Separate ﬁnancial statements and management report of ...

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as of December 31, 2005

Separate financial statements and management reportof Drägerwerk AG

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Drägerwerk AktiengesellschaftMoislinger Allee 53/5523542 Lübeck, Germanywww.draeger.com

Corporate CommunicationsTel.: +49 (0) 451 882–22 01Fax: +49 (0) 451 882–39 44

Investor RelationsTel.: +49 (0) 451 882–26 85Fax: +49 (0) 451 882–32 96

PR_RZ_E_Drae_Werk_AG_060419 19.04.2006 13:22 Uhr Seite U4

1Contents

2 Management report of Drägerwerk AG

9 Separate financial statements of Drägerwerk AG

9 Income statement of Drägerwerk AG for the year

ended December 31, 2005

10 Balance sheet of Drägerwerk AG as of December 31, 2005

12 Analysis of non-current assets of Drägerwerk AG

14 Notes to Drägerwerk AG’s separate financial statements 2005

28 The Company’s Boards

30 Major shareholdings of Drägerwerk AG

31 Forward-looking statements

Contents

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PR_RZ_E_Drae_Werk_AG_060419 19.04.2006 12:31 Uhr Seite 1

Management report of Drägerwerk AG2

Management reportof Drägerwerk AG

Dividend proposal

The Executive and Supervisory Boards of Lübeck-basedDrägerwerk AG will propose to distribute out of the netearnings of EUR 36.3 million for fiscal year 2005 a cashdividend of EUR 0.50 per preferred share (2004: EUR0.45) and EUR 0.44 per common share (2004: EUR 0.39),hence a total EUR 5.9 million, and carry forward thebalance of EUR 30.4 million.

The preferred stock dividend also governs the dividend forparticipation certificates, which will amount to EUR 5.00each (2004: EUR 4.50). Participation certificates entitle toa dividend ten times the preferred stock dividend sincetheir arithmetic par value is ten times that of a preferredshare.

Business activities

Drägerwerk AG, Lübeck, as a holding company, directly orindirectly holds the shares in the parent companies of thesubgroups Dräger Medical (65 percent) and Dräger Safety(100 percent). With the focus being placed on the corebusiness of these two subgroups in prior years, theCompany now only has a few other small shareholdings.

Drägerwerk AG has functions which serve to fulfill thecore tasks of the Company as well as provide services tothe subgroups and their subsidiaries. These functionsinclude the legal, tax and insurance departments, the treasury, public relations, investor relations, the financialcontrol and accounting departments for the Company and

the Group, HR, the internal audit and basic researchdepartments and real estate management via a real estatecompany (Dräger Immobilien GmbH). The services to thesubgroups are closely coordinated with them and providedin accordance with arm’s length principles.

The most important task of Drägerwerk AG is the manage-ment of the Group in its capacity as the ultimate parentcompany. This task has been facilitated by appointing amember of the Executive Board of Drägerwerk AG asExecutive Board Chairman of each of the subgroups’parent companies. The business activities of the subgroupsDräger Medical and Dräger Safety are discussed in detailin the group management report.

Control systems

The planning and control systems are based on the annual revision of the Dräger Group’s strategic plan. Thisplan contains the Group’s targets, which are developed inline with expected market developments, technologicaltrends and their influence on products and services, aswell as with the financial means of the Dräger Group. Thehead offices of the Group and subgroups are closely linkedwith the various business units, regions and group com-panies in the strategic plan.

The results are summarized in a five-year plan, the firstyear of which is developed into a detailed budget for thecoming year.

Target figures for the monthly reports on the developmentof the net assets, financial position and results of opera-tions of the group companies, subgroups and the DrägerGroup as a whole are derived from this budget. Thesedata are supplemented by detailed information requiredfor the management of the Group’s operating activities.In addition to the monthly reports, semi-annual risk


3Management report > Dividend proposal/Business activities/Control systems/General economic conditions/Business trend and results of operations

reports are compiled which mainly contain the strategicrisks that cannot be directly derived from the Group’sfigures.

The reports are discussed during Executive and Super-visory Board meetings and provide essential informationfor key decisions.

General economic conditions

In 2005, global economic activity was robust – despite thehigher prices for oil and raw materials – but varied con-siderably between the key economic areas. Real GDPgrowth in 2005 was 3.5 percent in the US, for example,2.8 percent in Japan, 9.9 percent in China and 1.4 per-cent in the euro area, with Germany recording growth of0.9 percent.

Consumer confidence in the US led to a renewed rise in consumption and further growth, despite prolonged structural problems due to the renewed current accountdeficit, the negative savings/income ratio and the increasein government debt. The stagnating Japanese economywas kick-started by the rise in exports and investments,coupled with an increase in consumption. With the waveof consolidation in the Japanese banking industry nowconsidered complete, interest rates still low, and a weakyen, this favorable economic trend has solid foundations.

The growth in China’s GDP also reflects a rise in invest-ments, exports, industrial output and consumption. A pro-longed period of high growth is needed for the country toachieve its per-capita-income target of $1,600 (2000:$800).

Driving growth in the euro area were exports and invest-ments. The highest growth rates were recorded byIreland, Spain, Finland and Luxembourg, and the lowest

by Italy, the Netherlands, Portugal and Germany, wherethe discrepancy between successful exports and ailingconsumption was particularly noticeable and put the brakes on any sustainable uptrend.

The industries in which the two subgroups operate arehighly concentrated and characterized by tough competi-tion. However, both industries boast long-term stabilityand a slight growth trend.

Business trend and results of operations

Drägerwerk AG’s business trend and net profit of EUR13.9 million (2004: – EUR 29.0 million) have essentiallybeen influenced by

(a) intragroup restructuring;(b) its result from operating activities;(c) the performance of its operating companies.

As to (a) intragroup restructuringAs of January 1, 2005, 70 percent of Dräger InterservicesGmbH was transferred to Dräger Safety AG & Co. KGaA and30 percent to Dräger Medical Holding GmbH as the busi-ness activities of Interservices GmbH are largely integratedin the business processes of the operating companies. As of the same date, Drägerwerk AG took over Dräger InTekGmbH from Dräger Interservices GmbH. This company,which is to begin trading under the name DrägerImmobilien GmbH as of February 1, 2006, serves as a facility and real estate management company for build-ings belonging to or rented by Drägerwerk AG in Lübeckand other locations in Germany. Its duties also includeletting unoccupied space to third parties as part of anindustrial estate model.

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Upon entry in the commercial register on October 31,2005, Dräger Medical AG & Co. KGaA was transformedinto Dräger Medical AG & Co. KG. This change in legalform has simplified the management structure and executive bodies of the subgroup and allowed it to useDrägerwerk AG’s expenses and corresponding loss carry-forwards for corporate income tax purposes.

As to (b) its result from operating activitiesDrägerwerk AG’s result from operating activities, includ-ing services to group companies and third parties, wasstable in 2005. The decline in other operating income andother operating expenses is due to the absence of non-recurring items.

Expenses of EUR 1.0 million (2004: EUR 0.6 million)were incurred by Drägerwerk AG for internal researchand development activities that are not provided and charged on as services to the subgroups. Expenses of EUR 5.8 million for research and development serviceswere incurred and charged on to the subgroups.

As to (c) the performance of its operating companiesIncome from profit and loss (P&L) transfer agreements(including the intragroup tax apportionment) increasedto EUR 57.2 million (2004: EUR 21.8 million) in fiscalyear 2005, as Dräger Medical was then able to pay a dividend after the final execution of the P&L transferagreement on December 31, 2003 left the company withno distributable net earnings out of which it could pay adividend in fiscal year 2004.

No losses had to be absorbed in fiscal year 2005 (2004:EUR 0.9 million).

Net assets and financial position

Being a holding company, Drägerwerk AG presents abalance sheet where high financial assets, intercompanyreceivables and liabilities, and liabilities from groupfinancing prevail.

In fiscal year 2005, non-current assets decreased to EUR650.6 million (Dec. 31, 2004: EUR 658.4 million). Thiswas mainly due to the change in financial assets, in parti-cular the sale of Dräger Interservices GmbH to DrägerSafety AG & Co. KGaA (around EUR 11.2 million) and theparallel buy-back of Dräger InTek GmbH (around EUR 2.3million). As regards property, plant and equipment andintangible assets, additions of EUR 6.7 million out-weighed disposals with net book values of EUR 0.3 mil-lion. Additions included software packages (EUR 1.6 mil-lion) as well as properties to round off its portfolio andrelocate a pathway in preparation for the new construc-tion project for Dräger Medical (EUR 2.0 million).

Liabilities to banks rose to EUR 255.7 million (Dec. 31,2004: EUR 232.9 million); of that amount, loans againstborrower’s note of EUR 215 million are due in one toseven years. This amount was netted with cash and cashequivalents, producing a slight increase in net financialliabilities to banks of EUR 164.2 million (Dec. 31, 2004:EUR 149.4 million). Net liabilities to group companies,however, decreased to EUR 57.5 million as a result ofgroup financing (Dec. 31, 2004: EUR 91.1 million).

Drägerwerk AG’s net profit increased equity to EUR 343.0million (Dec. 31, 2004: EUR 334.4 million), which nowequals 42.6 percent of the balance sheet total (Dec. 31,2004: 41.8 percent).


5Management report > Business trend and results of operations/Nets asset and financial position/Personnel and welfare/Research and development

Personnel and welfare

As of December 31, 2005, Drägerwerk employed 143 people (Dec. 31, 2004: 146).

As of January 1, 2005, the new company pension plans“Rentenplan 2005” for employees of the Dräger Groupand “Führungskräfteversorgung 2005” for managementcame into effect, superseding the former “Versorgungs-ordnung ’90” and “Ruhegeldordnung ’90 ” schemes.

Under the old pension plan, employees received pensionsbased on their salaries and period of employment. As partof the transition to the new plan, employees were guar-anteed a pension based on the old plan for their years ofservice prior to the transition.

The new plan, however, is now composed of three levels:Employer-funded basic levelEmployee-funded top-up level (deferred compensation)Employer-funded supplementary level

The pension cost for the employer-funded basic level isbased on the respective employee’s income.

The employee-funded top-up level allows employees toincrease their pension entitlement through deferred compensation. The contribution made at the employer-funded supplementary level depends on the employeecontribution through deferred compensation and on thecompany’s business performance (EBIT).

The funds resulting from the new pension plan were held in separate bank accounts in 2005. The employees’pension accounts have a minimum guaranteed interestrate of 2.75 percent.

Research and development

Investing in its technological future, the Dräger Groupspent a total of EUR 108.3 million, or 6.6 percent of revenues (2004: EUR 103.8 million, or 6.8 percent), onresearch and development.

The R&D departments of the subgroups employ 748 people worldwide. These work closely with staff membersat the Lübeck-based research department of DrägerwerkAG. This department employs 43 people, who areengaged in product basics and researching and develop-ing promising new technologies for the subgroups.

Technical innovations at Dräger Medical and DrägerSafety reflect the convergence of longstanding experiencein advanced technology product development in thefields of microsystems, nanomaterials, biomoleculartechnology, sensor functions, control equipment and IT.The Group’s strong affiliation with national and inter-national technology providers, research institutes and universities guarantees the high-tech standard of its products.

Dräger Safety’s R&D projects encompass miniaturizedelectrochemical and optical gas sensors, ion sensor spectrometric techniques for identifying molecular com-ponents in the air, and the analysis of trace elements inexhaled breath and saliva. The use of nanotechnology hasled to the development of highly sensitive gas sensors withhigh selectivity and low cross-sensitivity.

Dräger Medical’s R&D projects consist of concepts designed to increase the efficiency and quality of hospitalprocedures. Dräger Medical is currently collaborating ontwo research projects sponsored by the State whose aim isto address technical integration in operating rooms andthe intensive monitoring of in- and outpatients.

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Dräger Medical spent EUR 79.9 million, or 7.2 percent ofrevenues, on research and development (2004: EUR 79.5million, or 7.8 percent), and Dräger Safety EUR 27.4 mil-lion, or 4.9 percent of revenues (2004: EUR 23.7 million,or 4.7 percent). Expenses incurred by Drägerwerk AG andnot charged on to the projects of the subgroups amountedto EUR 1.0 million (2004: EUR 0.6 million).

In 2005, Dräger filed a total of 70 patent applications andone utility model with the German Patent and TrademarkOffice. Altogether, 103 new patent applications were sub-mitted to international patent offices. Inventors from thebasic research department in Lübeck were involved inalmost 50 percent of the new applications filed inGermany.

Environmental protection

Environmental protection and management are core elements of Dräger’s location policy and a contributoryfactor towards enhancing the Lübeck headquarters. Sincethe founding of the Dräger waste disposal association,which ensures professional waste management, legal certainty and high environmental standards for waste dis-posal at all companies located on the Dräger industrialestate, the DIN EN ISO 14001-compliant environmentalmanagement system has offered many resident companiesa number of additional advantages. The recertification ofDrägerwerk AG in January 2005, with an association certificate being granted for the first time, has allowed participating companies – including third-party firms – tomeet customers’ demands for environmental certificatesin an efficient manner. In addition to environmentalrecertification, an inspection of the Revalstrasse premisesby the regulatory authorities confirmed that the contin-gency standards make adequate provision for operationalhazards. Environmental considerations were also inclu-ded in the plans for the new Dräger Medical headquarters,e.g. the possibility of using innovative energy supply con-cepts and energy saving technology.

The positive historical trend in environment figures foreach production location has continued to improve.Electricity consumption has remained stable, waste volu-mes have been kept at prior-year levels, and water con-sumption has been reduced yet again by almost 10 percentto a total of 82,000m3.

In terms of energy consumption, the modernization of theenergy supply centers and overhaul of the heat supply net-work led to a 19.5 percent reduction in the use of primaryenergy sources (adjusted for weather effects: 18.3 percent)compared with consumption prior to this work. This alonehas resulted in a reduction in CO2 emissions, which forplants I/II are around 2,300 tons per year.


7Management report > Research and development/Environmental protection/Risks to future development

Risks to future development

As a holding company, Drägerwerk AG is fully exposed to the risks from the operating subgroups’ and other investees’ business activities and the value of its share-holdings, as well as to the risks from P&L transfer agree-ments.

The risk management (RM) system of the Dräger Group,including Drägerwerk AG, comprises all tools for measur-ing, managing and monitoring exposures and potentialrisks. Based on the Group’s and subgroups’ annually revised strategic plans and the resultant short andmedium-term plans, systematic financial control coversdivisions, companies and regions, subgroups and theGroup through monthly or quarterly reports.

Risk management is rounded off by the activities of theGroup internal audit function, the statutory annual audit,and risk reports routinely detail twice annually (and addi-tionally as and when required) all economic, market andcurrency risks, the competitive position and environment,as well as risks specific to the divisions. The RM systemcomplies fully with the objectives of the German Act onCorporate Control and Transparency (“KonTraG”). TheGroup’s internal audit department, the Audit Committeeof the Supervisory Board and the Group’s auditors holdregular discussions in order to optimize the efficacy andefficiency of the monitoring process.

The systems that are in place ensure that informationflows to the respective process owners, the ExecutiveBoard and the Supervisory Board and, if necessary, enables action to be taken at short notice.

In restructuring the Group, important steps have beentaken to safeguard the value of shareholdings and avoidlosses.

Of key concern to Drägerwerk AG is the avoidance of risksassociated with group financing. The interest rate riskinherent in financing is contained by agreeing on fixedlong and (partly hedged) short-term rates. The increase in short-term interest rates by one percentage point wouldaffect the Group’s results by increasing its interest ex-pense by EUR 1 million. For all currency risks pertainingto the operating activities of the divisions within its res-ponsibility, Drägerwerk AG concludes appropriate hedging transactions with external partners. Derivativesfor hedging purposes are only concluded with banks ofprime standing.

The joint venture agreement between Drägerwerk AG,Dräger Medical AG & Co. KG, Dräger Medical HoldingGmbH, Siemens Beteiligungen Inland GmbH, SiemensMedical Holding GmbH and Siemens AG and the part-nership agreement of Dräger Medical AG & Co. KG grantSiemens Medical Holding GmbH a put option wherebyDrägerwerk AG, Dräger Medical Holding GmbH or DrägerMedical Verwaltungs AG would be obligated to acquire theentire stake held by Siemens were the latter to exercisethis option. Siemens AG confirmed that it would revisethe joint venture agreement and the partnership agree-ment in line with the interests of both parties. Therefore,Siemens AG has agreed not to exercise its put option forthe time being.

The risks to future development from changes in the economic environment and various operational risks aredetailed in the Group management report.

In view of the information currently available, Dräger-werk AG’s continued existence as a going concern is notjeopardized.

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Subsequent events

No significant events occurred between the beginning ofthe new fiscal year and the approval of the financial state-ments.

Outlook

In fiscal year 2006, Drägerwerk AG will continue to pro-vide services to its group companies.

As in the past, net profit or loss in 2006 will principallyconsist of P&L transfers and income from investments.For 2006, Drägerwerk AG expects its major shareholdingsto continue their earnings uptrend.


9Separate financial statements > Income statement

Separate financial statements of Drägerwerk AG

Note 2005 2004

€ thousand € thousand

Other operating income (21) 37,477 44,796

Personnel expenses (22) (26,875) (26,819)

Amortization of intangible assets and depreciation ofproperty, plant and equipment (23) (5,181) (4,725)

Other operating expenses (24) (30,194) (44,581)

Income from investments (25) 57,721 21,387

Write-downs on financial assets and current securities (26) (59) (359)

Interest result (27) (10,089) (9,785)

Result from ordinary operations 22,800 (20,086)

Extraordinary result 0 (1,869)

Income taxes (1,515) 1

Other taxes (274) (648)

Profit/loss before distribution for participation capital 21,011 (22,602)

Distribution for participation capital (34) (7,067) (6,360)

Net profit/loss 13,944 (28,962)

Profit brought forward from prior year 22,396 56,692

Net earnings (35) 36,340 27,730

Income statement of Drägerwerk AG for the year ended December 31, 2005

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Separate financial statements of Drägerwerk AG10

Note 2005 2004


Assets

Intangible assets (6) 2,392 1,919

Property, plant and equipment (7) 43,502 42,318

Financial assets (8) 604,704 614,182

Non-current assets 650,598 658,419

Trade receivables 374 395

All other receivables and other assets 63,249 58,148

Receivables and other assets (10) 63,623 58,543

Current securities (11) 0 20,035

Cash and cash equivalents (12) 91,523 63,485

Current assets 155,146 142,063

Prepaid expenses (13) 269 422

Total assets 806,013 800,904

Balance sheet of Drägerwerk AG as of December 31, 2005


11Separate financial statements > Balance sheet

Note 2005 2004


Equity and liabilities

Capital stock (14) 32,512 32,512

Additional paid-in capital (15) 38,867 38,867

Reserves retained from earnings (16) 160,477 160,477

Net earnings 36,340 27,730

Participation capital – par value: €36,127 thousand (17) 74,797 74,797

Equity 342,993 334,383

Provisions for pensions and similar obligations 75,341 71,246

Other provisions 24,598 30,490

Provisions (18) 99,939 101,736

Liabilities to banks 255,690 232,895

Trade payables 1,432 4,986

All other liabilities 105,959 126,904

Liabilities (19) 363,081 364,785

Total equity and liabilities 806,013 800,904

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Separate financial statements of Drägerwerk AG12

Analysis of non-current assets of Drägerwerk AG

Cost

As of Additions Disposals Reclassi- As of Jan. 1, 2005 fications Dec. 31, 2005

€ thousand € thousand € thousand € thousand € thousand

Franchises, concessions, industrial property and similar rights and assets, as well as licenses thereto 10,879 1,811 222 (1) 12,467

Prepayments made 0 0 0 0 0

Intangible assets 10,879 1,811 222 (1) 12,467

Land, equivalent titles, and buildings (incl. on leased land) 118,666 2,011 879 699 120,497

Production plant and machinery 777 51 185 615 1,258

Other plant, factory and office equipment 14,668 992 701 2,933 17,892

Prepayments made and assets under construction 2,337 1,822 122 (2,239) 1,798

Property, plant and equipment 136,448 4,876 1,887 2,008 141,445

Intangible assets and property, plant and equipment 147,327 6,687 2,109 2,007 153,912

Shares in group companies 614,286 2,321 11,227 0 605,380

Loans to group companies 472 0 0 0 472

Investments 347 0 7 0 340

Other loans 2,472 0 630 0 1,842

Financial assets 617,577 2,321 11,864 0 608,034

764,904 9,008 13,973 2,0071 761,946

1 Additions from subsidiaries are disclosed at book value separately from the historical values.


13Separate financial statements > Analysis of non-current assets of Drägerwerk AG

Amortization, depreciation and write-downs Carrying amounts

As of Additions Disposals Write-ups Reclassi- As of Dec. 31, 2005 Dec. 31, 2004Jan. 1, 2005 fications Dec. 31, 2005

€ thousand € thousand € thousand € thousand € thousand € thousand € thousand € thousand

8,960 1,336 221 0 0 10,075 2,392 1,919

0 0 0 0 0 0 0 0

8,960 1,336 221 0 0 10,075 2,392 1,919

81,431 2,614 758 0 184 83,471 37,026 37,235

581 85 185 0 570 1,051 207 196

12,118 1,146 688 0 845 13,421 4,471 2,550

0 0 0 0 0 0 1,798 2,337

94,130 3,845 1,631 0 1,599 97,943 43,502 42,318

103,090 5,181 1,852 0 1,599 108,018 45,894 44,237

2,632 0 0 0 0 2,632 602,748 611,654

472 0 0 0 0 472 0 0

0 59 0 0 0 59 281 347

291 0 85 (39) 0 167 1,675 2,181

3,395 59 85 (39) 0 3,330 604,704 614,182

106,485 5,240 1,937 (39) 1,5991 111,348 650,598 658,419

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Notes to Drägerwerk AG’s separate financial statements14

Notes to Drägerwerk AG’s separate financial statements

GeneralThe separate financial statements of Drägerwerk AG have been prepared in accordancewith the provisions of the German Commercial Code (“HGB”). With a view to en-hancing transparency of presentation, certain items of the balance sheet and incomestatement have been summarized but are detailed further down in these notes. For the income statement, the total-cost method of presentation has consistently been used. The amounts in the separate financial statements are all shown in thousands ofEUR (EUR thousand).

Corporate governanceDrägerwerk AG’s declaration of conformity under the terms of Art. 161 German StockCorporation Act (“AktG”) has been issued and made available to the shareholders (cf.page 13 of the annual report).

Currency translationForeign-currency (i.e., non-euro) receivables and liabilities are stated at the historicalexchange rate. Losses from different current exchange rates are duly recognized.

Accounting policiesPurchased intangible assets are carried at cost less straight-line amortization over anestimated useful life of no more than 4 years.

Property, plant and equipment are carried at cost less straight-line depreciation overthe assets’ estimated useful life. Acquisition cost is capitalized in accordance with the provisions of Art. 255 (1) HGB. Consequently, it includes incidental purchase costs andpost-acquisition expenses, duly allowing for acquisition cost deductions, if any. Office andfactory buildings are depreciated over a maximum period of 50 years, production plantand machinery over a maximum period of 8 years, and other plant, factory and officeequipment over a maximum period of 15 years, but mainly between 2 and 5 years.Wherever permitted by tax regulations, movable items of property, plant and equipmentare depreciated according to the declining-balance method, applying the maximum ratespermissible. When straight-line depreciation results in higher charges, this method isused thenceforth for the remaining useful life. Low-value assets are fully written off in theyear of their addition. In fiscal year 2005, no special depreciation solely for income taxpurposes was charged.

Within financial assets, the shares in group companies and investments are statedat cost. Non or low-interest loans are disclosed at their present value. Discount and accu-mulated interest are shown as a write-down or write-up, respectively. Non-current assetswhose values, when determined according to the aforesaid principles, exceed the lowercurrent values are written down accordingly. Receivables and other assets are stated atprincipal or par, less any necessary allowances for bad debts, etc.

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15Notes to Drägerwerk AG’s separate financial statements

Adequate general allowances provide for the normal collection risk. Non or low-interestreceivables with a remaining term of more than one year are discounted. Prepaid

expenses do not include loan discounts as these are directly expensed. For accountingpurposes, participation capital is regarded as equity due to the terms and conditionsupon which the participation certificates are based. Therefore, it is shown in a separateline additional to the statutory classification format, under equity and after DrägerwerkAG’s net earnings. The par value of this participation capital is disclosed in the textcolumn. Although participation capital is treated as accounting equity, the underlyingparticipation rights maintain their obligatory nature under law. Therefore, the premiumyielded above par can be neither transferred to the additional paid-in capital nor alloca-ted otherwise. Hence it follows that this premium continues to form an integral part ofthe item “participation capital”. Civil-law considerations require that any profit distribu-ted in favor of participation capital may not be debited to a company’s net earnings butoffset against net profit. Consequently, the dividends for participation certificates reducethe net profit or increase the net loss for the period. The underlying dividend distributionis shown in a separate line immediately preceding net profit/loss.

Pension provisions provide for the present value of pension obligations on the basisof actuarial calculations, using an imputed annual interest rate of 6 percent.

As of January 1, 2005, the new company pension plans “Rentenplan 2005” foremployees of the German group companies and “Führungskräfteversorgung 2005” formanagement came into effect, superseding the former “Versorgungsordnung ’90” and“Ruhegeldordnung ’90” schemes. Under the old pension plan, employees received pensions based on their salaries and period of employment. As part of the transition tothe new plan, employees were guaranteed a pension based on the old plan for theiryears of service prior to the transition.

The new plan, however, is now composed of three levels:Employer-funded basic levelEmployee-funded top-up levelEmployer-funded supplementary level

The pension cost for the employer-funded basic level is based on the respective employee’s income. The employee-funded top-up level allows employees to increasetheir pension entitlement through deferred compensation. The contribution made atthe employer-funded supplementary level depends on the employee contributionthrough deferred compensation and on the company’s business performance (EBIT).The funds resulting from the new pension plan were held in separate bank accounts in 2005. These bank accounts are subject to particular restraints on disposal. Theemployees’ pension accounts have a minimum guaranteed interest rate of 2.75 percent.

The new “Heubeck 2005G” mortality tables will be used from 2005.

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Other provisions adequately allow for all identifiable risks in accordance with prudentbusiness judgment. Liabilities are stated at the amount repayable. Contingent liabilitiesare valued at the amount or volume of any such liability as of balance sheet date. Forcontingent liabilities from guarantees, suretyships and warranty/indemnity contracts,the loan sums actually drawn as of the balance sheet date are disclosed in addition to theguaranteed ceilings. The other financial obligations under contracts are discounted anddisclosed in these notes.


17Notes > Notes to the balance sheet

Notes to the balance sheet(amounts in EUR thousand unless stated otherwise)

Non-current assetsThe breakdown and development of non-current assets, including gross book values andaccumulated amortization, depreciation and write-downs in fiscal 2005, is shown in theanalysis of non-current assets.

Intangible assetsThe additions to this item mainly relate to the purchase of additional licenses for SAP R/3 software.

Property, plant and equipmentInvestments in property, plant and equipment (incl. reclassifications) amounted to EUR5.3 million and focused on purchases and restructuring measures for the new construc-tion for Dräger Medical (EUR 2.0 million) as well as prepayments made for these purpo-ses (EUR 1.8 million).

Financial assetsTo streamline the Group’s structure, Dräger Forum GmbH and Dräger KB GmbH weremerged into Drägerwerk AG in 2005.

As of January 1, 2005, 70 percent of Dräger Interservices GmbH was transferred toDräger Safety AG & Co. KGaA and 30 percent to Dräger Medical Holding GmbH. As of thesame date, Drägerwerk AG took over Dräger InTek GmbH from Dräger InterservicesGmbH. This company serves as facility manager for the premises in Lübeck.

In September 2005, Molvina Vermietungsgesellschaft mbH & Co. Objekt FinkenstraßeKG was formed with limited liability capital of EUR 5 thousand. This company will leasethe planned new construction to Dräger Medical AG & Co. KG.

Major shareholdings of Drägerwerk AGThe list of Drägerwerk AG’s shareholdings will be deposited with the CommercialRegister of the Local Court of Lübeck under HRB No. 499. The major shareholdings ofDrägerwerk AG are listed on page 30 of this report.

Receivables and other assetsThe movements in receivables from group companies in 2005 reflect cash managementand intercompany service fee clearing. Other assets include taxes receivable and mis-cellaneous non-trade receivables, as well as residual purchase price claims against theCobham Group from the sale of Dräger Aerospace GmbH and against CapgeminiDeutschland Holding GmbH from the sale of subsidiaries.

In addition, the cap premiums from interest rate hedges are capitalized in this item.

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Non-current securitiesThe fixed-interest securities are participation certificates of Drägerwerk AG repurchasedoriginally for delivery under the employee profit-sharing program were sold in fiscal2005.

Cash and cash equivalentsThis item comprises cash on hand and in bank.

The funds of EUR 281 thousand resulting from the new pension plan, which are subject to special restraints on disposal, are contained in this item.

Prepaid expensesThese exclusively comprise transitory items.

Capital stockDrägerwerk AG’s capital stock amounts to EUR 32,512,000 and is divided into 6,350,000 no-par bearer shares each of common and non-voting preferred stock.

Additional paid-in capital

2005 2004

Trade receivables 374 395

thereof due in more than 1 year 0 0

All other receivables and other assets

Receivables from group companies 41,773 27,604

thereof due in more than 1 year 0 0

Other assets 21,476 30,544

thereof due in more than 1 year 3,536 14,390

63,249 58,148

Receivables and other assets 63,623 58,543

Receivables and other assets

€ thousand

Drägerwerk AG’s additional paid-in capital originated from the stock premiums from

the Company’s (trans)formation, 2,556

the increases in capital stock of

March 1979 5,726

June 1981 7,016

July 1991 23,569

Additional paid-in capital 38,867

Additional paid-in capital

11

12

13

14

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Reserves from retained earningsThese reserves were created on the basis of profit appropriation resolutions by theCompany and its shareholders.

Participation capitalThe participation capital from the participation certificates issued and floated up toJune 30, 1991, forms part of securities series A, while that created after June 30, 1991,covers securities series K. The terms and conditions underlying the series K participa-tion certificates differ from those for the (series A) certificates outstanding up to June30, 1991, in that their holders may give 5 years’ notice of termination, however, not totake effect prior to December 31, 2021; the period of termination thereafter is again 5years. Therefore, these series K participation certificates represent a securities categoryof their own.

Since the 1997 annual shareholders’ meeting, series D participation certificates havebeen floated; their terms and conditions have been amended in order to qualify asaccounting equity, mainly to adapt to the terms defined by the Institute of PublicAuditors (“Institut der Wirtschaftsprüfer”), as follows: waiver of minimum yield, loss-sharing concept for participation certificates and adequate cumulative, compensatoryterms. Series D participation certificate holders may exercise their calling right every 5 years with 5 years’ notice as of calendar year-end, however, not to take effect prior toDecember 31, 2026.

Since December 1, 1999, the par value of participation certificates has amounted toEUR 25.56.

If the participation certificate holder exercises the calling right, the amount repay-able shall equal the average mean rate of the last 3 months at the Hamburg StockExchange or a maximum of the weighted average issue price of this tranche.

Number Nominal amount Premium Participationcapital

€ € €

As of December 31, 2005 1,413,425 36,127,143.00 38,670,225.37 74,797,368.37(No new participation certificates were issued in 2005.)

Series A 315,600 8,066,736.00 12,353,585.70 20,420,321.70

Series K 105,205 2,689,039.80 1,758,718.44 4,447,758.24

Series D 992,620 25,371,367.20 24,557,921.23 49,929,288.43

Participation certificates

Additionally, reference is made to the explanations in Note 4.

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ProvisionsOther provisions provide for personnel-related risks, mainly for profit shares/incentives,accrued vacation pay and pre-retirement part-time work, as well as for supplier invoicesnot yet received, litigation costs/risks and various other risks.

Liabilities

Provisions

2005 2004

Provisions for pensions and similar obligations 75,341 71,246

Tax provisions 2,956 2,166

Other provisions 21,642 28,324

Provisions 99,939 101,736

Liabilities

2005 Thereof Thereof 2004 Thereof Thereofdue within due after due within due after

1 year 5 years 1 year 5 years

Liabilities to banks 255,690 29,146 85,000 232,895 126,506 0

Trade payables 1,432 1,432 0 4,986 4,986 0

Liabilities to group companies 93,350 93,350 0 116,825 116,825 0

Liabilities to investees 0 0 0 8 8 0

Other liabilities 12,609 12,380 4 10,071 10,071 0

thereof for taxes 1,277 1,277 0 0 0 0

thereof for social security 252 252 0 250 250 0

Liabilities 363,081 136,308 85,004 364,785 258,396 0

The liabilities to banks include liabilities of EUR 215 million from loans against borrower’s note due in up to 7 years. EUR 130 million of these loans were issued inDecember 2005.

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Contingent liabilities

2005 2004

Contingent liabilities from suretyships and guaranties 0 0

Contingent liabilities under warranty/indemnity contracts 181,434 138,862

thereof from group companies 0 0

thereof loan amounts actually drawn 48,014 47,959

Contingent liabilities and other financial obligations

Other financial obligationsAs of the balance sheet date, other financial obligations from long-term leases existed ataround EUR 39.6 million (prior year: EUR 41.4 million), including some EUR 25.6 mil-lion in obligations to group companies (prior year: EUR 26.8 million). The annual burdencomes to some EUR 4.8 million (prior year: EUR 5.2 million). As part of the sale of the ITcompanies in fiscal year 2004, Drägerwerk AG, Dräger Medical AG & Co. KGaA (now:Dräger Medical AG & Co. KG) and Dräger Safety AG & Co. KGaA agreed with an IT ser-vices company to purchase IT services for the entire Dräger Group until February 2009.The discounted value of this obligation amounted to EUR 82.0 million as of December 31,2005. This volume is within the usual requirements of the Dräger Group.

The purchasing commitments from initiated capital expenditure projects are within thescope of ordinary day-to-day business.

As of December 31, 2005, Drägerwerk AG was not obligated to pay up any shares.

Put option of Siemens AGThe joint venture agreement between Drägerwerk AG, Dräger Medical AG & Co. KG,Dräger Medical Holding GmbH, Siemens Beteiligungen Inland GmbH, Siemens MedicalHolding GmbH and Siemens AG and the partnership agreement of Dräger Medical AG &Co. KG grant Siemens Medical Holding GmbH a put option whereby Drägerwerk AG,Dräger Medical Holding GmbH or Dräger Medical Verwaltungs AG would be obligated toacquire the entire stake held by Siemens were the latter to exercise this option. If andwhen this put option is exercised, the repurchase price payable by Dräger MedicalHolding GmbH is determined in a specific appraisal procedure laid down in detail toaccount for the economic development of the joint venture. Siemens AG confirmed thatit would revise the joint venture agreement and the partnership agreement in line withthe interests of both parties. Therefore, Siemens AG has agreed not to exercise its putoption for the time being.

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Notes to the income statement(amounts in EUR thousand unless stated otherwise)

Other operating incomeThis item chiefly covers income from services rendered to group companies. Otherwise,this item basically includes rental income, income from the reversal of allowances, othervaluation reserves and provisions, income from the disposal of non-current assets, andgains from foreign exchange and currency translation, as well as many individualamounts not allocable to other items.

Personnel expenses/employees

Amortization/depreciation charged in previous years solely for tax purposes improvednet profit for fiscal year 2005 by approx. EUR 573.8 thousand (prior year: EUR 773.4thousand).

Personnel expenses/employees

2005 2004

Salaries 15,754 15,679

Social security, pension expense and related employee benefits 11,121 11,140

thereof pension expense 9,707 9,605

Personnel expenses 26,875 26,819

Annual average headcount

Production operations 0 0

Other operations 142 142

Headcount as of the balance sheet date

Production operations 0 0

Other operations 143 146

Amortization/depreciation

2005 2004

Amortization of intangible and depreciation of property, plant and equipment 5,181 4,725

Due to the large number of pensioners at Drägerwerk AG, the introduction of the new“Heubeck 2005G” mortality tables led to a one-time reduction in personnel expenses ofEUR 384,175.

Amortization of intangible assets and depreciation of property, plant and equipment

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22

23


23Notes > Notes to the income statement

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Other operating expensesThese primarily include administrative expenses, such as rent and lease expenses, insur-ance premiums, contributions, fees and public levies, travel expenses, provisions foraccrued liabilities, losses from foreign exchange and currency translation, as well as on thedisposal of non-current assets. In addition, they cover a multitude of individual items notallocable elsewhere.

Income from investments

Write-downs on financial assets and current securitiesThis item simply contains write-downs on financial assets of EUR 59 thousand.

Interest result

Income from investments

2005 2004

Income from investments 488 441


Income from P&L transfer agreements – group companies 55,809 19,228

Expenses from loss absorption – group companies 0 (541)

Intragroup tax apportionment 1,424 2,259

Income from investments 57,721 21,387

Interest result

2005 2004

Income from other non-current securities and loans 64 44


Other interest and similar income 3,310 3,250


Interest and similar expenses (13,463) (13,079)

thereof to group companies (2,640) (3,801)

Interest result (10,089) (9,785)

The profit transfer as of December 31, 2003 left Dräger Medical AG & Co. KGaA with nodistributable net earnings out of which it could pay a dividend in fiscal year 2004. In fis-cal year 2005, Dräger Medical paid a dividend. In 2005, Dräger Medical AG & Co. KGaAwas transformed into Dräger Medical AG & Co. KG.

24

25

26

27



Derivative financial instrumentsDerivatives are used to hedge against currency and interest rate risks, particularly currency forwards, futures and options, as well as interest rate hedges (caps). Such con-tracts are only transacted with banks of prime standing and confined to hedge financetransactions. The volume of currency futures and forwards substantially includesexchange rate hedges on behalf of group companies for operations-related underlyingtransactions. At Drägerwerk AG, these exclusively involve closed positions. Interest ratehedges comprise caps and swaps.

The caps have maturities up to 2010 and a residual book value of approx. EUR 40thousand (after write-downs) and are contained in other assets. Other provisions donot contain any obligations from swaps or currency forwards as neither type of trans-action existed as of the balance sheet date.

In fiscal year 2005, a gain of EUR 464 thousand and a loss of EUR 12 thousand were realized on swaps.

Nominal amount Term in Fair value Carrying amounts

€ thousand years € thousand € thousand

Interest rate hedges 44,000 up to 5 40 40

Currency forwards and futures 0 up to 1 0 0

Derivative financial instruments

28


25Notes > Notes to the income statement/Other disclosures

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Other disclosures

Total remuneration of the Executive and Supervisory BoardsWithin Drägerwerk AG, the remuneration of Executive Board members for fiscal year2005 totaled EUR 6,950,842.79, breaking down into EUR 2,086,680.99 of fixed, and EUR4,864,161.80 of variable performance-related compensation. EUR 1,835,034.22 was paidto former members of the Executive Board and their surviving dependants.

A total EUR 27,929,778 provides for the accrued pension obligations to formerExecutive Board members and their surviving dependants. The remuneration ofDrägerwerk AG’s Supervisory Board amounts to EUR 437,360.00 for Drägerwerk AG.

In the opinion of the German tax authorities, the premium for a directors’ and officers’ liability insurance policy and a legal expense insurance for economic loss claimsis not part of the Supervisory Board’s remuneration.

Preferred stock owned by the Executive and Supervisory BoardsAs of December 31, 2005, the members of the Executive Board of Drägerwerk AG andtheir related parties directly or indirectly held a total of 96,192 preferred shares, equiv-alent to 0.76 percent of the total, and the members of the Supervisory Board and theirrelated parties 36,760 preferred shares, equivalent to 0.29 percent of the total.

Altogether, 97.87 percent of Drägerwerk AG’s common stock is held via Dr. HeinrichDräger GmbH and the same percentage of voting rights is attributable to ExecutiveBoard member Stefan Dräger under the terms of Art. 22 (1)(1) German SecuritiesTrading Act (“WpHG”).

Supervisory and Executive BoardsThe Company’s Supervisory and Executive Board members are listed under “TheCompany’s Boards” on pages 28 and 29.

Publications regarding significant voting rights in accordance with Art. 25 WpHGThe publication in accordance with Art. 25(1) WpHG of December 19, 2005 appeared inthe Börsen-Zeitung (in German) on December 21, 2005 as follows:

“Stefan Dräger GmbH, Lübeck, Germany, informed us in accordance with Art. 21 (1)WpHG that its share in the voting rights of our company exceeded the thresholds of 5, 10,25, 50 and 75 percent as of December 16, 2005 and that its share now equals 97.87 per-cent. This equates to 6,215,000 of the total 6,350,000 common voting shares of Dräger-werk Aktiengesellschaft. Of those shares, 97.87 percent of voting rights are attributable toStefan Dräger GmbH in accordance with Art. 22(1)(1)(1) WpHG.”

Auditor’s feeThe fee of EUR 467 thousand incurred in fiscal year 2005 for the separate financial state-ments of Drägerwerk AG and the consolidated financial statements related exclusively tothe audit of financial statements.

29

30

34

31 and 32

33



Distribution for participation capitalFor the reasons explained in Note 4, dividends for participation certificates may not be dis-tributed from net earnings. Consequently, within the income statement, we show aftertaxes and before net profit/loss the dividends for participation certificates in a separateline headed, “Distribution for participation capital.” Therefore, the participation capitaldividend is determined above the line and thus reduces our net profit (or increases ournet loss). The claim to annual dividends under the terms of Art. 2 (1) of the participationcertificate covenants corresponds to 10 times the cash dividend for the Company’s prefer-red stock, hence EUR 5.00.

Proposed appropriation of net earningsNet earnings for fiscal year 2005 amount to EUR 36,339,627.23. This item contains profitbrought forward from the prior year of EUR 22,395,884.53. In accordance with Art. 16(2) of the Company’s bylaws, we will propose to the annual shareholders’ meeting to dis-tribute these net earnings as follows:

We further propose that the remaining net earnings for fiscal year 2005 of EUR 30,370,627.23 be carried forward.

Lübeck, March 2, 2006

Drägerwerk AktiengesellschaftThe Executive Board

Stefan DrägerAlbert JugelWolfgang ReimHans-Oskar Sulzer

Proposed appropriation of net earnings

€

€0.44 cash dividend for 6,350,000 common shares 2,794,000.00

€0.50 cash dividend for 6,350,000 preferred shares 3,175,000.00

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36


27Auditor’s opinion

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Auditor’s opinionWe have audited the annual financial statements, comprising the balance sheet, theincome statement and the notes to the financial statements, together with the book-keeping system, and the management report of Drägerwerk AG for the fiscal year fromJanuary 1 to December 31, 2005. The maintenance of the books and records and the pre-paration of the annual financial statements and management report in accordance withGerman commercial law and supplementary provisions of the bylaws are the responsi-bility of the Company’s management. Our responsibility is to express an opinion on theannual financial statements, together with the bookkeeping system, and managementreport based on our audit.

We conducted our audit of the annual financial statements in accordance with theprovisions of Art. 317 German Commercial Code (“HGB”) and German generally ac-cepted standards for the audit of financial statements promulgated by the Institut derWirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standardsrequire that we plan and perform the audit such that misstatements materially affectingthe presentation of the net assets, financial position and results of operations in theannual financial statements in accordance with [German] principles of proper account-ing and in the management report are detected with reasonable assurance. Knowledgeof the business activities and the economic and legal environment of the Company andexpectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control systemand the evidence supporting the disclosures in the books and records, the annual financial statements and the management report are examined primarily on a test basiswithin the framework of the audit. The audit includes assessing the accounting prin-ciples used and significant estimates made by management, as well as evaluating theoverall presentation of the annual financial statements and management report. Webelieve that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.In our opinion, the annual financial statements give a true and fair view of the net

assets, financial position and results of operations of the Company in accordance with[German] principles of proper accounting. The management report is consistent withthe annual financial statements and as a whole provides a suitable view of theCompany’s position and suitably presents the opportunities and risks of future develop-ment.

Hamburg, March 9, 2006

BDO Deutsche Warentreuhand

AktiengesellschaftWirtschaftsprüfungsgesellschaft

Dyckerhoff Dr. ProbstWirtschaftsprüfer Wirtschaftsprüfer


The Company’s Boards28

The Company’s Boards

Supervisory Board of Drägerwerk AG

Chairman

Prof. Dr. Dieter FeddersenLawyer, Frankfurt/Main

Other supervisory board membership:Membership on statutory supervisory boards:

ASKLEPIOS Kliniken Verwaltungsgesellschaft mbH, Königstein (Chairman), since Dec. 23, 2005Dräger Medical AG & Co. KGaA, Lübeck, until Oct. 31, 2005 *Dräger Medical Verwaltungs AG, Lübeck, since Dec. 8, 2005Dräger Safety AG & Co. KGaA, Lübeck, since July 1, 2005LBK Hamburg GmbH, Hamburg (Chairman), since Dec.14, 2005Tarkett Sommer AG, Frankenthal (Chairman)

Membership on comparable German or foreign boards:Gesellschaft für Industriebeteiligungen Dr. Joachim Schmidt AG& Co. Holding-Kommanditgesellschaft, Berlin (Chairman of theBoard of Directors)

Vice-Chairman

Werner Gustäbel Group Works Council Chairman of Drägerwerk AG, Lübeck,until June 30, 2005

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck, until June 30, 2005

Additional Vice-Chairman:

Dr. Christian Dräger Businessman, Lübeck, until June 30, 2005

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck Dräger Safety AG & Co. KGaA, Lübeck

Additional Vice-Chairman:

Theo Dräger since July 1, 2005

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck (Chairman), until Oct. 31, 2005 *Dräger Medical Verwaltungs AG, Lübeck (Chairman) Dräger Safety AG & Co. KGaA, Lübeck Dräger Safety Verwaltungs AG, Lübeck Dr. Jens Ehrhardt Kapital AG, PullachL. Possehl & Co. mbH, Lübeck (Advisory Board)Sparkasse zu Lübeck, Lübeck

Uwe BohmWorks Council member of Dräger Medical AG & Co. KG, Lübeck *

Vice-Chairman since July 1, 2005

Siegfrid KasangWorks Council Chairman of Dräger Medical AG & Co. KG, Lübeck*Group Works Council Chairman of Dräger MedicalGroup Works Council Chairman of Drägerwerk AG since July 1, 2005

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck, until Oct. 31, 2005 *(Vice-Chairman)Dräger Medical Verwaltungs AG, Lübeck, since Dec. 14, 2005(Vice-Chairman)

Dr. Thomas Lindner Management Board Chairman of Groz-Beckert KG, Albstadt

Other supervisory board membership:Talanx AG, HanoverHDI Haftpflichtverband der Deutschen Industrie VAG, Hanover

Walter Neundorf Officer of Dräger Medical AG & Co. KG, Lübeck *

Regina Pawils Works Council member of Dräger Medical AG & Co. KG, Lübeck,since July 1, 2005 *

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck, since July 1, 2005,until Oct. 31, 2005 *Dräger Medical Verwaltungs AG, Lübeck, since Dec. 14, 2005


29The Company’s Boards

Dr. Martin Posth President of Asien-Pazifik-Forum Berlin e.V., Berlin, until Jan.12, 2006

Other supervisory board membership:Berlinwasser International AG, Berlin

Waltraud Ricke Union secretary of the metalworkers’ union IG Metall Lübeck/Wismar, Lübeck

Thomas Rickers1st Delegate of the metalworkers’ union IG Metall Lübeck/Wismar, Lübeck

Other supervisory board membership:Aker MTW Werft GmbH, Wismar, since March 4, 2005Dräger Medical AG & Co. KGaA, Lübeck, until Oct. 31, 2005 *Dräger Medical Verwaltungs AG, Lübeck, since Dec.14, 2005Minimax Management GmbH, Bad Oldesloe, since July 19, 2005

Gordon Riske CEO of Deutz AG, Cologne

Other supervisory board membership:ISRA Vision Systems AG, Darmstadt

Dr. Dietrich SchulzBusinessman, Lübeck

Other supervisory board membership:Süd-Chemie AG, Munich (Vice-Chairman)Ad Capital AG, Stuttgart

Executive Board of Drägerwerk AG

Theo Dräger Executive Board Chairmanuntil June 30, 2005

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck (Chairman), until Oct. 31, 2005 *Dräger Medical Verwaltungs AG, Lübeck (Chairman)Dräger Safety AG & Co. KGaA, Lübeck, (Chairman until June 30, 2005)Dräger Safety Verwaltungs AG, Lübeck,(Chairman until June 30, 2005)Dr. Jens Ehrhardt Kapital AG, PullachL. Possehl & Co. mbH, Lübeck (Advisory Board)Sparkasse zu Lübeck, Lübeck

Stefan DrägerExecutive Board Chairman since July 1, 2005

Other supervisory board membership:Dräger Medical AG & Co. KGaA, Lübeck, until Oct. 31, 2005 *Dräger Medical Verwaltungs AG, Lübeck, since July 1, 2005Dräger Safety AG & Co. KGaA, Lübeck (Chairman), since July 1, 2005Dräger Safety Verwaltungs AG, Lübeck (Chairman), since July 1, 2005

Ingo Gensch Corporate Personneluntil June 30, 2005

Other supervisory board membership:Dräger Medical Verwaltungs AG, Lübeck, until June 30, 2005Dräger Safety AG & Co. KGaA, Lübeck, until June 30, 2005Dräger Safety Verwaltungs AG, Lübeck, until June 30, 2005

Prof. Dr.-Ing. Albert JugelSafetyCEO of Dräger Safety Verwaltungs AG, Lübeck(General partner of Dräger Safety AG & Co. KGaA)

Dr. Wolfgang ReimMedicalCEO of Dräger Medical Verwaltungs AG, Lübeck (General partner of Dräger Medical AG & Co. KG *)

Other supervisory board membership:Dräger Medical Deutschland GmbH, Lübeck (Chairman)

Hans-Oskar SulzerFinance (CFO)

Other supervisory board membership:Dräger Medical Verwaltungs AG, Lübeck, until Dec. 8, 2005Dräger Safety AG & Co. KGaA, LübeckDräger Safety Verwaltungs AG, Lübeck

* On October 31, 2005, Dräger Medical AG & Co. KGaA was transformed into Dräger Medical AG & Co. KG. The SupervisoryBoard of Dräger Medical AG & Co. KGaA was dissolved as of this date. The legal provisions governing the composition of the Supervisory Board of Dräger Medical Verwaltungs AG have also changed. Following the special status proceedings in accor-dance with Art. 97 et seq. German Stock Corporation Act (“AktG”), the Supervisory Board has been in existence at DrägerMedical Verwaltungs AG since December 8, 2005 (share-holders) and December 14, 2005 (employee representatives).

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Major shareholdings of Drägerwerk AG30

Name and registered office Capital stock Shareholdingin LCU thousand in %

Germany Dräger Safety AG & Co. KGaA, Lübeck EUR 25,739 100

Dräger Medical Holding GmbH, Lübeck EUR 100 100

Dräger Electronics GmbH, Lübeck EUR 2,000 100

Dräger Medizin System Technik GmbH, Lübeck EUR 1,023 100

Dräger Safety Verwaltungs AG, Lübeck EUR 1,000 100

Dräger InTek GmbH, Lübeck (since February 1, 2006 Dräger Immobilien GmbH) EUR 250 100

FIMMUS Grundstücks-Vermietungs GmbH, Lübeck EUR 25 100

MOLVINA Vermietungsgesellschaft mbH & Co. Objekt Finkenstraße KG, Lübeck EUR 5 100

MAPRA Assekuranzkontor GmbH, Lübeck EUR 51 49

Europe

Netherlands Dräger Beheer B.V., Zoetermeer EUR 454 100

Dräger Finance B.V., Zoetermeer EUR 11 100

UK Draeger Medical UK Limited, Hemel Hempstead GBP 4,296 30

Switzerland Dräger Finanz AG, Zug CHF 500 100

Americas

Brazil Dräger do Brasil Ltda., São Paulo BRL 27,021 100

Major shareholdings

Major shareholdings of Drägerwerk AG


31Forward-looking statements

Forward-looking statements

This report contains statements concerning the futuredevelopment of Drägerwerk AG and its companies. These statements are estimates based on all informationavailable to date. If the underlying assumptions do notmaterialize, or if further risks surface, actual results maydiffer from current expectations. We therefore do not giveany warranty for such statements and estimates.

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Notes32


D

D

as of December 31, 2005

Separate financial statements and management reportof Drägerwerk AG

90

70

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