking Statements
    
    
    7PART IItem 1.
    
    Identity of Directors, Senior Management and Advisers
    
    
    8Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    8Item 3.
    
    Key Information
    
    
    8A.
    
    Selected Financial Data
    
    
    8Statement of Income Data
    
    
    8Balance Sheet Data
    
    
    9Other Data
    
    
    9Exchange Rate Information
    
    
    9B.
    
    Capitalization and Indebtedness
    
    
    10C.
    
    Reasons for the Offer and Use of Proceeds
    
    
    10D.
    
    Risk Factors
    
    
    11General Economic Conditions
    
    
    11Industry and Business
    
    
    11Technological Changes and Introduction of New Products
    
    
    11Highly Competitive Industry
    
    
    11Manufacturing Facility
    
    
    11Procurement Risk
    
    
    12Human Resources Management Risk
    
    
    12Information Technology Risk
    
    
    12International Operations and Legal Risk
    
    
    12Financial
    
    
    12Financial and Liquidity Risk
    
    
    12Currency Risk
    
    
    12Item 4.
    
    Information on the Company
    
    
    13A.
    
    History and Development of the Company
    
    
    13Organization and History
    
    
    13Business and Capital Expenditures
    
    
    13B.
    
    Business Overview
    
    
    13Introduction
    
    
    13Nature of the Companys Operations and Principal Activities
    
    
    14Principal Markets
    
    
    14Seasonality
    
    
    15Raw Materials and Suppliers
    
    
    15Marketing Channels
    
    
    15Dependence of the Company on Intellectual Property, Contracts and
New Manufacturing Processes
    
    
    15Competitive Position
    
    
    15Material Effects of Government Regulations
    
    
    16C.
    
    Organizational Structure
    
    
    16D.
    
    Property, Plant and Equipment
    
    
    16Item 5.
    
    Operating and Financial Review and Prospects
    
    
    17Introduction
    
    
    17New Accounting Rules and Accounting Standards
    
    
    18Critical Accounting Policies
    
    
    18Revenue Recognition and Accounts Receivable
    
    
    18Inventory Valuation
    
    
    18Employment Related Benefits
    
    
    18Discontinued Operations
    
    
    18Inflation
    
    
    19Other Risks
    
    
    19
 3




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##### 



TABLE OF CONTENTS
 PageA.
    
    Operating Results
    
    
    19Managements Discussion and Analyses of Financial Conditions and
Results of Operations
    
    
    19Our Products
    
    
    192005 Compared to 2004
    
    
    232004 Compared to 2003
    
    
    27B.
    
    Liquidity and Capital Resources
    
    
    30Foreign Currency Exchange Hedging
    
    
    31C.
    
    Research and Development, Patents and Licenses, etc
    
    
    31D.
    
    Trend Information
    
    
    32Overall Economic Environment
    
    
    32Early 2006 and Outlook
    
    
    33E.
    
    Off-Balance Sheet Arrangements
    
    
    34F.
    
    Tabular Disclosure of Contractual Obligations
    
    
    34Contractual Obligations
    
    
    34Item 6.
    
    Directors, Senior Management and Employees
    
    
    35A.
    
    Directors and Senior Management
    
    
    35General
    
    
    35Management Board (Vorstand)
    
    
    35Supervisory Board (Aufsichtsrat)
    
    
    36Committees of the Supervisory Board
    
    
    37Audit Committee
    
    
    37Administration Committee
    
    
    38Management Board Committee
    
    
    38B.
    
    Compensation
    
    
    38C.
    
    Board Practices
    
    
    39D.
    
    Employees
    
    
    39E.
    
    Share Ownership
    
    
    40Stock-based Compensation Plans
    
    
    40Employee Participation Program, Term: 2000 through 2005
    
    
    41Employee Participation Program, Term: 2002 through 2007
    
    
    41Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    41A.
    
    Major Shareholders
    
    
    41B.
    
    Related Party Transactions
    
    
    42C.
    
    Interest of Experts and Counsel
    
    
    42Item 8.
    
    Financial Information
    
    
    43A.
    
    Consolidated Statements and Other Financial Information
    
    
    43Export Sales
    
    
    43Legal Proceedings
    
    
    43Policy on Dividend Distributions
    
    
    43B.
    
    Significant Changes
    
    
    43Item 9.
    
    The Offer and Listing
    
    
    44A.
    
    Offer and Listing Details
    
    
    444. Market Price Information
    
    
    44Trading of ADRs on the New York Stock Exchange
    
    
    44Trading of Ordinary Shares on the Frankfurt Stock Exchange
    
    
    45C.
    
    Markets
    
    
    45General
    
    
    45
 4




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##### 



TABLE OF CONTENTS
 PageItem 10.
    
    Additional Information
    
    
    46A.
    
    Share Capital
    
    
    46B.
    
    Memorandum and Articles of Association
    
    
    46Registration, Objects and Purposes of the Company
    
    
    46General
    
    
    46The Annual General Meeting of Shareholders
    
    
    46The Supervisory Board
    
    
    46The Management Board
    
    
    46Directors
    
    
    47Ordinary Shares
    
    
    47Dividends
    
    
    48Voting Rights
    
    
    49Change of Shareholders Rights
    
    
    49Notification Requirements and Disclosure of Shareholdings
    
    
    50General Shareholders Meeting
    
    
    50Limitation on the Right to own Securities
    
    
    50Provisions that would delay a Change in Control
    
    
    50Provisions of German Law that are significantly different from
Provisions of U.S. Law
    
    
    51Provisions governing changes in the capital that are more
stringent than required by law
    
    
    51German Corporate Governance Code Declaration
    
    
    51NYSE Comparison
    
    
    51C.
    
    Material Contracts
    
    
    51D.
    
    Exchange Control
    
    
    52E.
    
    Taxation
    
    
    52Taxation
    
    
    52Withholding Tax on Dividends
    
    
    52Withholding Tax Refund Procedures
    
    
    53Reduced United States Tax Rate for Certain Dividends
    
    
    53Taxation of Capital Gains
    
    
    54German Capital Tax (Vermögensteuer)
    
    
    54Other German Taxes
    
    
    54F.
    
    Dividends and Paying Agents
    
    
    54G.
    
    Statement by Experts
    
    
    54H.
    
    Documents on Display
    
    
    55I.
    
    Subsidiary Information
    
    
    55Item 11.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    55Exchange Rate Risk
    
    
    55Transaction Risk and Currency Risk Management
    
    
    55Effects of Currency Translation
    
    
    56Foreign Currency Exchange Risk
    
    
    56Interest Rate Risk
    
    
    57Commodity Price Risk
    
    
    57Item 12.
    
    Description of Securities other than Equity Securities
    
    
    57A.
    
    Debt Securities
    
    
    57B.
    
    Warrants and Rights
    
    
    57C.
    
    Other Securities
    
    
    57D.
    
    American Depositary Shares
    
    
    58
 5




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##### 



TABLE OF CONTENTS
 PagePART IIItem 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    58Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    58Changes with Respect to Ordinary Shares
    
    
    58Treasury Stock
    
    
    58Item 15.
    
    Controls and Procedures
    
    
    58Disclosure Controls and Procedures
    
    
    58Internal Control over Financial Reporting
    
    
    58Item 16A.
    
    Audit Committee Financial Expert
    
    
    59Audit Committee and Financial Expert
    
    
    59Item 16B.
    
    Code of Ethics
    
    
    59Item 16C.
    
    Principal Accountant Fees and Services
    
    
    59Audit Committees pre-approval policies and procedures
    
    
    60Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    60Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    60PART IIIItem 17.
    
    Financial Statements
    
    
    60Item 18.
    
    Financial Statements
    
    
    60Item 19.
    
    Exhibits
    
    
    61Signature
    
    
    62
 6




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##### 



Preliminary Remarks
   
 
 Forward-Looking Statements
  
    
    changes in general political, economic or business conditions, especially an economic downturn or slow economic growth
in Europe or the United States;
    
    changes in currency exchange rates and interest rates;
    
    changes in laws, regulations and government policies, particularly those relating to emissions, environmental
protections and waste disposals;
    
    introduction of competing products and possible lack of acceptance of new products or services;
    
    increased competitive pressures which may limit our ability to reduce sales incentives and raise prices;
    
    price increases, shortages or supply interruptions of production materials, or labor strikes;
    
    other risks and uncertainties, some of which are described in Item 3. Key information under the heading Risk
Factors.
  7




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##### 



Part I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 A. Selected Financial Data
 Selected Financial Data
   2005
    
    2004
    
    2003
    
    2002
    
    2001
    
    
    
    
    
    
    
    (in thousands, except per share amounts)Statement of Income DataNet sales
    
    
    159,517
    
    
    
    151,512
    
    
    
    138,590
    
    
    
    150,684
    
    
    
    170,140Gross profit
    
    
    75,505
    
    
    
    72,502
    
    
    
    63,197
    
    
    
    69,002
    
    
    
    74,346Selling and marketing expenses
    
    
    (19,877
    )
    
    
    (18,973
    )
    
    
    (20,394
    )
    
    
    (23,944
    )
    
    
    (25,650
    )General and administrative expenses
    
    
    (12,408
    )
    
    
    (12,524
    )
    
    
    (12,153
    )
    
    
    (11,569
    )
    
    
    (12,018
    )Research and development expenses
    
    
    (6,432
    )
    
    
    (6,387
    )
    
    
    (6,301
    )
    
    
    (7,517
    )
    
    
    (8,503
    )Operating profit
    
    
    36,788
    
    
    
    34,618
    
    
    
    24,349
    
    
    
    25,972
    
    
    
    28,175Income from continuing operations
before taxes and minority interests
    
    
    39,337
    
    
    
    36,447
    
    
    
    28,030
    
    
    
    29,620
    
    
    
    29,400Income from continuing operations
    
    
    23,742
    
    
    
    21,814
    
    
    
    14,705
    
    
    
    20,074
    
    
    
    29,400Loss from discontinued operations,
net of tax
    
    
    (994
    )
    
    
    (10,188
    )
    
    
    (1,959
    )
    
    
    (2,539
    )
    
    
    Net income
    
    
    22,748
    
    
    
    11,626
    
    
    
    12,746
    
    
    
    17,535
    
    
    
    18,871Net earnings per share/ADR from:Continuing operations, basic and diluted
    
    
    2.73
    
    
    
    2.51
    
    
    
    1.68
    
    
    
    2.28
    
    
    
    2.16Discontinued operations, basic and diluted
    
    
    (0.11
    )
    
    
    (1.17
    )
    
    
    (0.22
    )
    
    
    (0.29
    )
    
    
    Net earnings per share/ADR ()
    
    
    2.62
    
    
    
    1.34
    
    
    
    1.46
    
    
    
    1.99
    
    
    
    2.16
 8




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##### 



2005
    
    2004
    
    2003
    
    2002
    
    2001
    
    
    
    
    
    
    
    Statement of
Income Data (continued)Dividends declared and paid
per Ordinary Share (*)
    
    
    1.35
    
    
    
    0.90
    
    
    
    0.70
    
    
    
    0.56
    
    
    
    0.56Dividends declared and paid
per Ordinary Share in U.S. dollars (*)
    
    $
    1.60
    
    
    $
    1.23
    
    
    $
    0.88
    
    
    $
    0.59
    
    
    $
    0.50
 
 (*)
    
    2005: proposed 
  
  2005
    
    2004
    
    2003
    
    2002
    
    2001
    
    
    
    
    
    
    
    (in thousands, except share data)Balance Sheet DataCurrent assets from continuing operations
    
    
    104,468
    
    
    
    92,842
    
    
    
    66,445
    
    
    
    113,580
    
    
    
    115,650Net current assets of
discontinued operations
    
    
    
    
    
    
    1,862
    
    
    
    11,592
    
    
    
    8,895
    
    
    
    Total assets
    
    
    138,824
    
    
    
    125,233
    
    
    
    119,780
    
    
    
    155,496
    
    
    
    150,604Current liabilities from continuing operations
    
    
    20,796
    
    
    
    22,443
    
    
    
    21,962
    
    
    
    19,579
    
    
    
    26,589Net current liabilities of
discontinued operations
    
    
    
    
    
    
    1,186
    
    
    
    895
    
    
    
    907
    
    
    
    Long term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,746
    
    
    
    9,037Share capital
    
    
    22,504
    
    
    
    22,504
    
    
    
    22,504
    
    
    
    22,504
    
    
    
    22,504Shareholders equity
    
    
    112,631
    
    
    
    99,355
    
    
    
    95,037
    
    
    
    92,508
    
    
    
    83,402Other DataAdjusted weighted average number of
shares outstanding basic
    
    
    8,690,524
    
    
    
    8,690,524
    
    
    
    8,750,201
    
    
    
    8,790,600
    
    
    
    8,719,507 diluted
    
    
    8,690,524
    
    
    
    8,690,524
    
    
    
    8,750,201
    
    
    
    8,790,600
    
    
    
    8,719,507
 
 Exchange Rate Information
 
 9




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##### 




 Year Ended December 31,
    
    High
    
    
    Low
    
    
    Average Rate
    
    
    End of Period(*)2005
    
    $
    1.3514
    
    
    $
    1.1655
    
    
    $
    1.2451
    
    
    $
    1.18342004
    
    
    1.3640
    
    
    
    1.1798
    
    
    
    1.2434
    
    
    
    1.36402003
    
    
    1.2610
    
    
    
    1.0371
    
    
    
    1.1309
    
    
    
    1.26102002
    
    
    1.0477
    
    
    
    0.8600
    
    
    
    0.9449
    
    
    
    1.04772001
    
    
    0.9548
    
    
    
    0.8388
    
    
    
    0.8958
    
    
    
    0.88202005July
    
    $
    1.2180
    
    
    $
    1.1895
    
    
    $
    1.2039
    
    
    $
    1.2089August
    
    
    1.2464
    
    
    
    1.2179
    
    
    
    1.2294
    
    
    
    1.2195September
    
    
    1.2551
    
    
    
    1.2019
    
    
    
    1.2254
    
    
    
    1.2049October
    
    
    1.2150
    
    
    
    1.1926
    
    
    
    1.2019
    
    
    
    1.2042November
    
    
    1.2059
    
    
    
    1.1655
    
    
    
    1.1787
    
    
    
    1.1773December
    
    
    1.2020
    
    
    
    1.1699
    
    
    
    1.1859
    
    
    
    1.18342006January(through January 31, 2006)
    
    
    1.2312
    
    
    
    1.1831
    
    
    
    1.2106
    
    
    
    1.2108
 
 (*)
    
    The average of the Noon Buying Rates on the last business day of each full month during the relevant period. Fluctuations in exchange rate between the euro and the U.S. dollar will affect the U.S. dollar
equivalent of the euro price of our ordinary shares on the German Stock Exchange. Accordingly,
exchange rate fluctuations are likely to affect the market price of our ADRs on the New York Stock
Exchange.Exchange rate fluctuations may also affect the amount of any cash dividend we pay if a shareholder
receives the dividend in U.S. dollars rather than in euros. Please refer to Item 3. Key
Information  Risk Factors and Item 11. Quantitative and Qualitative Disclosures about Market
Risk, for information how exchange rate fluctuations affect our business and operations. Please
also refer to Item 5. Operating and Financial Review and Prospects  Liquidity and Capital
Resources for a discussion of the hedging techniques we use to manage our exposure to exchange
rate fluctuations.
 B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  10




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##### 



D. Risk Factors
   
 General Economic Conditions
  
 Industry and Business
 
 Technological Changes and Introduction of New Products
  
 
 Highly Competitive Industry
  
 Manufacturing Facility
  11




---



##### 



Procurement Risk
  
 Human Resources Management Risk
  
 Information Technology Risk
  
 International Operations and Legal Risk
  
 Financial
 
 Financial and Liquidity Risk
  
 Currency Risk
 
 12




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##### 



Item 4: Information on the Company
 
 A. History and Development of the Company
 
 Organization and History
   
 Business and Capital Expenditures
 
 
  
 B. Business Overview
 
 Introduction
   13




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##### 



Nature of the Companys Operations and Principal Activities
     
 Principal Markets
 Sales by markets
(as percentage of total net sales) Percentage
ofRevenues in2005
    
    2004
    
    2003%
    
    %
    
    %Analytical Industry
    
    
    25
    
    
    
    22
    
    
    
    22Industrial
    
    
    24
    
    
    
    23
    
    
    
    19Research and Development
    
    
    19
    
    
    
    21
    
    
    
    22Optical and Glass Coating
    
    
    14
    
    
    
    13
    
    
    
    14Semiconductor Industry
    
    
    11
    
    
    
    13
    
    
    
    14Chemical and Process Technology
    
    
    4
    
    
    
    4
    
    
    
    4Storage Media
    
    
    3
    
    
    
    4
    
    
    
    5Total
    
    
    100
    
    
    
    100
    
    
    
    100
 locations delivered
 Sales by region
 2005
    
    2004
    
    2003T
    
    %
    
    T
    
    %
    
    T
    
    %Germany
    
    
    42,625
    
    
    
    26.7
    
    
    
    42,252
    
    
    
    27.9
    
    
    
    34,940
    
    
    
    25.2Europe (excluding Germany)
    
    
    51,118
    
    
    
    32.0
    
    
    
    49,349
    
    
    
    32.6
    
    
    
    48,314
    
    
    
    34.9United States
    
    
    36,150
    
    
    
    22.7
    
    
    
    33,140
    
    
    
    21.9
    
    
    
    32,797
    
    
    
    23.7Asia
    
    
    27,920
    
    
    
    17.5
    
    
    
    25,643
    
    
    
    16.9
    
    
    
    21,659
    
    
    
    15.6Rest of world
    
    
    1,704
    
    
    
    1.1
    
    
    
    1,128
    
    
    
    0.7
    
    
    
    880
    
    
    
    0.6Total
    
    
    159,517
    
    
    
    100.0
    
    
    
    151,512
    
    
    
    100.0
    
    
    
    138,590
    
    
    
    100.0
 14




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##### 



Seasonality
  
 Raw Materials and Suppliers
    
 Marketing Channels
   
 Dependence of the Company on Intellectual Property, Contracts and New Manufacturing Processes
  
 Competitive Position
  15




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##### 



Material Effects of Government Regulations
  
 C. Organizational Structure
  The Companys subsidiaries are:
 Identity
and Location of Company
    

Percent
OwnedPfeiffer Vacuum Austria GmbH, Vienna/Austria
    
    
    100.0
    %Pfeiffer Vacuum Belgium N.V., Temse/Belgium
    
    
    100.0
    %Pfeiffer Vacuum France SAS, Buc/France
    
    
    100.0
    %Pfeiffer Vacuum GmbH, Asslar/Germany
    
    
    100.0
    %Pfeiffer Vacuum Holding B.V., De Meern/Netherlands
    
    
    100.0
    %Pfeiffer Vacuum Inc., Nashua/United States
    
    
    100.0
    %Pfeiffer Vacuum Italia S.p.A., Rho (Milano)/Italy
    
    
    100.0
    %Pfeiffer Vacuum Ltd., Newport/Great Britain
    
    
    100.0
    %Pfeiffer Vacuum Nederland B.V., De Meern/Netherlands
    
    
    100.0
    %Pfeiffer Vacuum Scandinavia AB, Upplands Väsby (Stockholm)/Sweden
    
    
    100.0
    %Pfeiffer Vacuum Systems GmbH i.L., Asslar/Germany *)
    
    
    100.0
    %Pfeiffer Vacuum (Schweiz) AG, Zurich/Switzerland
    
    
    99.4
    %Pfeiffer Vacuum Korea Ltd., Yongin City, Kyungki-Do/South-Korea
    
    
    75.5
    %Pfeiffer Vacuum India Ltd., Secunderabad/India
    
    
    73.0
    %
 
 *)
    
    Pfeiffer Vacuum Systems GmbH i.L. was liquidated in 2005 and reported in the financial statements as discontinued operations. 
 D. Property, Plant and Equipment
 2 2 2 2 2 2 2 2
  16




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##### 




          
 Item 5. Operating and Financial Review and Prospects
 Introduction
   17




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##### 



New Accounting Rules and Accounting Standards
  
 Critical Accounting Policies
  
 Revenue Recognition and Accounts Receivable
   
 Inventory Valuation
  
 Employment Related Benefits
  
 Discontinued Operations
   18




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##### 



Inflation
  
 Other Risks
  
 A. Operating Results
 
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  
 Our Products
   
 Vacuum generation pumps
   Turbopumps
 Turbopumps -11
  
    
    Mechanical bearing system with precision ceramic bearings
    
    Magnetic bearing system comparable to the bearing system employed in the Transrapid
mag-lev bullet train
 19




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##### 



CompactTurbo TM
 MagneticTurbo TM TM
 TM
 TurboCube TM pumping stations
 TM
 backing pumps
 Rotary vane pumps
 3
 TM
 TM -3
  Dry pumps
  dry pumps
 20




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##### 




    
    Diaphragm pumps
    
    Reciprocating pumps (XtraDry), and, most recently,
    
    Screw pumps (RevoDry)
 3
 Roots pumps
 Roots pumps -3 3
  
    
    Coating industry
    
    Packaging industry
    
    Chemical and pharmaceutical industry
    
    Thin-layer technology
    
    Space simulation
    
    Metallurgy
    
    Freeze-drying
  
    
    The worlds first series of magnetically coupled Roots pumps
    
    ADEx series Roots pumps
 3
  CombiLine pumping stations
 CombiLine
 Vacuum measurement and analysis equipment
 Vacuum gauges
  21




---



##### 



total pressure measurement instruments
 
    
    ActiveLine: A proven series of gauges with a large number of different sensors whose
reliability has been proven in innumerable applications.
    
    DigiLine: Digital gauges for industrial applications in which sensors have to be
integrated into electrical control systems.
    
    ModulLine: Special, radiation-resistant gauges for research applications.
 Vacuum analysis equipment
 mass spectrometers
 Helium leak detectors
 Installation elements
 installation elements
  Vacuum systems
 vacuum systems
 
    
    Recipient (vacuum chamber)
    
    Vacuum pump or pumping station
    
    Measurement and regulating equipment
    
    Electrical/electronic control
 leak detection systems
 Service
   22




---



##### 



2005 Compared to 2004  (Percentages calculated based on amounts in thousands )
   Net Sales from Continuing Operations
   
 Net Sales from Continuing Operations by Segment
  December 31,2005
    
    2004( in thousands)
    
    %
    
    ( in thousands)
    
    %Net sales by segmentGermany
    
    
    70,159
    
    
    
    44.0
    
    
    
    67,585
    
    
    
    44.6Europe (excluding Germany)
    
    
    49,720
    
    
    
    31.1
    
    
    
    46,371
    
    
    
    30.6United States
    
    
    36,301
    
    
    
    22.8
    
    
    
    33,265
    
    
    
    22.0Rest of World
    
    
    3,337
    
    
    
    2.1
    
    
    
    4,291
    
    
    
    2.8159,517
    
    
    
    100.0
    
    
    
    151,512
    
    
    
    100.0
   
 23




---



##### 



Net Sales from Continuing Operations by Region
  December 31,2005
    
    2004( in thousands)
    
    %
    
    ( in thousands)
    
    %Net sales by regionGermany
    
    
    42,625
    
    
    
    26.7
    
    
    
    42,252
    
    
    
    27.9Europe (excluding Germany)
    
    
    51,118
    
    
    
    32.0
    
    
    
    49,349
    
    
    
    32.6United States
    
    
    36,150
    
    
    
    22.7
    
    
    
    33,140
    
    
    
    21.9Asia
    
    
    27,920
    
    
    
    17.5
    
    
    
    25,643
    
    
    
    16.9Rest of world
    
    
    1,704
    
    
    
    1.1
    
    
    
    1,128
    
    
    
    0.7159,517
    
    
    
    100.0
    
    
    
    151,512
    
    
    
    100.0
  
           
    
      
 Net Sales from Continuing Operations by Product
  December 31,2005
    
    2004( in thousands)
    
    %
    
    ( in thousands)
    
    %Net sales by productTurbopumps
    
    
    64,397
    
    
    
    40.4
    
    
    
    59,447
    
    
    
    39.2Measurement and Analyses Equipment, Components
    
    
    41,895
    
    
    
    26.3
    
    
    
    42,529
    
    
    
    28.1Service
    
    
    23,515
    
    
    
    14.7
    
    
    
    25,011
    
    
    
    16.5Backing pumps
    
    
    22,775
    
    
    
    14.3
    
    
    
    19,732
    
    
    
    13.0Systems
    
    
    6,935
    
    
    
    4.3
    
    
    
    4,793
    
    
    
    3.2Total
    
    
    159,517
    
    
    
    100.0
    
    
    
    151,512
    
    
    
    100.0
   
  
 24




---



##### 



   
   
 Order Intake and Order Backlog from Continuing Operations
          
  Cost of Sales and Gross Profit from Continuing Operations
   December 31,2005
    
    2004( in thousands)
    
    %
    
    ( in thousands)
    
    %Cost of salesGermany
    
    
    15,808
    
    
    
    18.8
    
    
    
    15,993
    
    
    
    20.2Europe (excluding Germany)
    
    
    38,453
    
    
    
    45.8
    
    
    
    35,238
    
    
    
    44.6United States
    
    
    27,225
    
    
    
    32.4
    
    
    
    24,493
    
    
    
    31.0Rest of World
    
    
    2,526
    
    
    
    3.0
    
    
    
    3,286
    
    
    
    4.2Total cost of sales
    
    
    84,012
    
    
    
    100.0
    
    
    
    79,010
    
    
    
    100.0
   
 Selling and Marketing Expenses from Continuing Operations
    
 25




---



##### 



General and Administrative Expenses from Continuing Operations
    
 Research and Development Expenses from Continuing Operations
 
  Operating Profit and EBIT Margin from Continuing Operations
  
 Net Financial Income from Continuing Operations
     
 Income Taxes from Continuing Operations
   
 Minority Interests
   
 Losses from Discontinued Operations
    
 Net Income
  
 26




---



##### 



2004 Compared to 2003  (Percentages calculated based on amounts in thousands )
  Net Sales from Continuing Operations
  December 31,2004
    
    2003( in thousands)
    
    %
    
    ( in thousands)
    
    %Net sales by segmentGermany
    
    
    67,585
    
    
    
    44.6
    
    
    
    60,546
    
    
    
    43.7Europe (excluding Germany)
    
    
    46,371
    
    
    
    30.6
    
    
    
    42,459
    
    
    
    30.6United States
    
    
    33,265
    
    
    
    22.0
    
    
    
    32,716
    
    
    
    23.6Rest of World
    
    
    4,291
    
    
    
    2.8
    
    
    
    2,869
    
    
    
    2.1151,512
    
    
    
    100.0
    
    
    
    138,590
    
    
    
    100.0
   
     
  December 31,2004
    
    2003( in thousands)
    
    %
    
    ( in thousands)
    
    %Net sales by regionGermany
    
    
    42,252
    
    
    
    27.9
    
    
    
    34,940
    
    
    
    25.2Europe (excluding Germany)
    
    
    49,349
    
    
    
    32.6
    
    
    
    48,314
    
    
    
    34.9United States
    
    
    33,140
    
    
    
    21.9
    
    
    
    32,797
    
    
    
    23.7Asia
    
    
    25,643
    
    
    
    16.9
    
    
    
    21,659
    
    
    
    15.6Rest of World
    
    
    1,128
    
    
    
    0.7
    
    
    
    880
    
    
    
    0.6151,512
    
    
    
    100.0
    
    
    
    138,590
    
    
    
    100.0
             
 27




---



##### 



December 31,2004
    
    2003( in thousands)
    
    %
    
    ( in thousands)
    
    %Net sales by productTurbopumps
    
    
    59,447
    
    
    
    39.2
    
    
    
    53,571
    
    
    
    38.7Measurement and Analyses Equipment, Components
    
    
    42,529
    
    
    
    28.1
    
    
    
    35,218
    
    
    
    25.4Service
    
    
    25,011
    
    
    
    16.5
    
    
    
    25,931
    
    
    
    18.7Backing pumps
    
    
    19,732
    
    
    
    13.0
    
    
    
    18,040
    
    
    
    13.0Systems
    
    
    4,793
    
    
    
    3.2
    
    
    
    5,830
    
    
    
    4.2Total
    
    
    151,512
    
    
    
    100.0
    
    
    
    138,590
    
    
    
    100.0
      
  
 Order Intake and Order Backlog from Continuing Operations
       
     
  Cost of Sales and Gross Profit from Continuing Operations
  December 31,2004
    
    2003( in thousands)
    
    %
    
    ( in thousands)
    
    %Cost of salesGermany
    
    
    15,993
    
    
    
    20.2
    
    
    
    17,996
    
    
    
    23.9Europe (excluding Germany)
    
    
    35,238
    
    
    
    44.6
    
    
    
    32,856
    
    
    
    43.6United States
    
    
    24,493
    
    
    
    31.0
    
    
    
    22,449
    
    
    
    29.8Rest of World
    
    
    3,286
    
    
    
    4.2
    
    
    
    2,092
    
    
    
    2.7Total cost of sales
    
    
    79,010
    
    
    
    100.0
    
    
    
    75,393
    
    
    
    100.0
  
 28




---



##### 



  
 Selling and Marketing Expenses from Continuing Operations
   
  
 General and Administrative Expenses from Continuing Operations
   
 Research and Development Expenses from Continuing Operations
    
 Operating Profit and EBIT Margin from Continuing Operations
   
 29




---



##### 



Net Financial Income from Continuing Operations
         
 Income Taxes from Continuing Operations
    
 
 Losses from Discontinued Operations
  
 Net Income
  
 
 B. Liquidity and Capital Resources
 
  
 
   
 30




---



##### 



        
     
    
  
  
 Foreign Currency Exchange Hedging
  
 C. Research and Development, Patents and Licenses, etc.
   31




---



##### 



  
 
 D. Trend Information
 
 Overall Economic Environment
 World economy
  United States
  Europe
  Asia
  Vacuum industry
  32




---



##### 



Early 2006 and Outlook
 Early 2006
  Outlook
         33




---



##### 



Purchasing
   
 E. Off-Balance Sheet Arrangements
  
 F. Tabular Disclosure of Contractual Obligations
  
 Contractual Obligations
 Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 year
    
    1-3 years
    
    3-5 years
    
    5 years in thousandsOperating leases
    
    
    3,511
    
    
    
    1,285
    
    
    
    1,136
    
    
    
    641
    
    
    
    449Purchase obligations
    
    
    8,874
    
    
    
    4,212
    
    
    
    3,376
    
    
    
    1,286
    
    
    
    Maintenance contracts
    
    
    112
    
    
    
    85
    
    
    
    18
    
    
    
    9
    
    
    
    Convertible bonds payable
    
    
    461
    
    
    
    
    
    
    
    461
    
    
    
    
    
    
    
    Pension payments *
    
    
    23,394
    
    
    
    1,739
    
    
    
    3,977
    
    
    
    4,488
    
    
    
    13,190Total contractual obligations
    
    
    36,352
    
    
    
    7,321
    
    
    
    8,968
    
    
    
    6,424
    
    
    
    13,639
 
 *
    
    Pension payments include only payments for the next ten years as reported by the Companys actuaries.   
 34




---



##### 



Item 6. Directors, Senior Management and Employees
 
 A. Directors and Senior Management
 General
       Management Board (Vorstand)
 Prokura
    Vorstandsvorsitzender
 35




---



##### 



Wolfgang Dondorf
  Manfred Bender
  
 Supervisory Board (Aufsichtsrat)
     36




---



##### 



Name
    
    Age
    
    Principal OccupationDr. Michael Oltmanns
(Chairman)
    
    
    49
    
    
    Attorney at Law and Tax Consultant
Law Offices of Menold Bezler,
Stuttgart, Germany
First elected: 1996
Chairman since 2001Further supervisory board posts
held by Dr. Oltmanns:
    
    
    
    
    
    HPC AG, Weinheim (Chairman)
Merkur Bank KGaA, Munich/Germany (Vice Chairman)
Jetter AG, Ludwigsburg (Chairman)
Scholz AG, Essingen (Chairman)Prof. Dr. Klaus-Jürgen Kügler
(Vice Chairman)
    
    
    55
    
    
    Dean (Professor)
at Giessen-Friedberg Technical University,
Giessen, Germany
First elected: 2001Michael J. Anderson
    
    
    48
    
    
    Managing Director of Bank of America Securities,
New York, United States
First elected: 1996Götz Timmerbeil
    
    
    38
    
    
    Certified Public Accountant and Tax Consultant,
Gummersbach, Germany
First elected: 2001Günter Schneider
    
    
    62
    
    
    Chairman of the Pfeiffer Vacuum Works Council,
elected by the employees
First elected: 1996Edgar Keller
    
    
    50
    
    
    Member of the Pfeiffer Vacuum Works Council,
elected by the employees
First elected: 2001
 
 Committees of the Supervisory Board:
  
 Audit Committee:
  Name
    
    Age
    
    Principal OccupationGötz Timmerbeil
(Chairman and Financial Expert)
    
    
    38
    
    
    Certified Public Accountant and Tax ConsultantDr. Michael Oltmanns
    
    
    49
    
    
    Attorney at Law and Tax ConsultantMichael J. Anderson
    
    
    48
    
    
    Managing Director of Bank of America Securities
 37




---



##### 



Administration Committee:
  Name
    
    Age
    
    Principal OccupationDr. Michael Oltmanns
(Chairman)
    
    
    49
    
    
    Attorney at Law and Tax ConsultantProf. Dr. Klaus-Jürgen Kügler
    
    
    55
    
    
    Dean (Professor)
at Giessen-Friedberg Technical UniversityMichael J. Anderson
    
    
    48
    
    
    Managing Director of Bank of America Securities
 
 Management Board Committee:
  Name
    
    Age
    
    Principal OccupationDr. Michael Oltmanns
(Chairman)
    
    
    49
    
    
    Attorney at Law and Tax ConsultantProf. Dr. Klaus-Jürgen Kügler
    
    
    55
    
    
    Professor
at Giessen-Friedberg Technical UniversityGötz Timmerbeil
    
    
    38
    
    
    Certified Public Accountant and Tax Consultant
 
 B. Compensation
   
 
 
 38




---



##### 



C. Board Practices
  Betriebsverfassungsgesetz
 
 D. Employees
 December 31,2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003Germany
    
    Foreign CountriesProduction
    
    
    277
    
    
    
    280
    
    
    
    276
    
    
    
    55
    
    
    
    57
    
    
    
    58Research and Development
    
    
    76
    
    
    
    81
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    2Selling and Marketing
    
    
    102
    
    
    
    98
    
    
    
    103
    
    
    
    96
    
    
    
    92
    
    
    
    91Administration
    
    
    55
    
    
    
    55
    
    
    
    64
    
    
    
    30
    
    
    
    33
    
    
    
    34Total
    
    
    510
    
    
    
    514
    
    
    
    520
    
    
    
    181
    
    
    
    182
    
    
    
    185
       39




---



##### 



E. Share Ownership
  Title of
    
    Identity of
    
    Numbers
    
    Percent ofClass
    
    Person or Group
    
    Owned
    
    ClassSupervisory BoardOrdinary Shares
    
    Dr. Michael Oltmanns
    
    
    100
    
    
    
    0.0
    %Ordinary Shares
    
    Michael J. Anderson
    
    
    0
    
    
    
    0.0
    %Ordinary Shares
    
    Prof. Dr. Klaus-Jürgen Kügler
    
    
    0
    
    
    
    0.0
    %Ordinary Shares
    
    Götz Timmerbeil
    
    
    0
    
    
    
    0.0
    %Ordinary Shares
    
    Edgar Keller
    
    
    0
    
    
    
    0.0
    %Ordinary Shares
    
    Günter Schneider
    
    
    80
    
    
    
    0.0
    %
 Title of
    
    Identity of
    
    Numbers
    
    Percent ofClass
    
    Person or Group
    
    Owned
    
    ClassManagement BoardOrdinary Shares
    
    Wolfgang Dondorf
    
    
    13,700
    
    
    
    0.2
    %ADRs
    
    Wolfgang Dondorf
    
    
    200
    
    
    
    0.0
    %Ordinary Shares
    
    Manfred Bender
    
    
    140
    
    
    
    0.0
    %Convertible Bonds
    
    Manfred Bender
    
    
    350
    
    
    
    0.0
    %
 
 Stock-based Compensation Plans
   40




---



##### 



Employee Participation Program, Term: 2000 through 2005
 
 
 Employee Participation Program, Term: 2002 through 2007
 
  
 
 
 
 Item 7. Major Shareholders and Related Party Transactions
 
 A. Major Shareholders
  41




---



##### 



Title of
    
    Identity of
    
    Amount
    
    Percent ofClass
    
    Person or Group
    
    Owned
    
    ClassDecember 31, 2005Ordinary Shares
    
    Arnhold and S. Bleichroeder Advisors, LLC,
New York/U.S.A.
    
    
    914,400
    
    
    
    10.52
    %Ordinary Shares
    
    Harris Associates L.P., Chicago/U.S.A.
    
    
    864,077
    
    
    
    9.94
    %Ordinary Shares
    
    Artisan Partners Ltd., Milwaukee/U.S.A.
    
    
    606,579
    
    
    
    6.98
    %December 31, 2004Ordinary Shares
    
    Harris Associates L.P., Chicago/U.S.A.
Arnhold and S. Bleichroeder Advisors, LLC,
    
    
    893,320
    
    
    
    10.28
    %Ordinary Shares
    
    New York/U.S.A.
    
    
    450,002
    
    
    
    5.18
    %December 31, 2003Ordinary Shares
    
    Harris Associates L.P., Chicago/U.S.A.
    
    
    901,373
    
    
    
    10.37
    %Ordinary Shares
    
    Arnhold and S. Bleichroeder Advisors, LLC,
New York/U.S.A.
    
    
    450,002
    
    
    
    5.18
    %
  
 B. Related Party Transactions
  
 
 C. Interests of Experts and Counsel
  42




---



##### 



Item 8. Financial Information
 
 A. Consolidated Statements and Other Financial Information
  
 Export Sales
  
 
 Legal Proceedings
  
 Policy on Dividend Distributions
  
   
  
 B. Significant Changes
  43




---



##### 



Item 9. The Offer and Listing
  
 A. Offer and Listing Details
 
 4. Market Price Information
 Trading of our ADRs on the New York Stock Exchange since July 16, 1996
  Price per ADRHigh
    
    Low($)2001
    
    
    48.00
    
    
    
    22.502002
    
    
    37.53
    
    
    
    16.502003
    
    
    36.33
    
    
    
    18.752004First Quarter
    
    
    43.50
    
    
    
    31.75Second Quarter
    
    
    41.00
    
    
    
    35.99Third Quarter
    
    
    41.99
    
    
    
    36.03Fourth Quarter
    
    
    45.79
    
    
    
    38.002005First Quarter
    
    
    53.49
    
    
    
    41.62Second Quarter
    
    
    54.25
    
    
    
    46.00Third Quarter
    
    
    50.73
    
    
    
    45.67Fourth Quarter
    
    
    55.40
    
    
    
    49.502005Month of July
    
    
    48.43
    
    
    
    45.67Month of August
    
    
    50.73
    
    
    
    48.72Month of September
    
    
    50.25
    
    
    
    48.75Month of October
    
    
    53.03
    
    
    
    49.50Month of November
    
    
    51.79
    
    
    
    49.82Month of December
    
    
    55.40
    
    
    
    49.902006Month of January through 31
    
    
    58.19
    
    
    
    53.81
 
  44




---



##### 



Trading of Ordinary Shares on the Frankfurt Stock Exchange since April 15, 1998
   Price per Ordinary ShareHigh
    
    Low
    
    High
    
    Low
    
    
    
    $
    
    $2001:
    
    
    51.36
    
    
    
    24.40
    
    
    
    45.28
    
    
    
    22.372002:
    
    
    41.80
    
    
    
    15.80
    
    
    
    36.42
    
    
    
    15.562003:
    
    
    30.65
    
    
    
    16.60
    
    
    
    35.83
    
    
    
    18.102004:First Quarter
    
    
    35.01
    
    
    
    25.40
    
    
    
    42.81
    
    
    
    31.06Second Quarter
    
    
    34.85
    
    
    
    29.15
    
    
    
    42.36
    
    
    
    35.43Third Quarter
    
    
    34.84
    
    
    
    28.66
    
    
    
    42.99
    
    
    
    35.36Fourth Quarter
    
    
    35.15
    
    
    
    29.17
    
    
    
    47.94
    
    
    
    39.792005:First Quarter
    
    
    40.09
    
    
    
    31.60
    
    
    
    51.96
    
    
    
    40.96Second Quarter
    
    
    42.39
    
    
    
    35.47
    
    
    
    51.08
    
    
    
    42.74Third Quarter
    
    
    41.75
    
    
    
    38.00
    
    
    
    50.30
    
    
    
    45.79Fourth Quarter
    
    
    47.25
    
    
    
    40.81
    
    
    
    55.92
    
    
    
    48.292005:Month of July
    
    
    40.26
    
    
    
    38.00
    
    
    
    48.67
    
    
    
    45.94Month of August
    
    
    41.45
    
    
    
    39.08
    
    
    
    50.55
    
    
    
    47.66Month of September
    
    
    41.75
    
    
    
    39.56
    
    
    
    50.30
    
    
    
    47.67Month of October
    
    
    44.40
    
    
    
    40.81
    
    
    
    53.47
    
    
    
    49.14Month of November
    
    
    43.80
    
    
    
    41.37
    
    
    
    51.57
    
    
    
    48.70Month of December
    
    
    47.25
    
    
    
    42.25
    
    
    
    55.92
    
    
    
    50.002006:Month of January
    
    
    48.70
    
    
    
    44.45
    
    
    
    40.22
    
    
    
    36.71
 
  
 C. Markets
 
 General
   45




---



##### 



Item 10. Additional Information
 
 A. Share Capital
  
 B. Memorandum and Articles of Association
 
 Registration, Objects and Purposes of the Company
 Aktiengesellschaft Aktiengesetz
  
 General
  
 The Annual General Meeting of Shareholders
  
 The Supervisory Board
   
 The Management Board
  46




---



##### 



Directors
        
 Ordinary Shares
    Barkapitalerhöhung Grundkapital
 47




---



##### 



  
  
 
  
    
    that have been or might potentially be issued in the future to cover bonds containing
conversion or option rights if said bonds have been or will be issued subject to the
exclusion of the right of subscription analogously to § 186, Sub-para. 3, Sent. 4, German
Stock Corporation Act, under an authorization in force at the time said authorization goes
into effect or under an authorization replacing it;
    
    that are sold as treasury shares subject to the exclusion of the right of subscription
of the shareholders pursuant to § 186, Sub-para. 3, Sent. 4, German Stock Corporation Act
under an authorization in force at the time said authorization goes into effect or under an
authorization replacing it.
 
  Dividends
  Dividendenschein Bundesanzeiger
 48




---



##### 



Voting Rights
 Bilanzgewinn Jahresüberschuss
 Unternehmensverträge Beherrschungsverträge Gewinnabführungsverträge
      Change of Shareholders Rights
 
 49




---



##### 



Notification Requirements and Disclosure of Shareholdings
   General Shareholders Meeting
     Limitations on the Right to own Securities
  Provisions that would delay a Change in Control
  50




---



##### 



Provisions of German Law that are significantly different from Provisions of U.S. Law
  Provisions governing changes in the capital that are more stringent than required by law
  German Corporate Governance Code Declaration
  
    
    No agreement was able to be reached in negotiations with our D & O
insurance carrier to obtain a lower premium if a deductible is
arranged. The Company will therefore not arrange for a deductible.
A deductible would not improve the overall motivation and sense of
responsibility of the management and supervisory boards. Both the
management and supervisory boards work to the benefit of the
enterprise (Point 3.8 of the Code).
    
    The compensation paid to the members of the management board has
in the past been and presently still is stated collectively in the
Consolidated Annual Report (Point 4.2.4 of the Code).
    
    The members of the supervisory board have in the past received and
presently still receive fixed compensation, which does not contain
any performance-related variable income elements. Their
compensation is stated collectively in the Consolidated Annual
Report (Point 5.4.5 of the Code).
  NYSE Comparison
   C. Material Contracts
  51




---



##### 



D. Exchange Controls
  E. Taxation
 Taxation
  
    
    are a beneficial owner of some of our ordinary shares/ADR;
    
    are holding some of our ordinary shares/ADR as a capital asset;
    
    are a resident of the United States for purposes of the United States  Germany income
tax treaty (the ''Income Tax Treaty), which generally includes: an individual U.S.
resident; a corporation created or organized under the laws of the United States, any state
thereof or the District of Columbia; and a partnership, estate or trust, to the extent its
income is subject to taxation in the United States as the income of a U.S. resident, either
in its hands or in the hands of its partners or beneficiaries;
    
    are not holding any of our ordinary shares/ADR as part of the business property of your
permanent establishment in Germany or, if you are an individual, as part of your fixed base
in Germany that you use to perform independent personal services; and
    
    are not subject to the limitation on benefits restrictions in the Income Tax Treaty, if
you are not an individual.
  We strongly urge you to consult your tax advisor as to the United States federal income and German
tax consequences and any other tax consequences of holding our ordinary shares/ADR. You should also
discuss with your tax advisor any facts and circumstances that may be unique to you.
 Withholding Tax on Dividends
  52




---



##### 



Withholding Tax Refund Procedures
  
   Reduced United States Tax Rate for Certain Dividends
  53




---



##### 




    
    it is eligible for benefits of a comprehensive income tax treaty with the United States
that the Internal Revenue Service determines is satisfactory for these purposes and that
includes an exchange of information program, or
    
    the stock of the foreign corporation on which the dividend is paid is readily tradable on
an established securities market in the United States.
   Taxation of Capital Gains
   German Capital Tax (Vermögensteuer)
 (Vermögensteuer (Vermögensteue
 Other German Taxes
  F. Dividends and Paying Agents
  G. Statement by Experts
  54




---



##### 



H. Documents on Display
    I. Subsidiary Information.
  Item 11. Quantitative and Qualitative Disclosures about Market Risk
   Exchange Rate Risk
 Transaction Risk and Currency Risk Management
  
 55




---



##### 



Effects of Currency Translation
   Foreign Currency Exchange Risk
   2005
    
    2004Currency
    
    Percentage of Sales
    
    Percentage of SalesU.S. dollars
    
    
    23
    %
    
    
    24
    %Swiss francs
    
    
    4
    %
    
    
    6
    %British pounds
    
    
    4
    %
    
    
    3
    %Other foreign currencies
    
    
    6
    %
    
    
    5
    %
     Foreign Currency Options  December 31, 2005 (All maturing in 2006)
 Contract Amount
    
    Weighted Average
    
    Fair ValueOption Strike
    
    December 31, 2005Price( in thousands)
    
    
    
    ( in thousands)U.S. dollar (USD) put (short)
    
    
    3,361
    
    
    
    1.19
    
    
    
    71
  
 56




---



##### 



Foreign Currency Forward Contracts  December 31, 2005
 Contract Amount
    
    Weighted Average
    
    Fair ValueForward Exchange
    
    December 31, 2005Rate( in thousands)
    
    
    
    ( in thousands)U.S. dollar (USD)
    
    
    6,911
    
    
    
    1.22983
    
    
    
    (317
    )
 
 Interest Rate Risk
  Commodity Price Risk
  Item 12. Description of Securities other than Equity Securities
 A. Debt Securities
  B. Warrants and Rights
  C. Other Securities
  57




---



##### 



D. American Depositary Shares
  Part II
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
 Changes with Respect to Ordinary Shares
 Treasury Stock
  
 Item 15. Controls and Procedures
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  58




---



##### 



Item 16A. Audit Committee Financial Expert
 Audit Committee and Financial Expert
  Item 16B. Code of Ethics
  Item 16C. Principal Accountant Fees and Services
   December 31,2005
    
    2004( in thousands)Audit fees
    
    
    407
    
    
    
    270Audit-related fees
    
    
    25
    
    
    
    2Tax fees
    
    
    45
    
    
    
    46All other fees
    
    
    13
    
    
    
    
 59




---



##### 



Audit Committees pre-approval policies and procedures
   Item 16D. Exemptions from the Listing Standards for Audit Committees
  Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  PART III
 Item 17. Financial Statements.
  Item 18. Financial Statements.
  60




---



##### 



Item 19. Exhibits
 Documents filed as exhibits to this Annual Report:
 1.1
    
    Articles of Association (Satzung) of the Company, as amended at June 8, 2005 (English
translation), to the Annual Report of the Company pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 2005 on Form 20-F,
filed with the U.S. Securities and Exchange Commission on March 23, 2006.1.2
    
    Internal Rules of Procedure (Geschäftsordnung) of the Company (English translation included),
incorporated herein by reference to Exhibit 1.2 to the Annual Report of the Company pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
December 31, 2000 on Form 20-F, filed with the U.S. Securities and Exchange Commission on
March 26, 2001.2.1
    
    Amended and Restated Deposit Agreement, dated as of July 15, 1998, among the Company, the
Bank of New York, as Depositary, and each Holder and Beneficial Owner from time to time of
American Depositary Receipts issued thereunder, including therein a form of American
Depositary Receipt representing the American Depositary Shares registered, incorporated herein
by reference to Exhibit (a) to Post-Effective Amendment No. 2 to the Form F-6 Registration
Statement of the Company and The Bank of New York as Depositary, filed with the U.S.
Securities and Exchange Commission on July 10, 1998.2.2
    
    Form of Certificate of Ordinary Shares, without nominal value (English translation included)
incorporated herein by reference to Exhibit 2.2 to the Annual Report of the Company pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
December 31, 2000 on Form 20-F, filed with the U.S. Securities and Exchange Commission on
March 26, 2001.2.3
    
    Terms of Issuance of Convertible Bonds issued in 2000 (English version), incorporated herein
by reference to Exhibit 2.4 to the Annual Report of the Company pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2000 on
Form 20-F, filed with the U.S. Securities and Exchange Commission on March 26, 2001.2.4
    
    Terms of Issuance of Convertible Bonds issued in 2002 (English version), incorporated herein
by reference to Exhibit 2.5 to the Annual Report of the Company pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2002 on
Form 20-F, filed with the U.S. Securities and Exchange Commission on March 25, 2003.2.5
    
    German Corporate Governance Code and incorporation of the Companys recommendations into
its corporate strategy (English version), filed with the U.S. Securities and Exchange
Commission on March 24, 2004.8.1
    
    Significant subsidiaries: Please see part C (Organizational Structure) in Item 4 (Information
on the Company).12.1
    
    Certification of the Chairman of the management board pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed with the U.S. Securities and Exchange Commission on March
23, 2006.12.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed with the U.S. Securities and Exchange Commission on March 23, 2006.13.1
    
    Certification of the Chairman of the Management Board pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, filed with the U.S. Securities and Exchange Commission on March
23, 2006.13.2
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, filed with the U.S. Securities and Exchange Commission on March 23, 2006.99.1
    
    The Companys Code of Ethics (English version), incorporated herein by reference to Exhibit
99.1 to the Annual Report of the Company pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 2004 on Form 20-F filed with the
U.S. Securities and Exchange Commission on March 30, 2005.
 61




---



##### 



SIGNATURE
     
   
 62




---



##### 



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm, Ernst & Young
    
    
    F-2Report of Independent Registered Public Accounting Firm, KPMG
    
    
    F-3Consolidated Statements of Income for the years
ended December 31, 2005, 2004 and 2003
    
    
    F-4Consolidated Balance Sheets at December 31, 2005 and 2004
    
    
    F-5Consolidated Statements of Shareholders Equity for the years
ended December 31, 2005, 2004 and 2003
    
    
    F-6Consolidated Statements of Cash Flows for the years
ended December 31, 2005, 2004 and 2003
    
    
    F-7Notes to the Consolidated Financial Statements
    
    
    F-8




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
 
 F-2




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 
 F-3




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
CONSOLIDATED STATEMENTS OF INCOME
 Year ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    
    
    
    (in thousands, except per share data)Net sales
    
    
    159,517
    
    
    
    151,512
    
    
    
    138,590Cost of sales
    
    
    (84,012
    )
    
    
    (79,010
    )
    
    
    (75,393
    )Gross profit
    
    
    75,505
    
    
    
    72,502
    
    
    
    63,197Selling and marketing expenses
    
    
    (19,877
    )
    
    
    (18,973
    )
    
    
    (20,394
    )General and administrative expenses
    
    
    (12,408
    )
    
    
    (12,524
    )
    
    
    (12,153
    )Research and development expenses
    
    
    (6,432
    )
    
    
    (6,387
    )
    
    
    (6,301
    )Operating profit
    
    
    36,788
    
    
    
    34,618
    
    
    
    24,349Interest expense
    
    
    (156
    )
    
    
    (83
    )
    
    
    (246
    )Interest income
    
    
    1,496
    
    
    
    1,247
    
    
    
    1,803Foreign exchange gain
    
    
    1,209
    
    
    
    665
    
    
    
    2,124Income from continuing operations
before income taxes and minority interests:
    
    
    39,337
    
    
    
    36,447
    
    
    
    28,030Income taxes:Current (Note 11)
    
    
    (14,538
    )
    
    
    (13,596
    )
    
    
    (14,000
    )Deferred (Note 11)
    
    
    (433
    )
    
    
    (1,037
    )
    
    
    675(14,971
    )
    
    
    (14,633
    )
    
    
    (13,325
    )Minority interests (Note 21)
    
    
    (624
    )
    
    
    
    
    
    
    Income from continuing operations
    
    
    23,742
    
    
    
    21,814
    
    
    
    14,705Discontinued operations (Note 20):Loss from discontinued operations, net of tax.
    
    
    (856
    )
    
    
    (10,188
    )
    
    
    (1,959
    )Loss from disposal of discontinued
operations, net of tax
    
    
    (138
    )
    
    
    
    
    
    
    Loss from discontinued operations
    
    
    (994
    )
    
    
    (10,188
    )
    
    
    (1,959
    )Net income
    
    
    22,748
    
    
    
    11,626
    
    
    
    12,746Net earnings per share/ADR fromContinuing operations, basic and diluted ()
    
    
    2.73
    
    
    
    2.51
    
    
    
    1.68Discontinued operations, basic and diluted ()
    
    
    (0.11
    )
    
    
    (1.17
    )
    
    
    (0.22
    )Net earnings per share/ADR ()
    
    
    2.62
    
    
    
    1.34
    
    
    
    1.46
  F-4




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004
    
    
    (in thousands)ASSETSCash and cash equivalents
    
    
    61,651
    
    
    
    44,986Trade accounts receivable, net (Note 3)
    
    
    22,481
    
    
    
    18,967Other accounts receivable (Note 4)
    
    
    1,259
    
    
    
    4,056Inventories, net (Note 5)
    
    
    13,747
    
    
    
    13,954Investment securities (Note 8)
    
    
    3,000
    
    
    
    9,000Prepaid expenses
    
    
    872
    
    
    
    541Deferred tax assets, net (Note 11)
    
    
    1,124
    
    
    
    774Other current assets
    
    
    334
    
    
    
    564Net current assets of discontinued operations (Note 20)
    
    
    
    
    
    
    1,862TOTAL CURRENT ASSETS
    
    
    104,468
    
    
    
    94,704Other intangible assets, net (Note 7)
    
    
    487
    
    
    
    491Property, plant and equipment, net (Note 6)
    
    
    22,394
    
    
    
    23,225Investment securities (Note 8)
    
    
    6,000
    
    
    
    1,002Deferred tax assets, net (Note 11)
    
    
    4,563
    
    
    
    1,985Prepaid pension cost (Note 13)
    
    
    
    
    
    
    2,817Other assets
    
    
    912
    
    
    
    1,009TOTAL NON-CURRENT ASSETS
    
    
    34,356
    
    
    
    30,529TOTAL ASSETS
    
    
    138,824
    
    
    
    125,233LIABILITIES AND SHAREHOLDERS EQUITYTrade accounts payable
    
    
    3,184
    
    
    
    2,965Other payables
    
    
    2,659
    
    
    
    2,328Accrued liabilities (Note 10)
    
    
    9,640
    
    
    
    9,519Income tax liabilities (Note 11)
    
    
    3,938
    
    
    
    5,720Customer deposits
    
    
    1,375
    
    
    
    1,911Net current liabilities of discontinued operations
    
    
    
    
    
    
    1,186TOTAL CURRENT LIABILITIES
    
    
    20,796
    
    
    
    23,629Convertible bonds (Note 12)
    
    
    461
    
    
    
    794Accrued pension (Note 13)
    
    
    4,382
    
    
    
    1,455Minority interests (Note 21)
    
    
    554
    
    
    
    TOTAL NON-CURRENT LIABILITIES
    
    
    5,397
    
    
    
    2,249SHAREHOLDERS EQUITY (Note 14)Share capital (13,459,350 no-par value ordinary shares
authorized; 8,790,600 issued and 8,690,524 outstanding
at December 31, 2005, and at December 31, 2004)
    
    
    22,504
    
    
    
    22,504Additional paid-in capital
    
    
    2,821
    
    
    
    2,821Retained earnings
    
    
    94,183
    
    
    
    79,256Accumulated other comprehensive loss
    
    
    (4,439
    )
    
    
    (2,788
    )Treasury stock, at cost (100,076 ordinary shares at
December 31, 2005, and December 31, 2004)
    
    
    (2,438
    )
    
    
    (2,438
    )TOTAL SHAREHOLDERS EQUITY
    
    
    112,631
    
    
    
    99,355TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    138,824
    
    
    
    125,233
  F-5




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Accumulated OtherComprehensive IncomeAdditional
    
    
    
    
    
    Minimum
    
    
    Cumulative
    
    
    Unrealized
    
    
    
    
    
    TotalShare
    
    
    paid in
    
    
    Retained
    
    
    pension
    
    
    translation
    
    
    gain/loss
    
    
    Treasury
    
    
    shareholderscapital
    
    
    capital
    
    
    earnings
    
    
    liability
    
    
    adjustment
    
    
    on hedges
    
    
    stock
    
    
    equity( in thousands)Balance at January 1, 2003
    
    
    22,504
    
    
    
    2,821
    
    
    
    65,870
    
    
    
    (656
    )
    
    
    1,560
    
    
    
    409
    
    
    
    
    
    
    
    92,508Dividends paid
    
    
    
    
    
    
    
    
    
    
    (4,903
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,903
    )Treasury Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,438
    )
    
    
    (2,438
    )Net income
    
    
    
    
    
    
    
    
    
    
    12,746
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,746Components of other
comprehensive income/loss
- net of tax of (462) 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    592
    
    
    
    (3,609
    )
    
    
    141
    
    
    
    
    
    
    
    (2,876
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,870Balance at December 31, 2003
    
    
    22,504
    
    
    
    2,821
    
    
    
    73,713
    
    
    
    (64
    )
    
    
    (2,049
    )
    
    
    550
    
    
    
    (2,438
    )
    
    
    95,037Dividends paid
    
    
    
    
    
    
    
    
    
    
    (6,083
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,083
    )Treasury stock
Net income
    
    
    
    
    
    
    
    
    
    
    11,626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,626Components of other
comprehensive income/loss
- net of tax of  294 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    (765
    )
    
    
    (360
    )
    
    
    
    
    
    
    (1,225
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,401Balance at December 31, 2004
    
    
    22,504
    
    
    
    2,821
    
    
    
    79,256
    
    
    
    (164
    )
    
    
    (2,814
    )
    
    
    190
    
    
    
    (2,438
    )
    
    
    99,355Dividends paid
    
    
    
    
    
    
    
    
    
    
    (7,821
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,821
    )Net income
    
    
    
    
    
    
    
    
    
    
    22,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,748Components of other
comprehensive income/loss
- net of tax of  2,429 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,592
    )
    
    
    2,327
    
    
    
    (386
    )
    
    
    
    
    
    
    (1,651
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,097Balance at December 31, 2005
    
    
    22,504
    
    
    
    2,821
    
    
    
    94,183
    
    
    
    (3,756
    )
    
    
    (487
    )
    
    
    (196
    )
    
    
    (2,438
    )
    
    
    112,631
  F-6




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    
    
    
    (in thousands)Cash flow from operating activities:Net income from continuing operations
    
    
    23,742
    
    
    
    21,814
    
    
    
    14,705Adjustments to reconcile net income to net cash
flows from operating activities:provided by operating activities:Depreciation and amortization
    
    
    3,202
    
    
    
    3,236
    
    
    
    3,811Loss on goodwill impairment
    
    
    
    
    
    
    1,037
    
    
    
    Change in deferred taxes
    
    
    433
    
    
    
    1,037
    
    
    
    (675
    )Provision for doubtful accounts, net of collections
    
    
    104
    
    
    
    (585
    )
    
    
    214Other non-cash income and expenses
    
    
    564
    
    
    
    7
    
    
    
    347Changes in net cash from discontinued operations
    
    
    (504
    )
    
    
    (580
    )
    
    
    (4,325
    )Effects of changes in operating assets and liabilities:Inventories
    
    
    627
    
    
    
    (2,211
    )
    
    
    1,868Receivables and other assets
    
    
    (1,249
    )
    
    
    1,655
    
    
    
    (2,070
    )Accrued pension liabilities
    
    
    (108
    )
    
    
    356
    
    
    
    4,482Pension trust (2004: Prepaid pension cost)
    
    
    
    
    
    
    2
    
    
    
    (35,955
    )Trade and other accounts payable
    
    
    (423
    )
    
    
    347
    
    
    
    (97
    )Accrued other liabilities (including income tax liabilities)
    
    
    (1,845
    )
    
    
    196
    
    
    
    4,250Net cash provided by (used in) operating activities
    
    
    24,543
    
    
    
    26,311
    
    
    
    (13,445
    )Cash flow from investing activities:Proceeds from disposals of fixed assets
    
    
    134
    
    
    
    161
    
    
    
    165Proceeds from disposals of discontinued operations
    
    
    171
    
    
    
    
    
    
    
    Capital expenditures from continuing operations
    
    
    (2,470
    )
    
    
    (2,092
    )
    
    
    (1,491
    )Capital expenditures from discontinued operations
    
    
    
    
    
    
    (1,308
    )
    
    
    (426
    )Purchase of investment securities
    
    
    (7,998
    )
    
    
    (1,002
    )
    
    
    (9,000
    )Redemption of investment securities
    
    
    9,000
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (1,163
    )
    
    
    (4,241
    )
    
    
    (10,752
    )Cash flow from financing activities:Redemption of borrowings
    
    
    
    
    
    
    
    
    
    
    (9,037
    )Dividend payment
    
    
    (7,821
    )
    
    
    (6,083
    )
    
    
    (4,903
    )Redemption of convertible bonds
    
    
    (77
    )
    
    
    
    
    
    
    (12
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (2,438
    )Net cash used in financing activities
    
    
    (7,898
    )
    
    
    (6,083
    )
    
    
    (16,390
    )Effects of foreign exchange rate changes
on cash and cash equivalents
    
    
    1,183
    
    
    
    (432
    )
    
    
    (2,244
    )Net increase (decrease) in cash and cash equivalents
    
    
    16,665
    
    
    
    15,555
    
    
    
    (42,831
    )Cash and cash equivalents at beginning of year
    
    
    44,986
    
    
    
    29,431
    
    
    
    72,262Cash and cash equivalents at end of year
    
    
    61,651
    
    
    
    44,986
    
    
    
    29,431Non-cash transactions:Convertible bonds and employee loans
    
    
    (256
    )
    
    
    (51
    )
    
    
    (154
    )Supplemental disclosures:Cash paid for interest
    
    
    153
    
    
    
    79
    
    
    
    170Cash paid for taxes
    
    
    13,898
    
    
    
    9,663
    
    
    
    6,719
  F-7




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1.    The Company and Basis of Presentation
    
 2.    Summary of Significant Accounting Policies
 Consolidation Principles
 Basis of Consolidation
   Minority Interest
  Use of Estimates
  F-8




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Reclassifications
  Foreign Currency Translation
 
  Revenue Recognition
   Cost of Sales
   Shipping and Handling Costs
   
 F-9




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Selling and Marketing Expenses
  Advertising
   
 General and Administrative Expenses
  Research and Development
  Cash and Cash Equivalents
  Trade Accounts Receivable
  Investment Securities
  Derivatives and Hedging Transactions
  F-10




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Inventories
  Property, Plant and Equipment
  Production halls
    
    40-50 yearsProduction and administration buildings
    
    25 yearsParking sites and similar facilities
    
    20 yearsMachinery and equipment (incl. IT-equipment)
    
    3-15 years
  Goodwill and Other Intangible Assets
   F-11




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for Stock-Based Compensation
  Pensions
   Income Taxes
  Restructuring
  Discontinued operations
  F-12




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Adoption of New Accounting Rules
      
  3.    Trade Accounts Receivable
  December 31,2005
    
    
    2004( in thousands)Trade accounts receivable
    
    
    23,255
    
    
    
    19,993Allowance for doubtful accounts
    
    
    (774
    )
    
    
    (1,026
    )Total trade accounts receivable, net
    
    
    22,481
    
    
    
    18,967
 F-13




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   Year ended December, 312005
    
    
    2004
    
    
    2003( in thousands)Balance at beginning of year
    
    
    1,026
    
    
    
    1,719
    
    
    
    1,738Provisions
    
    
    264
    
    
    
    396
    
    
    
    790Accounts written off
    
    
    (356
    )
    
    
    (108
    )
    
    
    (233
    )Collections on previously reserved accounts
    
    
    (160
    )
    
    
    (981
    )
    
    
    (576
    )Balance at end of year
    
    
    774
    
    
    
    1,026
    
    
    
    1,719
 4.    Other Accounts Receivable
    
 5.    Inventories
  December 31,2005
    
    
    2004( in thousands)Raw materials
    
    
    5,441
    
    
    
    4,861Work-in-process
    
    
    3,989
    
    
    
    5,983Finished products
    
    
    7,773
    
    
    
    7,504Inventories
    
    
    17,203
    
    
    
    18,348Inventory reserves
    
    
    (3,456
    )
    
    
    (4,394
    )Total inventories, net
    
    
    13,747
    
    
    
    13,954
  Year ended December, 312005
    
    
    2004
    
    
    2003( in thousands)Balance at beginning of year
    
    
    4,394
    
    
    
    4,541
    
    
    
    4,930Provisions
    
    
    693
    
    
    
    322
    
    
    
    256Inventory written off
    
    
    (1,631
    )
    
    
    (469
    )
    
    
    (645
    )Balance at end of year
    
    
    3,456
    
    
    
    4,394
    
    
    
    4,541
 F-14




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 6.    Property, Plant and Equipment
  December 31,2005
    
    
    2004( in thousands)Land
    
    
    980
    
    
    
    980Machinery and equipment
    
    
    38,802
    
    
    
    39,109Buildings and improvements
    
    
    30,589
    
    
    
    29,617Total property, plant and equipment, at cost
    
    
    70,371
    
    
    
    69,706Accumulated depreciation
    
    
    (47,977
    )
    
    
    (46,481
    )Total property, plant and equipment, net
    
    
    22,394
    
    
    
    23,225
      
 7.    Other Intangible Assets
  December 31,2005
    
    
    2004( in thousands)Software
    
    
    2,945
    
    
    
    2,657Intangible assets from pension accounting
    
    
    154
    
    
    
    220Total goodwill and intangible assets, at cost
    
    
    3,099
    
    
    
    2,877Accumulated amortization
    
    
    (2,612
    )
    
    
    (2,386
    )Total goodwill and intangible assets, net
    
    
    487
    
    
    
    491
      
 F-15




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 8.    Investment Securities
  December 31,2005
    
    
    2004( in thousands)Unrealized
    
    
    
    
    
    
    
    
    
    
    UnrealizedAmortized
    
    
    holding
    
    
    Fair
    
    
    Amortized
    
    
    holding
    
    
    Faircost
    
    
    loss
    
    
    value
    
    
    cost
    
    
    loss
    
    
    valueCurrentInvestment securities
    
    
    3,000
    
    
    
    39
    
    
    
    2,961
    
    
    
    9,000
    
    
    
    18
    
    
    
    8,982Non-current
Investment securities
    
    
    6,000
    
    
    
    250
    
    
    
    5,750
    
    
    
    1,002
    
    
    
    2
    
    
    
    1,000Total investment securities
    
    
    9,000
    
    
    
    289
    
    
    
    8,711
    
    
    
    10,002
    
    
    
    20
    
    
    
    9,982
   
 9.    Long-Term Debt
   
 10.    Accrued Liabilities
  December 31,2005
    
    
    2004( in thousands)Warranty provisions
    
    
    2,887
    
    
    
    2,897Employee-related expenses
    
    
    6,141
    
    
    
    5,882Other
    
    
    612
    
    
    
    7409,640
    
    
    
    9,519
  F-16




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Balance at beginning of year
    
    
    2,897
    
    
    
    3,529
    
    
    
    3,774Provisions
    
    
    789
    
    
    
    1,250
    
    
    
    2,459Utilization
    
    
    (319
    )
    
    
    (768
    )
    
    
    (2,070
    )Releases
    
    
    (480
    )
    
    
    (1,114
    )
    
    
    (634
    )Balance at end of year
    
    
    2,887
    
    
    
    2,897
    
    
    
    3,529
 11.    Income Taxes from Continuing Operations
    Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Germany
    
    
    31,340
    
    
    
    29,155
    
    
    
    17,721Outside Germany
    
    
    7,997
    
    
    
    7,292
    
    
    
    10,30939,337
    
    
    
    36,447
    
    
    
    28,030
  Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Current
Germany
    
    
    12,102
    
    
    
    11,192
    
    
    
    11,239Outside Germany
    
    
    2,436
    
    
    
    2,404
    
    
    
    2,76114,538
    
    
    
    13,596
    
    
    
    14,000Deferred
Germany
    
    
    (129
    )
    
    
    659
    
    
    
    (362
    )Outside Germany
    
    
    562
    
    
    
    378
    
    
    
    (313
    )433
    
    
    
    1,037
    
    
    
    (675
    )Income tax expenses
    
    
    14,971
    
    
    
    14,633
    
    
    
    13,325
 F-17




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2005
    
    
    2004( in thousands)Deferred tax assets:Pensions
    
    
    4,256
    
    
    
    2,029Inventory
    
    
    745
    
    
    
    607Intangible assets
    
    
    279
    
    
    
    400Tax loss carry-forward
    
    
    28
    
    
    
    207Derivatives
    
    
    120
    
    
    
    Other
    
    
    259
    
    
    
    2855,687
    
    
    
    3,528Deferred tax liabilities:Property, plant and equipment
    
    
    543
    
    
    
    651Derivatives
    
    
    
    
    
    
    116Other
    
    
    277
    
    
    
    2820
    
    
    
    769Deferred tax assets, net
    
    
    4,867
    
    
    
    2,759
  December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004( in thousands)Long-term
    
    
    Short-termDeferred tax assets, net
    
    
    4,563
    
    
    
    2,636
    
    
    
    1,124
    
    
    
    892Deferred tax liabilities, net
    
    
    (805
    )
    
    
    (651
    )
    
    
    (15
    )
    
    
    (118
    )Deferred tax assets, net
    
    
    3,758
    
    
    
    1,985
    
    
    
    1,109
    
    
    
    774
  Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Income tax expenses at German statutory rate
    
    
    14,897
    
    
    
    13,802
    
    
    
    11,061Higher (lower) foreign tax rates
    
    
    (14
    )
    
    
    (78
    )
    
    
    (507
    )Loss carry-forwards of a non-German subsidiary
    
    
    (178
    )
    
    
    (325
    )
    
    
    532Taxes due to new legislation on distributed earnings in prior years
    
    
    
    
    
    
    
    
    
    
    865Taxes due to dividend payments
    
    
    69
    
    
    
    11
    
    
    
    336Tax debits/credits due to tax filings in prior years
    
    
    40
    
    
    
    (24
    )
    
    
    (3
    )Impairment of goodwill
    
    
    
    
    
    
    393
    
    
    
    Non-deductible expenses
    
    
    147
    
    
    
    281
    
    
    
    245Tax effect on intercompany transactions with discontinued entity
    
    
    
    
    
    
    263
    
    
    
    979Other
    
    
    10
    
    
    
    310
    
    
    
    (183
    )Provision for income taxes
    
    
    14,971
    
    
    
    14,633
    
    
    
    13,325
 
 F-18




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   
 12.    Stock-Based Compensation
    F-19




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Employee Participation Program, Term: 2000 through 2005
 
 Employee Participation Program, Term: 2002 through 2007
 
  
 
 
 F-20




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Number of Shares from
    
    
    WeightedaverageBonds
    
    
    Bonds
    
    
    Bonds
    
    
    exerciseissued
    
    
    issued
    
    
    issued
    
    
    price per2000
    
    
    2002
    
    
    total
    
    
    shareConvertible shares outstanding at January 1, 2003
    
    
    180,000
    
    
    
    215,000
    
    
    
    395,000
    
    
    
    45.22Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (60,000
    )
    
    
    (5,000
    )
    
    
    (65,000
    )
    
    
    47.63Convertible shares outstanding at December 31, 2003
    
    
    120,000
    
    
    
    210,000
    
    
    
    330,000
    
    
    
    44.74Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    (20,000
    )
    
    
    (20,000
    )
    
    
    42.86Convertible shares outstanding at December 31, 2004
    
    
    120,000
    
    
    
    190,000
    
    
    
    310,000
    
    
    
    44.86Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    (10,000
    )
    
    
    (10,000
    )
    
    
    42.86Redeemed
    
    
    (120,000
    )
    
    
    
    
    
    
    (120,000
    )
    
    
    48.03Convertible shares outstanding at December 31, 2005
    
    
    
    
    
    
    180,000
    
    
    
    180,000
    
    
    
    42.86
      
 13.    Pension Benefits and Similar Obligations
  F-21




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Service cost
    
    
    1,026
    
    
    
    923
    
    
    
    970Interest cost
    
    
    2,228
    
    
    
    2,164
    
    
    
    2,163Expected return on assets
    
    
    (2,202
    )
    
    
    (2,081
    )
    
    
    (73
    )Amortization of:Unrecognized net actuarial losses
    
    
    169
    
    
    
    21
    
    
    
    46Unrecognized prior service cost
    
    
    69
    
    
    
    73
    
    
    
    77Other
    
    
    25
    
    
    
    21
    
    
    
    Pension cost, net
    
    
    1,315
    
    
    
    1,121
    
    
    
    3,183
  December 31,2005
    
    
    2004( in thousands)Change in benefit obligationBeginning projected benefit obligation
    
    
    44,488
    
    
    
    39,870Service cost
    
    
    1,026
    
    
    
    923Interest cost
    
    
    2,228
    
    
    
    2,164Benefit payments
    
    
    (1,664
    )
    
    
    (1,614
    )Actuarial losses
    
    
    4,067
    
    
    
    3,286Impact of foreign currency exchange rate differences
    
    
    364
    
    
    
    (141
    )Ending projected benefit obligation
    
    
    50,509
    
    
    
    44,488Accumulated benefit obligation
    
    
    45,835
    
    
    
    40,329Change in plan assetsFair value at beginning of year
    
    
    39,836
    
    
    
    38,229Return on plan assets
    
    
    1,848
    
    
    
    2,235Company contributions
    
    
    1,377
    
    
    
    1,087Benefits paid
    
    
    (1,664
    )
    
    
    (1,614
    )Impact of foreign currency exchange rate differences
    
    
    202
    
    
    
    (101
    )Fair value at end of year
    
    
    41,599
    
    
    
    39,836Underfunded status of plans
    
    
    (8,910
    )
    
    
    (4,652
    )Unrecognized actuarial loss
    
    
    10,359
    
    
    
    6,035Unrecognized prior service cost
    
    
    150
    
    
    
    219Unrecognized transition obligation
    
    
    227
    
    
    
    249Net amount
    
    
    1,826
    
    
    
    1,851
 F-22




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 December 31,2005
    
    
    2004( in thousands)Amounts recognized in balance sheetsIntangible assets  minimum pension liability
    
    
    154
    
    
    
    220Accrued pension
    
    
    (4,382
    )
    
    
    (1,455
    )Prepaid pension costs
    
    
    
    
    
    
    2,817Other comprehensive income  minimum pension liability, gross
    
    
    6,054
    
    
    
    269Net amount recognized in balance sheets
    
    
    1,826
    
    
    
    1,851
  December 31,2005
    
    
    2004
    
    
    2003GermanyWeighted average discount rate
    
    
    4.40
    %
    
    
    5.00
    %
    
    
    5.50
    %Rates of increase in compensation levels
    
    
    2.75
    %
    
    
    2.75
    %
    
    
    2.75
    %Expected long-term rate of return on assets
    
    
    4.50
    %
    
    
    5.50
    %
    
    
    5.50
    %United States, Netherlands and BelgiumWeighted average discount rate
    
    
    4.20 - 5.75
    %
    
    
    5.00 - 6.25
    %
    
    
    4.75 - 6.25
    %Rates of increase in compensation levels
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Expected long-term rate of return on assets
    
    
    4.50 - 7.50
    %
    
    
    4.50 - 7.50
    %
    
    
    4.50 - 7.50
    %
     Year
    
    in thousands2006
    
    
    1,7392007
    
    
    1,9122008
    
    
    2,0652009
    
    
    2,1842010
    
    
    2,3042011 - 2015
    
    
    13,19023,394
  December 31,2004
    
    
    2003( in thousands)
    
    
    %
    
    
    ( in thousands)
    
    
    %Equity securities
    
    
    8,757
    
    
    
    21.0
    
    
    
    2,947
    
    
    
    7.4Fixed-income securities
    
    
    27,151
    
    
    
    65.3
    
    
    
    32,580
    
    
    
    81.8Cash and cash equivalents
    
    
    4,121
    
    
    
    9.9
    
    
    
    2,600
    
    
    
    6.5Other
    
    
    1,570
    
    
    
    3.8
    
    
    
    1,709
    
    
    
    4.341,599
    
    
    
    100.0
    
    
    
    39,836
    
    
    
    100.0
 F-23




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Defined Contribution Plans
   
 14.    Shareholders Equity
 Treasury Stock
  
 Dividend Restriction
 
  
 Accumulated Other Comprehensive Income/(Loss)
  Minimum
    
    
    Currency
    
    
    Unrealizedpension
    
    
    translation
    
    
    gain/(loss)liability
    
    
    adjustment
    
    
    on hedges
    
    
    TotalDecember 31, 2005Before tax
    
    
    (6,054
    )
    
    
    (487
    )
    
    
    (316
    )
    
    
    (6,857
    )Tax impact
    
    
    2,298
    
    
    
    
    
    
    
    120
    
    
    
    2,418Net amount
    
    
    (3,756
    )
    
    
    (487
    )
    
    
    (196
    )
    
    
    (4,439
    )December 31, 2004Before tax
    
    
    (269
    )
    
    
    (2,814
    )
    
    
    306
    
    
    
    (2,777
    )Tax impact
    
    
    105
    
    
    
    
    
    
    
    (116
    )
    
    
    (11
    )Net amount
    
    
    (164
    )
    
    
    (2,814
    )
    
    
    190
    
    
    
    (2,788
    )December 31, 2003Before tax
    
    
    (107
    )
    
    
    (2,049
    )
    
    
    898
    
    
    
    (1,258
    )Tax impact
    
    
    43
    
    
    
    
    
    
    
    (348
    )
    
    
    (305
    )Net amount
    
    
    (64
    )
    
    
    (2,049
    )
    
    
    550
    
    
    
    (1,563
    )
 F-24




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 15. Commitments and Contingencies
  Contractual Obligations
 Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years in thousandsOperating leases
    
    
    3,511
    
    
    
    1,285
    
    
    
    1,136
    
    
    
    641
    
    
    
    449Purchase obligations
    
    
    8,874
    
    
    
    4,212
    
    
    
    3,376
    
    
    
    1,286
    
    
    
    Maintenance contracts
    
    
    112
    
    
    
    85
    
    
    
    18
    
    
    
    9
    
    
    
    Convertible bonds payable
    
    
    461
    
    
    
    
    
    
    
    461
    
    
    
    
    
    
    
    Pension payments*
    
    
    23,394
    
    
    
    1,739
    
    
    
    3,977
    
    
    
    4,488
    
    
    
    13,190Total contractual obligations
    
    
    36,352
    
    
    
    7,321
    
    
    
    8,968
    
    
    
    6,424
    
    
    
    13,639
 
 *
    
    Pension payments include only payments for the next ten years as reported by the Companys
actuaries.   
  16. Segment Information
    F-25




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Net sales from continuing operationsGermanyThird party
    
    
    70,159
    
    
    
    67,585
    
    
    
    60,546Intercompany
    
    
    54,747
    
    
    
    49,626
    
    
    
    36,986124,906
    
    
    
    117,211
    
    
    
    97,532Europe (excluding Germany)
    
    
    49,779
    
    
    
    46,468
    
    
    
    46,774United States
    
    
    36,366
    
    
    
    33,316
    
    
    
    32,870Rest of World
    
    
    4,386
    
    
    
    4,931
    
    
    
    3,557215,437
    
    
    
    201,926
    
    
    
    180,733Intercompany eliminations
    
    
    (55,920
    )
    
    
    (50,414
    )
    
    
    (42,143
    )Total net sales from continuing operations
    
    
    159,517
    
    
    
    151,512
    
    
    
    138,590
 Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Operating profit from continuing operations:Germany
    
    
    29,267
    
    
    
    27,506
    
    
    
    13,153Europe (excluding Germany)
    
    
    3,742
    
    
    
    3,920
    
    
    
    6,103United States
    
    
    3,059
    
    
    
    2,657
    
    
    
    4,148Rest of World
    
    
    613
    
    
    
    487
    
    
    
    40636,681
    
    
    
    34,570
    
    
    
    23,810Intercompany eliminations
    
    
    107
    
    
    
    48
    
    
    
    539Total operating profit from continuing operations
    
    
    36,788
    
    
    
    34,618
    
    
    
    24,349Corporate items from continuing operations:Interest income, net
    
    
    1,340
    
    
    
    1,164
    
    
    
    1,557Foreign exchange gain
    
    
    1,209
    
    
    
    665
    
    
    
    2,124Income from continuing operations before income taxes
    
    
    39,337
    
    
    
    36,447
    
    
    
    28,030
 December 31,2005
    
    
    2004( in thousands)Total assetsGermany
    
    
    95,053
    
    
    
    84,116Europe (excluding Germany)
    
    
    19,466
    
    
    
    21,306United States
    
    
    21,599
    
    
    
    15,626Rest of World
    
    
    2,706
    
    
    
    2,323Total assets from continuing operations
    
    
    138,824
    
    
    
    123,371Assets from discontinued operations
    
    
    
    
    
    
    1,862Total assets
    
    
    138,824
    
    
    
    125,233
 F-26




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2005
    
    
    2004( in thousands)Long-lived tangible and intangible assets:Germany
    
    
    21,847
    
    
    
    22,738Europe (excluding Germany)
    
    
    681
    
    
    
    777United States
    
    
    158
    
    
    
    58Rest of World
    
    
    195
    
    
    
    143Total
    
    
    22,881
    
    
    
    23,716
 Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Capital expenditure:Germany
    
    
    1,922
    
    
    
    1,553
    
    
    
    1,075Europe (excluding Germany)
    
    
    295
    
    
    
    437
    
    
    
    328United States
    
    
    144
    
    
    
    9
    
    
    
    30Rest of World
    
    
    109
    
    
    
    93
    
    
    
    58Total
    
    
    2,470
    
    
    
    2,092
    
    
    
    1,491
 Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Depreciation and amortization:Germany
    
    
    2,709
    
    
    
    2,718
    
    
    
    3,069Europe (excluding Germany)
    
    
    368
    
    
    
    408
    
    
    
    518United States
    
    
    50
    
    
    
    35
    
    
    
    162Rest of World
    
    
    75
    
    
    
    75
    
    
    
    62Total
    
    
    3,202
    
    
    
    3,236
    
    
    
    3,811
  Year ended December 31,2005
    
    
    2004
    
    
    2003( in thousands)Sales by product:Turbopumps
    
    
    64,397
    
    
    
    59,447
    
    
    
    53,571Measurement and analyses equipment, components
    
    
    41,895
    
    
    
    42,529
    
    
    
    35,218Service
    
    
    23,515
    
    
    
    25,011
    
    
    
    25,931Backing pumps
    
    
    22,775
    
    
    
    19,732
    
    
    
    18,040Systems
    
    
    6,935
    
    
    
    4,793
    
    
    
    5,830Total
    
    
    159,517
    
    
    
    151,512
    
    
    
    138,590
 F-27




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 17. Financial Instruments
 Fair Value
  Foreign Currency Exchange Hedging
         
 
  
 F-28




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 18. Earnings per Share
  2005
    
    
    2004
    
    
    2003Numerator:Net income from continuing operations ( in
thousands)
    
    
    23,742
    
    
    
    21,814
    
    
    
    14,705Denominator:Denominator
for basic earnings per share 
weighted-average shares
    
    
    8,690,524
    
    
    
    8,690,524
    
    
    
    8,750,201Effect of dilutive securities:Stock-based compensation (Note 7)
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per share 
adjusted weighted-average shares and
assumed conversions
    
    
    8,690,524
    
    
    
    8,690,524
    
    
    
    8,750,201Basic earnings per share ()
    
    
    2.73
    
    
    
    2.51
    
    
    
    1.68Diluted earnings per share ()
    
    
    2.73
    
    
    
    2.51
    
    
    
    1.68
  19. Restructuring
    
 F-29




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 20. Discontinued Operations
  
  Year ended December 31,2005
    
    
    2004
    
    
    2003 (in thousands)Loss from discontinued operations
before income tax benefit
    
    
    (1,208
    )
    
    
    (16,821
    )
    
    
    (4,853
    )Income tax benefit
    
    
    352
    
    
    
    6,633
    
    
    
    2,894Net loss from discontinued operations
    
    
    (856
    )
    
    
    (10,188
    )
    
    
    (1,959
    )Loss on disposal of discontinued operations
before income tax benefit
    
    
    (222
    )
    
    
    
    
    
    
    Income tax benefit
    
    
    84
    
    
    
    
    
    
    
    Net loss on disposal of discontinued operations
    
    
    (138
    )
    
    
    
    
    
    
    Total loss from discontinued operations
before income tax benefit
    
    
    (1,430
    )
    
    
    (16,821
    )
    
    
    (4,853
    )Income tax benefit
    
    
    436
    
    
    
    6,633
    
    
    
    2,894Net total loss from discontinued operations
    
    
    (994
    )
    
    
    (10,188
    )
    
    
    (1,959
    )
   December 31,2005
    
    
    2004 in thousandsAssetsTrade accounts receivable and other receivables
    
    
    
    
    
    
    6Inventories, net
    
    
    
    
    
    
    911Intangible and fixed assets
    
    
    
    
    
    
    602Deferred tax assets
    
    
    
    
    
    
    343Total current assets
    
    
    
    
    
    
    1,862LiabilitiesTrade accounts payable and other payables
    
    
    
    
    
    
    1,060Accrued other liabilities
    
    
    
    
    
    
    126Total current liabilities
    
    
    
    
    
    
    1,186
 F-30




---



##### 



PFEIFFER VACUUM TECHNOLOGY AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
 21. Minority Interests
     
 F-31