ANNUAL REPORT2009

ZEPPELIN WORLDWIDE

USA

2

BR

2

D

37 | 6 | 98

GB

2

B

1

A

5 | 5

H

1

CZ

7 | 13

SK

4 | 5

I

1

TM

5

TJ

1

UZ

4

RC

3

AM

1

KSA

1

IND

1 SGP

1

PL

2

BY

1

UA

7

TR

1

RUS

31 | 1 | 4

LOCATIONS FOR CONSTRUCTION MACHINERY AND ENGINES & SYSTEMS *

PRODUCTION FACILITIES AND ENGINEERING OFFICES FOR PLANT CONSTRUCTION

RENTAL BRANCHES

* In some cases at a shared location

1) incl. ZEPPELIN GmbH

ZEPPELIN AT A GLANCE

SALES 2009 2008 2007 2006 2005

Trade EUR m 1,558 2,208 2,080 1,735 1,552

Industry EUR m 238 239 176 125 115

Group (total)1 EUR m 1,796 2,447 2,257 1,860 1,667

EMPLOYEES (YEAR AVERAGE)

Trade1 5,124 5,304 4,518 3,973 3,802

Industry 1,144 669 603 561 529

Group (total) 6,268 5,973 5,121 4,534 4,331

of which trainees 257 311 247 221 232

FIXED ASSETS

Additions EUR m 99,6 149,7 130,6 124,2 102,0

Changes in consolidation group EUR m 31,5 0,6 – - 0,3 –

Depreciation EUR m 67,8 54,3 48,6 47,4 47,0

% of additions 68 36 37 38 46

of which rental assets

Additions EUR m 52,3 88,9 72,3 85,9 72,7

Changes in consolidation group EUR m 0,0 0,0 – – –

Depreciation EUR m 30,8 31,0 26,8 28,3 25,0

RESULTS FROM ORDINARY ACTIVITIES EUR m 26,7 101,2 119,1 77,0 57,3

GROUP NET INCOME EUR m 12,8 65,4 71,4 41,7 34,0

NET CASH FLOW EUR m 92,3 170,0 148,0 126,4 97,7

GROUP EQUITY EUR m 383,2 394,4 341,1 273,6 233,5

of which

Subscribed capital EUR m 100,0 100,0 50,0 50,0 50,0

Capital reserves EUR m 60,0 60,0 60,0 60,0 60,0

Revenue reserves EUR m 212,0 140,6 131,6 106,4 90,5

Retained earnings of the Group EUR m 0 83,0 89,9 50,2 27,3

Minority interests EUR m 11,2 10,8 9,7 7,0 5,7

3

SUPERVISORY BOARD 16

MANAGEMENT BOARD 17

SUPERVISORY BOARD REPORT 18

MANAGEMENT BOARD REPORT 20

TRACKS AND TRAILS IN 2009 24

Construction machines 26

Rental 30

Engines & systems 32

Plant construction 34

GROUP MANAGEMENT REPORT 36

Business and economic environment 38

Business development of the Company 45

Results of operations, financial position and net assets 51

Subsequent events 56

Risk report 56

Forecast 63

GROUP FINANCIAL STATEMENT 66

Consolidated balance sheet 66

Consolidated income statement 68

Statement of changes in fixed assets of the Group 70

Statement of changes in Group equity 72

Notes to the consolidated financial statements 74

Audit opinion 89

ZEPPELIN GROUP CONTACTS 90

IMPRINT

LEAVING A TRAILOUR CONSTRUCTION MACHINERY MOVES SAND. OUR AGRICULTURAL EQUIPMENT PLOWS FIELDS. OUR PLANT EQUIPMENT MIXES FOOD. OUR MARINE ENGINES MOVE WATER.

PRODUCTS BY ZEPPELIN MAKE THEIR MARK. QUITE LITERALLY – THROUGH VISIBLE TRAILS.THE 2009 ANNUAL REPORT IS ABOUT THESE VISIBLE TRAILS.

IT’S ALSO ABOUT THE FUTURE. ABOUT QUALITY. ABOUT ACHIEVEMENT. ABOUT CHANGE.

A CHANGING WORLD NEEDS SOLUTIONS THAT CHART FRESH PATHS – AND LEAVE BRAND-NEW TRAILS.

4

P. Gerstmann: The past year has been challenging in every respect. Demand has nose-dived.

We’ve experienced overcapacity in our markets. A capital market that simply hasn’t been work-

ing – causing order volumes to collapse. We are genuinely grateful we had such a solid founda-

tion on which to build. Navigating a course is so much easier when the trail is already there. Our

past has helped us cope with the upheaval we’ve witnessed in the wake of the financial crisis.

A. Bautzmann: We have profited greatly from the fact that Zeppelin has always viewed itself as

a company that makes progress through being ready to move forward. We’re not “business as

usual” people. And this stands us in good stead now.

P. Gerstmann: It was naturally a very difficult year, and we had to take action to address these

difficulties. And at the transition point between recognizing a challenge to taking action about it –

it’s when we get to this point that we excel. We’ve seen this in the past, and we’re seeing it

again now.

J.-P. Knepper: In a changing world, Zeppelin needs new solutions, and they won’t fall into our

lap. They come from stretching our abilities, every single day, from committing to change, and

devising new and better approaches for things that might have worked well in the past. It’s also

key that the people at Zeppelin have our trust and can take their own initiative to bring us closer

to customers, help us serve markets better and consistently enhance our quality.

M. Heidemann: The Connected Worksite initiative, launched with Caterpillar, is an excellent

example of how a challenging economic environment spurs Zeppelin to do things in new ways.

Crisis leads to change. But not if you play the ostrich and stick your head in the sand. It’s part of

our job as manager is to keep people’s heads free, so they can be effective locally in operational

terms, but still respond strategically to evolving market conditions and fulfill the requirements of

our customers more speedily.

P. Gerstmann: In the world we live in, change is a given. Deliberately factoring change into our

actions, reviewing our own standards and benchmarks regularly and adjusting them if need be –

this is what success in business is all about. Even so, this change-oriented approach is by no

THE ZEPPELIN MANAGEMENT BOARD DISCUSSESCHANGE AND TRANSFORMATION

TRACKS AND TRAILS

5

means accepted practice everywhere. It’s up to us to get through to people’s hearts and minds,

and create an appetite for change.

A. Bautzmann: Zeppelin is right now in the midst of radical transformation that will bring us

stronger out of the crisis. Our long-term strategic trajectory remains the same: we have our ex-

pertise as a manufacturer partner and problem-solver for customers in support and engineering-

based services, and we’ll continue to distil this expertise into opportunities to take the company

forward. At the same time, however, we’re also changing our corporate structures. We are intro-

ducing a new organizational structure this year. Five strategic business units enable us to forge

tighter, more immediate links with our customers, markets and business partners.

M. Heidemann: We can put strategic and operative measures into action more directly, reduce

costs, and build more intensity and speed of response into our business relationships. Going

forward, we’ll be a fitter, tougher player. The economic crisis has taught us one thing: whatever

business we pursue, the fundamental credo must be sustainability – which means long-term

customer satisfaction, and long-term win-win situations with our partners.

J.-P. Knepper: The way we act is also determined by what we need to do as a team. Perhaps

you’ll forgive me a soccer analogy here: if the opponent has control of the ball, we’re all defenders;

if it’s us making the game, we’re all strikers. But without sacrificing our game plan – the strategy

and tactics that guide and inform everything we do.

P. Gerstmann: I don’t think the future belongs to the specialists. Quite the opposite: we’re all

looking toward a common goal. For us this means we’re all focused on the customer. We are all

salespeople.

M. Heidemann: Being a seasoned salesman, this is an approach I relish. Because each and every

individual has a real influence on how customers perceive our company. It might sound harsh, but

bad times can be good for strong companies. These companies keep the promises they made

when times were better, and reinforce the partnerships with their customers. But even good com-

panies undergo a period of realignment, when they adjust to a changed environment. Our eight-

6

phase “umbrella program” is a case in point: through this 2009 program to combat the crisis, we

were actually able to strengthen customer loyalty. Our significant growth in market share for core

and large machines are testimony to this increased confidence.

J.-P. Knepper: What our business partners have always been able to rely on is that we’ll never

go for the short-term gain, the quick fix. We operate sustainably, responsibly, and with an eye

firmly on the future. And this is the basis on which we are working to improve our structures and

opportunities.

A. Bautzmann: Change despite continuity, or continuity despite change ?

J.-P. Knepper: Both, I’d say. But with a different relative weighting depending on the action ra-

dius and business radius. Let’s consider our personnel development policies. They are a shining

example of continuity. In bad times, Zeppelin did not let people go – once the crisis is passed, we

won’t have the expense of recruiting, training and developing people again.

M. Heidemann: We focus on our traditional areas of expertise and recognized strengths. We’re

passionate about everything we do for our customers. We don’t just want to do things differently

from our competitors – we want to be better. And we want to expand our competence, above all

in areas where we’re already good, and offer our customers complete system solutions. Where

would we be on the German market without our partnership with Caterpillar, which goes back

to 1954 ? Where would we be without our exemplary service philosophy ? Or our attractive financ-

ing offers for our customers?

P. Gerstmann: Or our plant engineering solutions, for that matter. We’re essentially staying on

the same strategic trajectory, in sectors where we know our way about. There’s plenty of scope

for development – through optimizing internal processes in our traditional areas of business, and

through strategic acquisitions which complement our activities.

7

M. Heidemann: And this explains why we demand from our staff that they continually learn and

develop professionally. Not that this is a one-way street, with one party making all the demands

and the other following orders. We breathe life into this commitment by making sure there’s

a huge range of training and professional development opportunities on offer for people. And

through this we are giving the people who work at Zeppelin the chance to shape their future,

but also require of them the fundamental willingness to be open to change.

J.-P. Knepper: Zeppelin is proud that our talents are chiefly home-grown. And to keep us best

equipped for challenges ahead, we’re training more people than ever on official apprenticeship

tracks, and we’re also pushing ahead with more dual degree courses, in which students combine

their engineering degree with work at Zeppelin. And we also launched our management develop-

ment program – when the crisis was at its height.

P. Gerstmann: We have to leave well trodden paths. If we don’t, we’ll be left behind. New ideas

emerge and are analyzed; some are taken further, others are discarded. Some opportunities are

used, others get bogged down, some fall on fruitful ground. Change is all about us – always. We

need courage for the future, humility before past achievement and stamina for a sometimes long

and strenuous path ahead.

A. Bautzmann: It’s not just about having ideas. It’s about having a good reason to depart from a

well-trodden path, and helping a great new idea become reality.

M. Heidemann: My take on what makes for successful change can be summed up by a remark

by Antoine Saint-Exupéry: “Don’t take the smooth roads. Take the paths no one has ever been –

so you can be certain you’ll leave a visible trail, and not just churn up the dust.”

P. Gerstmann: Change that just churns up dust is of no value. Solid changes give us that vital con-

tinuity which enables Zeppelin to make progress.

ROUND-TABLE DISCUSSION IN GARCHING ON MARCH 22, 2010

Left to right

Jürgen-Philipp Knepper

Peter Gerstmann

Michael Heidemann

Alexander Bautzmann

8

THE FUTURE.

9

ZEPPELIN IS COMMITTED TO SUSTAINABLE GROWTH. WE ASK THE QUESTION:ARE OUR PROFITS ALSO BENEFICIAL FOR OUR SOCIETY, OUR EMPLOYEES, OURCUSTOMERS ? SHORT-TERMISM IN BUSINESS CUTS OFF LONG-TERM OPPOR-TUNITIES. PICKING A FIELD CLEAN IN A SINGLE SEASON MEANS THERE WILLBE NO CROPS TO HARVEST THE FOLLOWING YEAR. MONOCULTURES, IN OURVIEW, AREN’T A GREAT IDEA.

Slash-and-burn trails don’t work. What we want to leave in our tracks is value – for as

many people as possible. Just like the tracks left in the harvested fields by our agricul-

tural machinery.

Zeppelin is strongly committed to sustainability and to the welfare of the communities in which

we operate. This fundamental credo guides and informs our actions from ecological, social and

economic perspectives. Our over hundred-year corporate culture is testament to our “long-haul”

view. As is the fact that we contribute part of our profits each year to the Zeppelin Foundation, a

charitable trust.

We protect natural resources, pursuing all workable process optimization opportunities that will

reduce consumption of energy and other resources, and limit our emissions. In selecting our busi-

ness partners, we take ecological and social criteria into account as well as economic aspects.

Doing business sustainably is also about ensuring customers derive long-term benefit from the

working relationship. Quality is therefore always a top commitment for us, alongside our commit-

ment to deliver premium products and first-class performance.

Particularly when times get rough, our customers have to be able to rely on their business partners.

The products themselves need to be reliable, of course, but so do the other services we offer.

Zeppelin has remained resolutely on our customers’ side throughout the global economic crisis,

for example by brokering flexible financing agreements with our partner Cat Financial. And we have

strengthened our market position through strategic acquisitions and effective use of synergies.

Our commitment to quality, reliability and sustainability also drives and encourages our manufac-

turer partner. In its vision for the future, Caterpillar articulates its own commitment to take a lead-

ing role in energy efficiency, environment design and “green building” in all new designs. Even

in the crisis year of 2009, our partner invested around US$ 6 million per working day in research

and development of forward-looking products

10

QUALITY.

11

We believe in the power of a good team, and offer our employees a working environment

in which they can develop their personal strengths. Our culture demands mutual respect

and integrity. Zeppelin wants achievers, but also team players. Fairness, mutual respect, a

team spirit and openness are the credos by which we work, also in our dealings with ex-

ternal partners.

We invest in modern offices and workshops in which our employees can work efficiently, and en-

courage collaboration across divisional and national boundaries. And Zeppelin reaps the benefits

of these efforts. It is evident our employees identify strongly with the company – as shown by

the solidarity pact concluded in 2009 in Germany to lead Zeppelin out of the crisis stronger than

ever and to secure jobs.

The capabilities of a company are only ever as good as the skills of its employees. Accordingly,

continuing professional development is, for us, an investment in our future. We promote a culture

of learning. Zeppelin has a particularly high proportion of trainees, with apprentices accounting for

around 9 percent of the workforce in Germany.

We also run our own vocational-school classes, where we co-define standards and help determine

what trainees learn. Zeppelin has its own training center for in-company professional development,

complementing face-to-face learning with systems such as distance learning to ensure quality

levels are consistently maintained in support and engineering.

Where at all possible, we promote people to management positions from within the workforce,

operating a special talent-fostering program and pan-Group management development for this

purpose. The key criteria for selecting and developing people are performance, potential and

personal qualifications. Our credo is to give every employee the opportunity to develop their own

ideas and make their mark in our company.

WHAT MATTERS IS GETTING THE BALANCE RIGHT. OUR ENTIRE TEAM WORKSTO THIS CREDO – FROM PLANT ENGINEERS TO ZEPPELIN HR CONSULTANTS.WE DERIVE ENERGY FROM DIVERSITY. AS AN INTERNATIONAL CORPORATEGROUP WHICH BRINGS TOGETHER A VARIETY OF PEOPLE AND CULTURESUNDER A SINGLE CORPORATE “ROOF”, DIVERSITY IS A SOURCE OF STRENGTH.OUR COMMITMENT IS TO BE MARKET LEADER IN EVERY COUNTRY IN WHICHWE OPERATE. OUR SHARED VALUE SYSTEM HELPS US TRANSFORM THISASPIRATION INTO REALITY.

12

ACHIEVEMENT.

13

OUR TRADITION IS BUILT ON SOLID GROUND, ITS FOUNDATIONS LAID BY THEPIONEERING SPIRIT OF COUNT ZEPPELIN. THIS SPIRIT OF INNOVATION LEDTO THE INVENTION OF THE AIRSHIP, AND TO THE ESTABLISHMENT OF THECOMPANY LUFTSCHIFFBAU ZEPPELIN GMBH (THE ORIGINAL AIRSHIP COM-PANY) AND THE ZEPPELIN FOUNDATION. AFTER THE WAR A NEW COMPANYEMERGED THAT EMBARKED ON FRESH BUSINESS VENTURES IN CONSTRUC-TION MACHINERY AND INDUSTRY.

The past lives on in our work when we go about our daily business with energy and drive.

Our products and services in our Trading and Industry divisions live through the innova-

tion that made Count Zeppelin stand out from the crowd. To this day, this vigor and drive

remain central to our corporate culture and values.

Part of this value system means taking our role as a sponsor and supporter seriously, investing in

education, research, cultural and social affairs, and also sports – Zeppelin sponsors the Friedrichshafen

volleyball team, for example. We co-founded Zeppelin University and are now one of the main

sponsors of this private, state-recognized university at which 650 young people are studying

Bachelor’s and Master's programs.

Yet we can only preserve tradition by constantly re-inventing ourselves and having the courage

to change. In pursuing the strong paths already forged by others, we leave our own unique trails

behind. Our mission is to deliver on our promises to customers while also living up to our own

corporate values – uncompromisingly and rigorously. And we will not deviate from this path.

We invest in the development of alternative propulsion systems such as SkySails. Rather than

going for immediate profit, we’re prepared to risk something new to take into the future. We sell

innovative products such as the hybrid diesel-electric Caterpillar D7E tractor which sets new

benchmarks for environmental efficiency with its lower fuel consumption, reduced emissions and

less wear and tear.

Quality and customer satisfaction are what drive the work we do. If a partner consistently fails to

measure up to our demands, we’ll go to someone who does. If a product no longer measures up,

we’ll improve it. Our work is a means to an end – to add value for customers – never an end in

itself. This is how Zeppelin keeps tradition alive.

14

CHANGE.

15

STRATEGIES ARE VITAL FOR NAVIGATING NEW TERRITORY. WE WANT TOENTER NEW TERRITORY WITH OUR IDEAS, AND OUR OWN MISSION SERVESAS OUR GUIDE. WE WANT TO OFFER OUR CUSTOMERS THE HIGHEST VALUEIN THE INDUSTRY. OUR CUSTOMERS‘ REQUIREMENTS – LIKE THOSE OF THEMARKET – ARE IN A STATE OF CONSTANT FLUX. WE CAN’T REACH GOALSSIMPLY BY DOING BUSINESS AS USUAL. NEW CONDITIONS CAN NECESSI-TATE A CHANGE OF APPROACH.

We trust in our knowledge. Zeppelin has always been good at fresh ventures. From the

pioneering spirit of Count Zeppelin, the new beginnings after the war, and then the

growth from a medium-sized company into an international corporate group, throughout

its history, Zeppelin always had the drive to be creative, to be among the players who

shape the environment. As the market leader, we do not copy. We take the initiative our-

selves – to always remain a boat’s length ahead.

Until the late 1980s, Zeppelin was a Caterpillar sales and service organization in West Germany,

and this was the full extent of its trading operations. The Industry division in Friedrichshafen was

primarily focused on military business in Germany. Much has happened since then: international-

ization, reorganization and restructuring of the Industry division, transforming it from a manufac-

turer of silos and conveying equipment to a provider of complete plant and engineering solutions

with a diversified product portfolio. New markets have been developed through strategic acqui-

sitions, making the Zeppelin Group more independent of economic fluctuations and extending our

value chain. Zeppelin has grown its engine business by taking over distribution rights for MaK

marine engines. MVS AG expanded the Zeppelin rental business into a comprehensive rental

service portfolio. Another major acquisition followed in the crisis year 2009: the food-processing

plant manufacturer Reimelt Henschel GmbH became part of the Zeppelin group. In total, more

than 30 companies have been acquired or newly established in the trading and industry sectors

over the last 20 years.

We embarked on 2010 with a new structure which aligns us more effectively with these different

business models. Our company is now organized into five strategic business units: Construction

Machines EU, International Construction Machines, Rental, Power Systems and Plant Construc-

tion. Today, with a workforce of 6,000 employees, Zeppelin is present at 200 locations worldwide.

To continue along this trajectory, we will need not only courage to make changes, but also above

all a clear sense of what we want to achieve.

With the pioneering spirit of its corporate culture, Zeppelin will continue to chart fresh courses.

We’ll use opportunities that present themselves. We’ll trust in the knowledge base that we derive

from our unique history. Because the company will only stay on course if we have the courage to

steer ahead – sometimes against the wind – through new seas.

16

SHAREHOLDER REPRESENTATIVES

Andreas Brand (Chairman)

Mayor of the City of Friedrichshafen

Dipl. Ing. Werner Baier

Chairman of the Supervisory Board of Webasto AG

Fahrzeugtechnik

Dr. Reinhold Festge (since 28 February 2010)

Managing partner

Haver & Boecker oHG

Dr. Werner Pöhlmann

Attorney at law, tax consultant, certified accountant

Univ.-Prof. Dr.-Ing. Dr.-Ing. e.h. Dieter Spath

Head of the Fraunhofer-Institute for Industrial Engineering

IAO and the Institute for Human Factors and Technology

Management at the University of Stuttgart

Univ.-Prof. Dr. Dr. h.c. mult. Horst Wildemann

Chair for business studies, management, logistics and

manufacturing at Munich University of Applied Sciences

Josef Büchelmeier (Chairman until 4 May 2009)

Lord Mayor (former)

Dr. Bernd Wiedmann † (until 8 April 2009)

Oberbürgermeister a. D., Rechtsanwalt

EMPLOYEE REPRESENTATIVES

Ralph Misselwitz (Deputy Chairman)

Field services master craftsman, Chairman of Zeppelin

Group General Works’ Council, Chairman of the General

Works’ Council of Zeppelin Baumaschinen GmbH

Manfred Enger

Service technician, Zeppelin Baumaschinen GmbH

Heribert Hierholzer

Foreman, Deputy Chairman of the General Works’

Council, Chairman of the Works’ Council of Zeppelin

Silos & Systems GmbH

Vincenzo Savarino

Second representative and treasurer of IG Metall

Friedrichshafen-Oberschwaben

Sibylle Wankel

Lawyer for IG Metall, regional manager for Bavaria

Dipl.-Ing. Eckhard Zinke

Sales Director, Zeppelin Baumaschinen GmbH

The supervisory board, whose membership complies with Sec. 7 MitbestG (“Mitbestimmungsgesetz”:

German Codetermination Act), comprises the following members:

SUPERVISORY BOARD

SUPERVISORY BOARD AND MANAGEMENT BOARD

17

Peter Gerstmann (Chairman)

Company development, IT, audit, corporate communications

Construction machinery (international), plant construction

Michael Heidemann (Deputy Chairman)

Sales and Service, Trade division

Construction machinery (EU), rental

Alexander Bautzmann

Finance, controlling, real estate management

Jürgen-Philipp Knepper

HR (labor director), law, compliance

Power systems

Ernst Susanek (Chairman until 31 December 2009)

MANAGEMENT BOARD

18

The supervisory board was given regular status and progress reports about the situation and

operations of the organization and Zeppelin Group verbally and in writing by the management

board throughout 2009. Four board meetings were convened, at which the supervisory board –

with input from various decision papers, reports and presentations – consulted with the manage-

ment board on strategy and planning, on the income and net asset position of the company and

its affiliated enterprises, its operating finances and risk exposure, and exercised supervisory

control over the management board on this basis.

The supervisory board discussed in detail the annual strategic investment and financial planning.

Following comprehensive consultation with the management board, the supervisory board took

decisions on a range of initiatives which – by law, statute or the Rules of Procedure for the Super-

visory Board – require supervisory board approval. These were chiefly decisions concerning the

foundation of new companies, the acquisition of shareholdings to round out the group’s portfolio

and geographical spread in both trading and industry divisions, increases in equity capital, appoint-

ments of managing directors in affiliated companies, and the granting of guarantees in connection

with a major export deal.

The supervisory board consulted in detail on the impacts and challenges arising for Zeppelin Group

companies out of the continuing worldwide economic and financial crisis and the currency crisis

in Eastern Europe. Long-term financing, rating, risk management, plus future development of the

Group compliance organization were further key issues on the board’s agenda.

December 31, 2009, was the retirement date of CEO Ernst Susanek. A member of the manage-

ment board since 1986, and Chairman from 1991 onwards, Ernst Susanek has decisively shaped

the progress of the Zeppelin Group. Succession planning, and related aspects concerning the

management board, were the main issues under discussion at eight sessions of the supervisory

board personnel council. Effective January 1, 2010, Peter Gerstmann was appointed the new

Chairman of the Management Board. Accordingly, effective January 1, 2010, the management

board of ZEPPELIN GmbH comprises four members, for which the supervisory board approved

a new allocation of responsibilities. The allocation also takes into account the restructuring of

the Group according to strategic business units, a change proposed by the management board

and subsequently approved by the supervisory board as an appropriate response to the strong

internal growth of existing business areas, internationalization and the establishment of new

fields of business.

Mayoral elections in 2009 in the city of Friedrichshafen resulted in a change of the city leader. In

accordance with supervisory board statutes, the supervisory board mandate of Josef Büchelmeier

SUPERVISORY BOARD REPORT

19

Andreas Brand

Chairman of the Supervisory Board

Mayor of the City of Friedrichshafen

passed to Andreas Brand on June 5, 2009. In its session of July 30, 2009, the supervisory board

duly elected Mayor Brand its Chairman.

In place of supervisory board member Dr. Bernd Wiedmann, who died as the result of an accident

on April 8, 2009, Dr. Reinhold Festge was elected as a member of the supervisory board by the

shareholders’ meeting on February 28, 2010. Dr. Festge is managing shareholder of Haver &

Boecker oHG, Oelde/Westphalia.

The annual financial statement and directors’ report, and the consolidated statement and direc-

tors’ report of ZEPPELIN GmbH to December 31, 2009, were audited by Ernst & Young AG,

Stuttgart, the auditors elected by the shareholders’ meeting on May 14, 2009 and commissioned

by the supervisory board. The auditors issued an unqualified opinion on each of the statements

and reports. The auditors’ report was submitted to each member of the supervisory board. Prior

to the accounts presentation & review meeting of the supervisory board, there were two addi-

tional, explanatory meetings concerning the audit of accounts, attended by the auditors, the

Chairman of the supervisory board and members of the supervisory board. At the accounts review

meeting of the supervisory board on May 5, 2010, the auditors reported on key findings and re-

sults of the audit, which as agreed also encompassed the Group’s early-warning risk identifica-

tion system.

The supervisory board has reviewed and endorsed the 2009 financial statement and consolidated

accounts submitted by the management board, and the directors’ report and consolidated directors’

report. The financial statement and consolidated accounts of ZEPPELIN GmbH as per December

31, 2009, have been endorsed and therefore approved. The supervisory board elected to follow

the proposals of the management board regarding the use of the retained earnings.

The supervisory board thanks the Zeppelin staff, employee representatives and the members of

the management board for their dedicated, conscientious work which has yet again brought such

success for the Group, even in an extremely difficult operating environment.

Friedrichshafen, May 5, 2010

For the Supervisory Board

Andreas Brand

Chairman of the Supervisory Board

20

The economic and financial crisis has had a grim impact. Global economic output has declined for

the first time since the Second World War. Our markets have taken a sharp plunge downwards –

the 45 percent decline in our core construction machine market in Germany is painful testimony

to this. We witnessed an even sharper drop in market volumes in our Eastern Europe dealership

territories, with markets shrinking by up to 80 percent. Marine production – which is what drives

our engine business – came to a complete halt, and the markets to which we sell our manufac-

turing equipment found themselves suffering substantial overcapacity, which essentially put a

freeze on investment. Zeppelin recorded a 27 percent decline in sales, and a drop in pre-tax earn-

ings of 75 percent. Yet despite the challenges of the operating environment, Zeppelin managed

to stem the tide through a range of intensive countermeasures, turning in a positive result on the

income statement and a positive cash flow.

In the face of extremely demanding conditions, and adversity in each of our lines of business,

Zeppelin managed to perform appropriately well. A downturn in demand for construction machines

meant the trading companies suffered a decline in sales of almost 30 percent. Hardest-hit were

Zeppelin Baumaschinen GmbH in Germany and Zeppelin International AG with the dealership

territories in the CIS countries. Plummeting market volumes in the marine business had a neg-

ative impact for Zeppelin Power Systems. Overall, we sold € 13,031 (2008: 19,054) construction

machines, engines and lift trucks, generating a sales volume of € 1,558 billion (2008: € 2,208

billion).

Our plant construction business profited from a healthy order intake of previous years, which gave

us a high order volume on the books at the start of 2009 and full capacity utilization in the first

months of the year. Owing to the acquisition of Reimelt Henschel GmbH, we were able to main-

tain sales at the previous year’s level: € 237.7 million compared to € 238.7 million in 2008. With

customers being so reluctant to make fresh investments owing to overcapacity in plastics pro-

duction and processing facilities, new order intake declined by 21 percent.

MANAGEMENT BOARD REPORT

21

The Zeppelin Group recorded a decline in sales volume of 27 percent to € 1,796 billion (2008: €

2,447 billion), with a particularly sharp downturn in Germany and eastern Europe. Stable develop-

ment in the industry division and in product support in the trading division were unable to offset

the loss of earnings. Consolidated earnings before tax fell to € 25.1 million (2008: € 98.7 million),

and Return on Sales decreased to 1.4 percent (2008: 4 percent).

Zeppelin’s response to the crisis was swift. We took action from a controlled defensive position.

We initiated savings programs, drove through cost reduction measures, and put a freeze on in-

vestment excepting for asset replacement and strategic essentials. Inventory levels, which had

been based on the growth of previous years, were brought into line with future expectations. We

have made significant adjustments to capacities in our rental fleets to make us more efficient

protagonists in a smaller market. In cooperation with employee representatives, a solidarity pact

was negotiated in which employees agreed to forego entitlements temporarily. This enabled

us to reduce personnel costs and safeguard our liquidity. Short-time work was introduced as a

response to capacity underutilization in our plant construction business. Targeted personnel reduc-

tion measures were initiated in eastern European territories, where we are witnessing a sustained

market decline. All these measures were enacted with a clear commitment to the principle that

a sales, service and engineering organization such as Zeppelin must where possible retain its

highly qualified workforce in the company.

Despite the crisis in our operating environments, Zeppelin has made strategic investments which

are key to moving the company forward. We have expanded our rental service portfolio and now

also offer traffic safety systems and road construction machinery for rental. Through our acquisition

of Reimelt Hentschel GmbH, a manufacturer of plant systems for the food and pharmaceutical

industries, we have gained entry into growth markets for our industrial operations. The rollout of

the Lawson M3 ERP software as our overarching enterprise solution in the largest Zeppelin Group

company has laid a robust foundation for even greater efficiency in our business processes.

Peter Gerstmann

Chairman of the Management Board

22

The economic crisis is not over yet, and with government stimulus packages for the construction

industry now being phased out, this will have to be compensated by private-sector and com-

mercial investment. The slowdown in investments in engines for utility vehicles and the marine

sector will weaken our power systems business in 2010. Low order volumes in our plant con-

struction business will have significant impact on our industrial business in 2010.

Nevertheless, Zeppelin looks ahead to the future positively. We have begun the new fiscal year

with far lower costs, significantly reduced inventory and secure liquidity. We can expect additional

positive impact from the full integration of Reimelt Henschel and HWS Zeppelin, both of which

were acquired in 2009. Our “Connected Worksite” activities – innovative navigation instruments

and machine monitoring systems – will ensure sustainable success. We are also expecting Euro-

pean markets to stabilize.

One major challenge ahead in fiscal 2010 is the organizational realignment of the Group on the

basis of strategic business units. By grouping business operations into market-oriented segments,

we are confident we can make our customer focus stronger and tighter than ever. Business is

now organized more strongly by product, by business model and growth potential. We now have

five strategic business units: Construction Machines EU, International Construction Machines,

Rental, Power Systems (engines and systems) and Plant Construction. This new organization will

make us a nimbler, more flexible player in global competitive environments. There will be more

local control at the operational level, and more central control at strategic level.

In the first quarter of 2010, we have seen the economy slowly begin to pick up, with global GDP

predicted to return to slight growth in 2010. However, this fledgling trend will unfortunately not

be enough to drive an all-out recovery of our key markets. Against this backdrop, we expect sales

volumes to stabilize in 2010, with a slight improvement in profits – the key proviso being that there

is no renewed deterioration of macroeconomic conditions.

MANAGEMENT BOARD REPORT

23

We would like to thank our customers for the excellent cooperation, and our staff and the works’

council for their ongoing commitment and in particular for their willingness to go along with the

cost reduction measures in 2009. We know that it is our people – the highly skilled, highly moti-

vated individuals who make up the Zeppelin knowledge base – who play the most important role

in moving Zeppelin forward into a successful future. We also thank our shareholders and super-

visory board for the trust they have placed in us.

We have a difficult year behind us, and the year ahead looks equally testing. Yet we are confident

we can overcome the challenges, because we’ve prepared for them well. Zeppelin enjoys entre-

preneurial freedom and financial stability, and these factors stand us in excellent stead. We’re

making good progress. Our business partners appreciate our efforts. And it is their trust which

will determine our success over the long term. Particularly in tough times, this remains our firm

conviction.

For the Management Board

Peter Gerstmann

Chairman of the Management Board

ZEPPELIN GmbH

24

Construction machines:

new

used

Lift trucks

Agricultural & forestry equipment

Plant construction:

Engineering

Engines and power systems

Service

Rental of:

Construction machines

Paving equipment

Lift trucks

Engines & systems

Agricultural & forestry equipment

Other services

WHAT HAPPENED WHERE IN 2009 ?THE COMPANIES OF THE ZEPPELIN GROUP, THEIR PRODUCTS AND SERVICES

ZEPPELIN CONSTRUCTION MACHINES

ZEPPELIN INTERNATIONAL

ZEPPELIN AUSTRIA

ZEPPELIN ÖSTERREICH

TRACKS ANDTRAILS IN 2009

25

* Not included in consolidated financial statement

MVS ZEPPELIN AND MVS ZEPPELIN AUSTRIA

ZEPPELIN RENTAL RUSSIA*

ZEPPELINPOWER SYSTEMS

ZEPPELIN SILOS & SYSTEMS AND REIMELT HENSCHEL

CONSTRUCTIONMACHINESPARTICULARLY IN THE CONSTRUCTION MACHINE BUSINESS, ZEPPELIN’S MISSIONIN 2009 WAS TO GROW DESPITE THE CRISIS. THE BUSINESS WILL THEREFOREEMERGE FROM THE CRISIS STRONGER THAN EVER, WITH HIGHER MARKET SHAREAND NEW PRODUCTS ACROSS ALL LINES – CONSTRUCTION MACHINES, LIFTTRUCKS, AGRICULTURAL EQUIPMENT AND SERVICE.

27

PRODUCTS AND ACTIVITIES

Construction machines

In its construction machine sales and service business, Zeppelin has since 1954 worked exclu-

sively with Caterpillar, the world’s largest manufacturer of construction equipment in an alliance

of excellence that delivers a stream of innovative products and services. No other construction

machine manufacturer comes anywhere near matching Caterpillar’s investment in new-product

research and development: approximately US$ 6 million every working day. This R&D investment

translates into innovations for greater fuel efficiency, lower emissions, more productivity, ease of

use and driver comfort, delivering greater value and lower cost for customers.

Lift trucks

With over 80 years’ experience in development and production of warehouse vehicles, the US-

American materials handling group NACCO, with its brand Hyster, is the oldest lift truck brand in

the world and has for many years been a strong partner of Zeppelin. Hyster trucks feature com-

pelling fuel efficiency, driver comfort and ease of service. With their high productivity, robust build

and economy of operation, Hyster lift trucks and warehouse vehicles are perfectly complemented

by excellent product support from Zeppelin.

Agricultural and forestry equipment

Some of the Zeppelin companies in Eastern Europe market high-quality agricultural equipment

by AGCO and New Holland, as well as forestry equipment made by the Finnish manufacturer

Ponsse. In this area also, Zeppelin partners with leading manufacturers who can provide excellent

products – with the focus squarely on delivering value to customers.

Zeppelin service

Across all products, across every Group company, Zeppelin product support has to measure up

to our own tough benchmarks for professionalism, rapid response and the best parts availability

in the industry. Which explains why Zeppelin is so committed to keeping the skills of service

engineers at state-of-the-art levels, with a broad range of training and development to make sure

we live up to our promises. Also essential is the high quality of workshop equipment and service

vehicles. We maintain extensive parts stores in all the countries we serve, and deliver first-class

support both in our workshops and at the customer’s site.

COMPANIES

Zeppelin Baumaschinen GmbH

The company’s business is exclusive sales of Caterpillar construction machines, Bucyrus large ex-

cavators (formerly Terex O&K) and Hyster warehouse vehicles, plus support and services relating

to these products. Operations concentrate largely on the German market. The company main-

tains a central parts store and product support service with nationwide coverage both on-site and

28

in its own workshops. 98 % of all parts reach customers in Germany within 24 hours. Zeppelin

Baumaschinen GmbH is Germany’s market leader for construction machines. The company also

sells used machines to all parts of the world. Working in cooperation with other Caterpillar partners,

Zeppelin also assists German construction and building-materials companies on their projects

outside Germany.

Phoenix-Zeppelin spol. s r.o.

The Zeppelin Group company in the Czech Republic holds exclusive sales rights for Caterpillar

construction machines and engines, and Hyster warehouse vehicles in the Czech Republic and

Slovakia. The company also rents construction machines, lift trucks and related equipment, and

offers extensive support services for all these products. In addition, Phoenix Zeppelin markets the

Challenger agricultural equipment of the US manufacturer AGCO, and operates a customer sup-

port network which offers nationwide coverage for service of construction machinery, lift trucks

and engines. Phoenix-Zeppelin spol. s r.o. is the market leader for construction machine sales in

its territories. At the start of 2006, the company also took over sales and service of Hyster ware-

house vehicles in Poland, Hungary and Ukraine.

Zeppelin Österreich GmbH

The core operations of Zeppelin Österreich GmbH are exclusive sales of Caterpillar construction

machines and engines, and of support and associated services for these products. The company

concentrates largely on the Austrian market, and also offers first-class product support, with

nationwide coverage both on-site and in its own workshops for service of construction ma-

chines, engines and other equipment. Zeppelin Österreich achieved significant success in 2009

with a major service initiative focusing on preventive maintenance.

Zeppelin International AG

Our intermediate holding, Zeppelin International AG, oversees the Zeppelin Group sales and

product support business in non-EU countries. The holding company has subsidiaries and repre-

sentations in Armenia, Russia, Belarus, Ukraine, Tajikistan, Turkmenistan and Uzbekistan. Zeppelin

has exclusive sales rights in these territories for Caterpillar construction machines and engines

and for Bucyrus large excavators (formerly Terex O&K). Depending on the regional focus, certain

Zeppelin International AG subsidiaries also sell AGCO and New Holland agricultural equipment

and Ponsse forestry equipment.

TRACKS AND TRAILS 2009

The products and services of Zeppelin Baumaschinen GmbH make their mark on the landscape

through roads and construction projects throughout Germany. On April 1, 2009, the newly founded

HWS Zeppelin GmbH took over the main business operations of HWS-Süd Baumaschinen GmbH

& Co KG, Dülmen, one of Germany’s leading paving-equipment rental companies, also with strong

29

used machine sales on the international scene. This new company moves Zeppelin and Caterpillar

forward in their common strategy to reinforce and expand road construction activities, allowing

us to participate in the burgeoning growth in this sector in Germany. HWS Zeppelin rents road

construction equipment with and without operating personnel.

On December 1, 2009, the Zeppelin Baumaschinen GmbH lift truck business acquired parts of

the company Fendt Fördertechnik GmbH, and integrated the former Nissan dealers of Fendt

Fördertechnik into the Zeppelin dealer organization. This part-acquisition enables Zeppelin – with

Hyster – to advance its strategy of continued expansion in the lift-truck business.

Phoenix Zeppelin won numerous major projects in 2009, with which the Czech subsidiary of

Zeppelin looks set to make significant headway in its business expansion drive. Mid year, Phoenix

Zeppelin succeeded in closing a deal with the country’s largest oil company, MND, for the supply

and installation of two huge generators for natural gas storage in Moravia. The company also

notched up successes in the construction machine business, making its largest-ever sale of equip-

ment to the mining industry in a deal with the Lhoist Group for three Caterpillar 775F off-highway

trucks, one 988H wheel loader, plus a 48-month full-service contract. Phoenix Zeppelin also suc-

ceeded in winning lucrative contracts in its other business areas, with the result that the com-

pany grew its market share from 25 percent to 28 percent.

Zeppelin International carried out a major infrastructure project in Russia in 2009, the objective

being to give the Russian company a sustainable and strongly competitive position going forward.

The key factor was to situate the locations as efficiently as possible and to network them through

a high-performance IT landscape. Through this project, the company was able to improve working

conditions and achieve a significant year-on-year reduction of its administration costs. In addition,

as part of the restructuring at Zeppelin International, a new company was carved out – Zeppelin

AGCO – to manage the agricultural and forestry equipment business. The objective is to intensify

the focus on agricultural and forestry industry and expand this segment.

Since 2009, Zeppelin Austria has been concentrating exclusively on sales and service of con-

struction machines and engines. The rental business was transferred to MVS Zeppelin Österreich

GmbH. This company is a subsidiary of MVS Zeppelin GmbH & Co. KG, Garching, Munich. To

further expand its core business and respond appropriately to current customer requirements,

Zeppelin Austria has established a modern new branch on a 12,000 m² site in Inzing, near Inns-

bruck, from where it serves the regions of Tyrol, Vorarlberg and Pinschgau.

30 RENTALWIDEN THE TRAIL, AND FORGE NEW PATHS WITH FRESH CROSS-CONNEC-TIONS. TWO PARALLEL STRATEGIES WHICH OUR RENTAL BUSINESSPURSUED THROUGHOUT 2009 – TO BECOME A STRONGER, DEEPER PLAYERON ITS MARKETS, AND TO DIVERSIFY OUTWARDS AND CREATE FRESHTRAJECTORIES FOR THE FUTURE.

31

ACTIVITIES

The Zeppelin rental companies offer bespoke rental solutions in construction machinery and

equipment, room and sanitary cell systems, traffic and construction site safety systems, work

platforms, lift trucks, agricultural equipment, vehicles and trailers. They provide highly specialized

services such as end-to-end management of site safety and traffic-flow safety, including project

planning, obtaining regulatory approvals, rentals with personnel, as well as planning and turnkey

provision of temporary buildings for occupation while renovation work is in progress. Since the

rental companies work closely with the Zeppelin service organizations in their countries, customers

also benefit from excellent machine availability.

TRACKS AND TRAILS IN 2009

We’re widening our trail – visibly and effectively with the foundation of our new company Zeppelin

Rental GmbH in 2009. A wholly owned subsidiary of ZEPPELIN GmbH, the new Zeppelin Rental

GmbH coordinates and directs our entire rental business. Its role is to ensure our rental strategy

is implemented consistently and uniformly right across the Group, which generates added value

for customers. We already have a rich and varied product and service portfolio in Germany, and

the new Zeppelin Rental GmbH has the objective of expanding this portfolio into all relevant

markets and extending our network of outlets so as to offer customers greater geographical

coverage. Also part of this strategy is expansion by MVS Zeppelin GmbH & Co. KG, which is

growing its portfolio of products in Germany and Austria. A major step toward diversification was

taken in 2009 with the acquisition of the operations of the Hamburg-based roadworks safety com-

pany BAD Baustellenabsicherung Dietrich GmbH & Co. KG. Through this acquisition, we’ve been

able to link our existing tracks into fresh pathways. With the site and traffic-flow safety business

already established in Berlin-Brandenburg, the Rhine-Ruhr area and southern Germany, we are

excellently positioned to expand in this sector.

ENGINES AND SYSTEMSENGINES AND POWER SYSTEMS FROM ZEPPELIN KEEP THINGS MOVING – IN WATER, ON RAILWAYS, ON CONSTRUCTION SITES OR IN POWER DELIVERYAROUND THE WORLD. AND ZEPPELIN POWER SYSTEMS IS ITSELF ALWAYSON THE MOVE, DEVELOPING NEW SOLUTIONS FOR CUSTOMERS AND CON-TINUING ITS OWN GROWTH PATH.

33

ACTIVITIES

Zeppelin Power Systems GmbH & Co. KG is based in Hamburg and has seven other locations in

Achim, Bremen, Cologne, Leipzig and Munich as well as Moscow and St. Petersburg. Zeppelin

embarked on this business back in the 1960s, and today markets a portfolio of products that com-

prises Caterpillar and MaK marine engines, locomotive engines and engine systems, as well as

power systems for the oil and gas industry, and combined heat and power plants. With ratings

from 15 KW to 16 MW, Caterpillar and MaK engines provide power to ships, locomotives, utility

vehicles and much more besides. The CAT-driven power generators and the Zeppelin-developed

combined heat and power plants based on both engine brands ensure reliable, efficient power

delivery.

TRACKS AND TRAILS IN 2009

Zeppelin Power Systems made a superb start to the year, having already secured a major deal in

the energy sector: a contract to set up and maintain a CHP plant to supply power to the future

Berlin Brandenburg International airport (BBI). In this project, Zeppelin Power Systems is delivering

services along the entire value chain, covering everything from project & implementation planning,

project management to comprehensive post-installation maintenance. The ability to deliver the full

value chain proved a unique differentiator for Zeppelin Power Systems, setting it well apart from

direct competitors.

Zeppelin Power Systems is also busy in other areas: two new halls and an office building were

opened at the Achim site to expand the marine engine business and create space for the used-

engine segment, which is seeing continual growth. In locomotive engines, the company won a

major order from the world's largest rail-vehicle manufacturer Bombardier to deliver 92 Caterpillar

engines to North America by yearend 2013. This is a milestone project for both Bombardier and

for Zeppelin Power Systems and Caterpillar, because the engines are intended for passenger train

locomotives which are hybrid diesel-electric powered and offer performance which is unmatched

by any other locomotive in the world. This is an impressive record. Uncompromisingly customer-

centric, Zeppelin Power Systems is blazing a trail of achievement across every area of its busi-

ness. A trail that looks set to last.

PLANT CONSTRUCTIONROLLS, CHOCOLATES AND SPICES – NEW PRODUCTS AT ZEPPELIN THAT TAKE THESYSTEMS DIVISION INTO NEW MARKETS WITH MULTIPLE ACTIVITY STREAMS.ZEPPELIN’S ACQUISITION OF THE REIMELT HENSCHEL GROUP UNDERSCORESOUR STRATEGY OF HEALTHY, ROBUST GROWTH AND ALSO MAKES US MOREINDEPENDENT OF OUR TRADITIONAL CORE MARKETS.

35

ACTIVITIES:

The Zeppelin Plant Construction division is one of the world’s leading providers of turnkey facilities

for storing, conveying, dosing and weighing bulk solids for the plastics manufacturing and process-

ing industries, and for the tire and rubber industries. The acquisition of the Reimelt Henschel Group

in 2009 has taken Zeppelin into a new field, the food and beverage industry, where the Reimelt

Henschel Group is likewise a leading provider of turnkey systems for storing, conveying, dosing,

weighing and automation of bulk solids. The integration of the Reimelt Henschel Group makes

the Zeppelin Industry division the global market leader in preparation of bulk solids. With subsidiaries

in all major economic centers, the Industry division can guarantee proximity to its globally operat-

ing customers.

TRACKS AND TRAILS IN 2009

The acquisition of Reimelt Henschel group is a further milestone in the Zeppelin Industry division’s

long-term growth strategy, opening up pathways into new market segments with good growth

opportunities. As the market leader in plant systems for the food and beverage industry, Reimelt

Henschel uses similar technology to Zeppelin. The Henschel brand, with its long tradition, gives the

Zeppelin Industry division additional process expertise in blending and compounding: new abilities

which complement its core technologies. The synergy effects from the merger will make us a more

powerful competitor at the global level. The new business segments make Zeppelin more inde-

pendent of economic fluctuations in its traditional core markets. Particularly in the food industry,

there is a marked trend to convenience products, and the automated processing systems of

Reimelt Henschel are required for their manufacture.

36

THE GLOBAL FINANCIAL AND ECONOMIC CRISIS HAS LEFT ITS MARK ON THEZEPPELIN GROUP. SALES VOLUME AND ORDER INTAKE DECLINED SHARPLY IN2009 ACROSS ALL BUSINESS SEGMENTS, WITH THE EXCEPTION OF PLANTCONSTRUCTION, WHERE THE TREND REMAINED STABLE THROUGHOUT 2009.DESPITE THESE DIFFICULTIES, THE ZEPPELIN GROUP MANAGED TO ACHIEVE APROFIT AFTER TAX. PAYROLL NUMBERS DECLINED SLIGHTLY. THE FOLLOWINGREPORT GIVES AN ACCOUNT OF BUSINESS DEVELOPMENT OVER THE PAST YEAR,THE MEASURES WE HAVE TAKEN TO COMBAT THE CRISIS, AND OUR FUTUREEXPECTATIONS.

GROUP MANAGEMENT REPORTSTATEMENT OF ACCOUNTS

37

1. BUSINESS AND ECONOMIC ENVIRONMENT

BUSINESS SEGMENTS

The Zeppelin Group is divided into the Trade and Industry segments. Business activities in the

Trade segment consist of sales, services and rental of Caterpillar construction machines and diesel

engines, MaK ship engines, Terex mining equipment and Hyster industrial trucks. Zeppelin is

the exclusive sales partner of Caterpillar Inc., Peoria (IL, USA), in Germany and many countries

in central and eastern Europe and central Asia. There is some overlap of the sales territory for

industrial trucks. In this sector, Zeppelin has the exclusive sales rights for the Hyster brand of the

US manufacturer NACCO Materials Handling, Mayfield Heights (OH, USA). All the companies

in the Trade division are market leaders in their particular fields of the construction machinery

business. Zeppelin also sells a wide range of add-on units, as well as agricultural machinery from

New Holland, AGCO and CLAAS, and Ponsse forestry machines, in certain central and eastern

European countries. Zeppelin sells new and used machines, and is also active in the rental sector.

The rental business involves construction machinery and construction equipment, modular space

systems, elements for securing construction sites and traffic, work platforms, lifts, telehandlers

and roadwork machinery.

The business activity of the Industry segment comprises the manufacture of technical machinery

for the production and processing of high-quality bulk goods in the worldwide market for plastics,

rubber and tires. By taking over the Reimelt Henschel Group, Rödermark in 2009, Zeppelin gained

access to new markets for comparable technologies. Systems and machinery for handling solid

and liquid raw materials in the foodstuffs and pharmaceuticals industries are designed, con-

structed and sold. Zeppelin is a leading global provider of machinery for high-quality bulk goods.

The Industry segment is divided into the product areas manufacturing plants, processing plants,

components and services. These are managed by the intermediary Zeppelin Silos & Systems

GmbH, Friedrichshafen.

OVERALL ECONOMIC DEVELOPMENT

With a 1 percent drop in real global GDP in 2009 (prior year: growth of 2.9 percent), the global

economy experienced its most severe downturn since the Second World War. This downturn was

most apparent among the industrialized nations, which saw output shrink by 3.2 percent (prior

year: growth of 0.6 percent). The drop in the euro zone was as much as 4 percent. As 2009 pro-

gressed, economists were constantly being forced to revise their forecasts for the development

GROUP MANAGEMENT REPORT

38

of the economy and individual sectors downwards. The curve did not start to bottom out until

mid-2009. The prevailing opinion among economists is that the global recession has now run its

course. The global growth seen in the second half of 2009 even accelerated towards the end of

the year. Most early indicators point to growth. However, these positive trends are based on a

very low starting point following the collapse of the global economy, meaning that the recovery

of economic indicators on paper in the first half of 2010 could be jeopardized before the upturn

sets in at the end of 2010.

Economists predict that central banks throughout the world will for the most part focus on stim-

ulating economic growth by keeping interest rates low and increasing money supply, at least un-

til fall 2010. The EUR/USD exchange rate, which is very important for Zeppelin, remained volatile

throughout 2009, and is hard to forecast due to the range of influencing factors. The exchange

rate between the ruble and the Ukrainian Hryvnia on the one hand and USD on the other, which

was critical in 2008, remained relatively stable throughout 2009 after a slow start to the year.

GDP in the US fell 2.4 percent on account of a downturn that lasted into the second quarter.

Breakdown of GDP development

39

2008 2009 2010 2011

Forecast Forecast

4.2 - 14.4 4.3 6.2

2.9 - 1.0 3.5 3.7

0.4 - 2.4 2.5 2.0

0.4 - 4.0 0.9 1.3

1.3 - 5.0 1.5 1.3

2.0 - 3.6 1.3 1.4

2.5 - 3.9 1.6 2.4

5.6 - 8.6 2.7 5.2

2.1 - 16.0 2.0 4.0

9.6 8.7 10.0 9.7

5.1 - 0.4 4.7 3.7

1) Handelsblatt 22 Janaury 2010 (World Bank)2) Based on GDP weighted for purchasing power of individual countries3) Changes in real GDP: Unicredit Freitagspapier 19 February 20104) CEE Quarterly Unicredit Q1 2010 from 4 February 2010

Global trade 1)

Global economy 2) 3)

USA 3)

Euro zone 3)

Germany 3)

Austria 3)

Czech Republic 4)

Russia 3)

Ukraine 4)

China 3)

Brazil 3)

The effects of the crisis on the emerging economies also had a negative impact on GDP in Latin

America, many south-east Asian countries and the Russian Federation. Only the economies of

China, India and Indonesia showed no sign of recession, due in no small part to generous meas-

ures by those countries’ governments.

In 2009, Germany saw its sharpest drop in GDP since the Second World War (5 percent), following

already poor growth of 1.3 percent in 2008. The economic decline mainly took place in the first half

of 2009. German exports and investments in capital goods collapsed by 14.7 percent and 20 per-

cent respectively in 2009, while private consumer spending rose 0.4 percent. The trade surplus

fell by a further 3.4 percent in 2009. In 2008 it shrank by just 0.3 percent. This development has

had a significant braking effect on the growth of the German economy. The number of Germans

in employment has only fallen slightly despite the crisis, averaging 40.2 million in 2009 or 0.1 per-

cent fewer than in the prior year. According to initial estimates by the Federal Office of Statistics,

the number of unemployed rose 5.4 percent to 3.3 million. Unemployment averaged 7.6 percent

for the year, up from 7.2 percent in the prior year.

The Austrian economy shrank by 3.6 percent in real terms in 2009, although it did appear to

be stabilizing in the second half of the year. This was strongly influenced by a drop in exports of

almost 17 percent, stemming in no small part from poor demand in central and eastern Europe.

Czech GDP fell by 3.9 percent, while GDP in Slovakia fell by as much as 5.0 percent. Only

Poland was able to maintain the positive trend of recent years, with growth in GDP of 1.7 per-

cent. However, the unemployment rates in each of these countries rose considerably, while

inflation remained low. The development of local currencies against the euro in 2009 was some-

what poorer than in the prior year in the Czech Republic and Poland, but achieved prior-year

levels towards the end of the year. Slovakia has been part of the eurozone since 1 January 2009,

which has impaired the country’s ability to compete against the backdrop of the economic crisis.

Russia’s economic performance indicators have experienced unexpectedly severe deterioration

in comparison to previous years in the course of the 2009 global financial and economic crisis.

Following turbulence on the currency markets between fall 2008 and February 2009, major per-

formance indicators are declining rapidly. In Ukraine, this development was exacerbated by polit-

ical instability in connection with presidential elections, disputes with Russia over natural gas

pipelines, the crisis on raw materials markets (ore exports) and a delay in the granting of an IMF

loan.

The Russian and Ukrainian currencies proved surprisingly robust against the USD throughout 2009

following an initial period of weakness at the beginning of the year. The supply of credit in Russia,

including in the local currency, improved considerably towards the end of 2009, while the financing

situation in the Ukraine remained highly critical.

GROUP MANAGEMENT REPORT

40

TRADE MARKET DEVELOPMENT

Major drops in demand caused by the financial, economic and currency crisis have led to major

limits on investment in Zeppelin products in industries of significance to Zeppelin’s Trade segment

(such as construction, automotive and ship construction). The construction industry saw a decline

in almost all regions of the world in 2009.

Economic development in Russia and Ukraine

Development of revenue (%) in the construction industry 2009 : 2008

41

2008 2009 2010 Forecast

R U R U R U

5.6 2.1 - 8.6 - 14.0 2.7 2.0

9.1 4.2 - 18.5 - 50.0 4.5 7.0

0.2 6.7 - 6.3 - 24.5 2.3 10.0

17.7 17.5 - 29.6 - 39.0 16.4 8.3

6.3 6.4 8.8 10.5 8.0 9.4

24.8 5.2 31.6 8.1 29.1 7.7

- 4.0

- 2.6

-13.2

- 31.9

- 8.2

- 12.8

- 6.5

- 8.4

- 12.7

5.7

7.0

- 5.8

2.6

- 3.7

- 40 % - 30 % - 20 % - 10 % 0 % 10 %

Germany

France

UK

Ireland

Italy

Spain

Euro zone

Russia

USA

India

China

Japan

Asia

World

GDP

Investments

Exports

Imports

Unemployment rate

Exchange rate compared to USD average

Source: CEE-Quarterly Q1/2010, Unicredit Group from 4 February 2010

Source: VDMA, European Commission, Global Insight

Rate of change

as a % (in real terms)

R = Russia; U = Ukraine

42

The German market, which is particularly important for Zeppelin, performed relatively well with

revenue in the construction industry falling just 4 percent. The government’s economic stimulus

package began to bear fruit in the construction industry from fall 2009. In the third quarter of 2009,

the Creditreform index for the construction industry rose from 3.0 points to 3.4 points in the sec-

ond quarter of 2009, but still fell short of the prior-year figure of 5.5.

The individual sectors of the German construction industry also exhibited a high degree of vari-

ance in 2009. While residential and commercial construction fell by 5.5 percent and 10 percent

respectively, construction industry revenue in the public sector grew 5 percent due to state eco-

nomic recovery programs.

Demand for construction machinery collapsed by 46.2 percent to 14,585 units in 2009, having

already slid 17.3 percent in 2008. 27,101 units were sold in the prior year. The Trade segment

accounted for 72 percent, which corresponds to 10,422 units and a fall of 42 percent. The Rental

segment saw a decline of 55 percent to 4,163 units. The negative trend on the markets slowed

in the course of 2009 as the basis effect took hold. While total market volume fell 56 percent in

the first quarter of 2009, this decline had slowed to 17 percent by the fourth quarter. The total

2009 market volume for construction machinery is estimated at EUR 1.04 b.

Key figures from the German construction industry

GROUP MANAGEMENT REPORT

Order range (months)

Asset utilization (%)

Order intake in real terms

Capital spending on construction in real terms

Revenue in the construction industry 1) (nominal)

Employees in the construction industry

Insolvencies in the construction industry

Source: Current figures, Hauptverband der Deutschen Bauindustrie e.V. from 26 February 2010; ifo1) Companies with more than 20 employees

Prior-year figures in parentheses As of Total Germany

Dec 2009

Dec 2009

Jan – Dec 2009

Jan – Dec 2009

Jan – Dec 2009

Dec 2009

Jan – Dec 2009

2.1

69.8

- 6.6%

- 0.8%

- 4.0%

0.6%

1.9%

2.1

69.8

- 6.6%

- 0.8%

- 4.0%

0.6%

1.9%

43

The nominal revenue of the German construction and construction materials machine industry

fell 43 percent to EUR 9.5 b in 2009, with construction machinery manufacturers alone seeing

revenue fall 51 percent to EUR 5.3 b. This made 2009 the industry’s most difficult year ever.

Compact machines were less severely affected than large-scale machines. The industry’s revenue

from overseas (export ratio of 70 percent) fell 46 percent due to the poor performance of markets

that had been thriving in the prior year, such as Russia and eastern Europe, the Middle East and

Spain. Domestic business shrank by 33 percent.

Following the slight reduction of the market by 2.5 percent in 2008, the German market for indus-

trial trucks collapsed by 40 percent in 2009. The 50 percent reduction in the important counterweight

forklifts sector, which is particularly important to Zeppelin, was considerably more severe than

the shrinkage of the warehousing technology sector (33 percent).

The negative development of the German industrial and construction sectors in 2009 also led to

a downturn in the lease market for construction machinery and equipment. At up to 10 percent,

the fall in connection with the lease of construction machinery was particularly stark. In addition to

the closure of a number of sites, reduced spending by German lessors on construction machines

was an important factor in the decline of the German construction machinery market. According to

the VDMA, only 4,163 units were added to rental stock in 2009. This is a reduction of 55 percent

on the prior year (9,147 units). The share of the total market fell to 28 percent from 33 percent

in 2008.

German construction machinery market 2008/2009 (retail and rental)

9,000

1st Quarter 08/09 2nd Quarter 08/09 3rd Quarter 08/09 4th Quarter 08/09 2008 2009

Units

- 56 %- 53 %

- 43 % - 17 % - 46.2 %

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

30,000

25,000

20,000

15,000

10,000

5,000

44

Demand for diesel engines fell to a very low level compared with previous years. This applies in

particular to the field of ship construction, but has also been seen in the industry, locomotive and

oil industry segments. Demand for gas generators for co-generation plants was alone in showing

continued growth due to KWKG [“Kraft-Wärme-Kopplungsgesetz”: German Combined Heating

and Power Act] and the subsidization of such plants.

Falling levels of investment in construction and capital goods in Austria led to a 36 percent reduc-

tion in the volume of the Austrian construction machinery market in 2009 on top of the contrac-

tion already seen in 2007 and 2008. While the Czech construction market was able to recover

from its 5.6 percent decline in 2008, the further postponement of major construction projects in

Slovakia resulted in a further decline in that country. The markets for construction machinery fell

around 50 percent on 2008, with the markets for forklifts falling by as much as 50 or 60 percent.

In the sales territory of Zeppelin International AG, the slump in global demand for raw materials,

the increasing exodus of capital, a lack of financing for machinery and limited public budgets have

had a negative impact on the market. Demand for machines and generators in all industries, in-

cluding mining, energy, road construction, agriculture, forestry and the construction industry in

general has fallen by between 30 and 75 percent. Stable demand in the smaller countries of cen-

tral Asia, Armenia and Belarus was unable to make up for the massive declines in Russia and

Ukraine. The ability of manufacturers and dealers of western technologies in the construction and

agricultural machinery sector to sell their products is increasingly being limited by the aggressive

pricing policy of Chinese competitors in certain sub-segments, in addition to local import restric-

tions (customs) and “buy local” initiatives introduced by state bodies in Russia.

INDUSTRY MARKET DEVELOPMENT

The financial and economic crisis has had a severe impact on some of the industries throughout

the world that are of particular importance to Zeppelin’s Industry segment. The spending of major

clients was even more limited than feared on account of credit and financing bottlenecks. The

global manufacturing output of the chemical industry fell around 6 percent in 2009, after stag-

nating in 2008. German chemical manufacturing even fell by more than 10 percent. In 2008 it

shrank by just 2.7 percent. Capacity utilization of chemical plant in Germany came to 77 percent.

Its normal range is between 83 and 85 percent. Similar drops were also seen in global production

of plastics. Widespread closures of plants throughout the world are the result of overcapacity that

could last into 2012 and beyond. The German rubber and plastics industry, a major supplier of the

automotive industry, saw a 13 percent drop in production in 2009 (2008: - 3 percent). Mechanical

engineering in Germany was hit hard by the 2009 spending crisis, with output falling 24 percent

(2008: + 4 percent). Order intake in the plastics and rubber machine sector even fell by 31 per-

cent. Manufacturers of foodstuff and packaging machinery concluded 2009 with a 27 percent

fall in orders. Plastics prices stabilized in 2009 after falling rapidly in 2008, but were unable to

maintain the slight rise seen in the fourth quarter. The number of investment projects planned by

plastics manufacturers has been on the rise again since the third quarter, and came to just under

EUR 300m at the end of 2009 (year-end 2008: just under EUR 200m). Interesting projects are

mainly arising in the middle East, Asia and South America.

GROUP MANAGEMENT REPORT

45

2. BUSINESS DEVELOPMENT OF THE COMPANY

REVENUE

The Zeppelin Group’s revenue fell by a total of 26.6 percent to EUR 1.8b in 2009 (prior year: EUR

2.45b). This figure falls significantly short of the target of EUR 2.1b (- 14 percent). This is mainly

due to the disappointing development of revenue in eastern Europe, which was below the prior-

year level at EUR 272m. Group revenue of EUR 59m was boosted by acquisitions. Particularly

noteworthy in this regard is the acquisition of the Reimelt Henschel group, which has been con-

solidated with the Zeppelin Group since 1 June 2009. Excluding acquisitions, revenue would have

fallen 29 percent on the prior year. At EUR 647m, group revenue was down 16 percent on the pri-

or year in the fourth quarter of 2009, which itself was down 4 percent on the final quarter of 2008.

This decline in revenue was for the most part caused by the global drop in demand for construc-

tion machinery, which affected both the new and used machinery business alike. In addition to

market reductions of 46 percent in Germany, and 50 percent in the Czech Republic and Slovakia,

collapses in Russia and Ukraine of up to 75 percent had a major impact.

Companies in the Trade segment saw revenue drop by just under 29 percent due to falling de-

mand for construction machinery. Revenue amounted to EUR 1.56m. The decline in revenue was

most severe at Zeppelin Baumaschinen GmbH in Germany, where revenue of EUR 291m corre-

sponded to a reduction of 32 percent, and at Zeppelin International AG. The latter generated EUR

271m less revenue, a fall of 46 percent, with EUR 174m of that figure attributable to the Russian

market alone, where revenue dropped 54 percent. A total of 13,031 machines and engines were

sold. This is 32 percent fewer than in the prior year, when 19,054 machines were sold. 1,164 ma-

chines were leased for the first time (2008: 1,615). The construction machinery segment fell 25

percent to 7,584 units. Sales of new machinery fell 45 percent to 3,312 units, 2,710 fewer than

in the prior year. The slight increase in sales of used machines by 10 percent to 3,759 units was

only able to partially compensate this. The engines segment saw a decline of 40 percent to 2,328

units.

In 2009, Zeppelin’s Industry segment benefitted from the high order backlog of EUR 230m at year-

end 2008, and its revenue for 2009 was comparable with the prior year at EUR 238m. However,

the consolidation of the Reimelt Henschel group mid-2009 generated revenue of EUR 59m, which

accounts for 25 percent of total revenue. Order intake of EUR 177m reflected the waning willing-

ness of customers to spend. Order intake came to EUR 225m in 2008. As of the end of 2009, the

order backlog for 2010 came to EUR 168m, a reduction of 27 percent.

46

EMPLOYEES

The number of people employed by consolidated group companies as of year-end fell slightly from

6,177 in the prior year to 6,086. The group also employed 273 trainees (2008: 361). The reduction

of personnel capacity by 465 employees in response to a significant and probably sustained re-

duction in business volume at Zeppelin International AG was offset by the addition of 537 em-

ployees as a result of acquisitions. Apart from the scaling back of capacities in Russia and Ukraine,

personnel capacities were mainly adjusted to the reduced business activity in 2009 by means of

flexible adjustment mechanisms. In Germany, this was mainly achieved by offering employees

short-term reductions in remuneration and vacation in the interest of safeguarding jobs in the long

term. The proportion of the workforce employed outside of Germany came to 39 percent (2008:

47 percent), which corresponds to 2,390 employees (2008: 2,875).

At all group companies, managers and staff undertook great efforts to further improve efficiency

and productivity in light of the challenging economic situation. As in prior years, HR policy focused

on training. The HR strategy is based on the idea of a learning organisation. Targeted manage-

ment development programs support value added processes throughout the company. Technical

Revenue by company

1) incl. MVS Zeppelin Österreich GmbH2) incl. affiliates3) incl. ZEPPELIN GmbH

2009 2008 %

611 902 - 32

1641) 165 - 1

213 228 - 7

69 103 1) - 33

186 223 - 17

315 587 - 46

1,558 2,208 - 29

238 239 0

1,797 2,447 - 27

Share of group sales

EUR m

Change

GROUP MANAGEMENT REPORT

Zeppelin Baumaschinen GmbH

MVS Zeppelin GmbH & Co. KG

Zeppelin Power Systems GmbH & Co. KG

Zeppelin Österreich GmbH

Phoenix-Zeppelin, spol. s r.o. 2)

Zeppelin International AG 2)

Trade division (total)

Industry division 2) (total)

ZEPPELIN GmbH Group 3) (total)

47

workshops, sales training, programs for young potentials and the refinement of management skills

reinforce the company’s core competencies and give the company more appeal as an employer.

April 2009 also saw the start of the group-wide management development program, aimed at

maintaining the company’s competitive edge and innovative power by ensuring management

positions are ideally staffed.

IMPORTANT EVENTS IN THE FISCAL YEAR

The company’s approach to strategy and operations focused on restructuring the organization and

optimizing processes. Zeppelin agreed on a new organizational and management structure in

October, which will be gradually rolled out in the course of 2010. The Group’s business activities

1) incl. MVS Zeppelin Österreich GmbH2) incl. affiliates

1)

1)

Employees by company

%

36 36 0

1,540 1,580 - 3

680 687 - 1

394 377 5

196 238 - 18

797 811 - 2

1,072 1,458 - 26

4,679 5,151 - 9

1.098 629 75

273 361 - 24

6,086 6,177 - 1

3,696 3,302 12

872 428 104

2,390 2,875 - 17

268 242 11

ZEPPELIN GmbH (Holding)

Zeppelin Baumaschinen GmbH

MVS Zeppelin GmbH & Co. KG

Zeppelin Power Systems GmbH & Co. KG

Zeppelin Österreich GmbH

Phoenix-Zeppelin, spol. s r.o. 2)

Zeppelin International AG 2)

Trade division (total)

Industry division 2) (total)

Trainees and apprentices (Group)

ZEPPELIN GmbH Group (total)

Germany

thereof Industry division

Rest of world

thereof Industry division

Change20082009At year-end

48

will in future be managed by five strategic segments: Construction Machinery (EU), Construction

Machinery (International), Rental, Power Systems and Industry. The heads of these segments are

also members of group management. This is also related to the group strategy process, which

includes the strategy processes of the sub-groups as of 2010.

Asset management has been accorded high priority by all companies of the Zeppelin Group in

response to the decline in business. Inventories alone were reduced by EUR 160m (27 percent).

In 2009, the Zeppelin Group underwent external assessment by Creditreform Rating AG for the

ninth time. The rating “A- (watch)” confirms the Group’s good credit standing and the above-

average rating of key financial and qualitative factors compared to the economy as a whole and

our industry, even though we did not attain the prior-year rating of A+ on account of the state

of the economy. Only the economic outlook for the next 12 months was classified as between

stable and slightly negative due to reduced revenues and the associated decline in earnings.

Zeppelin Baumaschinen GmbH implemented the “Change Prozess” strategic process in response

to the challenges posed by the 2009 financial and economic crisis and the new set of priorities

they entail. The marked decline in the market, and therefore sales and revenue, required a strong

focus on crisis and cost management.

In 2009, Zeppelin Baumaschinen GmbH acquired an 80 percent share in the newly established

HWS Zeppelin GmbH, Garching bei München. With effect as of 1 April 2009, the company acquired

the core business activities of HWS-Süd Baumaschinen GmbH & Co. KG, Dülman, a leading rental

service provider for the road construction industry in Germany, by means of an asset purchase

and sale agreement.

In 2006, Caterpillar presented its future corporate policy with the slogan “Caterpillar Vision 2020”.

This process involves Caterpillar suppliers and dealers throughout the world. In 2009, concrete

metrics and measures were drawn up by all companies within the Trade segment together with

Caterpillar in pursuit of this goal. The sales strategy for Hyster forklifts and industrial trucks was

refined together with NACCO Material Handling, and medium-term planning up to and including

2012 was revised to include targets that take into account the development of markets in 2009.

In spring 2009 Zeppelin Baumaschinen GmbH, the Group’s largest company, introduced the ERP

standard software (Lawson M3), replacing the old, internally authored systems. This transition

affected all employees of the company and all business processes, requiring extensive training

measures. As well as replacing software, procedures were changed, new processes were intro-

duced and new concepts implemented. The rollout process will continue into 2010.

The modernization of the network of branches in Germany, which has been ongoing for some

years, was rolled out to Alsfeld, Erfurt, Illingen, Hanau and Kaufbbeuren in 2009, albeit to a lesser

extent. There were also numerous other individual measures aimed at modernization and im-

proving environmental protection, occupational health and safety and fire prevention. The new

GROUP MANAGEMENT REPORT

49

construction of the Böblingen branch began in 2009, and the first of three construction phases

completed.

MVS Zeppelin GmbH & Co. KG reacted to the decline of the market by making swift adjustments

to capacity, improving inventory and fleet management and investing in growing segments of the

portfolio. Significant levels of divestiture were seen in the construction machinery, construction

equipment and transportation technology segments. This improved the seasonal utilization of

rental assets. Locations not meeting our criteria for profitability were closed, and 2009 saw the

number of branches fall from 109 to 98. The shop concept launched in 2007 is now operated at

50 rental locations. BAD Baustellen-Absicherung Dietrich GmbH & Co., Hamburg, was acquired

as of 1 September 2009 by means of an asset deal, along with its associated contracts. In the

interest of making better use of synergies in the Group’s rental business, the Company acquired

Zeppelin Österreich GmbH’s share in MVS Zeppelin Österreich GmbH with five locations at the

start of 2009.

Zeppelin Österreich GmbH was able to turn a profit despite a 30 percent drop in revenue on account

of the 36 percent reduction in the construction machinery market by adjusting inventories and

capacities and implementing cost-cutting measures. The network of branches was modernized

and expanded with the new construction of the Innsbruck branch.

The interim holding Phoenix-Zeppelin, spol. s r.o., with registered offices in Modletice near Prague,

has also been responsible for the sales and service activities for Caterpillar construction machines

and generators and Hyster industrial trucks in the Czech Republic and Slovakia as well as the sales

and service of Hyster equipment in Poland, Hungary, Belarus and Ukraine. Phoenix-Zeppelin is also

expanding its sales operations with agricultural machines in the Czech Republic and Slovakia.

While revenue with construction machinery and forklifts fell dramatically, the Power Systems

segment grew thanks to the supply of locomotive engines to ČZ LOKO. The Rental segment

expanded its network of locations. A branch is currently under construction in Ostrava (CZ), and

extension work is underway at the branches in Prague (CZ) and Banska Bystrica (SK).

In 2009, Zeppelin Power Systems GmbH & Co. KG changed the sales model for MaK ship engines

from a commission-based authorized sales representative contract model to the dealer model

already successfully used for Caterpillar engines, according to which engines are purchased and

sold on the dealer’s account. The details of the restructuring of the organization into the three

operating business segments Maritime / Ship, Locomotive / Industry / Petroleum and EPG / Gas

begun towards the end of 2007 and the associated integration of service responsibility in each

segment were refined. The conditions have therefore been set for optimal business processes,

raising the possibility of entering new fields of business such as packaging or turnkey solutions.

At the Achim bei Bremen site, further building extensions have increased manufacturing and

storage capacity, while manufacturing functions have been combined and improved. The develop-

ment of wind propulsion systems for ships by SkySails GmbH & Co. KG, in which a four percent

share was acquired towards the end of 2008, did not meet the planned milestones in 2009.

50

In its capacity as interim holding, Zeppelin International AG, Zug, Switzerland, manages the sales

and service business of the Zeppelin Group in Russia, Ukraine, Belarus, Armenia, Tajikistan, Turk-

menistan and Uzbekistan. In addition to sales and service for Caterpillar construction machines

and engines, the company generates a significant portion of revenue from agricultural and forestry

machines. The general economic landscape in the countries for which Zeppelin International is

responsible deteriorated drastically in 2009. In Russia, the industry segments mining and oil / gas

extraction tended to fare better than the relatively undifferentiated “volume business” of civil

engineering and road construction, a market that is increasingly being targeted by Chinese com-

petitors. The collapse of the market most strongly affected the Moscow region, as well as the

North West of the country. Business with agricultural and forestry machines also fell heavily

throughout the country. After establishing dedicated companies for the engines and agricultural

business in Russia, activities in these segments will become more focused and reinforced in

that country from 2010. The rental of construction machinery in Russia will be promoted by the

newly established Zeppelin Rental Russland OOO. The expansion of locations and new construc-

tion of branches originally planned for 2009/10 has largely been halted on account of the crisis.

Zeppelin Silos & Systems GmbH, Friedrichshafen is the managing company in the Zeppelin Group’s

Industry segment. By acquiring Reimelt Henschel GmbH, Rödermark, with various locations

and foreign holdings, Zeppelin’s Industry segment has significantly expanded the scope of its

business activities. These now include developing, planning and selling systems for the produc-

tion and processing of high-quality bulk goods and liquids in the worldwide market for plastics,

rubber, tires, foodstuffs and pharmaceuticals. Zeppelin is the global market leader in bulk goods

technology.

In 2009, Zeppelin’s Industry segment benefitted from the high order backlog at the end of 2008.

As a result, engineering and manufacturing were well utilized in the first few months of 2009,

after which the rapid decline in the order backlog became very apparent. Operations in the fiscal

year were heavily influenced by the acquisition of Reimelt Henschel GmbH and the resulting

integration measures, as well as the implementation of cost-cutting measures in response to

the crisis in sales. In 2009, the Industry segment suffered a severe drop in order intake from

EUR 225m to EUR 177m.

More than 160 separate projects were launched in connection with the integration of Zeppelin

and Reimelt. The main measures include merging the business of both companies with plastics

processors at two locations, merging administrative functions, introducing a new, standardized

ERP system based on SAP and merging the global distribution structure. Reduced working hours

were introduced selectively at the locations in Friedrichshafen, Kassel and Landau in the fall on

account of the challenging situation with regard to employment. Agreements on temporary salary

reductions were concluded with employees who did not reduce their working hours.

The Industry segment’s research and development activities remained at a high level, with regard

to both product refinement and the search for new technological solutions. In 2009, the develop-

GROUP MANAGEMENT REPORT

51

ment of a new series of locks was successfully tested at the technical department in Friedrichs -

hafen, and made ready for series production. A bolted silo concept was also made ready for series

production, and applied in a first order. This product opens up market opportunities that until now

had only been possible to a limited extent due to the high cost of transporting finished silos. Inno-

vations were also implemented in internal processes. The engineering software Comos PT and 3D

planning software PDMS enable new, more efficient workflows in the field of technical projects.

3. RESULTS OF OPERATIONS, FINANCIAL POSITION AND NET ASSETS

The development of the Zeppelin Group’s results of operations, financial position and net assets

reflects the severe impact of the global economic downturn on our markets. The decline of the

markets in Germany and eastern Europe hit us particularly hard. The stability of business in the

Industry segment and the services side of the Trade segment was unable to compensate for the

earnings lost. Group results for the year fell significantly short of the prior year. Comprehensive

cost-cutting measures and the acceptance of temporary salary cuts by employees ensured that

we were still able to achieve a positive group result for 2009. The Group’s total assets fell, mainly

due to the reduction of inventories, which had risen strongly in previous years. The equity ratio

rose slightly to 31 percent on account of the reduction in total assets.

RESULTS OF OPERATIONS

The 27 percent reduction in revenue to EUR 1.796b (prior year: EUR 2.447b) also reduced the

Zeppelin Group’s total operating performance by 26 percent to EUR 1,876b (prior year: EUR

2,545b). Inventories of finished goods and work in process fell EUR 9.7m (prior year: increase of

EUR 4.4m). Other operating income fell to EUR 89.2m from EUR 92.2m in the prior year, due to

the increased reversal of provisions (+ EUR 8.6m) and reduced currency exchange gains (- EUR

13.5m) in comparison to the prior year. Cost of materials totaling EUR 1.316b (prior year: EUR

1.821b) fell 28 percent, somewhat more severely than total operating performance, causing the

ratio of cost of materials to total operating performance to fall to 70.1 percent (prior year: 71.6

percent). Gross profit (revenue plus changes in inventories and other own work capitalized less

cost of materials) fell EUR 160.1m or 25.3 percent to EUR 471.6m (prior year: EUR 631.7m).

Personnel expenses fell almost 2.6 percent to EUR 288.5m (prior year: EUR 296.1m). The average

headcount increased by 295 employees or 5 percent to 6,268 (prior year: 5,973), due to both cor-

porate acquisitions and the reduction of capacities throughout the year, particularly in eastern

Europe. Various collective wage increases, for example in central and eastern Europe, were offset

52

by voluntary, temporary salary cuts (particularly in Germany) and a fall in variable, profit-based re-

muneration at the majority of group companies. The ratio of personnel expenses to total operating

performance rose to 15.4 percent (prior year: 11.6 percent).

Amortization of intangible assets and depreciation of property, plant and equipment was up EUR

3.6m on the prior year to EUR 26.5m. Depreciation of assets for rental remained at prior-year

levels with EUR 30.8m. It was included under cost of materials.

Other operating expenses fell steeper than total operating performance, dropping EUR 97.7m or

34 percent to EUR 186.0m (prior year: EUR 283.7m). This was mainly due to the fall in selling

costs (- EUR 28.7m) and administrative costs (- EUR 7.2m), as well as far lower exchange rate

losses (EUR 54.1m), which had risen dramatically in the prior year on account of the currency crisis

in Russia and Ukraine.

The financial loss of EUR 33.1m (prior year: loss of EUR 20.2m) was significantly influenced by

write-downs totaling EUR 10.3m in connection with a holding. A EUR 1.3m reduction in interest

income was accompanied by a EUR 2.1m increase in interest expenses, due in particular to high

levels of inventories at group companies in eastern Europe. The interest expense alone came to

EUR 23.5m, or 1.3 percent of revenue (prior year: 0.8 percent).

Results from ordinary activities by company

1) incl. MVS Zeppelin Österreich GmbH2) incl. affiliates3) incl. ZEPPELIN GmbH

2009 2008 %

6,031 39,445 - 85

4,112 1) 11,690 - 65

10,186 21,337 - 52

4,151 2,769 1) 50

6,627 13,909 - 52

- 3,807 4,041 - 194

27,300 93,191 - 71

7.747 12.798 - 39

26.729 101.176 - 74

11,523 26,359

GROUP MANAGEMENT REPORT

Zeppelin Baumaschinen GmbH

MVS Zeppelin GmbH & Co, KG

Zeppelin Power Systems GmbH & Co. KG

Zeppelin Österreich GmbH

Phoenix-Zeppelin, spol. s r.o. 2)

Zeppelin International AG 2)

Trade division (total)

Industry division (total)

ZEPPELIN GmbH Group 3) (total)

of which foreign companies

Share of group revenue

EUR k

Change

53

The Group’s earnings before income taxes fell to EUR 25.1m (prior year: EUR 98.7m. Return on

sales before taxes therefore came to 1.4 percent (prior year: 4.0 percent). Return on equity fell to

6.4 percent (prior year: 26.8 percent), and return on capital employed to 4.2 percent (prior year:

10.0 percent, before tax in each case).

In fiscal 2009, the Zeppelin Group generated net income for the year of EUR 12.8m (prior year:

EUR 65.4m) after deducting income taxes of EUR 12.3m (EUR 33.3m). The tax rate rose to 49

percent of earnings before income tax (2008: 34 percent, 2007: 39 percent).

FINANCIAL POSITION

The Zeppelin Group’s financial requirements are characterized on the one hand by fixed assets

(including extensive rental assets) that make up almost a third of total assets. »They are also char-

acterized by the inventories and receivables necessary for trade in construction machinery and

other high-value capital goods, which exhibit relatively rapid turnover.

Group equity fell by EUR 11.2m in fiscal 2009 to EUR 383.2m (prior year: EUR 394.4m). Total

assets fell 8 percent to EUR 1.244b (prior year: EUR 1.355b), while the equity ratio improved to

30.8 percent (prior year: 29.1 percent). Long-term funds classified as liabilities totaling EUR 765m

(prior year: EUR 727.9m) exceeded fixed assets and the non-current portion of current assets

Development of capital expenditures in the Group

2009 2008 2007 2006 2005

7,701 9,911 8,174 3,733 1,208

86,941 127,215 117,292 118,389 96,205

18,292 11,494 20,820 6,918 4,279

10,308 19,308 18,705 11,326 11,943

52,258 88,880 72,250 85,915 72,657

6,083 7,533 5,517 14,230 7,326

4,944 12,625 5,110 2,065 4,632

99,586 149,751 149,751 124,187 102,045

31,511 572 – - 305 –

I. Intangible assets

II. Property, plant and equipment

- Land and buildings

- Plant and machinery

as well as furniture and fixtures

- Rental assets

Other items of property, plant and equipment

III. Financial assets

Total capital expenditures 1)

1) Changes in consolidated group

EUR k

54

totaling EUR 387.9m (prior year: EUR 413.6m) by EUR 377m (prior year: EUR 314.3m) as of the

balance sheet date and comprise equity, pension provisions (EUR 480m), long-term other provi-

sions (EUR 34.6m) and liabilities to banks and others (EUR 250.5m). They therefore accounted for

86 percent of the group’s inventories (prior year: 53 percent). The increase in long-term funds is

mainly due to the increase in non-current liabilities to banks (+ EUR 59.5m).

Current provisions and liabilities amounted to EUR 479m at the end of the fiscal year (prior year:

EUR 627.2m). They mainly related to trade payables of EUR 156m, liabilities to banks of EUR

117m, tax and other provisions of EUR 109m as well as advance payments received and other

liabilities of EUR 95m.

At the end of 2009, the Group had lines of credit comprising bank loans and guarantees of EUR

600m at 15 German and foreign banks, of which 50 percent or EUR 300m (of which EUR 80m for

guarantees) had been drawn. The companies in the Trade segment were still able to take advan-

tage of credit lines at Caterpillar Financial Services and other specialist institutions to finance sales

in Germany and abroad, although at times only accessible by Zeppelin’s customers subject to

stricter criteria on account of the financial crisis. Since 2004, the Group in Germany has been

using publicly traded financing instruments such as debenture bonds with a current volume of

EUR 147.5m and an asset backed securities program for EUR 25m. One acquisition was financed

using a long-term loan from the KfW (“Kreditanstalt für Wiederaufbau”) totaling EUR 28.7m in

connection with the economic stimulus package Konjunkturprogramm II. In addition, leasing is

used as an instrument for extensive investments in rental assets, and to finance vehicles and

IT hardware.

Deteriorating conditions in the economy and the market influenced the downgrading of the

Zeppelin Group’s credit rating from Creditreform Rating AG from “A +” in the prior year to “A –

(watch)”. The banks’ own ratings of Zeppelin also reflected its declining results.

The additions to fixed assets of EUR 99.6m (including rental assets of EUR 52.3m) in the fiscal

year were counterbalanced by depreciation of EUR 67.8m (of which EUR 30.8m from rental

assets offset against cost of materials). Depreciation thus covered 68 percent (prior year: 36.2

percent) of capital expenditure.

The Group’s net cash flow fell EUR 77.7m or 45.7 percent to EUR 92.3m in fiscal 2009 (prior year:

EUR 170.0m). The ratio of cash flow to revenue therefore came to 5.1 percent (prior year: 6.9

percent).

NET ASSETS

The Zeppelin Group’s net assets fell EUR 111m (8 percent) to EUR 1.244b (prior year: EUR 1.355b)

in 2009. One significant factor in this development was the EUR 160m reduction in inventories

(prior year: increase of EUR 124.9m). As of 31 December 2009, fewer resources were tied up in

fixed assets (- EUR 21.6m) and trade receivables (- EUR 28.8m). The significant reduction of stock

GROUP MANAGEMENT REPORT

55

Composition of net assets, equity and liabilities

Balance sheet totals in EUR m

Intangible assets, property, plant and equipment, equity investments

Inventories

Cash and cash equivalents

Receivables, other assets

Short-term provisions and liabilities

Other long-term provisions, long-term liabilities

Equity

Pension provisions

1,244

2008 20082009 2009

1,244

30.6 %

24.6 %

9.6 %

35.2 %

30.8 %

38.5 %

22.9 %

1,355

29.1 %

46.3 %

7.7 %

16.9 %

Equity and

liabilities

Assets

1,355

29.6 %

24.4 %

1.8 %

44.2 %

in the second half of the year caused cash and cash equivalents to rise sharply by EUR 95.3m to

EUR 119.4m.

Due to the reduction in inventories, the composition of assets in the consolidated balance sheet

as of 31 December 2009 changed once again compared to the prior year. The share of fixed as-

sets (EUR 380.5m) rose to 30.6 percent (prior year: 29.6 percent), while inventories fell to 35.2

percent (prior year: 44.2 percent). Trade receivables fell 10 percent to EUR 246.8m (prior year:

275.6m). Including all other receivables, their share of total assets was slightly above the prior-

year level at 24.6 percent. Cash and cash equivalents rose significantly to 9.6 percent (prior year:

1.8 percent).

Capital turnover fell considerably to 1.4 per annum (prior year: 1.9 p.a.) on account of the almost

27 percent fall in revenue. The theoretical range of trade receivables rose to 50 days (prior year:

41 days), primarily due to the disproportionate amount of revenue invoiced in December in 2009

(share of annual total: 13 percent, prior year: 9 percent).

Outside the consolidated balance sheet, the companies in the Zeppelin Group had leased assets

and machines for the rental fleet as well as assets (vehicle fleet, IT hardware and software) total-

ing EUR 163.2m (prior year: EUR 232.0m). The rental assets accounted for EUR 146.8m (prior

year: EUR 220.3m) thereof.

7.8 %

56

5. RISK REPORT

RISK MANAGEMENT

Risk management is an important component of the business and decision-making processes in

the ZEPPELIN GmbH Group. The early identification, quantification and reporting of risks allows

them to be evaluated and mitigated.

The core of risk management is a detailed planning and reporting function encompassing all the

companies in the Group. The focus is on controlling key performance indicators regarding the

development of business on a monthly basis, and extrapolating them to the end of the year.

Special attention is paid to risks in the inventories and receivables dominating the business of

the Trade segment and the contract and order risks in the Industry segment, and their current

evaluation.

The controlling-based reporting system is supplemented by a designated risk reporting system.

Twice a year (quarterly in the future), the risk reporting system of the Group companies describes

and evaluates the risks inherent in the critical success factors in 12 fields of risk, according to

the extent and likelihood of the risk, and juxtaposes these with the risk provision instruments.

The development of risks and provision for the same is followed on a rolling basis over several

quarters.

ZEPPELIN GmbH’s Group internal audit concentrated its efforts on the Trade segment in 2009

according to the size and significance of the companies, focusing on the introduction of the M3

ERP software at Zeppelin Baumaschinen GmbH, cooperating with Group HQ’s compliance team,

including the audit of compliance-related processes and the development and refinement of risk

management tools.

4. SUBSEQUENT EVENTS

There were no events of significant importance for the results of operations, financial position and

net assets of the Group after the balance sheet date or they have already been accounted for in

the 2009 financial statements.

GROUP MANAGEMENT REPORT

57

COMPLIANCE

Compliance at Zeppelin is based on the conviction that social responsibility, legal integrity and

ethical action are the key to sustainable success. Compliance with legal provisions, government

requirements and internal corporate guidelines is an important aspect of the management and

corporate culture at Zeppelin.

The Zeppelin Group’s code of conduct was issued in March 2008 and has been signed by the

general managers of all our subsidiaries and second-tier subsidiaries. Employees and business

partners can access the code, which forms the basis of our compliance program, on our home-

page.

Compliance was set up as an independent department in September 2008 and allocated to the

director of the HR and legal department of ZEPPELIN GmbH. A Compliance Officer was ap-

pointed by Group HQ at the end of 2008. This was followed by the independent appointment of

compliance officers for all subsidiaries and subgroup holdings. Employees and external parties

can contact the internal compliance officer via the Zeppelin homepage and a dedicated email

address. An external attorney at law has been available for confidential communications as com-

pliance ombudsman since mid-2009.

The compliance documents will be adapted to ongoing developments and requirements through-

out 2010.

A. INDIVIDUAL RISKS

GENERAL ECONOMIC AND INDUSTRY RISKS

Due to the wide range of countries, industries and activities in which ZEPPELIN GmbH and its

subsidiaries are involved, the general economic and also industry risks are diffused. This holds

true both for the cyclical developments and for the varying rates of growth in the key purchasing

industries in the various regions served. This diversification of business activities was not suffi-

cient to fully protect Zeppelin’s revenue and results from the global economic collapse seen in

every industry in 2009 and the huge upheaval on the financial and foreign exchange markets, even

in the major global economies.

Our traditional focus on customers in the German construction industry gave way somewhat in

recent years to growth in the engine business for ship construction, industrial companies and

power generation, as well as the increasingly diversified rental business and successful growth

in the plant construction business of the Industry division.

With around 53 percent of group revenue, Germany remains the Zeppelin Group’s most important

market, and all the more so in 2009 in light of falling revenues in eastern Europe. The risk inherent

in the rather volatile German construction industry has been encountered by continuously improv-

58

ing the service offering, reducing fixed costs, flexible use of capacities and ongoing portfolio

grooming. Peripheral activities with a negative effect on results were gradually discontinued over

the last few years. The product program and the sales activities have been expanded to include

industries and customers not dependent on the construction industry, such as quarrying and ex-

traction, environmental and timber industry, mining, horticulture and landscape gardening.

The fact that the foreign share of group revenue has tended to increase in recent years also re-

flects the geographical diversification. With the extensive Caterpillar engine program, Zeppelin is

meanwhile also the most important Caterpillar dealer for built-in motors in ships and locomotives

on the international stage and is currently expanding in the areas energy generation and storage,

mobile communications and oil/gas extraction. Participating in the SkySails venture company also

means thecCompany is pursuing an initiative in the growing market for renewable propulsion con-

cepts. Sales and services relating to Hyster industrial trucks open up opportunities in logistics, a

long-term growth market. The Group sees additional opportunities for its agricultural and forestry

machines in the expanding agriculture and forestry sectors in central and eastern Europe.

The target markets for Zeppelin’s Industry segment are mostly outside of Germany. This is why

Zeppelin is benefitting from the strong, long-term, global increase in demand for plastics, and the

investment this requires from the chemicals and plastics industry. Engineering capacities and

expertise were expanded by means of targeted corporate acquisitions in recent years in growth

industries such as those concerned with rubber and tire manufacturing, and minerals processing.

Through the successful realization of large-scale turnkey plants in recent years, Zeppelin proved

itself a competent partner, even for global leaders of large-scale plants. By acquiring the Reimelt

Henschel Group in the summer of 2009, Zeppelin has spread into the market for high-quality bulk

goods machinery for the global foodstuffs, cosmetics and pharmaceuticals industries, where

demand is relatively stable, and in so doing has reinforced its position on the market.

One consequence of the economic and political uncertainty in the countries of eastern Europe

and Asia is Zeppelin’s relatively low level of investment in these countries.

PERFORMANCE-RELATED RISKS

The punctual supply of construction machines and engines to customers of the companies in the

Trade segment is essentially secured by rolling demand management with a lead time. Since 2004,

the worldwide demand for construction machinery has, however, been growing at such a rate

that the delivery times at Caterpillar for standard and large-scale machines as well as engines are

long and often uncertain. This situation had to be dealt with by stockpiling and the use of ma-

chines from the used machines and engines park to bridge the time until the delivery can be made.

The situation regarding Caterpillar’s delivery times improved suddenly in 2008 on account of the

global fall in demand. The continuity of supply from manufacturing partners was however affect-

ed in 2009 by cuts in output stemming from reduced working hours and supplier defaults due to

insolvency, and had to be compensated by Zeppelin by means of above-average inventories for

the volume of its business.

GROUP MANAGEMENT REPORT

59

We responded to growing demand from plant construction in Zeppelin’s Industry division in recent

years with a corresponding organizational and capacity structure at the central plant in Friedrichs -

hafen, as well as the decentralized expansion of local engineering firms in major target markets

and industries. Zeppelin also cooperates with experienced local partners, for instance to build and

erect silos, especially for large-scale projects. In individual cases, joint ventures are also set up,

e.g., Zeppelin Gulf Co. Ltd., Saudi Arabia, for projects in the Middle East.

PERSONNEL RISKS

Zeppelin views the recruitment, integration and long-term retention of qualified specialists and

executives as fundamental for the success of the Company. Our corporate mission not only

sets out the goals and strategy of the Company to our employees, but also expresses our deter-

mination to be an attractive employer. To avoid personnel-related risks, applicants are selected

carefully and employees receive extensive basic and advanced training, partly at the Zeppelin

Academy. High-potential programs for employees and an assessment center for the selection of

future specialists and executives aim to ensure that potential is tapped into at an early stage.

Cross-company and cross-border development of executives was intensified at group level. The

standard of the training of our apprentices in Germany and Austria remains exemplary in our busi-

ness and ensures that our growing need for well-qualified young people is always covered. In

light of future demographic development, the number of trainees remained constant throughout

the short-term drop in demand and despite the difficult conditions for business. Owing to the lack

of qualified candidates in eastern European countries, operating our own training centers is a

decisive prerequisite for growth in that region, even if such activities have been scaled back in

the wake of the current economic crisis.

Investment in modern work stations at workshops and in offices that comply with statutory pro-

visions and guidelines, as well as in customer service vehicles and tools not only represents a

further way of improving employee efficiency, but is also an important factor in retaining em-

ployees and attracting applications on the employment market.

Thanks to the target and performance-related salary components, the remuneration level of

employees is higher than the industry average in commercially successful years. Regular em-

ployee surveys and employee feedback meetings allow any unfavorable developments as well

as employee and HR needs requiring further attention to be noted and measures for improve-

ment introduced.

The effects of the current economic downturn were largely contained through adjustments in

2009 by using variable employee capacities (flexitime accounts and flexible working models),

terminating temporary employment and ceasing to outsource service processes. Reduced work-

ing hours were implemented in a targeted manner. Capacity was significantly reduced in eastern

Europe in 2009 in anticipation of the volume of business expected for the coming years follow-

ing a careful review using qualitative selection criteria, after a period of strong growth in 2007

and 2008.

60

The employees and management of the Zeppelin’s German companies in particular made a crucial

contribution to the positive Group result in the crisis year of 2009 with their exemplary willing-

ness to do without elements of their remuneration in order to safeguard the Company’s profits

and employment. This pact of solidarity will continue into 2010, with adjustments as needed.

No specific risks relating to key employees have been identified, thanks in part to the improve-

ment on the employment market due to the economic situation even in those European countries

which had previously enjoyed a boom period.

FINANCIAL RISKS

Generally speaking, financial risks are limited by the equity ratio which we aim to keep at 30 per-

cent or above in the consolidated balance sheet. In addition, ZEPPELIN GmbH and its German

subsidiaries have long-term pension provisions at their disposal in excess of EUR 97m whose eco-

nomic appropriateness is secured by a discount factor of 5.26 percent and by accounting for a

pension increase of 1.0 percent p.a..

To diversify the external sources of financing, supplier financing linked to sales and comprehen-

sive lines of credit of German and, to a growing extent, foreign banks are being supplemented

by the possibility of sales financing from various special institutions such as Caterpillar Financial

Services, GEFA Leasing GmbH and SüdLeasing GmbH as well as an ABS program. Non-current

liabilities to banks rose in proportion to total bank liabilities (68 percent) and total assets (20 per-

cent) to EUR 244m in 2009 (2008: 59 percent and 14 percent respectively).

Currency risks from individual transactions or projects are hedged where this is economically

justified. European currencies which had lost value in 2008 proved relatively stable over the course

of 2009. To further reduce risks, capital increases were implemented, and liabilities were entered

into in local currency (Russia) for the first time. In future, the currency risks for these countries

and the transfer of machines and engines to the customer’s country will be limited to the im-

mediate date of sale thanks to a machines logistics center at Zeppelin International AG in

Switzerland.

Credit standing checks of customers are to a large extent updated online in cooperation with

credit agencies on an ongoing basis, while the receivables collection is handled with an efficient

dunning system, involving debt collecting agencies. For the most part, sales financing for sales

of machines is carried out via special institutions which thus also bear a large part of the potential

default risks. We focused on including other financing partners in the sales process in addition to

Caterpillar Financial Services, previously our strongest partner, which had to considerably reduce

its offering at times due to changes in the Caterpillar Group’s financing priorities. Customers are

required to make payments on account for plant construction products and large ship engines as

well as on international markets, and credit insurance is taken out in individual cases.

Our risk management activities have been positively reinforced by the fact that defaults on receiv-

ables remained low even in the crisis year of 2009 (EUR 3.2m, 2008: EUR 2.9m).

GROUP MANAGEMENT REPORT

61

One of the compensation-related criteria for management in the Group, besides earnings targets,

remains a system of receivables and inventory management geared consistently to certain targets

in terms of amount and risks.

External specialist and legal counsel is regularly sought to reduce the risks that could arise from

fiscal, competition, patent, antitrust and environmental rulings and laws. This applies in particular

ro due diligence processes for acquisition projects.

While limited risks are borne by the Company, insurance policies are taken out to secure against

the financial consequences of large liability risks and high damages; the cover is checked regularly.

Special attention is paid to claims management and preventative measures. In addition to local

insurance policies in the respective countries, potentially uninsurable serious losses are covered

by a multi-line policy for the Group.

Investment projects are decided and approved on the basis of planning and economic viability

calculations in accordance with the Group’s investment authorization guideline.

B. OPPORTUNITIES

Actively seeking and using opportunities while at the same time weighing up the associated

risks, is a core component of entrepreneurial activity and thus of the management approach of

ZEPPELIN GmbH and all its subsidiaries.

As the exclusive sales and service representative for capital goods of major, and usually leading,

suppliers such as Caterpillar, NACCO, Terex, New Holland, AGCO, CLAAS and Ponsse, we are

able to exploit potential in our markets to a generally above-average level. This applies especially

to the those countries of eastern Europe benefiting from rapidly rising demand for raw materials,

power and agricultural products, but also for the significant markets in the transportation sector

(shipping, locomotives), power generation and power transport.

The closely-knit network of sales and service organizations in most countries, the leading position

earned in recent years in virtually all model classes of the local construction machinery markets,

motivated and loyal managers and employees as well as a sustainably sound financial base allow

us to continue successfully using the opportunities in future. Many of these factors were once

again positively assessed by Creditreform Rating AG, which awarded an “A- (watch)” rating in

2009.

The strong market position achieved by Zeppelin with products made by prominent manufacturers

is secured by a comprehensive aftersales service for products sold which, as past experience has

shown, often forms the basis for expanding a company’s own market share in times of economic

downturn. The sale of spare parts and customer service proved to be a stabilizing factor for employ-

ment and cash flow in the crisis year of 2009, as sales of machines and engines plummeted.

The financial strength and financing power of the Zeppelin Group enables it to win projects and

business and make use of targeted opportunities to acquire interesting companies to enhance

62

and expand its range, especially in times of economic difficulty. For example, by acquiring Reimelt

Henschel GmbH in 2009, Zeppelin’s Industry segment has now entered the market for machinery

for the foodstuffs, pharmaceuticals and cosmetics industry. In 2009, Zeppelin’s Trade segment

reinforced Zeppelin’s placement in the road construction machinery and construction site and road

traffic safety sector by making targeted acquisitions in Germany.

C. OVERALL ASSESSMENT OF THE RISK SITUATION

Risk management as a management tool and recognizing and influencing individual risks as well

as using opportunities are of great significance at Zeppelin. Over the years, risk management has

been continuously adjusted to meet growing demands and expanded to include new areas such

as aspects of compliance. This is confirmed by the positive evaluation of our risk management

system given by Creditreform Rating AG for many years. The Group internal audit department and

Group controlling monitor risk reporting on an ongoing basis. The risk management system is

also reviewed and assessed annually by the Company’s auditors for compliance and efficiency.

Risks which could jeopardize the continuing existence of ZEPPELIN GmbH or its investments

existed neither in the reporting period nor are there any discernable for the foreseeable future.

GROUP MANAGEMENT REPORT

63

6. FORECAST

Economic forecasts for 2010/11 generally predict growth for global trade (4.3 percent), the glob-

al economy (3.5 percent) and also for Zeppelin's most important markets (USA 2.5 percent, Ger-

many 1.5 percent, Russia 2.7 percent, China 10.0 percent).

However, the forecasts also make it clear that market and business volumes seen before the

economic crisis will not be achieved again until 2012 at the earliest. Even then, it is likely that

potential demand will no longer meet the levels achieved in the period from 2004 to 2008 through

policies of easy money and speculation, for example for raw materials and real estate. More strin-

gent lending conditions and regulations for banks will also have a braking effect, presenting many

companies and also countries with the problem of how to finance any recovery (“credit crunch”).

Another source of uncertainty is the question of how different industries will fare once govern-

ment support is withdrawn throughout the world. This applies in particular to the construction

industry and the automotive sector.

Although demand in the German construction machinery sector is expected to rise by up to 10

percent, this would represent only 50 percent of the market volume of 32,800 units seen in 2007.

The forecast published by Caterpillar of global growth in revenue between 10 percent and 25

percent in 2010 following a 37 percent decline in 2009 may be largely due to the restocking of

Caterpillar dealers’ stores rather than any significant growth in the markets. The development of

business in the Trade segment from 2010 onwards will be supported by Caterpillar's ambitious

targets for growth and market share. This also includes the financing potential of Caterpillar Finan-

cial, available to dealers once again since the end of 2009 at even more competitive conditions.

In Zeppelin's Industry segment, the fall in revenue in 2010 stemming from the declining invest-

ment cycle in consumer industries (e.g. chemicals and plastics industry) will only be offset by the

fact that the Reimelt Group will be in our possession for the entire year.

Overall, Zeppelin group companies anticipate a mere 4 percent growth in revenue to EUR 1.88b

in 2010, with employee capacity remaining constant at 5,800 (excluding trainees). Due to a slight

improvement in margins, reduced burdens compared to 2009 as a result of falling inventories

(interest, valuation allowances) and the effect of cost-cutting measures introduced in 2009 with

an effect on the entire year, pre-tax profits are expected to rise to EUR 35m (group net profit for

the year: EUR 20m). Total assets are expected to continue to fall to EUR 1.1b. The investment

plan for 2010 currently includes measures totaling EUR 43m (concentrating on Germany with

EUR 27m), which can be financed internally with funds from amortization and depreciation, and

profit retention. EUR 65m of additions are expected to be made to rental assets, mainly for re-

placements.

The current economic forecasts for 2011 do not allow much scope for ambitious growth targets.

64

The Group aims to achieve revenue of EUR 2.0b (growth of 6 percent) excluding acquisitions,

which would roughly equal group revenue for 2007 despite acquisitions carried out in the mean-

time. The aim is to achieve a return on sales before taxes of between 2 percent and 3 percent.

The development of the Zeppelin Group’s business in the first two months of 2010 was shaped

by the muted development of the economy and the market in key consumer industries. In addi-

tion, the unusually long and hard winter has hit the construction industry particularly hard. Con-

struction output in Germany for the month of January was down 19 percent on the prior year, and

asset utilization in the German construction industry plummeted to well below 50 percent in

the first few months. Demand for new construction machinery remained 19 percent below the

figure for the prior year after two months, of which 10 percent was attributable to the Retail sub-

segment and 35 percent to Rental. The revenue of the Zeppelin Group after two months came to

EUR 188m (prior year: EUR 202m = - 7 percent), falling short of expectations. Although a recovery

in the order and project backlog has been seen in the months since March, the loss of revenue

due to the winter will make it hard to achieve our goals for 2010.

7. PROPOSAL FOR THE APPROPRIATION OF PROFIT

The retained earnings of ZEPPELIN GmbH totaled EUR 91,635,241.17. Of this, management pro-

poses to distribute EUR 3,500,000.00, and carry forward EUR 88,135,241.17.

Friedrichshafen, 31 March 2010

The Management

Peter Gerstmann

Alexander Bautzmann

Michael Heidemann

Jürgen-Philipp Knepper

GROUP MANAGEMENT REPORT

65

66

ZEPPELIN GmbH | Consolidated balance sheet as of 31 December 2009

31 Dec 2008

EUR k EUR k EUR k

10,703 8,468

9,321 10,726

684 6,459

20,708 25,653

171,444 146,388

6,863 5,934

28,753 30,976

116,892 149,943

5,622 7,248

329,574 340,489

16,140 11,437

720 229

0 39

9,776 20,044

1,891 2,331

1,707 1,863

30,234 35,943

380,516 402,085

33,137 35,887

73,649 83,761

373,813 507,612

23,746 38,874

-65,995 -67,584

438,350 598,550

246,836 275,581

13,303 4,238

1,436 4,354

38,171 39,119

299,746 323,292

119,377 24,044

857,473 945,886

6,424 7,186

1,244,413 1,355,157

ASSETS

A. FIXED ASSETS

I. Intangible assets

1. Industrial and similar rights and assets and licenses in such rights and assets

2. Goodwill

3. Payments on account

II. Property, plant and equipment

1. Land, land rights and buildings including buildings on third-party land

2. Plant and machinery

3. Other equipment, furniture and fixtures

4. Rental assets

5. Payments on account and assets under construction

III. Financial assets

1. Shares in affiliates

2. Loans to affiliates

3. Equity investments in associates

4. Equity investments

5. Securities classified as fixed assets

6. Other loans

B. Current assets

I. Inventories

1. Raw materials, consumables and supplies

2. Work in process

3. Finished goods and merchandise

4. Payments on account

5. Payments received on account of orders

II. Receivables and other assets

1. Trade receivables

2. Receivables from affiliates

3. Receivables from other investees and investors

4. Other assets

III. Cash on hand, bank balances, checks

C. PREPAID EXPENSES

GROUP FINANCIAL STATEMENT

67

31 Dec 2008

EUR k EUR k EUR k

100,000 100,000

60,000 60,000

11,276 11,276

200,710 129,272

211,986 140,548

0 83,012

11,222 10,843

383,208 394,403

97,033 104,693

9,225 15,450

134,327 139,237

240,585 259,380

360,482 310,550

39,666 46,461

160,605 292,801

112 4,059

290 7,128

57,485 39,194

618,640 700,193

1,980 1,181

1,244,413 1,355,157

EQUITY AND LIABILITIES

A. EQUITY

I. Subscribed capital

II. Capital reserves

III. Revenue reserves

1. Reserve for shares of a controlling company

2. Other revenue reserves

IV. Consolidated net retained profit

V. Minority interests

B. PROVISIONS

1. Provisions for pensions and similar obligations

2. Tax provisions

3. Other provisions

C. LIABILITIES

1. Liabilities to banks

2. Payments received on account of orders

3. Trade payables

4. Liabilities to affiliates

5. Liabilities to other investeesand investors

6. Other liabilitiesthereof for taxes: EUR 29,676k (prior year: EUR 16,353k)thereof for social security: EUR 1,741 (prior year: EUR 1,589k)

D. DEFERRED INCOME

68

ZEPPELIN GmbH | Consolidated income statement for fiscal year 2009

2009 2008

EUR k EUR k

1,796,456 2,446,513

- 9,748 4,425

400 1,700

89,236 92,232

1,876,344 2,544,870

1,179,840 1,689,380135,687 131,480

1,315,527 1,820,860

235,457 245,543

45,407 42,377

7,601 8,150

288,465 296,070

26,454 22,861

186,024 283,671

59,874 121,408

897 47

216 253

6,413 7,731

10,587 458

160 0

29,924 27,805

26,729 101,176

12,339 33,296

1,589 2,466

12,801 65,414

904 1,728

11,897 63,686

74,012 33,379

- 85,909 - 14,053

0 83,012

GROUP FINANCIAL STATEMENT

1. Revenue

2. Decrease (prior year: increase) in finished goods and work in process

3. Other own work capitalized

4. Other operating income

5. Cost of materials

a) Cost of raw materials, consumables & supplies and of purchased merchandiseb) Cost of purchased services

6. Personnel expenses

a) Wages and salaries

b) Social security and other benefit costs

c) Pension costs

7. Amortization, depreciation and write-downs of intangible assets and property, plant and equipment

8. Other operating expenses

9. Income from equity investments

10. Income from other securities and loans classified as fixed financial assets

11. Other interest and similar income

12. Write-downs on financial assets

13. Expenses from loss absorption

14. Interest and similar expenses

15. Result from ordinary activities

16. Income taxes

17. Other taxes

18. Consolidated net income of the group for the year

19. Income attributable to minority interests

20. Group share in net income for the year

21. Profits carried forward by the Group

22. Allocations to revenue reserves of the Group

23. Consolidated net retained profit

ZEPPELIN GmbH | Group cash flow statement for fiscal year 2009

2009 2008 Change

EUR k EUR k EUR k

25,140 98,710 -73,570

7,132 4,996 2,136

19,322 17,865 1,457

46,409 50,506 - 4,097

10,587 458 10,129

- 9,096 - 491 - 8,605

- 950 5,359 - 6,309

6,531 24,067 - 17,536

- 408 1,804 - 2,212

104,667 203,274 - 98,607

- 12,339 - 33,296 20,957

92,328 169,978 - 77,650

684 33

158,856 -143,116

46,467 -1,680

- 4,517 -12,392

- 201,309 89,924

92,509 102,747

- 7,701 - 9,911

- 34,683 - 38,335

2,595 - 53,647

- 4,944 - 12,625

- 17,429 - 549

n7,843 0

5,232 4,481

n 903 423

- 48,184 - 110,163

- 9,000 - 6,500

- 538 - 447

89,482 106,053

- 30,000 - 100,000

49,944 - 894

94,269 - 8,310

24,044 32,992

1,064 - 638

119,377 24,044

69

Earnings before income taxes

Write-downs/write-upsIntangible assets

Property, plant and equipment excluding rental assets

Rental assets: fixed and current assets

Financial assets

Change in pension provisions

Change in other long-term provisions

Unrealized exchange losses/gains

Other non-cash changes

Gross cash flow

Income taxes

Net cash flow

Loss/gain on disposals of fixed assets

Decrease (prior year: increase) in inventories

Decrease (prior year: increase) in trade receivables

Increase in other assets

Decrease (prior year: increase) in other liabilities

Cash flow from operating activities

Investments inIntangible assets

Property, plant and equipment excluding rental assets

Rental assets payment balance

Financial assets

Cash received from the acquisition of consolidated companies

Revenues from disposals ofIntangible assets

Property, plant and equipment excluding rental assets

Financial assets

Cash flow from investing activities

Dividend payments toshareholders of ZEPPELIN GmbH

minority interests

Proceeds from borrowing

Repayment of borrowing

Cash flow from financing activities

Change in cash and cash equivalents

Cash and cash equivalents at the beginning of the fiscal year

Exchange rate related changes in cash and cash equivalents

Cash and cash equivalents at the end of the fiscal year

70

ZEPPELIN GmbH | Statement of changes in fixed assets of the Group for fiscal year 2009

21,949 -195 3,480 6,727

25,473 5 2,000 49

6,459 0 35 925

53,881 - 190 5,515 7,701

225,388 922 17,733 18,292

34,807 461 2,783 1,890

89,442 - 545 3,907 8,418

218,460 406 0 52,258

7,248 - 6 32 6,083

575,345 1,238 24,455 86,941

629,226 1,048 29,970 94,642

11,894 0 648 4,310

3,568 0 893 222

39 0 0 0

20,044 75 0 0

2,331 0 0 161

3,082 0 0 251

40,958 75 1,541 4,944

670,184 1,123 31,511 99,586

A c q u i s i t i o n a n d

GROUP FINANCIAL STATEMENT

Changes in the

consolidated group

EUR k

Currency

differences

EUR k

Additions

EUR k

1 Jan

2009

EUR k

I. Intangible assets

1. Industrial and similar rights and assets, and licenses in such rights and assets

2. Goodwill

3. Payments on account

II. Property, plant and equipment

1. Land, land rights and buildings including buildings on third-party land

2. Plant and machinery

3. Other equipment, furniture and fixtures

4. Rental assets

5. Payments on account and assets under construction

III. Financial assets

1. Shares in affiliates

2. Loans to affiliates

3. Equity investments in associates

4. Equity investments

5. Securities classified as fixed assets

6. Other loans

1) Thereof changes in the consolidated Group EUR 2,705k 2) Thereof changes in the consolidated Group EUR 245k 3) Thereof changes in the consolidated Group EUR 6,962k 4) Thereof changes in the consolidated Group EUR 2,442k

5) Thereof changes in the consolidated Group EUR 2,755k 6) Thereof changes in the consolidated Group EUR 261k 7) Thereof changes in the consolidated Group EUR 415k 8) Netted in cost of materials.

71

6,750 9,749 28,962 0 18,259 1) 10,703 8,468 3,923

0 0 27,527 0 18,206 2) 9,321 10,726 3,209

- 6,735 0 684 0 0 684 6,459 0

15 9,749 57,173 0 36,465 20,708 25,653 7,132

5,813 4,934 263,214 0 91,770 3) 171,444 146,388 7,647

27 742 39,226 0 32,363 4) 6,863 5,934 1,440

162 4,904 96,480 61 67,788 5) 28,753 30,976 10,235

- 44 85,814 185,266 0 68,374 116,892 149,943 30,771 8)

- 5,931 1,804 5,622 0 0 5,622 7,248 0

27 98,198 589,808 61 260,295 329,574 340,489 50,093

42 107,947 646,981 61 296,760 350,282 366,142 57,225

39 457 16,434 0 294 6) 16,140 11,437 33

0 0 4,683 0 3,963 7) 720 229 209

- 39 0 0 0 0 0 39 0

0 0 20,119 0 10,343 9,776 20,044 10,343

0 599 1,893 0 2 1,891 2,331 2

- 42 365 2,926 0 1,219 1,707 1,863 0

- 42 1,421 46,055 0 15,821 30,234 35,943 10,587

0 109,368 693,036 61 312,581 380,516 402,085 67,812

p r o d u c t i o n c o s t

Disposals

EUR k

Reclassi-

fications

EUR k

31 Dec

2009

EUR k

Write-ups

EUR k

Accumulated

depreciation

31 Dec 2009

EUR k

Net

book value

31 Dec 2009

EUR k

Net

book value

31 Dec 2008

EUR k

Annual

depreciation

EUR k

ZEPPELIN GmbH | Statement of changes in Group equity

72

50,000 60,000 213,947 1,571 5,939 331,457

- 6,500 - 6,500

50,000 - 50,000 0

-549 - 549

- 158 - 158

100,000 60,000 157,289 1,571 5,390 324,250

63,686 63,686

- 4,376 - 4,376

63,686 - 4,376 0 59,310

100,000 60,000 220,975 - 2,805 5,390 383,560

100,000 60,000 220,975 - 2,805 5,390 383,560

- 9,000 - 9,000

- 15,247 - 15,247

- 160 - 160

100,000 60,000 211,815 - 2,805 - 9,857 359,153

11,897 11,897

936 936

11,897 936 0 12,833

100,000 60,000 223,712 - 1,869 - 9,857 371,986

1) The reported amount includes the balance (EUR 7,983k) obtained from offsetting debit differences totaling EUR 8,399k and credit differences totaling EUR 416k stemming from acquisition accounting in the revenue reserves.

2) The reported amount includes the balance (EUR 23,230k) obtained from offsetting debit differences totaling EUR 23,646k and credit differencestotaling EUR 416k stemming from acquisition accounting in the revenue reserves.

GROUP FINANCIAL STATEMENT

EUR k

Sub-

scribed

capital

EUR k

Capital

reserves

EUR k

Equity

earned by

the Group

Adjustment item

from currency

translation

Other

non-operating

transactions

EUR k EUR k EUR k

Accumulated other

comprehensive income

Equity

1 Jan 2008

Dividend payments

Capital contributions from company funds

Offsetting goodwill

Other changes

Net income of the Group for the year

Other comprehensive income

Total recognized results

31 Dec 2008

1 Jan 2009

Dividend payments

Offsetting goodwill

Other changes

Net income of the Group for the year

Other comprehensive income

Total recognized results

31 Dec 2009

Parent company

1)

2)

73

8,256 1,409 9,665

- 447 - 447

- 41 - 41

7,768 1,409 9,177

1,728 1,728

- 62 - 62

1,728 - 62 1,666

9,496 1,347 10,843

9,496 1,347 10,843

- 538 - 538

8,958 1,347 10,305

904 904

13 13

904 13 917

9,862 1,360 11,222

341,122

- 6,947

0

- 549

- 199

333,427

65,414

- 4,438

60,976

394,403

394,403

- 9,538

- 15,247

- 160

369,458

12,801

949

13,750

383,208

Adjustment item from

currency translation

EUR k EUR k EUR k EUR k

Accumulated other

comprehensive income

Minority

interests

Equity

Minority interests Group equity

74

ZEPPELIN GMBH NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2009

I. GENERAL

The consolidated financial statements of ZEPPELIN GmbH, Friedrichshafen, for the fiscal year 2009

have been prepared in accordance with the provisions of HGB [“Handelsgesetzbuch”: German

Commercial Code]. Figures in the consolidated financial statements are stated in thousands of

euro.

In accordance with the general valuation principles of Sec. 252 (1) No. 4 HGB in conjunction with

Sec. 253 (3) HGB, foreseeable risks and losses from the development of the exchange rate in the

period between the cut-off date and the date on which the consolidated financial statements are

prepared were taken into account. This burdened earnings by EUR 11.0m. There were no com-

parable risks or losses to be taken into account in the consolidated financial statements as of 31

December 2009.

II. ACCOUNTING AND VALUATION METHODS

The financial statements of ZEPPELIN GmbH and of the other companies included in the consol-

idated financial statements are generally prepared in accordance with uniform accounting and val-

uation principles.

Intangible assets and property, plant and equipment are capitalized at acquisition or production

cost in line with tax provisions. Self-constructed assets are stated at direct cost as well as direct-

ly allocable materials and production overheads.

Acquisition or production cost is reduced by systematic amortization and depreciation. Impair-

ments are recorded as required by special circumstances.

The customary useful life for intangible assets is generally between three and five years. Amor-

tization of the goodwill resulting from first-time consolidation is recorded on a straight-line basis

over a period of five or ten years.

Buildings are depreciated using the straight-line method or based on the depreciation rates per-

mitted by tax provisions.

Moveable assets are generally depreciated on a systematic basis using the straight-line method

over their useful lives or using the highest tax-allowed rates and the declining-balance method.

GROUP FINANCIAL STATEMENT

75

Low-value assets with an individual acquisition cost of between EUR 150.00 and EUR 1,000.00

are capitalized and generally depreciated over a useful life of five years.

Rental assets are depreciated using the straight-line method over the useful lives permitted un-

der tax provisions. The total depreciation of EUR 30,771k (prior year: EUR 30,988k) is included un-

der cost of materials.

Shares in non-consolidated affiliates are recognized at the lower of cost or market on the balance

sheet date.

Loans are stated at their nominal amount or their lower realizable value on the balance sheet date.

Long-term investments are capitalized at the lower of acquisition cost or net realizable value on

the balance sheet date.

Inventories are generally valued at the lower of acquisition or production cost in line with tax pro-

visions or net realizable value on the balance sheet date. Adequate allowances provide for inven-

tory valuation risks from slow-moving and obsolete goods.

Receivables and other assets are stated at their nominal value, except for notes receivable, which

are stated at their present value. Specific bad debt allowances provide for recognizable risks. The

general credit risk is provided for by different general bad debt allowances for notes receivable

and trade receivables.

Provisions for pensions in Germany are determined on the basis of actuarial principles in accor-

dance with Sec. 6a EStG [“Einkommenssteuergesetz”: German Income Tax Act] using an inter-

est rate of 5.26% (prior year: 4.5%) and an unchanged pension increase rate of 1%. The “2005

G mortality tables” by Prof. Dr. Klaus Heubeck were used. The discount rate was raised from

4.5% in the prior year to 5.26% in order to accurately reflect the pension commitments to active

and former employees as of 31 December 2009. The resulting reduction in pension provisions

amounts to EUR 7,536k, and is reported as other operating income. For foreign companies, the

normal interest rate for the country concerned was used.

Provisions account for all identifiable risks and contingent liabilities at the amount of expected uti-

lization.

Liabilities are recorded at the amount repayable.

III. BASIS OF CONSOLIDATION

Apart from ZEPPELIN GmbH, the consolidated group comprises eight (prior year: seven) German

and 23 (prior year: 21) foreign companies.The following companies are included:

76

Affiliates

Name and location of the company Share in equity and liabilities % 1)

Companies included apart from the parent company

Zeppelin Baumaschinen GmbH, Garching near Munich

MVS Zeppelin GmbH & Co. KG, Garching near Munich

MVS Zeppelin Verwaltungs GmbH, Garching near Munich

Zeppelin Power Systems GmbH & Co. KG, Hamburg

Zeppelin Power Systems Verwaltungs GmbH, Hamburg

Zeppelin Struktur GmbH, Garching near Munich

Zeppelin Österreich GmbH, Fischamend near Vienna, Austria

MVS Zeppelin Österreich GmbH, Fischamend near Vienna, Austria

Phoenix-Zeppelin, spol. s r.o., Modletice near Prague, Czech Republic

Phoenix Zeppelin, spol. s r.o., Banska Bystrica, Slovakia

Zeppelin Polska Sp. z o.o., Warsaw, Poland

Zeppelin Logistics Sp. z o.o., Warsaw, Poland

Phoenix-Zeppelin Ukraine Ltd., Kiev, Ukraine

Zeppelin International AG, Zug, Switzerland

Zeppelin Russland OOO, Moscow, Russia

Zeppelin AGRO OOO, Moscow, Russia

Zeppelin Belarus OOO, Minsk, Belarus

Zeppelin Ukraine TOW, Kiev, Ukraine

Zeppelin Armenien LLC, Yerevan, Armenia

Zeppelin Turkmenistan JV, Ashgabat, Turkmenistan

Zeppelin Silos & Systems GmbH, Friedrichshafen

Reimelt Henschel GmbH, Rödermark

Zeppelin Belgium N.V., Genk, Belgium

Zeppelin Plast Tech S.r.l., Milan, Italy

Zeppelin Systems Limited, Nottingham, UK

Zeppelin Systems USA Inc., Houston, Texas, USA

Reimelt Corporation, Odessa, Florida, USA

JMB Zeppelin Equipamentos Industriais Ltda., São Pãulo, Brazil

Zeppelin Solid Technology (Beijing) Co. Ltd., Beijing, China

Zeppelin Technology Far East Pte. Ltd., Singapore

Zeppelin Plastech Asia Pte. Ltd., Singapore

100

100

100

100

100

100

100

100 2)

85

85 3)

85 3)

85 4)

85 3)

100

100 5)

100 5)

100 6)

100 5)

100 6)

100 6)

100

100 7)

100 7)

90 7)

100 7)

100 7)

100 8)

100 7)

100 7)

100 7)

100 9)

GROUP FINANCIAL STATEMENT

1) Direct and indirect.2) Shares are held by MVS Zeppelin GmbH & Co. KG, Garching near Munich.3) Shares are held by Phoenix-Zeppelin spol. sr.o., Modletice near Prague, Czech Republic.4) Shares are held by Phoenix-Zeppelin spol. sr.o., Modletice near Prague, Czech Republic and DEKRA POLSKA Sp. z o.o., Warsaw, Poland5) Shares are held by Zeppelin International AG, Zug, Switzerland.6) Shares are held by Zeppelin International AG, Zug, Switzerland and Zeppelin Russland OOO, Moscow, Russia.7) Shares are held by Zeppelin Silos & Systems GmbH, Friedrichshafen.8) Shares are held by Reimelt Henschel GmbH, Rödermark9) Shares are held by Zeppelin Technology Far East Pte. Ltd., Singapore.

77

The German consolidated group was enlarged to include Reimelt Henschel GmbH, Rödermark,

which is assigned to the Industry segment.

The international consolidated group was enlarged to include Zeppelin AGRO OOO, Moscow,

Russia, which is assigned to the Trade segment, and also Reimelt Corporation, Odessa, Florida,

USA, which is assigned to the Industry segment.

Reimelt Henschel GmbH was acquired in 2009 and consolidated for the first time on 31 May 2009.

The company’s focus is on developing and selling machinery for the production and processing

of bulk goods in the fields of foodstuffs and pharmaceuticals. Reimelt Corporation is a wholly

owned subsidiary of Reimelt Henschel GmbH.

Zeppelin AGRO OOO was established in 2009.

While the inclusion of Zeppelin AGRO OOO, Moscow, Russia did not have a material impact on

comparability between the consolidated financial statements as of 31 December 2009 and the

prior year's consolidated financial statements, the inclusion of Reimelt Henschel GmbH and Reimelt

Corporation means comparability is limited in certain respects. The following gives an overview

of the significant effects of the inclusion of Reimelt Henschel GmbH and Reimelt Corporation for

the first time on the respective items of the balance sheet and income statement.

Balance sheet 31 Dec 2009 EUR k

Intangible assets Industrial and similar rights and assets 1,013 Goodwill 1,504Financial assets Loans to affiliates 491Inventories Raw materials, consumables and supplies 5,375 Work in process 10,313Provisions Tax provisions 1,694 Income statement

Decrease in finished goods inventories and work in process 10,414

Six German companies (prior year: four) and 15 (prior year: four) foreign companies with a small

volume of business activity were not included in the consolidated financial statements in accor-

dance with Sec. 296 (2) HGB. Overall, they are immaterial as regards the requirement to present

a true and fair view of the net assets, financial position and results of operations of the Group. An

overview of the disclosures required pursuant to Sec. 313 (2) No. 4 HGB is presented below. The

disclosures for one non-consolidated company have been omitted in full in accordance with Sec.

313 (3) Sentence 1 HGB.

78

Companies not included in the consolidated group

GROUP FINANCIAL STATEMENT

Companies not included in the consolidated group

pursuant to Sec. 296 HGB

Share in equity

and liabilities % 1)

Equity

EUR k

Net income/loss

EUR k

100 2) 865 - 135

80 2) 837 - 788

100 500 0 3)

67 4) 5) – –

67 4) 5) – –

42.5 6) 105 3

100 7) 5) – –

100 8) 29 -1

100 8) 5) – –

100 9) - 314 19

50 9) 124 1

100 10) 241 39

90 10) 143 - 228

100 9) 5) – –

90 9) 5) – –

100 9) 5) – –

100 9) 5) – –

100 9) 5) – –

100 10) 1,417 - 120

100 11) 5) – –

41.65 12) 16,995 2,826

49 10) 5) – –

Name and location of the company

AT Baumaschinentechnik Beteiligungs GmbH, Munich

HWS Zeppelin GmbH, Garching near Munich

Zeppelin Rental GmbH, Garching near Munich

Zeppelin SkySails Sales & Service GmbH & Co. KG, Hamburg

Zeppelin SkySails Sales & Service Verwaltungs GmbH, Hamburg

Zeppelin-Körös-Spedit Kft. Budapest, Hungary

Zeppelin Rental Russland OOO, Moscow, Russia

Zeppelin Central Asia Machinery LLC, Tashkent, Uzbekistan

Zeppelin Tajikistan, Dushanbe, Tajikistan

Reimelt France S.A.R.L. Vénissieux Cedex, France

Reimelt UK Ltd., Enfield, UK

DIMA service for plant engineering s r.o., Bratislava, Slovakia

Zeppelin Silo ve Sistemleri Imalat Sanayi Ticaret Anonim Sirketi, Istanbul, Turkey

Reimelt (Canada) Ltd. Ontario, Canada

Reimelt Ltda., Sao Paolo, Brazil

Reimelt Henschel Asia Ltd., Hong Kong, China

Mania Technologie (Shenzhen) Co., Ltd., Shenzhen, China

Reimelt Korea Corporation, Gyeonggi-do, Korea

Zeppelin Systems India Pvt. Ltd., Baroda, India

Alpha Project Services Pvt. Ltd., Baroda, India

Other equity investments

ČZ LOKO a. s., Ceska Trebova, Czech Republic

Zeppelin Gulf Co. Ltd., Al Jubail, Saudi Arabia

1) Direct and indirect.2) Shares are held by Zeppelin Baumaschinen GmbH, Garching near Munich.3) Profit and loss transfer agreement with ZEPPELIN GmbH, Friedrichshafen.4) Shares are held by Zeppelin Power Systems GmbH & Co. KG, Hamburg.5) Financial statements were not completed on the date that the list of shareholdings was prepared.6) Shares (50 %) are held by Phoenix-Zeppelin spol. s r.o., Modletice near Prague, Czech Republic. 7) Shares are held by Zeppelin Rental GmbH, Garching near Munich.8) Shares are held by Zeppelin International AG, Zug, Switzerland and Zeppelin Russland OOO, Moscow, Russia.9) Shares are held by Reimelt Henschel GmbH, Rödermark.10) Shares are held by Zeppelin Silos & Systems GmbH, Friedrichshafen.11) Shares are held by Zeppelin Systems India Pvt. Ltd., Baroda, India.12) Shares (49 %) are held by Phoenix-Zeppelin spol. s r.o., Modletice near Prague, Czech Republic.

79

IV. CONSOLIDATION PRINCIPLES

Until 31 December 2000, business combinations were consolidated using the book value method

(Sec. 301 (1) Sentence 2 No. 1 HGB) as at the date of acquisition or the date of first-time con-

solidation of the subsidiary. A Brazilian subsidiary that was included in the consolidated financial

statements for the first time in fiscal 1998 was consolidated using the revaluation method (Sec. 301

(1) Sentence 2 No. 2 HGB) in order to use the revaluation of fixed assets performed in preparing

the financial statements pursuant to local GAAP for consolidation purposes as well.

For business combinations since 1 January 2001, capital is generally consolidated using the

revaluation method as at the date of acquisition.

If a debit difference arises in the course of the initial consolidation, this is allocated to the individ-

ual assets of the subsidiaries to the extent that their value is higher than the book value in the

separate financial statements. Any remaining difference or any debit difference arising from the

application of the revaluation method was treated as goodwill and amortized pursuant to Sec. 309

(1) Sentence 1 HGB or netted against the revenue reserves of the Group.

The consolidation of one German and one international company for the first time in 2009 gave

rise to goodwill of EUR 15,247k. This was offset against the Group's revenue reserves. They were

consolidated for the first time on 31 May 2009. No difference resulted from the first-time consol-

idation of one other foreign company.

Minority interests in equity and net income are accounted for in the balance sheet under “minority

interests” and in the income statement under “net income for the year attributable to minority

interests”. The amount disclosed in the income statement under “net income for the year attrib-

utable to minority interests” results from offsetting income (EUR 951k; prior year: EUR 1,783k)

against losses (EUR 47k; prior year: EUR 55k).

Other revenue reserves contain the accumulated results of the companies included in the consoli-

dated financial statements, unless distributed, as well as consolidation entries affecting income.

One further component consists of the accumulated currency exchange differences, as well as

goodwill offset or credit differences from capital consolidation added to revenue reserves with no

effect on income pursuant to Sec. 309 (1) Sentence 3 HGB.

EUR 74,012k of the Group’s net income for 2008 was added to other revenue reserves.

After a capital increase was implemented at an international group company in which a majority

share is held, equity investments included in the consolidated financial statements until 31 Decem-

ber 2008 using the equity method and reported as investments in associates due to immateriality

80

were reassigned to shares in affiliates in 2009, and valued at amortized cost. Intercompany re-

ceivables and liabilities were eliminated in the course of consolidation of intercompany balances.

Differences were recognized partly directly in the income statement and partly with no effect on

income.

Income and expenses between consolidated companies were offset against each other.

Intercompany profits from property, plant and equipment and inventories were eliminated.

Deferred tax assets were recorded on prepaid expenses due to consolidation entries with effect

on income. The option of recognizing deferred tax assets pursuant to Sec. 274 (2) HGB was not

exercised.

V. CURRENCY TRANSLATION

The financial statements of foreign companies of the Group are translated to euro (reporting

currency of the consolidated financial statements) based on the functional currency concept.

The functional currency of the companies included in the consolidated financial statements is

generally the respective local currency as the foreign companies carry out their business activities

independently from a financial, economic and organizational perspective. Two of the companies

have the US dollar as their functional currency. Assets and liabilities are translated at the mean

rate of exchange prevailing on the balance sheet date; equity (subscribed capital, reserves and

profit carryforward) is translated at historical rates. Any translation difference resulting from changes

in exchange rates is accounted for in the revenue reserves until the subsidiary concerned is decon-

solidated. Income and expenses are translated at the average annual rate. The net result in the

consolidated income statement is carried over to the balance sheet and the difference posted to

the translation reserve directly under equity.

Transactions in foreign currency reported in the separate financial statements of the companies

are valued at historical rates. Exchange rate gains or losses occurring until the balance sheet date

from the valuation of monetary items as well as short-term receivables and liabilities denominated

in foreign currency are accounted for with effect on income. The imparity principle is observed for

long-term receivables and liabilities.

VI. NOTES TO THE CONSOLIDATED BALANCE SHEET

The development of the individual fixed asset items is presented separately in the “Statement of

changes in fixed assets of the Group”.

Intangible assets mainly comprise software, licenses and similar rights as well as goodwill and

similar assets.

GROUP FINANCIAL STATEMENT

81

The reversal – due to Sec. 308 (3) HGB old version being repealed – of the transfers of special

items with an equity portion carried out in prior years and special tax-allowed depreciation record-

ed in prior years led to additional depreciation of EUR 405k in 2009. The aforementioned adjust-

ments to the book value of property, plant and equipment result in an additional write-down of

EUR 7,299k in subsequent years.

Shares in affiliates include in particular shares in a controlling company of Luftschiffbau Zeppelin

GmbH, Friedrichshafen (EUR 11,276k). The shares correspond to 10 % of subscribed capital, which

amounts to EUR 35.0m. In addition to a capital increase in India, additions include the establish-

ment of two new companies in Germany and one in Tajikistan, as well as a capital increase and

contribution to revenue reserves at a German subsidiary. Changes to the group of consolidated

companies resulted in the addition of four international companies. Fully written-off equity invest-

ments in a German subsidiary were among the disposals. In the fiscal year, two German affiliates

were written down by a total of EUR 33k.

Equity investments include shares in two German companies and two foreign companies.Receiv-

ables from affiliates include receivables due from shareholders totaling EUR 2,318k (prior year:

EUR 3,500k).

Maturity of receivables and other assets

5,751 246,836(2,816) (275,581)

0 13,303(3,500) (4,238)

0 1,436(0) (4,354)

651 38,171(3,920) (39,119)

6,402 299,746

1. Trade receivables(prior year)

2. Receivables from affiliates(prior year)

3. Receivables from other investees and investors(prior year)

4. Other assets(prior year)

Due in more

than one year

EUR k EUR k

Total

Liabilities

82

116,891 243,394 197 360,482(126,441) (153,180) (30,929) (310,550)

37,512 2,154 0 39,666(46,461) (0) (0) (46,461)

156,170 4,412 23 160,605(288,245) (4,556) (292,801)

112 0 0 112(4,059) (0) (0) (4,059)

290 0 0 290(7,128) (0) (0) (7,128)

57,157 252 76 57,485(34,585) (4,415) (194) (39,194)

368,132 250,212 296 618,640

1. Liabilities to banks(prior year)

2. Payments received on account of orders(prior year)

3. Trade payables(prior year)

4. Liabilities to affiliates(prior year)

5. Liabilities to other investees and investors(prior year)

6. Other liabilities(prior year)

Cash and cash equivalents comprise cash on hand, bank balances and checks.

Prepaid expenses include deferred tax assets from consolidation entries totaling EUR 1,009k (pri-

or year: EUR 1,332k) and debt discounts of EUR 312k (prior year: EUR 250k).

The reserve for shares of a controlling company concerns the equity investment in Luftschiffbau

Zeppelin GmbH, Friedrichshafen held by ZEPPELIN GmbH.

The development of the individual group equity items is presented separately in the “Statement

of changes in group equity” (exhibit 4). As of 31 December 2009, EUR 91,635k is available for dis-

tribution to the shareholders of the parent company (net retained profit of the parent company).

Other provisions mainly concern personnel, warranty obligations, outstanding invoices, obliga-

tions from full-service agreements, a bill of exchange and potential losses from pending transac-

tions.

Of the tax provisions, EUR 6,769k relates to deferred tax liabilities (prior year: EUR 4,708k). Of

this, an amount of EUR 6,354k (prior year: EUR 3,078k) relates to deferred taxes pursuant to Sec.

274 (1) HGB (deferred tax liabilities from separate financial statements).

Liabilities are broken down in the following schedule of liabilities: Liabilities to affiliates include li-

abilities to the shareholder of EUR 66k (prior year: EUR 4,013k). Deferred income mainly concerns

the rental business.

GROUP FINANCIAL STATEMENT

Due in less

than 1 yearEUR k

Due in less

1 to 5 yearsEUR k

Due in more

than 5 yearsEUR k

Total

EUR k

83

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are used to hedge interest rate and currency risks relating to

operating activities or to reduce the financing requirements resulting from operating activities.

Mostly forward exchange contracts are entered into to hedge against the risks resulting from

the fluctuation of receivables, liabilities and anticipated transactions denominated in foreign cur-

rency.

With a view to balancing the interest risk, any future interest and currency risks arising in the

course of financing the Company are hedged by entering into appropriate interest rate swaps. In-

terest derivatives effectively convert liabilities subject to variable interest into fixed-interest liabil-

ities and can thus reduce the agreed interest obligation tied to the hedged item.

Financial instruments are recognized and valued based on the imparity principle. The market value

of financial instruments is determined using generally accepted methods based on the market

data available as of the balance sheet date. If the criteria for the creation of valuation units are not

satisfied, negative market values are recognized under other provisions. A provision for potential

losses of EUR 1.0m was recognized for interest rate swaps.

The nominal volumes and fair values (mark to market) as of the balance sheet date were as follows:

Nominal volumes and fair values

Nominal volume Fair value

EUR m EUR m

Interest rate swapsPositive fair values 50.0 2.9Negative fair values 145.5 - 9.4

Forward exchange contracts 31.1 1.9

226.6 - 4.6

Revenue

84

53.4% relates to German revenue and 46.6% to international revenue.

Other operating income includes the following significant items:

Income from the reversal of provisions, income from return deliveries, book gains from the dis-

posal of fixed assets, gains from sale and leaseback transactions, reversal of valuation allowances,

cost refunds, exchange rate gains, rent and other services.

NOTES TO THE INCOME STATEMENT

Revenue breaks down into the following activities:

EUR k

Trade segment

Earth movers (new) 456,044

Earth movers (used) 225,903

Rental business 102,270

Fork-lift trucks including rental 57,360

Power systems including rental 228,864

Agricultural machinery including rental 40,925

Components, construction site equipment; incl. rental 26,028

Replacement parts 270,392

After-sales service 132,095

Other 18,360

1,558,241

Industry segment

Plant construction companies 111,261

Plant construction administrators 36,652

Equipment, minerals 58,153

SeServices, other 31,665

237,731

ZEPPELIN GmbH 484

1,796,456

GROUP FINANCIAL STATEMENT

85

Other operating income includes income relating to other periods of EUR 23.1m, mainly from the

reversal of provisions.

Other operating expenses primarily contains significant administration expenses, operating and

selling costs, maintenance expenses, additions to bad debt allowances, bad debts, exchange rate

losses and additions to provisions.

EUR 502k (prior year: EUR 309k) of interest income is attributable to affiliates. EUR 44k (prior

year: EUR 51k) of interest expenses concerns affiliates.

Income taxes include deferred taxes of EUR 907k (prior year: deferred tax assets of EUR 1,399k).

The corporate income tax rate of 15 % applicable as of 1 January 2008 has been taken as a basis

for the valuation of the deferred taxes attributable to the German companies. The average income

tax rate comes to 29.0 % including the solidarity surcharge (5.5 %) and trade tax (average multi-

plier 366.0 %).

Notes to the consolidated cash flow statement

The consolidated cash flow statement presents changes in cash and cash equivalents of the Group

over the course of the fiscal year. In accordance with German Accounting Standard (GAS) 2, cash

flows are classified into operating activities, investing activities and financing activities.

The cash and cash equivalents disclosed in the cash flow statement comprise all of the liquid

assets disclosed in the balance sheet, i.e. cash on hand, checks and bank balances.

Cash flow from investing and financing activities are recorded on a payment basis; investments

in rental assets are disclosed net of payments received for disposals. By contrast, cash flow from

operating activities is derived indirectly from the net income of the group for the year. In the course

of the indirect calculation, changes in balance sheet items relating to operating activities are ad-

justed for currency translation effects and effects of first-time consolidation or deconsolidation.

The base value in the cash flow statement is translated to the group result for the year as follows:

EUR k

Earnings before income taxes 25,140

Income taxes 12,339

12,801

In fiscal 2009, interest received amounted to EUR 6,413k and interest paid totaled EUR 29,924k.

Current income taxes amount to EUR 20,273k.

Contingent liabilities and other financial obligations

DISCLOSURES AND OTHER NOTES

86

EUR m

1. Contingent liabilities

Obligations in respect of bills of exchange 28.5

Guarantees 10.8

Guarantee contracts 14.1

53.4

2. Financial obligations

Rent and lease obligations

due 2010 85.1

due 2011 through 2014 112.1

due after 2014 1.5

Repurchase agreements 133.1

331.8

The following assets and liabilities were added to the Zeppelin Group by the acquisition of Reimelt

Henschel GmbH, for a purchase price of EUR 26,704k:

EUR k

Fixed assets 15,726

Current assets excluding cash and cash equivalents 32,249

Cash and cash equivalents 9,275

Provisions - 15,882

Liabilities - 29,911

11,457

The purchase commitment is at the customary level.

87

OFF-BALANCE-SHEET TRANSACTIONS

SALE AND LEASE BACK TRANSACTIONS

In our industry, sale and lease back agreements are generally concluded for the lease of movable

assets (rental assets) in order to refinance the rental business. This freed up liquidity totaling EUR

125.9m in 2009 (prior year: EUR 111.1m). As the lease payments encumber existing credit lines

in the future, fluctuations in cash inflows in the lease business due to slumps in demand, late pay-

ments and increased default rates can negatively affect the Group’s liquidity.

At one German subsidiary, the ERP software acquired in fiscal years 2008 and 2009 and the

licenses acquired in the period from 2006 to 2007 for the purpose of replacing the software

were sold to a leasing company on 1 July 2009 and leased back for further use in order to im-

prove liquidity and reduce refinancing costs. This freed up EUR 7.8m of capital employed. This

transaction allowed the financing of utilized assets with matching maturities and the reduction

of the risk associated with changes in the interest rate.

The future impact of the contractually agreed lease payments on liquidity is included in the afore-

mentioned lease obligation.

FACTORING

Receivables from the new and used machinery business are sold to finance revenue in the short

term. Factoring forms an integral part of the range of financing measures available to industrial

and trading companies. This takes the form of asset-backed financing involving the sale of a

portfolio of receivables. The company concerned continues to administer the receivables for an

appropriate fee. The receivables thus sold are no longer reported in the consolidated financial

statements.

The total volume of the receivables sold in the course of asset-backed financing comes to EUR

20.0m as of 31 December 2009 (31 December 2008: EUR 24.2m).

The early inflow of liquidity gives the Group more options. At the same time, improved liquidity

raises the Company’s credit rating.

AUDIT FEES

Audit fees break down as follows:

EUR k

Statutory audit 623

Tax advisory services 122

Other services 217

962

88

The audit item contains the fees for the audit of the separate and consolidated financial state-

ments of ZEPPELIN GmbH and the separate financial statements of the German group compa-

nies included in the consolidated financial statements, as well as the review of the reporting pack-

ages of certain international group companies which are also included.

The other items include the fees for ZEPPELIN GmbH and the German group companies includ-

ed in the consolidated financial statements.

PERSONNEL

OTHER NOTES

Disclosure of the remuneration drawn by the governing bodies has been suppressed in accordance

with the protective clauses of Sec. 314 (1) Nos. 6a and 6b in conjunction with Sec. 286 (4) HGB.

Four companies – namely Zeppelin Baumaschinen GmbH, Garching near Munich, Zeppelin Silos

& Systems GmbH, Friedrichshafen, Zeppelin Power Systems GmbH & Co. KG, Hamburg, and

MVS Zeppelin GmbH & Co. KG, Garching near Munich – do not publish their financial statements

pursuant to Sec. 264 (3) HGB and Sec. 264b HGB.

Friedrichshafen, 31 March 2010

The management of ZEPPELIN GmbH

Peter Gerstmann

Alexander Bautzmann

Michael Heidemann

Jürgen-Philipp Knepper

Personnel

The average number of employees for the year was

Wage earners 2,330

Salaried employees 3,681

Trainees 257

6,268

GROUP FINANCIAL STATEMENT

89

We have audited the consolidated financial statements prepared by ZEPPELIN GmbH, Friedrichshafen,

comprising the consolidated balance sheet, the consolidated income statement, the consolidated

cash flow statement, the consolidated statement of changes in equity and the notes to the con-

solidated financial statements, together with the group management report for the fiscal year

from 1 January to 31 December 2009. The preparation of the consolidated financial statements

and the group management report in accordance with German commercial law is the responsi-

bility of the Company’s management. Our responsibility is to express an opinion on the consoli-

dated financial statements and on the group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Sec. 317 HGB

(“Handelsgesetzbuch”: German Commercial Code) and German generally accepted standards for

the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of

Public Auditors in Germany) (IDW). Those standards require that we plan and perform the audit

such that misstatements materially affecting the presentation of the net assets, financial position

and results of operations in the consolidated financial statements in accordance with [German]

principles of proper accounting and in the group management report are detected with reason-

able assurance. Knowledge of the business activities and the economic and legal environment of

the Group and expectations as to possible misstatements are taken into account in the determi-

nation of audit procedures. The effectiveness of the accounting-related internal control system

and the evidence supporting the disclosures in the consolidated financial statements and the

group management report are examined primarily on a test basis within the framework of the

audit. The audit includes assessing the annual financial statements of those entities included in

consolidation, the determination of entities to be included in consolidation, the accounting and

consolidation principles used and significant estimates made by management, as well as evalu-

ating the overall presentation of the consolidated financial statements and the group management

report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply

with the legal requirements and give a true and fair view of the net assets, financial position and

results of operations of the Group in accordance with [German] principles of proper accounting.

The group management report is consistent with the consolidated financial statements and as

a whole provides a suitable view of the Group’s position and suitably presents the opportunities

and risks relating to future development.

Stuttgart, 31 March 2010

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Nover Pentz

Wirtschaftsprüfer Wirtschaftsprüfer

[German Public Auditor] [German Public Auditor]

AUDIT OPINION

90

ZEPPELIN GROUP CONTACTS

GROUP

ZEPPELIN GmbH

Registered office

Leutholdstraße 10888045 Friedrichshafen, GermanyTel. +49 7541 202-201Fax +49 7541 202-210www.zeppelin.com

Headquarters

Graf-Zeppelin-Platz 185748 Garching bei MünchenGermanyTel. +49 89 320 00-0Fax +49 89 320 00-482Email: info@zeppelin.comwww.zeppelin.com

DISTRIBUTION

Zeppelin Baumaschinen GmbH

Graf-Zeppelin-Platz 185748 Garching bei MünchenGermanyTel. +49 89 320 00-0Fax +49 89 320 00-482Email: zeppelin@zeppelin.comwww.zeppelin-cat.com

HWS Zeppelin GmbH

Gewerbestrasse 5848249 Dülmen, GermanyTel. +49 2590 938 900Fax +49 2590 938 9029Email: verkauf@hws-sued.dewww.hws-zeppelin.de

MVS Zeppelin GmbH & Co. KG

Graf-Zeppelin-Platz 185748 Garching bei MünchenDeutschlandTel. +49 89 320 00-220Fax +49 89 320 00-222Email: info@mvs-zeppelin.dewww.mvs-zeppelin.de

Zeppelin Power Systems

GmbH & Co. KG

Ruhrstraße 15822761 Hamburg , GermanyTel. +49 40 853 151 0Fax +49 40 853 151 39Email: powersystems@zeppelin.comwww.zeppelin-powersystems.com

Zeppelin SkySails

Sales & Service GmbH & Co. KG

Ruhrstraße 15822761 Hamburg, GermanyTel. +49 40 866 93 19 0Fax +49 40 866 93 19 11Email: contact@zeppelin-skysails.comwww.skysails.com

Zeppelin Österreich GmbH

Zeppelinstraße 2A-2401 FischamendAustriaTel. +43 2232 790-0Fax +43 2232 790 291Email: marketing@zeppelin-cat.atwww.zeppelin-cat.at

MVS Zeppelin Österreich GmbH

Zeppelinstraße 2A-2401 FischamendÖsterreichTel. +43 2232-78 378-0 Fax +43 2232-78 378-599 Email: office@mvs-zepplin.atwww.mvs-zeppelin.at

Phoenix-Zeppelin spol. s r.o.

Lipova 7225170 ModleticeCzech RepublicTel. +420 26 60 15 200Fax +420 26 60 15 361Email: info@p-z.czwww.p-z.cz

ČZ LOKO, a.s.

Bezrucovo nam.58056002 Česka TřebováCzech RepublicTel. +420 325 518 811Fax +420 325 518 888

Phoenix Zeppelin spol. s r.o.

Partizanska cesta 8997401 Banskà BystricaRepublic of SlovakiaTel. +421 88 414 66 60Fax +421 88 414 66 61Email: sekretariat@cat.sk www.phoenixzeppelin.sk

Zeppelin Polska Sp. z o.o.

ul. Racjonalizacji 6/802-673 Warsaw, PolandTel. +48 22 566 47 00Fax +48 22 566 47 36Email: biuro@zeppelinpl.com www.zeppelin-polska.com.pl

Zeppelin-Körös-Spedit Kft.

Harsayi Kalman utca 831151 Budapest, HungaryTel. +36 1 307 51 20Fax +36 1 305 00 34Email: hyster@zks.huwww.zks.hu

Zeppelin International AG

Chamerstraße 856300 Zug, SwitzerlandTel: +41 41 747 00 30Fax +41 41 747 00 31Email: zeppelin@zeppelin-int.chwww.zeppelin.com

Zeppelin Russland OOO

Leningradskoe shosse 64, Building 2125565 MoskowRussiaTel. +7 495 221 35 39 Fax +7 495 745 84 78 Email: zeppelin.ru@zeppelin.ruwww.zeppelin.ru

Zeppelin Rental Russia OOO

Vostochnaya Street 10 143000 Odintsovo Moscow Region, RussiaTel. +7 495 645 3018 Fax +7 495 645 3019 Email: info@zeppelin-rental.ru www.zeppelin-rental.ru

Zeppelin Ukraine LLC

Vasilkovskaya Str. 34, 3rd floor03022 Kiev, UkraineTel. +380 444 942 330 Fax +380 444 942 331 Email: zeppelin@zeppelin.uawww.zeppelin.ua

Zeppelin Belarus OOO

Drozda Str. 25a, 3rd floor220004 Minsk, BelarusTel. +375 17 200 0548 Fax +375 17 200 2234 Email: zeppelin@zeppelin.com.bywww.zeppelin.com.by

Zeppelin Armenia LLC

V. Mayakovskiy378551 Abovyan Kotayk region, ArmeniaTel. +374 222 (10) 28 42 21 Fax +374 222 (222) 37 075 Email: cat@zeppelin.am

Zeppelin Turkmenistan JV

Bitarap Turkmenistan Shaely 608744001 Aschgabat, TurkmenistanTel. +993 12 37 90 90 Fax +993 12 37 90 99 Email: turkmenistan@zeppelin.tmwww.zeppelin.tm

Zeppelin Central Asia

Machinery LLC

Ashrafi Str. 70700074 Tashkent, UzbekistanTel. +998 71 291 94 37 Fax +998 71 291 52 63 Email: centralasia@zeppelin.uz www.zeppelin.uz

Zeppelin Tadjikistan LLC

Rudaki avenue 21734025 Dushanbe, TajikistanTel. +992 372 272 301 Fax +992 372 272 301 Email: centralasia@zeppelin.uzwww.zeppelin.uz

91

SYSTEMS

Zeppelin Silos & Systems GmbH

Leutholdstraße 10888045 FriedrichshafenGermanyTel. +49 7541 202 02Fax +49 7541 202 405Email: zentral.fn@zeppelin.comwww.zeppelin-industry.com

Reimelt Henschel GmbH

Messenhäuser Straße 37-4563322 Rödermark, GermanyTel. +49 6074 691 0Fax +49 6074 6031Email: info@reimelt.dewww.reimelt.de

Reimelt France E.U.R.L.

Parc Club du Moulin à ventBâtiment 5933 Avenue Docteur Georges Lévy69693 Venissieux CedexFranceTel. +33 4 72893838Fax +33 4 72893830Email: reimeltfrance@reimelt.frwww.reimelt-henschel.com

Zeppelin Belgium N. V.

Munsterenstraat 93600 Genk, BelgiumTel. +32 89 62 94 00Fax +32 89 61 18 31Email: zeppelin.belgium@zeppelin.bewww.zeppelin.be

Zeppelin Plast Tech Srl.

Centro Direzionale "Summit"Palazzo "C"/Via Brescia 2620063 Cermusco sul NaviglioMilan, ItalyTel. +39 02 9210 6905Fax +39 02 9210 4219Email: info@zeppelin-zi.comwww.zeppelin-zi.com

Zeppelin Systems Ltd.

Unit 5 Core 27, Little Oak DriveSherwood Business ParkAnnesly Nottingham NG 15 0EBUnited KingdomTel. +44 1623 753 291Fax +44 1623 723 647Email: info@zeppelin-uk.comwww.zeppelin-industry.com

Reimelt UK Ltd.

159a Chase Side, EnfieldGB - Middlesex, EN2 OPWTel. +44 208 3639040Fax +44 208 3665542Email: sales@reimelt.co.ukwww.reimelt-henschel.com

ZEPPELIN Silo ve Sistemleri

Imalat Sanayi Ticaret A.S.F. Kerim Gökay Cad. Ortabahar Sok. Apt. No, 6/32 K 1534732 Götztepe-Istanbul, TurkeyTel. +90 2 165 66 75 28Fax +90 2 165 66 247www.zeppelin-industry.com

Zeppelin Gulf Company Ltd.

P.O.BOX: 1495Al-Jubail 31951Kingdom of Saudi Arabia Tel. +966 500 211 817Fax +966 3 661 2250 Email: zeppelingulf@zeppelin-gulf.comwww.zeppelin-industry.com

Zeppelin Systems USA Inc.

11050 West Little YorkBuilding D, HoustonTX 77041, USA Tel. +1 713 84 95 666Fax +1 713 84 95 655 Email: zeppelin-usa@zeppelin-usa.comwww.zeppelin-industry.com

Reimelt Corporation

13330 Byrd DriveOdessa, FL 33556-5312, USATel. +1 813 920 7434Fax +1 813 920-3864Email: info@reimelt.comwww.reimelt-henschel.com

JMB Zeppelin Equipamentos

Industrías Ltda.

Rua Joao XXIII650 Bairro CooperativaCEP 09851-707 Sao Bernardo do CampoSao Paulo, BrasilTel. +55 11 439 39 401Fax +55 11 439 22 333 Email: info@jmbz.com.brwww.jmbzeppelin.com.br

Reimelt Ltda.

Branch Office BrazilAvenida Queiróz Filho, 968 - Vila HamburguesaBR - 05319-000 São Paulo - SPBrasilTel. +55 11 3643 4463Fax +55 11 3643 4460Email: raul@reimelt.com.brwww.reimelt-henschel.com

Zeppelin Systems India Pvt. Ltd.

Level 4 - ADM BuildingAlembic Campus, Alembic Road Vadodara - 390 003, IndiaTel. +91 265 229 17 16 Fax +91 265 229 17 11 Email: info@zeppelin-india.comwww.zeppelin-industry.com

Zeppelin Solid Technology

(Beijing) Co., Ltd.

111# Parkview CenterNo. 5 Fangyuan West RoadChaoyang DistrictBeijing 100015China Tel. +86 10 643 24 859 Fax +86 10 643 24 829 Email: office@zeppelin-china.comwww.zeppelin-industry.com

Reimelt Henschel Asia Limited

Reimelt Henschel Asia Limited Unit 4, 25/F9 Chong Yip StreetKwun Tong, Kowloon Hong KongTel. +852 23434230Fax +852 23434261Email: info@reimelt-henschel-asia.comwww.reimelt-henschel.com

Zeppelin Systems Korea

# 1014-16, Dongbu Root Bldg. 16-2 Su-nae-dong, Bundang-gu,Seongnam-si, Gyeonggi-doSeoul, SüdkoreaTel. +82 31 7199531Fax +82 31 7199547Email: zeppelin@zeppelin-korea.co.krwww.reimelt-henschel.com

Zeppelin Technology

Far East Pte. Ltd.

237 Alexandra Road# 03-03/04/05 The AlexcierSingapore 159929Singapore Tel. +65 6876 5690 Fax +65 6476 3309www.zeppelin.sg

ZEPPELIN GMBH

Headquarters:

Graf-Zeppelin-Platz 1

85748 Garching bei München

Germany

Tel. +49 89 320 00-0

Fax +49 89 320 00-482

Registered Office:

Leutholdstraße 108

88045 Friedrichshafen

Germany

Tel. +49 7541 202-201

Fax +49 7541 202-210

Corporate Communications:

Tel. +49 89 320 00-440

Fax +49 89 320 00-500

E-Mail: info@zeppelin.com

You can obtain reports and other information about Zeppelin on

the web at www.zeppelin.de

The Annual Report 2009 was published on May 20, 2010.

The English version is a translation of the German original.

The German version is binding.

Concept and design:

ServiceDesign GmbH, Heidelberg

Eveline Gramer, Planegg

Translation:

Hannah Lea, Munich

Printed by:

G. Peschke Druckerei GmbH, Munich

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