Annual Report

Order Intake reaches record level Sales and Earnings below previous year Continuation of complementary acquisitions Andritz
Shares outperform ATX High Order Backlog provides solid basis for 2003
"A Global Market Leader in High-Tech Production Systems and Services for Pulp and Paper, Steel, and Other Specialized Industries"
Pulp and Paper
Rolling Mills and Strip Processing Lines
Environment and Process Technologies
Feed Technology
Other Operations / Hydraulic Machines
We engineer the future
Vision
Highlights of the 2002 Business Year
Company Profile
Global Group Publicly listed Andritz Group is a global market leader in the supply of customized plants, systems, and services for the pulp and paper industry, the steel industry, and other specialized industries (sewage sludge dewatering and drying, feed technology). Global presence The Group is based in Graz, Austria, and production is conducted at 16 sites in Austria, Germany, Finland, Denmark, the Netherlands, France, the USA, Canada, and China. With over 60 affiliates and offices around the world, employing approximately 4,600 employees, the Group also has a worldwide presence close to its customers. With research centers in Europe and the USA, the Andritz Group develops innovative processes and equipment on an on-going basis. These employ patented and proprietary technologies which help the Group maintain its leadership position. The global presence of Andritz, combined with technology leadership, strengthen the Groups competitive position and help to achieve important strategic goals. Business Development and Financial Goals Solid growth Through advancement of existing products, continuous development of new technical solutions, and complementary acquisitions, the Andritz Group has grown an average of 10% each year. The Order Intake nearing 1.3 billion Euros in 2002 was a record level for the Andritz Group. The company has been profitable for over 15 years in a row. The Groups financial goals are: Long-term Sales growth of 10% per year on average EBITDA Margin (as % of Sales) of over 7% A Return on Capital Employed (ROCE) of over 20% A dividend payout ratio of at least 30% of Net Income Business Activities The activities of the Andritz Group are focused within four strategic Business Areas, and encompass the development, manufacture, and service for systems and plants for producing all types of pulp (including equipment for recovery of chemicals), and tissue paper: Pulp and Paper Business Area processing steel strip: Rolling Mills and Strip Processing Lines Business Area processing and treating waste water and sludge: Environment and Process Technologies Business Area producing animal feed: Feed Technology Business Area The Andritz Group is a global market leader in each of the different market segments for all four strategic Business Areas. The companys activities also comprise the production of different hydraulic machines (e.g. water turbines, pumps for the pulp and paper industry) as well as components for
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space technology: Other Operations / Hydraulic Machines.
Strategy The strategy of the Andritz Group is organic growth (through intensive R&D and capitalizing on the synergies between Business Areas) combined with the acquisition of complementary products and technologies. The goal is to become a comprehensive supplier of complete process lines in each of the Business Areas. This strategy has manifested itself in the acquisition of a number of companies over the past 12 years, which has significantly strengthened the process competence in all Business Areas. In the area of pulp and paper, the Andritz Group offers all process steps for producing any kind of pulp, including the recovery of chemicals. Andritz is also the only company worldwide to cover the entire process line for stainless steel strip finishing and hot-dip galvanizing. Continuous growth of the service business is a very important strategic objective for the Group. Traditional service encompasses the sale of replacement parts and the manufacture of engineered wear parts, which help customers achieve production optimization and cost savings. More innovative, comprehensive service offerings include Internet and eBusiness solutions from on-line spare parts ordering, to complete plant documentation, to on-line remote diagnostics of a customer's equipment. Comprehensive cost management and future-oriented capacity optimization help secure the Groups long-term profitability. Growth through R&D and complementary acquisitions
The Company Boards
Managing Board:
Supervisory Board: Appointed members: Delegated Members: Johann Tschrischnig Brigitta Wasserbauer Andreas Martiner
Wolfgang Leitner (President and CEO) Markku Hnninen Franz Hofmann Friedrich Papst Bernhard Rebernik
Kurt Stiassny (Chairman) Hans Albrecht (Deputy Chairman) Michael Hildisch Christian Nowotny Anton Schneider Hellwig Torggler
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Company Profile
150th Anniversary of Andritz - The Milestones

1852 - Andritz is founded by Hungarian entrepreneur Josef Krsi, who started his career as an apprentice in an iron works in Hungary. At age 25, Krsi establishes his own company, a small iron foundry, in the Graz suburb of Andritz. 1900 - Andritz is transformed into a joint stock company. 1950 - Creditanstalt-Bankverein, Vienna, buys the majority of Andritz shares. 1987 - AGIV AG, an investment company headquartered in Frankfurt, Germany, becomes majority shareholder of Andritz AG. 1990-2000 - In 1990, Andritz begins to change its strategy from being a licensee for other manufacturers to an international supplier of high-tech production systems. The purchase of Sprout-Bauer in the USA, specialists in mechanical pulping systems (refiners) and animal feed, marks the beginning of the successful expansion of the Andritz Group. Further complementary acquisitions include Durametal Corporation in the USA, a producer of refiner plates (1992), Kone Wood of Finland a leading supplier of equipment for wood processing in the pulp industry (1994), and Danish Jesma-Matador A/S (later renamed Sprout-Matador), which strengthened Andritz position in Feed Technology (1995). 1998 - Andritz buys 75% of Sundwiger Eisenhtte Maschinenfabrik GmbH & Co., of Hemer, Germany. Sundwig is a leading supplier of cold rolling mills and strip processing plants for the international steel industry. 1999 - Ownership in Andritz changes once more. AGIV AG sells its shares to a consortium consisting of The Carlyle Group, GE Capital, Unternehmensinvest AG, Deutsche Beteiligungs AG, Custos Privatstiftung (founded by Andritz CEO Wolfgang Leitner) and other members of the Andritz Managing Board. 2000 - Andritz buys the first 50% stake in Finnish Ahlstrom Machinery Group (later renamed Andritz-Ahlstrom), making the Andritz Group one of the leading suppliers of production systems for all kinds of pulping and chemical recovery. With the purchase of Universal Milling Technology, Andritz further establishes itself as one of the world market leaders in Feed Technology. 2001 - In June, Andritz makes its initial public offering on the Vienna Stock Exchange, successfully placing two million new shares with investors in Austria and other countries. Immediately after the IPO, Andritz buys the remaining 50% in Andritz-Ahlstrom, which is merged with Andritz Oy, Finland, a few months later. 2002 - In May 2002, Andritz successfully places a 100 MEUR corporate bond with national institutional and retail investors. The proceeds of the bond sale enable the company to create a solid financial basis for further Group growth. By acquiring ABB Drying, Andritz complements its process competence in the pulp and paper industry, enabling it
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to offer complete drying and baling lines for market pulp. The purchase of the continuous strip annealing line from SELAS SAS, France, makes Andritz a supplier of complete hot-dip galvanizing lines (Rolling Mills and Strip Processing Lines Business Area).
1953: Machining of the pump turbine for Limberg hydropower station, Austria, in the production workshops of former Maschinenfabrik Andritz
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The Year 2002 at Andritz

February - Forest industry company Group Celulosa Arauco y Constitucin, Chile, places a 50 MEUR order with Andritz for a complete woodyard and chemical recovery systems for a greenfield kraft mill in Chile. March - The results for Business Year 2001 are published. Andritz announces record Sales and Earnings Before Interest and Tax (EBIT), increased profitability and doubled Net Income for the year. April - Andritz receives an order to supply a complete sewage sludge treatment plant for the city of Ljubljana, Slovenia. The system comprises thickening, dewatering, and drying an important reference order in Southeast Europe. May - Andritz successfully places a 100 MEUR corporate bond (coupon: 6%; term: 6 years) with institutional and retail investors. The remaining 50% stake in French affiliate Guinard Centrifugation, a specialist for centrifuges for sludge dewatering, is purchased. June - UPM-Kymmene, Finland, orders the largest chemical recovery island in the world worth over 100 MEUR for Wisaforest pulp mill. Andritz presents its new tissue machine concept - PrimeLine. The concept features the highest flexibility in manufacturing customized tissue grades. July - The new Fiber Preparation Systems Division commences worldwide operations. The Division combines the product and system know-how of Andritz and the former Andritz-Ahlstrom in recycling, stock preparation, paper machine approach flow, and treatment of the paper sludge and waste water. August - Andritz reports declines in Sales and EBIT for the First Half of 2002. However, Order Intake rises for the Third Quarter in a row. September - Andritz Fiber Preparation receives its first order for supply of a turnkey deinking system to Vipap Videm Krsko Proizvodnja Papirja in Celuloze, Slovenia. October - Andritz receives the Stock Exchange Award for 2002, honoring its professionalism in Investor Relations. It is also the winner of the PIROL Award (Prize for Investor Relations Online). Orders totalling 170 MEUR are received for chemical recovery systems in Germany, Portugal, and Austria. Andritz acquires the continuous annealing line section from French SELAS SAS, complementing its product offering in hot-dip strip galvanizing. The acquisition of ABB Drying enables Andritz to offer complete drying and baling lines for market pulp. Andritz is a complete equipment supplier for all types of fibers and covers the entire process line from the woodyard to market pulp bales. November - Andritz publishes the results for the First Three Quarters of 2002. Order Intake is above the reference level for the previous year, Sales and EBIT are on the decline from previous year. Two Andritz tissue machines for Chinese tissue maker Gold Hong Ye achieve speed records. After integrating the new Andritz PrimePickup system, one machine runs constantly at 2,020 m/min for two days in a row and produces excellent quality.
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2002: Successful start-up of the new fiberline constructed for Aracruz Celulose, Brazil. Andritz was the main supplier for the project.
Letter from the Managing Board

Ladies and Gentlemen, Dear Shareholders, Record Order Intake Despite difficult global economic conditions, the Andritz Group experienced satisfactory development during the past business year. Compared to the record year 2001, Andritz had to manage declines in Sales and Net Income, in step with the general industrial economy. However, this was offset somewhat by achieving a record level of Order Intake, creating a solid basis for business development in 2003. Andritz: supplier of complete production systems The favorable development of Order Intake can be attributed to the following factors: the complementary acquisitions we have made in order to extend our process competence in each Business Area, and our strategy to develop the company as a supplier of complete production lines. The acquisitions of ABB Drying technology and SELAS technologies for continuous strip annealing in October 2002 were two important steps. This has clearly strengthened our process competence in the Pulp and Paper Business Area and the Rolling Mills and Strip Processing Lines Business Area. Another competitive advantage lies in the Groups global presence. This ensures the required closeness to our customers. Most customers also work on a global basis, and our global reach enables us to offer comprehensive and rapid service. Our international network and many reference installations in various parts of the world contribute to our competitiveness, and allow us to take advantage of market opportunities that arise in regions with an above-average growth rate. The development of several new products has met with excellent acceptance from customers around the world. In pulp and paper, a number of innovative product and system solutions (Andritz PrimeLineTM concept for tissue machines and the Vertical AirTM system for recovery boilers) were very successfully launched. Our goal is to become the technologically preferred supplier to a wide spectrum of customers, while keeping our cost structure as low as possible. Being seen as a reliable and competent technological partner by our customers in all Business Areas, offering them attractive prices, and executing the orders received within budget are absolute prerequisites for success. Further organizational integration - an important goal for 2003 A priority for the current year is further integration of our organization within the Andritz Group at the strategic Business Area level. This should enable us to capitalize on synergies, particularly when executing large orders and projects. We have taken steps to optimize the organization through an internal Business Processes Program and have come much closer to this goal. We have seen positive results over the year, especially in the sales phase of projects. This is just the beginning. In the future we want to act even more uniformly on the market, and we want to guarantee our customers complete, on-time execution of projects with minimal interfaces. A special project team has been formed to actively design and optimize our business models and processes within the
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Andritz Group.
Friedrich Papst Wolfgang Leitner (President and CEO)
Bernhard Rebernik
Markku Hnninen Franz Hofmann / andritz 2002
In the coming years, we will continue to increase our investments in information technology in order to optimize our own business processes and our customer orientation. Today, we offer customers internet-based platforms such as the Pulp and Paper Service Club. One of the features of the Service Club is online ordering of replacement and wear parts. The extension of our Customer Relationship Management System, which has been implemented Group-wide, will make it possible in the future to deliver our products and services in a coordinated and personalized manner to individual customer requests. It will also help us standardize and streamline our workstreams and proposals. In the area of procurement, we have implemented web-based solutions (eProcurement) to automate some purchasing transactions and take advantage of online auctions. We have the potential here to improve our efficiencies and costs further. Successful issue of corporate bond, Andritz Shares outperform ATX Of special importance for the Andritz Groups medium-to-long-term development was the successful issue of the 100 million Euro corporate bond in May 2002. The proceeds allowed us to redeem our existing interest-bearing borrowings and to optimize our financing structure on a sustained basis. Together with its high net liquidity, the Andritz Group has a solid financial basis for further growth. The development of Andritz Shares during their first full year on the Vienna Stock Exchange was very satisfactory. Andritz shares gained 7.9% over the year, clearly outperfoming the ATX index. As we have previously stated, it is our goal to increase our comparatively small free float (approx. 16% of our shares) as soon as conditions on international financial markets permit. The Managing Board wishes to thank all employees in the Group for their input and performance during the year under review. We have been able to hold our own in a very difficult economic environment due to the contribution and diligence of each employee in the worldwide Group. We thank our customers and business partners for the confidence they have placed in us, and assure them that we will perform to their requirements fully during the year to come. Andritz AG Managing Board
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Status Report
General Economic Conditions The global economy developed much less favorably in 2002 than the leading economic researchers had predicted at the beginning of the year. The slight recovery during First Quarter of 2002, which continued into Second Quarter, gave reason to expect a gradual acceleration of economic growth. These assumptions were supported by published economic indicators (purchasing managers' index, consumer confidence, etc.) which pointed toward a continuation of the moderate economic upswing in the USA. These early indications were not sustained. The US economy continued to weaken during the Third Quarter of 2002. In its Beige Book, the US Federal Reserve Board stated that economic growth had once more slowed down slightly since last summer. In response to this, the Federal Reserve Board lowered the US prime rate another 50 basis points in November, bringing it to its lowest rate in 41 years. The development in Euroland mirrored that in the US. The deterioration in export Sales by Business Area Weak global economy
prospects resulting from continued weakness of the global economy, as well as lower building investments and retail sales, signalled only a very moderate economic recovery.
100%
The 2002 Business Year Sales Andritz Group Sales for year 2002 were 1,110.1 MEUR, 15.8% below the record level achieved in 2001 (1,318.7 MEUR). The reason for this decline was the low Order Intake during the Second Half of 2001 and the First Quarter of 2002 that came in the wake of the prevailing economic situation and affected Sales with a certain time lag. In addition, many projects were nearing final acceptance in the course of 2002 and some new projects were only in their initial stages, so they translated only partly into Sales. Order Intake and Order Backlog Order Intake by the Andritz Group progressed quite satisfactorily. Despite weakness in global markets, Andritz secured the largest Order Intake in its history. Total Order Intake of 1,299.7 MEUR for the year was 16.0% higher than the previous year (1,120.9 MEUR). Particularly pronounced increase for the Pulp and Paper Business Area is notable. The Kraft Mill Systems Division (Pulp and Paper Business Area) won very important orders for chemical recovery systems. For instance, the largest chemical recovery island in the world was ordered from Andritz for UPM-Kymmene in Finland. In addition Order Intake for the Tissue Machines Division also increased significantly. Environment and Process Technologies also secured the largest Order Intake since its formation (147.7 MEUR). Major orders included sewage sludge dewatering and drying plants in Sacramento and Honolulu in the USA, and Paris, France.
Pulp and Paper
Sources: OECD, WIFO
Feed Technology
60% 16% 11% 10% 3%
Order Intake reaches record level in 2002
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Others
Status Report
Status Report
The Order Backlog of the Andritz Group also developed very favorably, reaching 903.6 MEUR at year's end. Compared to the previous year (31.12.2001: 740.4 MEUR) this is an increase of 22.0%, giving Andritz a solid backlog of orders for 2003. Earnings Decline in Earnings compared to record 2001 Andritz Group Earnings were lower than the record level achieved during the previous year, essentially due to decreased Sales and curtailed Earnings in the Pulp and Paper and Environment and Process Technologies Business Areas. The weakness in the North American service business (Pulp and Paper) and cost overruns on certain projects (Environment and Process Technologies) were additionally responsible for the decline in Earnings. The other Business Areas of the Group developed very favorably, for instance Rolling Mills and Strip Processing Lines, whose EBITDA (Earnings before Interest, Tax, Depreciation and Amortization of Goodwill) increased markedly. In total, Earnings before Interest, Tax, Depreciation and Amortization of Goodwill (EBITDA) was 80.9 MEUR for 2002, a decline of 14.4% from the previous years all-time high (94.5 MEUR). Profitability expressed as EBITDA margin increased from 7.2% in 2001 to 7.3% in the year under review. Earnings Before Interest and Tax (EBIT) totalled 45.3 MEUR (2001: 54.6 MEUR). The Financial Result for 2002 declined from the previous year to 0.5 MEUR (2001: 5.5 MEUR). This is mainly attributed to lower interest levels - especially in the USA and expenses in conjunction with the hedging of interest risks related to the 100 MEUR Andritz corporate bond. The results are also burdened by the valuation of Financial Assets at year-end and the financial instruments that are maintained as security for project-related currency risks. Earnings Before Tax amounted to 45.7 MEUR in 2002 (2001: 60.1 MEUR). The Net Income for the year, before deducting Minority Interests, was 27.6 MEUR (2001: 37.5 MEUR).
Andritz Group Key Figures (IAS) MEUR Sales EBITDA EBITDA Margin EBITA EBITA Margin Earnings before Interest and Tax (EBIT) Earnings before Tax
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2002 1,110.1 80.9 7.3% 58.7 5.3% 45.3 45.7 27.6
2001 1,318.7 94.5 7.2% 68.0 5.2% 54.6 60.1 37.5
% change -15.8% -14.4% -13.7% -17.0% -24.0% -26.4%
Net Income for the Year (including minorities)
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Net Worth Position and Capital Structure The balance sheet as of December 31, 2002 shows the following changes over the balance sheet as of December 31, 2001: The 100 MEUR corporate bond issued in May 2002 increased long-term Liabilities to 100.6 MEUR (31.12.2001: 1.0 MEUR). Approximately half the proceeds of the bond were used to redeem interest-bearing short-term financial obligations (2001: 47.5 MEUR). The remaining proceeds were assigned to cash assets, which rose to 188.1 MEUR as of December 31, 2002 (31.12.2001: 117.8 MEUR). The Andritz Groups net liquidity was 102.6 MEUR as of 31.12.2002 (31.12.2001: 77.3 MEUR). The Andritz Groups equity capital as of December 31, 2002 was 222.9 MEUR and has therefore decreased 7.4 MEUR compared to December 31, 2002 (230.3 MEUR). The reason is the increase in the exchange rate of the Euro against the US Dollar, which caused the equity capital of Andritz holdings in the area of the US Dollar to decrease due to conversion effects. This exchange rate effect was partly compensated by the hedging reserve according to IAS 39 (valuation of financing instruments at the current value). With an equity ratio of 24.5% as of December 31, 2002 (compared to 24.5% for the previous year), the Andritz Group has a solid and balanced financial structure. Research and Development Research and Development is an important strategic activity in the Andritz Group. More than 160 people work in the companys research centers in the USA, Austria, Finland, and France to find new processes and products with which the Andritz Groups technological lead is to be secured for all product ranges on a long-term basis. In addition, pilot plants are operated in cooperation with customers. The Andritz Group invested a total of 30.1 MEUR for Research and Development in 2002. Including the expenditure for contract-related development, the total R&D expenditure for new processes and products amounted to over 3% of Sales during the reporting period. The Divisions of the Pulp and Paper Business Area continued the development of processes for fiber quality improvement. Considerable development work was also aimed at reducing waste in the production process (energy conservation, re-use of chemicals and water, etc.). A number of new service products were developed. New products and technologies, most notably SelectaFlotTM flotation technology, CompaDisTM dispergers, PapillonTM refiners, and LemaxX-Spiral refiner plates, were successfully launched. The world's largest cross-cutter for market pulp was successfully placed in operation. Net liquidity increases to 102.6 MEUR
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Status Report
Status Report
In the Rolling Mills and Strip Processing Lines Business Area, further process optimizations were made on levelling lines and coating lines. Computer simulation of process runs is being conducted in order to achieve better plant integration. The first regeneration system using the advanced Pyromars process was started up. The newly developed silicon separation unit for high-silicon waste acid was also successfully launched. In Environment and Process Technologies, the performance range of standard drying equipment was extended both upwards (up to 20 t/h evaporation rate for fluidized bed dryers) and downwards (starting at 500 kg/h for belt drying equipment). The newly developed belt dryer can operate with low temperature waste energy sources, such as hot water, low-pressure steam, or off-gas. Feed Technologys research activities concentrated on the successful conclusion of the product developments which had been initiated over the past three years. Many new products (new generation of pellet presses, hammermills, extruder lines, and optimized control concepts) were successfully brought to market. Outlook In the course of 2002, leading economic research institutes (OECD, WIFO) have reduced their forecasts of economic growth for the year 2003. Due particularly to the continued weakness of the German economy, Eurolands gross domestic product (GDP) in 2003 is expected to grow by a mere 1.4%. Researchers are more optimistic about the United States, whose GDP is predicted to rise by 2.2%. According to the forecasts, Japan will leave the economic trough only temporarily and its GDP is likely to grow by just 0.8% in 2003. The global economy is not expected to return to long-term growth until at least 2004. The possibility of war against Iraq and a further downward trend in international financial markets would be capable of further delaying or even shattering the global economys recovery. Based on these macro-economic assessments, leading research institutes (RISI, Jaakko Pyry, Heinz H. Pariser) expect a moderate recovery for the principal markets that are relevant for the Andritz Group (i.e. pulp, paper, and steel) in 2003. According to forecasts, it will not be until the Second Quarter or the beginning of the Third Quarter of 2003 that the international pulp market might improve and price increases might materialize. The essential impetus for this will likely come from Asian markets, but also through rising demand in the US. By the time of publication of this Annual Report, a number of pulp producers had announced price increases for the month of February. From todays point of view, generally good project activity can be expected, which will increase over the year.
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The global steel market is expected to develop similarly. Some large inventories of end-users and the moderate total demand that is due to the economic situation will have a marked influence on the development during the First Half of 2003. A sustained upward development is not to be expected before the Second Half of 2003. Expectations for the stainless steel market are slightly more optimistic, and it is expected to see higher growth rates during the coming year than the general steel market. Higher project activity is expected particularly in China.
The Andritz Group expects its business to develop favorably in 2003, with slight increases over the previous year for Sales and Net Income. This expectation is mainly backed by the Groups high Order Backlog as of December 31, 2002 (903.6 MEUR), which, together with the short-term service business, results in a good Sales and Earnings visibility for 2003. As matters are today, the Andritz Group expects good project activity for all four strategic Business Areas. Especially in South America, Asia, and Europe, where Andritz enjoys a good market position and has a number of reference plants, major projects should be awarded for pulp and papermaking equipment and for (stainless) steel production plants. If, however, the global economic upswing that forecasters predict for the Second Half of 2003 should lag further, then the Andritz Groups Earnings development will likely be adversely affected. In 2003, the Andritz Group will continue its Group-wide integration that was begun in 2002 and successfully implemented. Increased consolidation and integration of the newly acquired companies into the Business Area organizations should bring a more uniform presence of the Group in global markets, and is expected to generate additional synergies in Group-wide business processes. This should further reduce fixed costs and, therefore, improve the Andritz Groups competitive position.
Andritz expects increase in Sales and Net Income in 2003
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Status Report
The Business Areas of the Andritz Group at a Glance

Pulp and Paper Rolling Mills and Strip Processing Lines
Profile The Rolling Mills and Strip Processing Lines Business Area designs and constructs complete lines for the production of cold-rolled carbon steel, stainless steel, and non-ferrous metal strip. The Andritz Group is the only supplier to provide all processes involved in the manufacture of stainless steel (rolling, annealing, and pickling) on a comprehensive basis and can supply all the production systems through a single source. For Products Production lines, systems and processes for all production steps in the woodyard for production of chemical pulp, including chemical recovery for production of mechanical pulp in the paper and board industry for production of mechanical fibers for MDF fiberboards for processing recycled paper, preparing stock for all paper/board/tissue making processes, and for paper machine approach flow systems for pulp drying, cutting, and baling for production of tissue paper: CrescentFormer machines, through-air drying machines and tissue machines with the TissueFlexTM*) shoe press for sludge dewatering and in-mill recycling of water as well as services: original replacement parts, engineered, customized and technologically advanced wear parts, equipment rebuilds, and modernizations pumps for the pulp and paper industry dynamic simulation of all mill processes
*) Trade mark of Voith Paper, cooperation partner of Andritz
Profile The Pulp and Paper Business Area is a global leader in the supply of complete lines, systems, processes, and services for production of all types of pulp, kraft mill chemical recovery, fiber preparation in papermaking, tissue production, and engineered, customized, and technologically advanced wear and spare parts. Extensive services complete the large product portfolio.
steel strip coating, Andritz offers the two common processes for steel strip galvanization: electrolytic and hot-dip galvanizing. Products Equipment for the steel, stainless steel, non-ferrous metal, and aluminium industry: Cold rolling mills Strip processing lines Surface treatment systems Finishing systems Regeneration plants Continuous heat treatment systems
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Profile The Environment and Process Technologies Business Area focuses on sewage sludge dewatering and drying. Its product range covers the entire spectrum of technologies for mechanical and thermal treatment of sludge from municipal and industrial sewage sludge plants. The Business Area handles the planning, manufacture, erection, and start-up of complete systems, including automation and safety engineering. Critical machines and components (drum and belt thickeners, belt filter presses, centrifuges, belt, drum and fluidized bed dryers) are developed and produced in-house. Products Plants, systems, machines and processes for Process water treatment Mechanical waste water treatment Sludge thickening Sludge dewatering Sludge drying Thermal sludge utilization Industrial solid/liquid separation
Feed Technology
Profile The Feed Technology Business Area is one of the global market leaders in developing and manufacturing systems, machines, and processes for the industrial production of animal feed. This comprises complete feed mill lines as well as unit equipment for grinding and mixing, expanding, pressing, extruding, cooling, vacuum coating, and drying. The Business Area also supplies plants and systems for industrial production of biofuel pellets. Products Size reduction systems Conditioners and expanders Pellet mills Extruders Dryers and cooling equipment Pellet coating systems Spare and wear parts

Profile Other Operations encompass Andritz Group activities such as the planning, development, and manufacture of water turbines, large-scale pumps for selected applications, pumps for the primary and secondary loop in nuclear power stations, centrifugal pumps for the pulp and paper industry, as well as space technology components. Products Water turbines Large-scale pumps Centrifugal pumps Reactor pumps
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Space technology components
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The Business Areas of the Andritz Group at a Glance
New fiberline constructed for Aracruz Celulose, Brazil. Andritz supplied a complete woodyard, fiberline (washing, screening, bleaching), chemical recovery systems, the worlds largest sheet drying system and baling lines.
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Pulp and Paper

Pulp Mill Technologies Wood Processing Division Kraft Mill Systems Division Pulp Mill Services Division Paper Mill Technologies Mechanical Pulping Systems Division Fiber Preparation Systems Division Tissue Machines Division Paper Mill Services Division 24 26 30
33 38 41 45
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Pulp and Paper
Business Area Managers: Markku Hnninen (Pulp Mill Technologies) Bernhard Rebernik (Paper Mill Technologies)
Profile The Pulp and Paper Business Area is one of the global leaders in the supply of systems, equipment, and services for the production of all types of fiber (chemical pulp, mechanical pulp, and recycled fibers) including chemical recovery systems. The Business Area also supplies stock preparation and machine approach systems for making paper, board, and tissue, and sheet drying/baling systems for market pulp. The Business Area's products are supplemented by customized, engineered, and technologically advanced wear parts such as refiner plates, chipper knives, screen baskets, as well as a full array of technical services. The successful acquisition of complementary product areas over the past few years enables the Pulp and Paper Business Area to supply complete processing lines from the woodroom to pulp fiberlines to the finished pulp bale. With the acquisition of ABBs Drying Business (now Andritz Fiber Drying) in October 2002, the Business Area has added process and system competence to its existing know-how in sheet and flash drying and dryer hoods for tissue. dryer and the cutting/baling equipment downstream of the dryer. Following the expiration of the cooperation agreement with Voith Paper in the area of stock preparation, the global Fiber Preparation Systems Division was established. It has operated worldwide since July 1, 2002, combining the activities of Andritz and the former Andritz-Ahlstrom for stock preparation and recycled fiber preparation. The market and customer-oriented strategy of the Business Area is reflected in its organization which came into effect on January 1, 2002. "Pulp Mill Technologies is subdivided into the Wood Processing, Kraft Mill Systems, and Pulp Mill Services Divisions, and "Paper Mill Technologies comprises the Mechanical Pulping Systems, Fiber Preparation Systems, Tissue Machines and Paper Mill Services Divisions. In each major market, the Pulp and Paper Business Area has a number of service and sales locations. In Asia and Latin America, Andritz has improved its strong foothold considerably with excellent reference deliveries. Prior to the acquisition, Andritz supplied the pulp dewatering equipment upstream of the pulp
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Market Development The development of the international pulp market varied widely over 2002. During the First Quarter, the demand for NBSK (Northern Bleached Softwood Kraft pulp) was quite moderate on account of the adverse economic development, and the price decreased to approx. US Dollar 430 per ton. Production curtailments on the part of the large global pulp producers and a slightly rising demand caused Norscan inventories to go down markedly in the course of the Second Quarter. Toward the end of June, inventories reached 1.3 million tons, lower than the landmark of 1.5 million tons that market observers consider as the limit for a balanced market. Slight price increases in May and June took the NBSK price to about US Dollar 470 per ton. The price of eucalyptus pulp developed especially favorably, increasing to as much as US Dollar 520 per ton and exceeding the price for NSBK. Many paper mills were not producing to capacity due to weak demand. This affected pulp sales and led to a higher output of pulp despite the weak demand. The result was an on-going decline in pulp pricing. By the end of December 2002, Norscan inventories had increased to over 1.6 million tons. Despite the difficult situation on the pulp and paper market, especially during the Second Half, project activity was satisfactory. Most projects were for upgrading and modernizing existing production lines. In China, project activity was particularly brisk, but the North American market remained at a very low level. Business Development in 2002 The Sales of the Pulp and Paper Business Area were 672.2 MEUR in 2002, a decline of 23.9% compared to the previous year (2001: 883.0 MEUR). The main reason was the low Order Intake of the previous years Second Half, and the weak development of the service business during the first six months of 2002, especially in North America. Pulp Mill Technologies had a decline in Sales of 26.2% to 382.8 MEUR (2001: 518.7 MEUR). The Wood Processing and Kraft Mill Systems Divisions suffered above all from a low Order Intake in 2001 and consequent Sales declines. On the other hand, the service business, represented by the Pulp Mill Services Division, had Sales that were only slightly below those of the previous year. Paper Mill Technologies Sales amounted to 289.4 MEUR; compared to the amount achieved in 2001 (364.3 MEUR), this marks a 20.6% decline. All Divisions of Paper Mill Services recorded declines in Sales. Due to the declining Sales and the weak development of the services business in North America which was especially pronounced during the First Half of the year - EBITDA decreased 23.4% from the previous year, to 53.5 MEUR (2001: 69.8 MEUR). Profitability expressed as EBITDA margin was increased to 8.0% (2001: 7.9%). Decline in Sales Wide variations in market development in 2002, overall project activity satisfactory
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Pulp and Paper
Pulp and Paper
Increase in Order Intake
Order Intake developed satisfactorily, reaching 843.3 MEUR during the year in review. This exceeded the previous year by 31.2% (2001: 642.8 MEUR). The upswing is mainly due to large orders booked for chemical recovery systems. It is furthermore reflected in the overview of the Order Intake by business segments. Based on the excellent development of the Kraft Mill Systems Division, which almost doubled the Order Intake versus 2001, the Pulp Mill Technologies business segments order bookings rose 55.0% to 503.7 MEUR (2001: 324.9 MEUR). The Order Intake for Paper Mill Technologies was 339.6 MEUR, or 6.8% above the previous year (318.0 MEUR). While the Mechanical Pulping Systems and the Tissue Machines Divisions increased their Order Intakes considerably from the previous year, the Fiber Preparation Systems and Paper Mill Services Divisions recorded Order Intake declines.
Key Figures for the Pulp and Paper Business Area (IAS) MEUR Sales Order Intake Order Backlog 31.12. EBITDA EBITDA margin EBITA EBITA margin Capital investments Employees 2002 672.2 843.3 582.0 53.5 8.0% 39.2 5.8% 11.5 2,634 2001 883.0 642.8 431.5 69.8 7.9% 53.9 6.1% 10.8 2,626 2000 718.6 886.6 666.5 44.6 6.2% 30.8 4.3% 15.0 2,656 1999 328.5 298.2 195.3 25.0 7.6% 18.2 5.5% 8.6 1,426
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/ andritz 2002
Major Orders for Pulp Mill Technologies: UPM-Kymmene of Finland selected Andritz to supply a complete chemical recovery system for its Wisaforest pulp mill in Pietarsaari. Total contract value is over 100 MEUR. This mill will be the largest chemical recovery plant in the world. The contract with RWE Industrie-Lsungen GmbH, which has been commissioned to construct a new kraft mill for Zellstoff Stendal GmbH in Saxony-Anhalt, Germany, became effective. Andritz will supply the evaporation plant, chemical recovery boiler, and recausticizing plant. Chilean forest products company Celulosa Arauco y Constitucin S.A. entrusted Andritz with the supply of a complete wood and chip processing plant and extensive chemical recovery systems, including the evaporation plant for a greenfield kraft pulp mill in Valdivia, Chile. Major Orders for Paper Mill Technologies: Just a few weeks after the Fiber Preparation Systems Division commenced its global operations on July 1, 2002, the Division recorded sales successes with its new flotation technology SelectaFlotTM and disperging unit CompaDisTM. Complete systems were sold to Papiers Stadacona, Canada, Vipap Videm Krsko, Slovenia, UPM-Kymmene Shotton Paper, United Kingdom, PT Aspex Paper, Indonesia, and well-known Chinese paper companies, Shandong Bohui Industrial Co. Ltd. and Shandong Tralin Paper Ltd. SCA Tissue North America LLC, USA, ordered a wet-crepe tissue processing line from Voith Andritz Tissue LLC, the 50:50 joint venture between Andritz and Voith Paper. The new machine will be installed at a greenfield tissue mill in Alabama, USA. German tissue producer WEPA was the first to select a new Andritz PrimeLine tissue machine. The Mechanical Pulping Systems Division extended its market leadership in China by securing orders for the delivery of TMP systems for papermaking and pressurized refiner systems for fiberboard production. Orders included a major contract from Dare Wood Industries for the largest fiber production line ever installed in China. New service centers were established in China and Chile. Local rebuild capabilities were improved in Southeast Asia by introducing a partnership with a local high-quality workshop in Jakarta, Indonesia. Mechanical Pulping Systems Division extends market leadership in China Tissue machine for SCA Tissue North America
/ andritz 2002
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Pulp Mill Technologies
Wood Processing Division

Division Manager: Jarmo Viiala Hollola, Finland Profile The Wood Processing Division is one of the worlds leading suppliers of systems, equipment and processes for all steps required in a woodyard from the arrival of logs to their subsequent preparation into wood chips for the production of chemical and mechanical pulps. The Wood Processing Division is headquartered in Hollola, Finland, and has sites in Sweden, USA, Canada, Brazil and Austria. Business Development in 2002 Despite the lower level of capital investments in the pulp and paper industry, the Wood Processing Division succeeded in keeping and even extending its good position in the major markets of Northern and Central Europe, South America and the USA. While Sales were at a lower level than in the previous year, due to a lower Order Intake in previous quarters, the Order Intake in 2002 was well above last years level. Major Orders Complete woodroom for Arauco The Division was selected by J.M. Huber Corporation, USA, to supply a wood handling system for a new Oriented Strand Board (OSB) facility to be built in Oklahoma, USA. The system will consist of two complete debarking lines. Each line wil be equipped with a LogPorter portal crane. The Divisions groundwood processing expertise was impressively confirmed by an order from Stora Enso Baienfurt GmbH & Co. in Germany for a woodyard and groundwood modernization project. Research and Development New Andritz debarking concept: Rotary Debarker The Rotary Debarker was developed to meet the needs of the modern woodroom, by effectively debarking logs of varying quality and even while frozen without deicing, while minimizing wood losses. It reduces the required loading height, dampens noise, and evens out variations in wood flow. The debarker allows for accurately controlled throughput and debarking degree to meet customer needs without sacrificing fiber. A 3D chip measurement prototype was tested in cooperation with the Andritz Automation department. When combined with an existing Andritz automatic chip sampling device, the on-line chip size information can be utilized for cooking optimization and to support operating/maintenance decisions such as chipper knife condition monitoring. A major R&D focus was the further development of the debarking process. The first installation of a new debarking concept, the Rotary Debarker, was started up in October 2002 in Canada. The Division booked an order for a complete wood and chip processing installation from Celulosa Arauco y Constitucin S.A. in Valdivia, Chile.
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/ andritz 2002
Woodyard and chip handling plant for eucalyptus wood, delivered to Aracruz Celulose S.A., Brazil. The capacity of the two chipping lines is the largest in South America.
/ andritz 2002
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Pulp and Paper
Kraft Mill Systems Division

Division Manager: Markku Hnninen Helsinki, Finland Profile The Kraft Mill Systems Division is one of the worlds market leaders in the supply of systems, equipment, and processes for the production of chemical pulp, and in the recovery of chemicals used in the pulping process. The products of the Division include continuous cooking systems, washers, screens, bleaching systems, recovery boilers, evaporation plants, recausticizing equipment, lime kilns, and effluent evaporators. The Kraft Mill Systems Division is based in Kotka, Finland, with significant operations in Alpharetta, Georgia, USA; Tokyo, Japan; Stockholm, Sweden; and Curitiba, Brazil. The Division maintains research laboratories in Kotka, Finland; and Glens Falls, New York, USA. Business Development in 2002 Order Intake almost doubled Compared to the previous year, Kraft Mill Systems Division Sales were significantly lower in 2002 due to lower Order Intake in 2001. On the other hand, Order Intake in 2002 nearly doubled from the previous year. Successful startup of fiberline for Aracruz Some very significant projects were completed successfully in 2002. Among them was the new Fiberline C for Aracruz Celulose S.A., Brazil. This fiberline has the worlds highest single-line kraft pulp capacity and utilizes Andritz Drum Displacer (DD) washers for washing and bleaching of the eucalyptus pulp. The Division also supplied key items for the white liquor plant and lime kiln. Also in Brazil, the start-up of the evaporation and white liquor plants for Votorantim Celulose's Jacarei Mill occurred in 2002. This project is a significant expansion of bleached eucalyptus pulp production. Other start-ups of note during the year include Sdra Cell's new recovery boiler at the Vr Mill in Sweden, and new fiberline/recovery systems for Rizhao's greenfield kraft mill in China. In the USA, fiberline equipment for MeadWestvaco and a complete fiberline for Weyerhaeuser in Oregon are of particular importance - the Weyerhaeuser installation featuring the first TurboFeedTM chip feeding system. TurboFeed eliminates some of the mechanical equipment used in conventional feeding systems. As a result, capital and operating costs are reduced. The year 2002 also saw the start-up of a new Lo-Solids continuous digester for Nippon Paper in Iwakuni, Japan. The unit is designed to cook both softwood and hardwood. Lo-Solids Cooking conversions were also carried out on existing continuous digesters for Chuetsu Nomachi and Nippon Paper Yufutsu mills in Japan.
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/ andritz 2002
Bleaching towers supplied to Aracruz Celulose, Brazil, as part of Andritz EPC delivery of a 2,205 adt/d fiberline.
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Lo-Solids Cooking employed in an Andritz continuous cooking system makes it possible to reach optimum pulp properties for bleaching. It eliminates the negative effects of organic substances dissolved in cooking liquor, which typically affect the strength of the pulp and impair the bleaching response. At the same time, Lo-Solids Cooking reduces consumption of cooking chemicals. Major Orders Andritz to supply largest chemical recovery island worldwide Andritz was selected to supply a new chemical recovery island to UPM-Kymmene's Wisaforest pulp mill in Pietarsaari, Finland, the largest in the world in terms of capacity. Andritz scope will comprise: evaporation plant, recovery boiler, recausticizing plant and lime reburning kiln. The chemical recovery system utilizes the latest technologies for energy efficiency. When the chemical recovery plant of the mill is completed, it will produce approx. 600 MW of steam and 140 MW of electricity from renewable natural resources. Andritz was chosen to supply chemical recovery systems for a greenfield pulp mill, which will be built by Celulosa Arauco y Constitucin S.A. in Valdivia/Chile. The scope of supply includes a black liquor and sulphite liquor evaporation plant, the lime reburning kiln, and a complete recausticizing system. The contract for supply of a new chemical recovery island (evaporation, recovery boiler, recausticizing, and lime kiln) for Zellstoff Stendal GmbH in Germany became effective in 2002. The systems ensure that the tightest environmental regulations can be met, thanks to use of the most up-to-date technologies developed by the Andritz Group. Andritz Vertical Air System for minimal sulphur dioxide and nitrous oxide emissions Research and Development The main drivers for the current technology development programs in chemical pulping are the following: - to lower investment costs per ton of production through process simplification, optimization, standardization or modularization, and by reducing consumption of chemicals and wood. - to improve product quality and strength of pulp through minimal fiber damage and optimized solutions for end-user applications. - to increase overall energy efficiency through better utilization of liquid and solid fuels: producing more electricity and high-value process steam, simultaneously decreasing the specific energy consumption of equipment.
/ andritz 2002
Andritz was also selected to deliver a new chemical recovery boiler to Soporcel, Portugal. The boiler in the Setubal mill has a capacity of 2,400 tonnes of dry solids per day and utilizes combustion technology based on the Vertical Air system, developed by Andritz, which significantly reduces sulphur dioxide and nitrous oxide emissions.
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- to improve environmental performance: lower emissions and reduction of effluents. - to integrate process controls and optimization tools into the production machinery and processes. In the fiberline area, the main developments have been the further streamlining of digester feed systems (TurboFeed) and simplified cooking configurations (DownFlow Lo-Solids Cooking). In the remaining fiberline, efforts are focusing on the shortening of bleaching sequences by combining several stages into one reactor and designing equipment to perform multiple tasks. Many of the solutions developed can be used for modernization purposes of the installed base as well as in greenfield applications. Longer-term process research includes the development of sulphur-free pulping and new bleaching chemicals and stages. Many of these programs are conducted in close cooperation with customers and in cooperation with research institutions and other suppliers. In the recovery block, the main developments have been around the High Efficiency Recovery Boiler (HERB). The ultimate goal is a considerable increase of the generation of electricity. The first HERB boiler design is under delivery to Wisapower, Pietarsaari, Finland. It will work at elevated temperature and higher steam pressure levels. Other technologies for even better energy production are currently being developed. Other essential elements are the further development of the Vertical Air system, improved furnace processes, and advanced materials to accommodate the higher steam temperatures and pressures. The first chloride removal system based on ash recrystallization (ARC) is under delivery and will be started up in 2003. Besides more efficient black liquor processing, the Division is also studying better ways to utilize solid bio-fuels (bark, wood residues, etc.) in the chemical pulp mill.
/ andritz 2002
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Pulp Mill Services Division

Division Manager: Risto Hmlinen Savonlinna, Finland Profile The Pulp Mill Services Division supports the large installed base of Andritz equipment for Wood Processing and Kraft Mill Systems all over the world, with the core of the sales being obtained from North America and Europe. Primary emphasis is on services such as engineered wear parts, replacement parts, equipment rebuilds, technical services, and equipment upgrades for kraft pulp mills and woodyards supplied by Andritz or other equipment suppliers. Apart from traditional services, the Division also serves customers with its OPETM (Overall Production Efficiency) program for continuous improvement and optimization of entire production processes. Headquarters for the Pulp Mill Services Division is Savonlinna, Finland. The Division is managed through sales and service locations worldwide, providing fast and responsive services to local customers. Production facilities for rebuilds are located in Finland and the USA. Additionally, the Division offers rebuild services through partner workshops in New Zealand, Indonesia, South Africa, Brazil, and Portugal. Business Development in 2002 The business progress of the Services Division was mainly influenced by the weak development of pulp and paper markets in 2002. Sales and Order Intake in the reporting year were approximately the same as in 2001, but showed different regional developments especially where Order Intake is concerned. While the latter was significantly increased in Central Europe, South America and the Asia-Pacific region, and kept nearly stable in Nordic countries, it fell significantly in North America. This was due to consolidation/ closure of many older mills in the USA and Canada, as well as extreme cost-cutting programs enacted by all major pulp and paper producers in the region. It wasnt until the last Quarter of the year that the service business showed signs of improvement in Northern Europe and in the USA. New service office in Chile, partnership in Southeast Asia Major Orders Several chemical recovery boilers were upgraded with the new Andritz Vertical Air technology: Carter Holt Harvey Ltd, Siam Pulp & Paper, and UPM-Kymmene. The patented Vertical Air system creates optimum temperature and velocity profiles in the recovery boiler, improving operational efficiency of the boiler and reducing emissions. South American orders included rebuilding a debarking drum for Aracruz and a satellite cooler replacement for a lime kiln for Cenibra, both in Brazil. In November, the Division established a new service office in Chile. high-quality workshop in Jakarta. Local rebuild
capabilities were improved in Southeast Asia with the introduction of a partnership with a
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/ andritz 2002
Andritz Pulp Mill Services ensure that the right resources skilled people, proper tools and specialist consultation are available to clients at any place, at any time.
/ andritz 2002
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Drum upgrades and rebuilds were performed for International Papers Svetogorsk Mill, Mets-Botnias Rauma Mill, UPM-Kymmenes Kuusanniemi Mill and Domtars Ashdown Mill. Digester upgrades were ordered in North America and Finland. Crisobe Industrial in Mexico ordered a digester shell replacement. The conversion of a digester for the kraft cooking process was ordered by Georgia-Pacific, Camas Mill, USA. Orders for lime kiln rebuilds at Georgia-Pacifics Brunswick Mill and Interstate Papers Riceboro Mill were booked. An OPETM contract for digester service with P.T. Tels Musi Mill in Indonesia and a longterm contract for recausticizing service with Mets-Botnias Joutseno Mill in Finland were signed. Research and Development In 2002, the Division concentrated its development efforts on improving the customer interface in order to respond to customers' needs more efficiently. The web-based Service Club was launched together with the Paper Mill Services Division as an information platform for customers. Registered users of the Service Club can track information related to the business between Andritz and the users company. Some new service products were developed to minimize downtime in a mill: a faster method of rebuilding debarking drums, an improved belt-pulley design for belt conveyor upgrades, and further improvements to the HQ+ Knife system for chippers to improve the reliability and to add more value for customers. OPE Online Diagnostics successfully installed The OPE Online Diagnostics system was further developed and successfully used in connection with a JetScreen test run for the Mets-Botnia, Joutseno Mill in Finland. OPE Online Diagnostics improves equipment reliability by producing valuable information for operations personnel for preventive maintenance.
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/ andritz 2002
Mechanical Pulping Systems

Profile The Mechanical Pulping Systems Division is one of the leading global suppliers of complete systems for producing high-quality mechanical pulps for paper and board makers and high-quality fibers for Medium Density Fiberboard (MDF) and Particleboard (PB) producers. The pulping technology is based on the proven RTS/TMP (Retention time, Temperature, Speed) and APMP/P-RC (Alkaline Peroxide Mechanical Pulping / Preconditioning Refiner Chemical Treatment) technologies. comprehensive equipment supplier for mechanical pulping. Complete dewatering and baling systems are offered for production of market pulp, with capacities of up to 3,000 t/d. The Division operates mainly through its headquarters in Vienna and Graz, Austria, as well as its affiliates in Montreal, Quebec, Canada; Muncy, Pennsylvania, USA; and Alpharetta, Georgia, USA. The acquisition of ABBs drying business adds locations in Vxj, Sweden; Kotka, Finland; and Montreal, Canada. The Divisions research laboratory in Springfield, Ohio, USA is a completely equipped and independently certified process research facility. In addition, dewatering and sheet drying pilot plant work is performed in Graz on different pulps. Business Development in 2002 The Divisions business developed satisfactorily. Sales in 2002 were slightly reduced due to the lower Order Intake booked during the previous year, during which not a single large sheet drying system was awarded. Order Intake, however, developed favorably. Despite the difficult market conditions, it increased compared to last year. Major Orders Mechanical Pulping Stora Enso, Port Hawkesbury, Canada, placed an order to expand the production capacity of existing RTS refining lines. With the expansion, Port Hawkesbury will have the highest throughput of mechanical pulp for improved publication grades in the world. Abitibi-Consolidated ordered a high-consistency peroxide bleach plant comprising four 4.2 m twin-wire presses, a high consistency mixer and high-consistency bleaching towers for its Alma Mill in Canada. Solikamsk OAO, Russia, placed a follow-up order for a second TMP line, this time based on Andritz RTS-TMP technology. This will enable the mill to reduce the chemical pulp content in their newsprint as well as to minimize energy consumption. Increase in Order Intake Equipment for pulp dewatering, washing, drying, and high-consistency bleaching makes the Division a Humbert Kfler Vienna, Austria Division Manager:
/ andritz 2002
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Paper Mill Technologies
Pulp and Paper
Yueyang Paper Mill, China, ordered a complete woodyard and APMP/P-RC plant for up to 350 admt of LWC paper per day. Chilean board manufacturer CMPC ordered an additional RTS-TMP line to increase its board making capacity. The order also included a high-consistency bleach plant and a wet lap system. Shandong Chenming, a fast-growing paper company in China, entrusted Andritz with the supply of its first mechanical pulping system using the Andritz APMP/PR-C process, for 180 admt/day of fine paper. UPM-Kymmenes Rauma Mill in Finland ordered additional dewatering equipment for a capacity increase of the high-consistency bleach plant supplied by Andritz in 2000. UPM-Kymmenes Voikkaa Paper Mill in Finland and Stora Enso North Americas Biron mill in the USA, invested in new post-bleach washing stages for their existing peroxide bleach plants. Lenzing AG, an Austrian dissolving sulphite pulp producer, selected the Division to supply a twin-wire wash press for its brownstock washing expansion and quality increase. Sheet Drying Two major orders were received from UPM-Kymmene in Finland. A pulp machine with shoe press will be supplied to the Wisaforest mill and the Division will rebuild a pulp machine at the companys Kaukas Mill. A dewatering system for flash drying was supplied to Zubialde, Spain, and started up successfully. Kruger of Canada ordered a wet lap system (consisting of a twin-wire press and cross cutter) for its Bromptonville mill. Panelboard Due to its excellent reputation in the Chinese MDF market, the Division was selected to supply the largest fiber production line ever installed in China, for Dare Wood Industries. The scope is a complete "Front-End Package," consisting of woodyard equipment, chip washing, and a pressurized refining system. The Division also received its first order from Turkey for a pressurized refining system.
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/ andritz 2002
S3068-RTS/TMP refiner installation for the production of improved newsprint papers at Holmen Paper in Hallstavik, Sweden. Two primary lines (17 MW each) increase production capacity and reduce energy consumption.
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Research and Development The Division is continuously focusing on process-oriented solutions to enable customers to enter broader markets with mechanical pulps, minimize operating costs, and environmental impact. Development of patented basic processes continued jointly with customers. These processes include: RT Pretreatment (a process to prepare wood chips), RTS (a process to reduce refining energy consumption, and to improve fiber qualities due to precisely controlled longer retention times for chips in the pretreatment stage, elevated temperature and speed), and APMP/P-RC (process to optimize fiber quality while reducing refining energy consumption). These processes are being applied to improve fiber properties, reduce energy and chemical consumption, and obtain maximum yield from raw materials. In the area of MDF production, development work on new technologies and processes for increased use of sawdust, responding to the requirements of fiberboard producers in Europe, is under way. The goal is to obtain the highest quality of fibers at minimized raw material and energy input. Many customers are seeking to reduce the environmental impact of their bleaching processes. Here, the Divisions R&D efforts are concentrated on reducing the use of chemicals or on using chemicals with less environmental impact and the closure of internal water loops to reduce the effluent load. Another major driver to achieve productivity improvements is the need for increased production capacity from proven technologies. This has led to the development of a new screw press size capable of handling over 1000 t/d in a single line. The first press of this size will likely start up in late 2003. Aracruz pulp dewatering line sets new world records The new pulp dewatering line for Aracruz Celulose in Brazil set new world records for daily production (approximately 2,500 tons). The new target for R&D efforts is a 3,000 t/d single line.
/ andritz 2002
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/ andritz 2002
The world's largest twin-wire pulp machine at Aracruz Celulose, Brazil, at 8 m trim and a capacity of approx. 2,500 admt/d.
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Fiber Preparation Systems Division

Division Managers: Jarmo Hkkinen Kotka, Finland Christian Pedratscher Graz, Austria Fiber Preparation Systems is a global supplier of systems, equipment, and services for all papermaking processes such as recycled fiber processing, paper machine approach systems, broke handling, internal water loop handling, and sludge and reject handling. The Division works mainly through its sites in Kotka, Finland; and Graz, Austria; with significant operations in Glens Falls, New York, USA. Business Development in 2002 The business development of the Division in 2002 was satisfactory in the light of the difficult market conditions, with Sales and Order Intake decreased from the previous year. Major Orders The Division was awarded several major reference orders shortly after its market entry: New products successfully launched The first turnkey deinked pulp (DIP) line was sold to Vipap Videm Krsko Proizvodnja Papirja in Celuloze d.d., in Slovenia. technologies, e.g. the SelectaFlot
TM
Profile Fiber Preparation Systems is a new Division created in the course of the reorganization of the Pulp and Paper Business Area that combines the activities of Andritz and former Andritz-Ahlstrom (now Andritz Oy) in the stock and recycled fiber preparation areas as of July 1, 2002.
This order features several newly developed
flotation cell, and the CompaDisTM disperger, which
will contribute to the quality of the complete line. In addition, Andritz will supply its FibreFlow drum pulper, coarse and fine screening, thickening with screw presses and disc filters, cleaner plants, HC peroxide and MC dithionite bleaching stages, and integrated water treatment. UPM-Kymmene Shotton Paper, United Kingdom, ordered key packages for its new deinking line, encompassing a FibreFlow drum pulper, the worlds largest screw press and a CompaDis disperging system. The new line at Shotton Paper will be the largest single-line DIP installation with disperging in the world when it is started up in 2003. Papiers Stadacona, Canada, placed an order for the first SelectaFlot deinking cell to be installed in North America as well as for a FibreFlow drum pulper and fine screening system. Shandong Bohui Paper, China, selected the Division for the supply of a deinking plant and Holmen Peninsular, Spain, placed an order for dewatering and thickening equipment.
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/ andritz 2002
UPM-Kymmene Shotton Paper (UK) is constructing the world's largest single-line deinking plant, with a capacity of close to 1,000 t/d. Andritz will supply the disperging system, two sludge screw presses and the largest screw press for pulp dewatering ever built (shown), with a screw diameter of 1.9 m and a length of 10 m.
/ andritz 2002
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Hansol EME, a leading engineering company in South Korea, selected the Division to supply a FibreFlow drum pulper and coarse screening system for a new DIP line to be installed at Sepoong Corporation in Kunsan, South Korea. PT Aspex Paper, Indonesia, selected Andritz to provide the technology, detailed engineering, and site services for a major rebuild of its DIP line. The supply includes a new FibreFlow drum pulper (the second FibreFlow sold to PT Aspex), SelectaFlot flotation technology, CompaDis disperging, disc filter, and DAF micro-flotation. Chinese customers Shandong Bohui Industrial Co. Ltd., and Shandong Tralin Paper Co. Ltd. ordered complete approach flow systems for their paper machines. The Division received orders for new stock preparation systems for tissue production from WEPA in Germany and SCA Prudhoe in the United Kingdom. Significant orders for sludge dewatering screw presses came from UPM-Kymmene in the United Kingdom and in Finland, Vipap Videm Krsko, Slovenia, and Dongying Huatai Paper Industry Co. Ltd., China. Research and Development Intensive efforts in the development of flotation, disperging, refining, and agitation led to the launch of SelectaFlot flotation cell, CompaDis disperger, Papillon refiner and TurboMix agitator. Development of products and processes to increase pulp quality, improve operating efficiency, and reduce energy input in applications for pulping, screening, and deflaking will be introduced to the market shortly.
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Tissue Machines Division

Profile The Tissue Machines Division provides all types of tissue machines, including CrescentFormers, Through-Air Drying machines and machines with the patented TissueFlex
TM*)
Division Manager: Rudolf Greimel Graz, Austria
shoe press. Ventilation and drying systems with high-efficiency hoods
for tissue and other paper/board grades complement the product portfolio. Andritz and Voith Paper are parties in a cooperation agreement for tissue machines. The parties share know-how and conduct joint research and development. Andritz is responsible for the production and sale of tissue machines in Asia, Europe, and Africa. Voith Andritz Tissue LLC, a 50:50 joint venture of Andritz and Voith Paper, supplies technology and related services to the NAFTA markets. The acquisition of ABB Drying strengthens the Divisions competitive position in the area of high-efficiency hoods for tissue machines, particularly in the North American market. The Tissue Machines Division is based in Graz, Austria, and has sites in Montreal, Canada, and Janesville, Wisconsin, USA (Voith Andritz Tissue LLC).
*) Trademark of Voith Paper, cooperation partner of Andritz
Business Development in 2002 The Division performed well during 2002. Sales decreased as a result of the lower Order Intake in 2001, but the Division succeeded in boosting the Order Intake considerably from the previous year. Acquisition of ABBs Drying business strengthens the Divisions position in the field of high-efficiency Yankee dryer hoods for impingement temperatures from 300-700 C. The ABB compact hood with integrated burner and recirculation fan extends the Andritz product range with regard to large tissue and paper dryers. Its dryers for pulp and paper in North America enjoy an excellent market position, and therefore this area is a good complement to the existing activities of the Division. During the First Half of 2002, the Division introduced the new Andritz PrimeLine tissue machine concept to its customers. PrimeLine
TM
PrimeLine tissue machine concept successfully introduced
provides enormous flexibility in
producing custom-tailored tissue grades and responds to the most stringent quality and performance requirements. It is specially developed for making extra-soft paper and answers the trend toward high tissue product quality. Two CrescentFormer tissue machines installed by Andritz at APP/Gold Hong Ye's Suzhou mill in China in 1998 achieved new speed records as a result of the optimization by an Andritz Service Team. After installation of PrimePickup in the CrescentFormers, both machines ran at record speeds of 2,020 m/min (TM2 producing facial tissue) and 2,000 m/min (TM1 with toilet paper).
/ andritz 2002
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A new tissue machine for Hengan Changde Paper Products, Hunan Province, China, the second tissue machine from Andritz, was successfully started-up. tissue paper right from the start. A dust removal system for the tissue machine at Werrapapier Wernshausen GmbH, Germany was started up and achieved the guaranteed values from the very first day. At Papierfabrik Rieger GmbH, Trostberg, Germany, the machine and hall ventilation equipment for a board machine was also started up successfully. Major Orders Tissue machine for SCA Tissue North America SCA Tissue North America LLC, USA, ordered a wet-crepe tissue production line from Voith Andritz Tissue LLC. Most of the components for the new machine will be produced in Graz. The new machine will be installed in Alabama, USA. The line is scheduled to start-up in early 2004. German tissue paper producer WEPA selected the new Andritz PrimeLine tissue machine. The new machine for WEPA is the second complete line ordered from Andritz, following the PM8 installed in 1996. It will be erected at WEPAs mill in Kriebethal, Saxony, Germany. The PM9 is equipped with a TissueFlex shoe press and a PrimeDryTM T-rib Yankee dryer for the highest production flexibility. It also features an Andritz 700C EquiDry S high-efficiency hood and the new PrimeReel with linear primary and secondary arm. broke treatment. Renova S.A., the largest tissue manufacturer and converter in Portugal, ordered a major modernization of its PM5 at the Torres Novas Mill to increase production capacity, improve product quality, and reduce gas consumption. Another tissue machine modernization order was placed by Gom-Camps S.A., of La Riba, Spain. The modernization will increase machine speed and consists of an EquiDry F hood with recirculation system and a PrimeControl system - the newly-developed Andritz control system for the complete tissue line. This order is a follow-up to a complete Andritz CrescentFormer tissue machine supplied to Gom-Camps in 1998. German company Gebr. Grnewald Papier based in Kirchhundem-Hofolpe, manufacturer of machine-glazed baking and packing papers, ordered a high-temperature EquiDry F hood, which will replace the steam-heated hood supplied by Andritz in 1976. Grnewalds main goal is to achieve noticeable improvements in production and energy efficiency. This modernization will make the machine one of the highest-performing MGpaper machines in Europe. Andritz will also supply the proven stock preparation system for the new two-line pulp preparation, with approach system, fiber recovery, and It reached its maximum operating speed of 1,800 m/min after only a few weeks, producing marketable
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/ andritz 2002
Tissue machine delivered to Hengan Changde Paper Products in China. In 1998, Hengan purchased its first tissue line from Andritz.
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Pulp and Paper
Research and Development Advancement of Andritz ThroughAir Drying technology Other focused R&D activities concerned improvement of PrimeLine tissue machine components. The development of the new Andritz Centerwind reel for winding up especially bulky tissue papers uniformly and carefully has been finalized. In addition, the Tissue Machines Division has been intensively working on developing new service business products, such as the PrimePickup suction box for CrescentFormers to improve the machine runnability especially at high speeds, and Yankee dryer condition analyses. Research and Development efforts in the Tissue Machines Division were aimed at completing the Andritz Through-Air Drying technology (Andritz Prime TADTM) combining the air technology knowledge of Andritz and the recently purchased ABB Drying.
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Paper Mill Services Division

Profile Paper Mill Services encompasses the service activities for the Mechanical Pulping Systems and Fiber Preparation Systems Divisions. Primary emphasis is on traditional mill service (engineered wear parts, equipment rebuilds, and upgrades) to existing customers. The two major wear parts are refiner plates and wedgewire screen baskets, which are manufactured in Andritz own plants to proprietary designs. Additionally, the Division is offering innovative solutions for increasing the reliability, efficiency, and availability of machines and systems used in the paper industry. Process and mechanical audits of total operating plants are the basis of future upgrades provided by the Division. Headquarters for the Paper Mill Services Division is Muncy, Pennsylvania, USA. The Division is managed through major geographic regions, each with at least one Andritz Service Center equipped to provide fast and responsive services to local customers. Production of refiner plates is performed in Muncy, Pennsylvania in the USA, while production of screen baskets is performed in Brantford, Ontario, Canada. Business Development in 2002 Both the Sales and Order Intake by the Division experienced a decrease in 2002, with different regions affected uniquely. Some growth was achieved in Northern Europe, but declines from the previous year came from the North American region. Refiner plate sales showed a moderate increase over 2001 due to the improved market for newsprint, especially in Northern Europe. Major Orders The string of innovations introduced to the market enabled the Division to secure several orders, among which was a large APMP rebuild for Millar Western in Canada, a complete service order for the refiners at Hallstaviks mill in Holmen, Sweden, and several rebuild orders for disc filters in UPM-Kymmene mills (Kajaani, Voikkaa, and Kymi), Stora Ensos mill at Kotka, Finland and for Australian and US customers. Cartiere di Cadividad, Italy, entrusted the Division with a modernization contract for a headbox screening system. Three single screen lines will be converted into a four-stage screening system. Andritz FiberSentryTM screen baskets and special rotors will be installed to increase screening performance. Sergio Torza Muncy, Pennsylvania, USA Division Manager:
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Pulp and Paper
Pulp and Paper
Research and Development New LemaxXSpiral refiner plate successfully launched In 2002, Andritz-Durametal introduced several new proprietary products such as the LemaxX-Spiral refiner plate for low-consistency refining applications where uniformity of refining action is very important. These plates have spiral bars, which assures that the angle of incidence between the wood fiber and the refining bar stays constant across the refining zone. With the goal of achieving further production process improvements, several new techniques for system optimization were investigated, and a joint pilot project with a large paper company was initiated. This project features use of neural network technology to simulate a complete TMP system on the basis of installed sensors. The customer need not make any additional investment. The objective is to attain complete documentation on the best mode to operate a plant and to adjust the production processes and the control systems accordingly. Any improvements to the process equipment can be evaluated in this manner.
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FiberSentry screen baskets offer superior basket strength with high slot precision, and in combination with Andritz rotors provide unmatched screening performance.
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Pulp and Paper
Push pickling line for carbon steel with silicon separation, supplied to EKO Eisenhttenstadt, Germany. The plant comprises coil transport, mechanical equipment for inlet and outlet, and the complete chemical treatment section.
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Business Area Manager: Peter Gravert Vienna, Austria
Profile The Rolling Mills and Strip Processing Lines Business Area designs and builds complete lines for the production of cold-rolled carbon steel, stainless steel and nonferrous metal strip. These lines consist of equipment for cold-rolling, surface processing, strip finishing, and acid regeneration. The know-how and proprietary equipment is developed in-house and manufactured at the companys own manufacturing shops. The Andritz Group is the only supplier to provide all technologies and processes involved in the manufacture of stainless steel strip (rolling, annealing and pickling) on a comprehensive basis and can supply all the production systems through a single source. This ensures minimized interfaces and takes the interdependencies of the overall process into account. The acquisition of the furnace technology section from SELAS SAS, France, in October 2002, has added continuous hot-dip galvanizing and strip annealing systems to the Andritz portfolio. This enables the Company to offer complete systems for the two common processes for continuous galvanizing of steel strip: electrolytic galvanizing. The Rolling Mills and Strip Processing Lines Business Area operates through the following companies: Andritz AG, Austria; Andritz-Ruthner Inc., USA; Thermtec, Netherlands; Sundwig GmbH, Germany; Andritz Selas SAS, France; Andritz Technologies Pvt. Ltd., India; and Andritz GmbH, Germany. Market development hot-dip and
Varied market development
The development of the international market for flat steel products (steel and stainless steel) was quite varied over 2002. As a result of import restrictions imposed by the USA and a slight rise in demand that came in the wake of the economic recovery, prices were seen to rise in nearly all product categories during the First Half of the year. Especially in the stainless steel sector, producers were able to push prices due to strong demand in China and the USA. Over the Second Half, however, the international steel market weakened again, and, contrary to predictions by economic research institutes, prices began to erode on account of the economic recovery cooling off all over the world. This led to a general reluctance on the part of global steel producers to make capital investments. Increased project activity was noticeable only in China, where Andritz has an excellent market position. In spite of the generally moderate market and overall economic development, steel consumption increased between 4% and 5% in 2002, to 802 million tonnes, mostly due to the dynamic growth in China, where demand soared by nearly 15% compared to the previous year. China now accounts for almost 25% of global steel consumption, and during the coming years, this trend can be expected to continue. For the other countries in Asia, the rise was about 3%. In Europe (+0.4%) and the NAFTA region (+1.4%) the increases were only minor.
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The stainless steel market had seen growth of between 5% and 7% over the past few years, exceeding the growth rates of the general steel market, and continued its aboveaverage development in 2002. Especially in China, the largest buyer market for stainless steel, the demand rose again quite dynamically. Business Development in 2002 The Rolling Mills and Strip Processing Lines Business Area developed very favorably during the year under review. Sales reached a record level (177.4 MEUR), which corresponds to an increase of 6.0% over the previous year (167.4 MEUR). Earnings and profitability also developed exceptionally well. EBITDA rose by 27.6% to 11.1 MEUR (2001: 8.7 MEUR), the EBITDA margin to 6.3% (2001: 5.2%). The Business Area achieved a satisfactory Order Intake for 2002. At an amount of 175.7 MEUR, it was just 10.5% below the record value of the year before, 196.3 MEUR. Production systems delivered to SKS Shanghai Krupp Stainless, China - consisting of a bright annealing, slitting, cutting, and grinding line - were successfully commissioned and passed acceptance tests. The plants supplied to Baosteel, China (ELO galvanization), ThyssenKrupp, Germany (hot-dip galvanizing, slitting and push pickling line), NLMK, Russia (equipment for hotdip galvanizing), Harada, Japan (4/S6 rolling mill), First Copper, Taiwan (20-high rolling mill), CSSSC, also in Taiwan (20-high rolling mill), and EKO Eisenhttenstadt, Germany (push pickling line with silicon separation), were also successfully handed over to the customers.
Satisfactory development of stainless steel market
Sales reach record level, Earnings and profitability improved
Key figures for the Rolling Mills and Strip Processing Lines Business Area according to IAS
MEUR 2002 2001 167.4 196.3 159.2 8.7 5.2% 6.1 3.7% 3.4 562 2000 169.1 130.2 141.2 8.7 5.1% 6.4 3.8% 1.9 522 1999 140.8 141.9 180.2 7.5 5.3% 5.7 4.0% 551
/ andritz 2002
Sales Order Intake Order Backlog 31.12.

EBITDA
177.4 175.7 154.0 11.1 6.3% 8.5 4.8% 1.6 642
EBITDA margin
EBITA
EBITDA margin Capital investments Employees
2.9
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Major Orders Andritz worldwide reputation as an equipment supplier to the stainless steel industry was successfully underlined with orders received from Baoxin in Ningbo, China (20-high rolling mill, levelling line and reconstruction of a skin-pass mill), Tisco, China (slitting line) and North American Stainless, USA (chemical strip treatment section for a stainless steel annealing and pickling line). With the order bookings from NLMK Novolipezk, Russia, and voestalpine, Austria, the Business Area was also able to underline its market position in heavy-duty color coating lines. The Business Areas Order Intake furthermore included bookings from Thyssen, Germany (reconstruction of a strip coating line), Corus, Netherlands (reconstruction of a slitting line), VAW Grevenbroich, Germany (levelling line), and NLMK, Russia (trimming line and reconstruction of a repair line). Rome Strip, USA, ordered a two-high rolling mill, one of the few orders that were placed in the United States in 2002. Hydrochloric acid regeneration plant orders with integrated pickling bath cleaning included: an order from Baosteel, the fourth in a row, Handan, the second in a row, and Maanshan, all of them in China. POSCO, Korea, ordered a mixed-acid regeneration (Pyromars) plant, the second in a row in this case. Research and Development Research and Development programs received a high priority in 2002. The first regeneration system based on advancement of the Pyromars process was placed in operation. EKO Eisenhttenstadt, Germany, successfully started a silicon separation unit, a new development, which is used for high-silicon waste pickling acid. Other R&D projects related to optimization of actuators used to control the roll gap contour in various rolling mills (four-high, six-high, 20-high). Process optimizations were carried out for Andritz levelling lines and for strip coating systems, in which field computer simulations of process run sequences are conducted in order to improve system integration.
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Hot-dip galvanizing plant FBA 8, supplied to ThyssenKrupp Stahl AG in Dortmund, Germany. Production is 450,000 t/year. Strip thickness ranges from 0.3 to 1.5 mm and width from 800 to 1,650 mm.
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Plant for sewage sludge drying, supplied for the Greater Glasgow Solution Project in Scotland. The plant comprises 12 dewatering centrifuges and 6 drying lines.
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Business Area Managers: Olaf Jansen Johannes Kappel Graz, Austria
Profile The products of the Environment and Process Technologies Business Area cover the entire range of technologies for mechanical and thermal treatment of sludge from municipal and industrial sewage treatment plants. Andritz is one of the global leaders in this field and offers comprehensive support from design to manufacture of key components; erection, and start-up of complete sludge treatment plants, including automation and safety engineering. Industrial process technology is another important sector for the Business Area. Andritz supplies filtration systems (belt presses, centrifuges, hyperbaric drum and disc filters, and different types of vacuum filters), especially for coal and mineral suspensions. In addition, Andritz addresses applications in the pigment and filler industry with its heavy-duty centrifuges and belt presses. The Business Areas extensive product portfolio in industrial and municipal solid/liquid separation is supplemented by a large range of screens, sieves, and sand filters, offering Andritz customers technical solutions for nearly all applications. The Business Area operates through its headquarters, Andritz AG, Austria, and the following affiliates: Andritz-Ruthner Inc., USA; Andritz GmbH, Germany; AndritzGuinard S.A.S., France; Andritz Ingeniera S.A., Spain; Andritz Technologies Ltd., China; Andritz Ltd., Great Britain; Andritz Pty Ltd., Australia; Andritz Singapore Pte Ltd., Singapore; and Andritz 3Sys AG, Switzerland. Production facilities for machines and components are located in Graz, Austria; Chteauroux, France; Pittsburg, Texas, USA; and Foshan, China. Market development
Good project activity in the USA, Southern Europe and Asia
In 2002, the market for equipment and systems for municipal sewage and sludge treatment underwent a dynamic development for Andritz Environment and Process Technologies. Especially in the USA, Southern Europe, and Asia, there was brisk project activity. The market for large systems in the United States has recovered. Increasing demand is also noted from Eastern Europe, not only among the EU membership candidates, but also from Russia and other CIS countries. In Western Europe, the more stringent legal requirements for depositing sewage sludge have caused plant operators to make capital investments in treatment systems for sewage sludge and thus, have brought about a heightened demand for products from this Business. The project activity in industrial process engineering was seen to increase slightly, particularly in the mining industry. The demand for equipment in the paper industry remained subdued.
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Business Development in 2002 Environment and Process Technologies Sales decreased in comparison to the previous year by 9.2% to 122.8 MEUR (2001: 135.3 MEUR). This decline is mainly attributable to the many projects that were only in their starting phase in the business year and will not have an effect on Sales until later. Earnings development was not satisfactory. Due to the slight decline in Sales and to cost overruns on some large projects, EBITDA declined markedly to 2.8 MEUR (2001: 9.0 MEUR). Profitability expressed as EBITDA margin was 2.3%, compared to 6.7% in 2001. With regard to the cost overruns, it should be noted that the projects handled in 2002 were successfully accepted by the customers. The Business Area has made sufficient reserves for claims which are offset by claims on the part of Andritz that the general contractors for the projects may make, and the matter is expected to be finally concluded in the course of 2003. Order Intake by the Business Area reached 147.7 MEUR in 2002, a record level (2001: 140.6 MEUR). Order Intake reaches record level
Key figures for the Environment and Process Technologies Business Area according to IAS MEUR Sales Order Intake Order Backlog 31.12. EBITDA EBITDA margin EBITA EBITA margin Capital investments Employees 2002 122.8 147.7 122.6 2.8 2.3% 1.0 0.8% 1.9 439 2001 135.3 140.6 99.7 9.0 6.7% 7.2 5.3% 1.9 435 2000 133.2 118.6 96.3 5.9 4.4% 4.0 3.0% 3.1 421 1999 97.3 123.6 110.8 1.5 1.5% -0.5 n.sp. 2.0 396
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Major Orders Success in the USA In the year 2002 the Business Area was extremely successful with its 100% USaffiliate Andritz-Ruthner Inc. The City of Honolulu, Hawaii, USA, via Synagro Technologies Inc., ordered a turnkey sludge treatment system from Andritz, which comes as part of the implementation of its new waste management concept. The system will comprise two AndritzGuinard centrifuges and a DDS drum drying line. By drying the sewage sludge, Honolulu wants to save valuable landfill space and produce a high-value fertilizer, which Synagro will market. Andritz will also supply two D7LL centrifuges and a DDS drum drying system for Sacramento Regional County Sanitation District, California, USA. Andritz to supply dewatering and drying lines to Paris The Business Area has been successful in the French market as well. The only large order awarded in 2002 for several dewatering and drying lines was awarded to Andritz: Syndicat Interdpartemental pour lAssainissement de lAgglomration Parisienne (SIAPP), Valenton, the water company for the Greater Paris Area, will receive three Andritz DDS 70 drum drying lines, which will evaporate 7,000 liters of water per hour, and five large D7LL centrifuges. The major factors in selecting Andritz were the impressive installed base of large sludge drying plants as well as the strong local presence of Andritz in France. Andritz was furthermore able to book an important order from Slovenia, including a PowerDrain system for sewage sludge thickening, two Andritz-Guinard centrifuges for sludge dewatering and a DDS drum drying system for the new waste water treatment plant in Ljubljana. Successful start of Andritz 3Sys Andritz 3Sys AG, a newly established affiliate in Switzerland, had a particularly successful start, building and commissioning an industrial size pilot unit from the new belt dryer (BDS) series. In drying applications for industrial sludges, a fiber sludge drying installation was successfully taken into operation and accepted after a delivery period of only 10 months at Papeterie de Voiron, Usine de Voreppe, France. For the Blue Plains Wastewater Treatment Plant in the US capital, Washington, DC, Andritz will supply 13 Aqua-Screens for the fine screening of raw sewage. Three large D7LL centrifuges were sold to King County South Wastewater Treatment Plant, Renton, Washington. Other major bookings came from Santiago de Chile (five D7LL machines), Rome and Florence with a total of nine units, and Lyons (four centrifuges). The orders for the new, large-decanter series came as a consequence of successful side-by-side trials on site.
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Andritz Technologies Ltd., a newly established affiliate in Foshan, China, received orders for several belt presses and thickeners. Three D6L centrifuges were ordered for the new large sewage treatment plant by the city of Guangshou, China. ZOF Kuzbasskaja, Russia, ordered a Hyperbaric Filter with 120m2 filter area for the Kuzbass, region in Siberia. It will work on finest-grain coal concentrate. A decisive reason for the order was that the expensive thermal drying system can be shut down because of the filter, and in addition, old lagoon sludges can be treated. This increases the amount of recycled, sellable coal and reduces the filtrate load. Research and Development The performance range of the standard drying equipment was extended both upwards (up to 20 t/h evaporation rate for fluidized bed dryers) and downwards (starting with 500 kg/h for belt dryers). The newly developed belt dryer can operate with low-temperature waste energy sources, such as hot water, low-pressure steam, or off-gas. Given the coming into force of the ATEX guideline for safety standards of non-electric units in mid-2003, the safety engineering aspects of thermal plants were revised in 2002, and the new requirements were met. New belt dryer
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Two Sprout-Matador fish feed extrusion lines at Dana Feed A/S, Denmark, a member of the Provimi group of companies.
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Feed Technology
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Feed Technology
Business Area Managers: Finn N. Jensen (Sprout-Matador) David Billingsley (UMT)
Profile The Feed Technology Business Area is one of the world market leaders in developing and building systems, machines, and processes for the industrial production of animal feed (mixed feed, pet food, and fish feed). This comprises complete feed mill lines as well as unit equipment for grinding and mixing of raw material for feed production, expanding, pressing, extruding, cooling, vacuum coating, and drying. The Business Area also supplies equipment and plants for industrial production of biofuel pellets, as well as pelleting systems for recycling industries. Due to extensive innovations and continuous investments in R&D, the Business Area offers customized system solutions, including automation, for all aspects of feed manufacturing, as well as wood and waste pellet production. The aftermarket business spare and wear parts and service forms an important portion of the activities of the Business Area. In the field of pellet mill dies and rolls, the Business Area is the clear global market leader. The Feed Technology Business Area operates primarily through Sprout-Matador, Denmark; Andritz Inc., USA; and UMT, Netherlands. It has production facilities in Denmark, the USA, and the Netherlands. In total, the Business Area is established with 14 proprietary sales offices and a number of service offices. In addition, it has a network of distributors and agents in many other countries of the world. Market Development
Moderate market growth
In conjunction with the slight improvement in global economy, the global feed market underwent moderate growth in 2002. In the areas of conventional (mixed) feed and special feed (pet, fish and aquatic feed) there was satisfactory project activity overall, although with vast regional variations. Several projects were awarded in Northern and Eastern Europe, but Central Europe and South America were relatively weak in development. The conventional feed industry invested in efficiency and flexibility of system technology. Rarely were there investments to increase the capacity of existing equipment. There continued to be an overcapacity situation in the production of salmon feed, especially during the Second Half of the year. As a consequence, many projects were postponed into 2003. However, there is a general trend for manufacturing lines featuring especially large capacities.
Growing demand for biofuel pelleting plants

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In the area of biofuel production, the market activity has been high for wood pelleting equipment, with rising demand through the year in Northern and Eastern Europe and North America.
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Business Development in 2002 The Sales and Earnings development of the Feed Technology Business Area was satisfactory. Despite the difficult market conditions, especially in North and South America, the Business Area succeeded in increasing its Sales slightly versus the previous year (108.4 MEUR, +1.3% compared to 107.0 MEUR in 2001). Earnings progressed at an above-average rate. Due to restructuring measures that had been implemented at production sites in North America and England, as well as the successful integration of UMT, Earnings and profitability (EBITDA margin) clearly improved compared to the previous year. EBITDA increased 29.8% to 6.1 MEUR (2001: 4.7 MEUR), profitability expressed as EBITDA margin reached 5.6% (4.4%). The most marked Earnings increase was achieved by the UMT Group purchased in 2000. Comprehensive restructuring will continue into 2003, with the goal of optimizing production capacity. This should lead to increased competitiveness throughout 2003 and beyond. During the year under review, several process lines for new pet food and aquatic feed plants were handed over and successfully commissioned, of which the following is worth mentioning: a complete extrusion line comprising the Multimill 1400 fine grinder, the Ex1250 extruder including the ECS expansion control system, the CZD Multizone dryer, and the VAC vacuum coater, which was successfully placed in operation in Provimi's new fish feed factory in Alitec, Chile. Earnings progressed favorably due to successful restructuring
Key figures for the Feed Technology Business Area according to IAS MEUR Sales Order Intake Order Backlog 31.12. EBITDA EBITDA margin EBITA EBITA margin Capital investments Employees 2002 108.4 104.7 23.5 6.1 5.6% 4.2 3.9% 5.4 609 2001 107.0 112.6 27.6 4.7 4.4% 0.9 0.9% 6.7 676 2000 67.8 70.7 14.3 4.6 6.8% 2.4 3.5% 0.8 412 1999 59.6 53.5 11.5 0.6 1.0% -1.4 n.sp. 1.7 408
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Feed Technology
Feed Technology
Major Orders The most significant orders for the Business Area were four large feed mill rebuild and expansion projects in the UK, Scandinavia, and Eastern Europe. In addition Andritz will deliver two full process lines for highest capacities including all key equipment, the liquid addition units, and controls for a new feed plant project in Denmark. From the aquatic feed sector, a large order for a Norwegian salmon feed project was booked. Orders for several medium-capacity extrusion lines were received from Asia. Orders for wood pelleting plants Several large orders were won from the wood pelleting sector in North America and Northern and Eastern Europe. A large order for six wood pelleting lines received from Skellefte Kraft in Sweden helped to consolidate the very strong position of the Andritz Feed Technology Business Area in this market segment. Research and Development The research and development activities of the Business Area in 2002 were focused on completion of the intensive new product development programs which had been started over the past three years. All products and processes a new generation of pellet mills, hammermills, and extrusion line equipment, including advanced control systems have successfully been placed in operation in several installations during the year. Smaller R&D projects targeting increased process flexibility and process data evaluation and communication were initiated for completion during the First Half of 2003. The extrusion test center, which opened last year, has been used by several large international pet food and aquatic feed producers.
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Sprout-Matador pellet mills offer superior pelleting performance and quality as well as optimized machine control.
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Feed Technology
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Runner of a vertical Kaplan turbine during workshop assembly. The runner was delivered to Edling power station of sterreichische Donaukraftwerke; its diameter is 5.6 meters and the maximum output 44,480 kW.
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Business Area Manager: Manfred Wrgtter Graz, Austria
Profile Other Operations encompass Andritz Group activities such as the development, planning, and manufacture of water turbines, large-scale pumps for selected applications, pumps for the primary and secondary loops in nuclear power stations, centrifugal pumps for the pulp and paper industry, as well as space technology components. The main markets are Europe, China and certain countries in Southeast Asia. Market Development The difficult market conditions for the Business Areas main product, water turbines, remained unchanged in 2002. There were only a few modernization projects, and some single larger repair orders and service projects. In new investments, the so-called minipower sector, involving projects for a maximum capacity of 10 megawatts, saw a minor revival, but the price pressure in this sector remained quite considerable. Chinese customers were quite prepared to make investments, so project activity in this area was fairly brisk, with some turbine projects looking quite promising. Geographically varied development was characteristic of the stock pumps business for the pulp and paper industry. The European markets moderate progress, with hardly any new project awards, was contrasted by high project activity in China. Business Development in 2002
Favorable business development
Other Operations underwent a favorable development in 2002. Sales increased by 12.7% to 29.3 MEUR (2001: 26.0 MEUR). EBITDA was more than trippled (7.4 MEUR compared to 2.3 MEUR for 2001). Along with this development, profitability expressed as EBITDA margin rose to 25.3% (2001: 8.9%).
Key figures for Other Operations according to IAS MEUR Sales Order Intake Order Backlog 31.12. EBITDA EBITDA margin EBITA EBITA margin
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2002 29.3 28.3 21.5 7.4 25.3% 5.8 19.8% 2.6 277
2001 26.0 28.6 22.6 2.3 8.9% -0.1 n.sp. 0.9 246
2000 22.7 26.8 20.3 5.3 23.3% 3.9 17.2% 1.3 230
1999 29.5 21.2 16.2 3.6 12.2% 0.8 2.7% 1.5 240
Capital investments Employees
68
Order Intake at 28.3 MEUR was about equal to the good level achieved in 2001 (28.6 MEUR). Much of the Order Intake was due to the service business which primarily consists of rebuilds and modernization jobs for water turbines and turbine controls as well as spare parts supplies for nuclear power stations and stock pumps for the pulp and paper industry. At the end of March 2002, the first turbine set (vertical Kaplan turbines) for Groraming hydropower station on the river Enns, Austria, was placed in operation successfully and as scheduled. The axial-flow pumps for Hong Kong drinking water supply passed the test runs at Andritz contract partner in Shenyang, China; they are currently being installed. Stock pumps for the pulp and paper industry were again a very successful Andritz activity in 2002. The 60:40 Joint Venture, Andritz-Kenflo in Foshan, China, succeeded in increasing the number of stock pumps sold significantly compared to 2001 and thus, in further extending its leading position in China. Major Orders Orders for key components for turbine equipment in different installations (Shapotou, Jin Yin Tai and Meng Li) were received from various customers in China. Austrian Hydro Power placed an order for the construction of a butterfly valve for the penstock of Maiskogel power station. Six further DAAR ring units were supplied for Ariane 5 launcher rockets. Research and Development Together with ASTR (Anstalt fr Strmungsmaschinen), research activities were resumed and intensified in the field of hydraulics development. By developing peak hydraulics with efficiencies higher than in competitive products, it was possible to reap a large number of orders for the newly developed headbox pump shortly after launching. Further intensive work on other product innovations is currently under way. Product improvements in the area of the hydraulics of Kaplan bulb turbines were achieved thanks to intensified research and development work, and their success was corroborated by several contracts received from various customers in China. Major further developments focused on shaft seals, in the effort to strengthen the services business for nuclear power stations. Focus on hydraulics development Andritz-Kenflo extends its lead in Chinese market
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Andritz Shares
Share Price Development Andritz Shares outperform ATX The Andritz Share price developed satisfactorily during 2002, despite the general downturn on international financial markets. The price of Andritz shares increased 7.9%, considerably outperforming the ATX of the Vienna Stock Exchange, which gained 0.85% over the same period. The highest closing price in 2002 was 28.00 Euros (April 24 and 25, 2002), the lowest was 19.40 Euros (February 4 and 5, 2002). Trading Volume The average daily trading volume during the business year 2002 was 13,255 Andritz shares or 308,806 Euros. Andritz Shares rank 21st place in the 2002 turnover statistics of the most actively traded stocks on the Vienna Stock Exchange. The market capitalization of Andritz based on the closing price at year end (December 30, 2002: 22.99 EUR) was 298.9 MEUR. Inclusion in the Prime Market and ATX Since January 1, 2002, Andritz Shares have been quoted in the top segment of the Vienna Stock Exchange, the Prime Market, and have been part of the ATX since January 21, 2002. Share Buy-Back Program The 95th General Meeting of Shareholders of Andritz AG held on April 17, 2002, authorized Andritz AGs Managing Board to buy back shares to a maximum value of 10% of the share capital over a period of 18 months.
Andritz Ownership Structure

(December 31, 2002)
Ownership Structure by Region

(Estimate by Andritz)
UIAG, Univest ~13%
GE Capital ~6% Deutsche Beteiligungs AG ~6% Others ~10% Italy ~3% UK ~8% Others ~3% Austria ~50% Germany ~8%
Free float ~16%
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Certus ~25%
Carlyle ~31%
Switzerland ~16%
France ~5%
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30
Share price development of Andritz since IPO
28
26
24
22
20
18 06/01 07/01 08/01 09/01 10/01 11/01 12/01 01/02 02/02 03/02 04/02 05/02 06/02 07/02 08/02 09/02 10/02 11/02 12/02
Andritz AG Managing Board decided to make use of this authorization. Up to 5% of the share capital of Andritz AG is open for buy-back between May 16, 2002 and June 27, 2003, corresponding to a maximum of 650,000 shares within a price range of 10 and 35 Euros per share. The share buy-back program is to improve the supply and demand for Andritz Shares on the Vienna Stock Exchange and the potential use for the current stock option program for Andritz Group management. The transactions made under the share buy-back program are published on the Andritz website (www.andritz.com). Stock Exchange Award 2002 and PIROL 2002 In October 2002 Andritz received the Stock Exchange Award for 2002. This award is conferred annually by the Austrian Association for Financial Analysis and Asset Management (VFA) and is based on an assessment of the Investor Relations activities of publicly listed companies. The assessment criteria include the depth of information and transparency of Annual and Quarterly Reports, the accuracy of the Earnings forecasts, competence and availability of the Investor Relations contact, and corporate strategy. Andritz was also the winner of the PIROL Award (Prize for Investor Relations Online). The websites of publicly listed companies in Austria are assessed in terms of content, technical viewpoint, and service offer from the perspective of investors. Both awards go far toward affirming Andritz open and transparent information policy vis--vis its shareholders and the financial community.
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Andritz receives Stock Exchange Award
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Andritz Shares
Andritz Shares
Investor Relations Andritz Investor Relations activities were further intensified in 2002. On the occasion of the publication of the results for year 2001 and the quarterly reports for 2002, roadshows were held in Austria and in other countries, and one-on-one meetings with large institutional investors were organized. Analyst presentations were made in Helsinki, Finland, and London, UK, to increase future research coverage, with many representatives of renowned investment banks in attendance. These presentations met with good response. A public presentation was organized in Linz, Austria, together with a large Austrian bank, which was attended by about 100 retail investors. Shareholders Club For retail investors of Andritz and other interested shareholders, the Andritz Shareholders Club was founded. Membership is free of charge and without any obligation. Members are sent all new press releases and information on different events. If you wish to join the Shareholders Club, please contact Andritz Investor Relations by phone (+43 316 6902 2722), e-mail (welcome@andritz.com) or via our website (www.andritz.com).
Key Figures for Andritz Shares
Security Identification Number ISIN-Code First Listing Day Types of Shares Number of Shares Free Float Stock Exchange Ticker-Symbols Stock Exchange Indices ATX Weighting Free Float Factor
AT 000 0730007 073000 June 25, 2001 no-par value shares, bearer shares 13 million approx. 16% Vienna (Prime Market) Reuters: ANDR.VI Bloomberg: ANDR, AV ATX; ATXPrime; WBI approx. 0.65% 0.25
Contact
Andritz Investor Relations Michael Buchbauer Head of Investor Relations Stattegger Strasse 18, A-8045 Graz Phone: +43 316 6902 2979, Fax: +43 316 6902 465 Internet: www.andritz.com E-Mail: michael.buchbauer@andritz.com
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The Austrian Working Group for Corporate Governance, which consists of representatives of the Austrian Institute of Certified Public Accountants, of the Austrian Association for Financial Analysis and Asset Management (VFA sterreichische Vereinigung fr Finanzanalyse und Anlageberatung), of listed companies and institutional investors on the Vienna Stock Exchange, presented the Austrian Code of Corporate Governance on 1st October 2002. This is a kind of code for corporations which covers the standards of good corporate management common in international business practice. It is not in the form of a statute law, but in the form of a set of rules to which companies may submit at their own discretion. Beside important legal requirements, the Code contains regulations that are commonly used on an international level; noncompliance with these regulations must be explained and justified. The Code also contains rules exceeding these requirements, and which should be used voluntarily. The Austrian Code of Corporate Governance encompasses the following categories of rules: 1. Legal Requirement (L): this rule refers to mandatory legal requirements. 2. Comply or Explain (C): this rule is to be followed; any deviation must be explained and the reasons stated in order to be in compliance with the Code. 3. Recommendation (R): the nature of this rule is a recommendation; non-compliance with this rule requires neither disclosure nor explanation. This Code primarily applies to Austrian stock listed companies. It is based on the provisions of Austrian corporation law, securities law and capital markets law as well as on the principles set out in the OECD Principles of Corporate Governance. Companies voluntarily undertake to adhere to the principles set out in the Austrian Code of Corporate Governance. Andritz AG cooperated in the drafting of the Corporate Governance Code by making suggestions and remarks during the conception phase and it considers the finished Code as an important contribution toward making the Vienna Stock Exchange even more attractive for financial investors. Andritz endorses compliance with the Austrian Corporate Governance Code. It regards the Code as an essential means to implement responsible management and control of Andritz AG which is directed toward creating added value. Implementation of and compliance with the Code will promote and intensify the confidence of shareholders and investors, customers, employees and suppliers, representatives of the media and other stakeholders in the company. The Managing Board and the Supervisory Board as well as the entire staff of Andritz are committed to meeting the Code. The complete Corporate Governance Code can be accessed and downloaded from the Andritz website under www.andritz.com. The website also contains the statement on the meeting of the Code with explanations to the deviations.
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Corporate Governance
Corporate Governance
Corporate Risks
The Andritz Group acts globally and in different Business Areas and is therefore subject to certain corporate and industry-specific risks. To determine these risks at an early stage, Andritz has since long established a Group-wide control and steering management committee whose main task is to identify nascent risks early on and to take counter-measures. This system has proved very successful to date, and it will continue to be an essential factor of pro-active company management within the Andritz Group. The risks described in the following and the effects that these may have on the business development of the Andritz Group have been taken into account in the Andritz Groups medium-to-long-term corporate planning, using various scenarios. At present, these do not give rise to any concerns. The risks that the Andritz Group incurs include but are not limited to the following: - Risks related to the industry Cyclicality The Andritz Group has activities in industries whose nature is cyclical. This is especially true of the Pulp and Paper and the Rolling Mills and Strip Processing Lines Business Areas, and, to some extent also of the Feed Technology Business Area. This goes back to the fact that these industries are directly dependent on the economic development and the not infrequent fluctuations in demand for their products that come with it. The price level for these products is in part directly dependent on the prevailing relationship between supply and demand. Possible price fluctuations are therefore apt to have a direct influence on capital investment decisions of Andritz Group customers, with subsequent influences on Sales and then also on covering the Groups fixed cost. With the targeted expansion of the stable services business and the continued, pre-emptive capacity management, the Andritz Group has been able to reduce the effects of cyclicality on the business development, a strategy that it will maintain in the future. It is still not impossible that one or several of these risks become imminent and that this causes substantial and/or sustained impairment of the financial success of the company. Customer concentration There is a trend toward company mergers in the buyer industries of the Andritz Group, especially in the pulp and paper and the steel industry. This might result in a reduction of the number of customers in the future and in the Group having to face corporations with greater purchasing power. Customer dependence might increase, which could have direct consequences on the Groups business activities.
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- Risks related to the Groups business Currencies International Andritz Group has a number of affiliates outside the Euro region throughout the world. The currencies in these countries may be subject to substantial fluctuations in exchange rates. All appreciable exchange rate risks in connection with the orders received from outside the Euro region are hedged by futures. Developments of exchange rates may still have negative effects on the Sales, whose value is converted into Euros and on the Earnings results of the Group. Also, the Shareholders Equity of the Andritz Group is susceptible of being affected by changes in the exchange rate. Competition The Andritz Group works in a very competitive market for each of the Business Areas. With persistent and intensive research and development work, the Group has succeeded in updating the technologies offered to customers to the latest state-of-the -art. There is, however, no way of guaranteeing that the Group can maintain and defend this current leadership also in the future. The Andritz Group invests approx. 3% of its total Sales in Research and Development and is confident that it will continue to seek to offer its clients the latest in top technologies also in the future. Integration of newly acquired companies It is a strategic goal of the Andritz Group to become a comprehensive supplier of equipment in all its Business Areas through organic growth and complementary acquisitions. In the course of implementing this strategy, a number of companies with world-wide operations were purchased since 1990, and successfully integrated in the opinion of the company. Although Andritz can show a good track record in integrating newly acquired companies, it cannot be excluded for future acquisitions that the planned objectives and synergies cannot be reached wholly or partly and that this affects the economic development of the Group. Similarly, recently acquired companies such as Ahlstrom Machinery are still in the process of being integrated and may experience unexpected delays or setbacks. - Risks related to major orders Payment risks The Groups business involves handling of projects with a large contract volume (major projects) in each of the Business Areas. If customers fail to meet their payment obligations for these major projects, it is not unlikely that this will have negative effects on the net worth and liquidity situation of the Group. The Andritz Group has tried to limit these risks by securing payment guarantees from banks for the majority of projects. Even in the event of an export credit insurance being concluded, no more than 85% of the purchase price can be recovered.
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Corporate Risks
Corporate Risks
Liabilities and performance of projects In conjunction with the performance of plants supplied by Andritz, the Group is in many cases under an obligation to grant performance warranties and to guarantee certain deadlines. If the performances stated are not achieved or the deadlines are exceeded, various gradations of liquidated damages or penalties are applied and/or modifications have to be made on the deliveries at the Groups expenses. If the warranted performances are by far not reached, the customer has the right to rescind the contract and return the contractual object to Andritz. Such a case is susceptible of adversely affecting the Groups financial development. As a basic principle, the Group declines to accept liability for consequential damage, and insists on limitations of liability if enforceable. Should it turn out to be impossible to agree on limitations of liability, such a case of compensation payment might have negative effects on the companys business activity. Cost overruns Since certain parts of the manufacture of Groups supplies are outsourced, the Group may be compelled to quote to the customer without knowing exactly how much the purchased parts will cost. Certainly there are empiric data and quotations from potential suppliers, but variations of the exchange rate and other risks may adversely affect the Groups Earnings. On EPC (engineered, procured and constructed) contracts, which might involve buildings and project infrastrucure in some cases, there may also be cost overruns or non-performance because typically, these contracts are handled with a consortium partner or subcontractor. If such an EPC supplier fails to deliver, or if the contractually agreed performances are not fulfilled by him, then this may impair Earnings of the Group substantially. Intellectual property infringement In connection with the supply of production systems the Group typically has to indemnify customers against patent infringements by installing and, in certain cases, using the Groups equipment for producing their products. Although the Group endeavours to investigate thoroughly existing patents and other IP rights it may overlook some. This could lead to negative effects on the Groups profitability and financial standing. - Risks related to the capital markets Development of international financial markets, recommendations by research analysts, small free float Possible price variations and high volatility on the major stock markets might adversely affect the price of Andritz Shares. As a publicly listed company, Andritz is regularly covered by financial analysts. Analysts selling or buying recommendations may lead to considerable price fluctuations for Andritz Shares. In addition the relatively small free float of the Andritz Shares and the resulting low liquidity on the Stock Exchange may
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also lead to considerable price fluctuations.
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Automation equipment is an integral part of products in all Business Areas of the Andritz Group. At 16 Andritz sites worldwide, over 200 engineers plan the automation equipment for Andritz machines and plants. This decentralized structure guarantees the necessary customer proximity. Andritz Automation's core competences include start-up, plant optimization, and aftersales service for plants planned and manufactured by Andritz. Cooperation between all business units within Andritz Automation ensures that the process know-how available throughout the Group can be applied to obtain customer-oriented solutions. Innovations are implemented in a joint, coordinated research and development program for automation in order to keep up with the ever shorter intervals between introducing new products. Here, Andritz makes use of the knowledge in a range of different special disciplines. In 2002, automation solutions were developed in all Business Areas in order to improve the processes and plants both technically and economically. Activities in Research and Development PrimeControl A modular automation concept for services specific to Andritz and dealing with control, adjustment, and visual display systems for tissue machines has made it possible to use tested software modules in well-established plant sub-assemblies. The customer benefits from a much shorter commissioning period and the resulting lower costs. Dynamic Process Simulation Over the past few years, Andritz Automation has expanded its activities considerably in the dynamic process simulation sector. Acquisition of IDEAS Simulation Inc., previously AMEC Technologies Inc., in January 2003 has substantially strengthened know-how in the dynamic process simulation sector for the pulp and paper industry. IDEAS Simulation Inc. is one of the market leaders world-wide in this sector and has successfully established the IDEAS software as the leading platform for dynamic process simulation in the pulp and paper industry. Dynamic process simulation is mainly used for simulating production processes before production systems actually go online. The goal is to minimize the time required for start-up by identifying and containing risks and possible bottlenecks that may occur in the actual production process. The software tool, in collaboration with the customer and during the planning and design phases, allows simulation of production phases and variations of the plant to be supplied. Based on the results, both the production process and the plant can be optimized before it is actually built. In addition, it is an ideal tool for hands-on training of future operating personnel as well as for the Andritz personnel who will implement the plant. Aquisition of
IDEAS Simulation Inc. strengthens know-how in dynamic process simulation
Andritz Automation
Andritz Automation
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Andritz Automation
Service, OPETM Online (Overall Production Efficiency) Over the past 15 years, remote diagnosis and teleservice have allowed technologists and software specialists in the Andritz Group to provide assistance to customers' maintenance teams. The latest information technologies provide the means to assist plant operators with operations, service, and maintenance matters, with complete service concepts. With vibration analyses preventive maintenance becomes reality. By applying well-directed data acquisition and analysis, weak points can be detected at an early stage and optimization potential identified. If problems arise, it is possible to consult the competent specialists at any time, regardless of where they may be. Advanced Control Many Andritz Group technologies are controlled very efficiently by means of so-called "Advanced Control Strategies". These proprietary processes are used to optimize pass schedules for cold-rolling mills, or to increase the efficiency of pickling lines. Modelassisted, advanced control algorithms are also applied in digester control and in debarking processes. In 2002, close cooperation with renowned specialists in advanced control strategies created a basis for the use of generic processes in process optimization. Andritz Automation in 2002 In 2002, Andritz Automation again was able to bring a number of projects to a successful conclusion. The automation solutions and products developed make a substantial contribution to increased customer benefit. In constructing and commissioning the Aracruz Pulp Mill in Brazil, the modular plant software and the consistent, comprehensive "soft" commissioning of the plant allowed completion of actual commissioning in just 42 hours from chip production to packing of the pulp bales. The cross-cutter and bale packing lines were simulated in a plant and process simulation unit, then optimized and the operating personnel trained on the dynamic simulation model. The well-established automation products LogScanTM and WoodScanTM were installed at complete woodyard systems in Austria, Brazil, Finland, Canada, and Germany. For the stainless steel annealing and pickling line supplied to ThyssenKrupp Nirosta of Krefeld, Germany, an integrated mathematical model was installed for the annealing furnace and pickling line in order to boost plant efficiency and product quality. Andritz competence in automation systems for environmental engineering plants was proven in the UK. A plant treating municipal sludge was equipped with 7 PLC systems for 3000 I/O. This plant is operated with a graphic visual display system and runs in (hot) standby mode.
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As of December 31, 2002, the Andritz Group had 4,601 employees, a slight increase of 1.2% over the same date in 2001 (December 31, 2001: 4,545). This is essentially due to the acquisitions of ABB Drying and SELAS SAS. Excluding the acquisitions the number of Andritz Group employees amounts to 4,403 people. The global presence of the Andritz Group is also reflected in the distribution of its personnel, of which approximately one quarter each work in Austria, Northern Europe, and North America, the remainder is split over the countries in continental Europe (Germany and France) and Asia. Major goals in 2002 Implementation of the new organizational structure for the Pulp and Paper Business Area had its counterpart in Human Resources. Newly appointed managers were carefully introduced to their new management assignments by experienced management staff and have been able to assume complete responsibility for the various business units. Additional manpower requirements for management positions, for instance in newly acquired companies, were filled with highly qualified recruits in due time. In the course of the continuous personnel management activities, the Andritz Group took part in a number of career information fairs and has strengthened cooperation with universities and colleges. This is to ensure that the requirement for qualified young personnel can be met quickly in the future. Many employees have taken part in training modules offered internally. Future additional training modules will be planned after making an intensive analysis on the job requirements of Andritz Group employees. Courses and programs offered by external institutes were also attended by many colleagues.
Germany 8%
France 5% Netherlands 4%
Regional distribution of Andritz Group employees
Austria 25% United Kingdom 2% Others 8%
North America 23%
Northern Europe 25%
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Employees
Employees
Employees
Other elements of Human Resources work were also further deepened. For instance, salary models, based on success-related criteria, were introduced on a major scale. Activities begun in the past for employee coaching by experienced managers inside the company were continued. External specialists were also hired in order to coach our employees singly or in groups. The Andritz Group appears as an attractive employer, which is expressed by the application of a sufficient number of qualified candidates for vacancies and the low labor turnover. Global Human Resources Management Efforts to "globalize" the Groups Human Resources management were clearly pushed during the year under review. In the light of global coordination of central functions, harmonization of systems and processes applied in Human Resources work in the various Andritz Group affiliates has been an objective. Central goals of global personnel management are to standardize guidelines and procedures in the areas of recruiting, training, personnel development, and performance assessment. In this manner, Andritz employees around the globe will receive similar and comparable training. This will assist in filling position vacancies with internal candidates. With the greatest possible continuity, committed and highly qualified employees will be offered attractive career opportunities throughout the Group.
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eBusiness
In November 2000, Andritz launched its Group-wide Andritz eBusiness Connectivity Model. This project is designed to make use of the possibilities and opportunities available from Internet technologies in a profitable way for all those concerned. It is one of the Andritz Group's foremost strategic goals to intensify its use of the new media by applying Internet-based customer and system solutions more extensively. The primary approach of Andritz eBusiness initiatives is to offer customers, suppliers, and partners new and more comprehensive services. At the same time, the Andritz business processes along the value-added chain will become more efficient and effective with Internet-based solutions. This allows a prompt and personalized reaction to individual needs, as well as generating benefits for all stakeholders of the Andritz Group. In 2002, the activities launched under the Andritz eBusiness project were continued. Here, the emphasis lay on implementing customer-oriented web applications, as well as on boosting the efficiency of internal business processes. A total of eight new eBusiness solutions were completed in the year under review, focusing largely on eService, eProcurement, and on Intranet-based applications to provide better interaction between company sites. The Pulp and Paper Service Club - the Internet portal for Andritz' customers in the Pulp and Paper Business Area was further extended in 2002. There are now some 800 users registered from over 240 customers. As from the start of 2003, Andritz also has an online ordering service for spare parts. Andritz has generated further cost-saving potentials in the eProcurement sector by automating purchase order transactions and utilizing online auction tools. procurement. The eProcurement activities planned for 2003 will focus particularly on strategic
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eBusiness
Business Process Management

Through internal growth, but also by acquiring companies with complementary products, the Andritz Group has seen major growth over the past years. The newly added companies have in some cases implemented different organizational process systems and IT solutions which make the targeted Group-wide integration of Andritz Business Areas and the utilization of synergies rather difficult. New ways of thinking and approaches call for a critical review of the processes used today. Development of adequate structures to implement these new approaches requires professional business process management. New definition of responsibilities is an objective, as is adaptation of processes to the new technologies used and to the new entrepreneurial framework. Finally, the interfaces between the different companies in the Group must be checked. Business Process Management will, therefore, be one of the major focuses for the Andritz Group in 2003. During the Fourth Quarter of the reporting year a new central function was established which will follow up on the integration of the Group in terms of Business Process organization. The goal is to standardize important processes throughout the entire Group and inside the Business Areas as far as useful. Andritz Business Process Management has the following focuses: Collaboration Andritz defines Collaboration as a concerted action to create benefit (both within the Group and also with external partners). The essence of collaboration is coordinated cooperation between business units to perform a defined service by sharing knowledge and dividing tasks. The aim is to achieve a higher benefit overall than would be possible with separate individual activities. Andritz has placed considerable emphasis on the process of order handling to create inter-Group collaboration and synergies. Customer Relationship Management (CRM) It is a defined goal of the Andritz Group to be a preferred technical supplier with regard to all its Business Areas, and to build a lasting relationship of trust and satisfaction with each customer over time. Efficient processes which are tuned both to the company strategy, to the Andritz Group staff, and to customer requirements are needed for this. Andritz has implemented a Customer Relationship Management (CRM) System. The first step was for all the Divisions of the Pulp and Paper Business Area, working with the motto, "Speaking with one voice to the customer." The CRM System enables improved internal exchange of information about a customer's specific needs and requirements. The target is to be a competent partner of our customers through joint and concerted actions. This will strengthen Andritz' position as a supplier of complete systems and services for the pulp and paper industry.
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Apart from well-trained employees who are prepared to take responsibility, the complexity of Andritz systems requires manufacturing standards of the highest level and systematic organization of the sequences that are necessary for planning, manufacture, and installation. Thorough knowledge of the technologies that are essential for customers is a prerequisite for developing machines, plants, and processes with which warranty values can be met and surpassed. Key components and equipment whose design and manufacture needs special knowledge are produced at one of the production sites run by the Andritz Group. Other components are made by sub-suppliers that Andritz selects and whose quality it monitors. These suppliers have long-term experience in cooperating with Andritz and are a key factor in the cost leadership of the Andritz Group. Focus 2002 During the year under review, aspects of integration in the Andritz Group played a major role in Quality Management. Process analysis that covered several sites permitted the identification and utlization of "Best Practices" in all sections. Successful implementation of the new European standards for pressurized vessels has led to a further increase in the quality and operating reliability of major plant components. Greater emphasis on endangerment analyses has made it possible to reduce risks to a minimum. In procurement / outsourcing, higher qualification of suppliers was targeted and realized in the aim to streamline process sequences and to cut lead times. With suitable quality assurance contracts, supplier/buyer relationship was improved with mutual benefits. Consistent orientation to process approaches and utilization of experience feedback by systematic cause analysis and consequent improvements are given top priority in the work on management systems in the meaning of the new ISO 9001: 2000 standard, which will be implemented in 2003.
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Quality
Quality
Environmental Protection
Protecting the environment and conservation of natural resources have had a prominent place in the Andritz Groups corporate philosophy for many years now. As a global company, the Andritz Group is committed to the concept of global environmental protection. Therefore, uniform environmental protection guidelines have been implemented at the different sites. Compliance with these guidelines is observed by Environmental Protection Assignees. Stringent environmental protection standards have been implemented especially at the production level, with the added result of optimized utilization of the materials and resources used in manufacture. During the year 2002, the main focus of the environmental protection program was placed on optimization of the existing waste management system and measures to save materials and resources, especially in water supply and disposal of waste water. The residual waste quantity from our production processes was again reduced during the year under review and far better utilization of the materials and resources employed was achieved. These measures and the results attained at the site in Graz have been confirmed by the receipt of the Graz koprofit award. Environmental protection is an important subject not only within our operations but also with the products that Andritz develops. Optimum utilization and recycling of the materials used in production processes are capable of reducing environmental pollution to a minimum and of curtailing operating costs for our customers at the same time. The Pulp and Paper Business Area offers its customers comprehensive solutions especially in recovery of the chemicals and liquids used in kraft pulp production. The product range encompasses evaporation plants, recovery boilers, and recausticizing systems, as well as lime kilns and waste water evaporators, and ensures near-complete recycling of the materials used in kraft production. The products contribute both to the economy and to the optimization of the production processes. Here, Andritz has very long experience, with an installed base of over 800 reference plants. Up-to-date technologies have also been developed for generating energy from biomass to increase electric power production. Andritz offers these technologies with great success on the market. The biomass-derived energy in a pulp mill is sufficient to supply electricity to the entire mill complex and also to transfer a certain amount of excess energy to the public power network. Such a biomass project will be realized in conjunction with the construction of the worlds largest recovery plant at UPMKymmenes Wisaforest mill in Pietarsaari, Finland. After its start-up, this plant will be able to generate up to 600 megawatts of steam and up to 140 megawatts of electricity from renewable energy forms.
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Andritz drying plants turn sewage sludge to dry granulate that can be re-used in agriculture and industry. This helps to save raw materials. Photo: Drying plant in Cardiff, GB.
85
The RT Pretreatment process for chips and the RTS process for improving fiber qualities were patented by Andritz to reduce both energy and chemical consumption. They also optimize yield from the raw material employed. Andritz refiner plates give a reduction of the energy consumption of up to 450 kWh/t in many applications, but at the same time the quality of the end products is also improved. In Fiberboard applications, Andritz refiner plates allow energy savings of up to 30 to 50% depending on the characteristics of the raw materials and on the final product quality. In many applications, these savings may be as high as 200 kWh/t. Our EquiDry S high-temperature hood utilizes exhaust heat from the dryer to produce steam for heating the Yankee cylinder. Distinct energy savings are achieved. The regeneration systems for pickling acid that were developed for application in the Rolling Mills and Strip Processing Lines Business Area are designed for almost complete recovery of the acids used. This not only gives largely wastewater-free operations but also reduces plant operating cost. The Chemcoater is used in strip coating systems for applying the chromate solution in the so-called no-rinse process. This is a closed system, hence no chromate goes into the waste water. The drying systems for sewage sludge developed and constructed by Environment and Process Technologies also help to save raw materials and to reuse waste. With these plants, the sewage sludge that is a by-product of cleaning municipal and industrial effluents is dried and converted into granulate which can be reused as fuel, fertilizer or soil improver, or as aggregate material in the brick and cement industry.
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Consolidated Financial Statements 2002 of the Andritz Group according to IFRS
Independent Auditors Report Consolidated Balance Sheet Consolidated Income Statement Consolidated Cash Flow Statement Consolidated Statement of Shareholders Equity Notes to the Consolidated Financial Statements
88 89 90 91 92 93
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Independent Auditors Report

We have audited the accompanying consolidated group balance sheet of Andritz AG ("Andritz Group) as at 31 December 2002, and the related consolidated statement of income, consolidated cash flow statement and consolidated statement of shareholders equity for the year then ended. These group financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these group financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing ("ISA) as published by the International Federation of Accountants ("IFAC). Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the group financial statements give a true and fair view of the consolidated financial position of the Andritz Group as at 31 December 2002 and of the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with International Accounting Standards ("IFRS). We confirm, that the accompanying status report is in compliance with the group financial statements and that the legal requirements are met for the exemption of the obligation of preparing group financial statements and a status report according with Austrian law. Vienna, 18 February 2003
AUDITOR TREUHAND GMBH Wirtschaftsprfungs- und Steuerberatungsgesellschaft Auditor Treuhand GmbH is a member of
Deloitte & Touche
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Consolidated Balance Sheet

as of December 31, 2002 and 2001
2002 (in TEUR) 2001 (in TEUR)
Notes Assets Intangible assets Goodwill Property, plant and equipment Shares in associated companies Investments Fixed and financial assets Deferred tax assets Inventories Advance payments made Trade accounts receivable Cost and earnings of projects under construction in excess of billings Other receivables Prepayments and deferred charges Marketable securities Cash and cash equivalents Current Assets Total Assets Shareholders' Equity and Liabilities Share capital Capital reserves Retained earnings Shareholders' equity Minority interests Provisions for severance payments Provisions for pensions Other provisions Provisions Liabilities for deferred taxes Non-current interest bearing borrowings Bonds Interest bearing borrowings Trade accounts payable Billings in excess of cost and earnings of projects under construction Advance payments received Liabilities for current taxes Other liabilities Liabilities Total Shareholders Equity and Liabilities 10. 10. 9. 18.
1. 18. 2. 3. 4. 5. 6.
5,651 133,687 120,679 3,384 11,748 275,149 17,696 113,206 3,225 188,244 61,411 39,993 3,411 19,401 188,129 617,020 909,865
5,908 147,982 126,775 3,276 11,572 295,513 21,114 118,134 25,287 212,945 99,392 34,204 9,393 7,908 117,835 625,098 941,725
94,510 45,966 82,461 222,937 6,238 26,845 18,621 121,968 167,434 45,803 610 100,000 4,292 84,129 5. 113,493 30,931 8,298 125,700 467,453 909,865
94,510 45,966 89,854 230,330 9,345 23,468 14,424 140,552 178,444 39,605 976 0 47,494 142,379 94,823 73,618 3,540 121,171 484,001 941,725
12. 11.
The following notes to the consolidated financial statements form an integral part of this consolidated balance sheet.
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Consolidated Income Statement

for the years ended December 31, 2002 and 2001
2002 Notes (in TEUR)
2001 (in TEUR)
Sales Changes in inventories of finished goods and work in progress Capitalized cost of self-constructed assets
13.
1,110,110 1,011 244 1,111,365
1,318,701 8,669 1,225 1,328,595 19,018 (802,435) (289,932) (160,715) 94,531 (26,539) 67,992 (13,404) 54,588 325 3,093 2,105 5,523 60,111 (22,635) 37,476 (3,882) 33,594 2.82 0.90 11,916,667
Other operating income Cost of materials Personnel expenses Other operating expenses Earnings before interest, taxes, depreciation and amortization (EBITDA) Depreciation and amortization (without amortization of goodwill) Earnings before interest, taxes and amortization of goodwill (EBITA) Amortization of goodwill Earnings before interest and taxes (EBIT) Income/expense from associated companies Interest results Other income from financing activities Financial results Earnings before taxes (EBT) Income taxes Net Income Share of profit due to minority interests Net Income excluding minority interests Earnings per non par value share (in EUR) Proposed or paid dividend per non par value share (in EUR) Weighted average number of non par value shares
14. 15. 16.
16,173 (618,703) (287,316) (140,645) 80,874 (22,141) 58,733 (13,467) 45,266 (46) 321 194
17.
469 45,735
18.
(18,088) 27,647 (1,189) 26,458
19.
2.04 0.90 12,976,624
The following notes to the consolidated financial statements form an integral part of this consolidated income statement.
90
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Consolidated Cash Flow Statement

for the years ended December 31, 2002 and 2001
2002 (in TEUR) 2001 (in TEUR)
Earnings before taxes (EBT) Interest result Depreciation and amortisation of fixed assets Income/Expenses from investments in associated companies Changes in accrued expenses Results from the sale of fixed and financial assets Taxes paid Interest received Interest paid Gross cash flow Changes in inventories Changes in advance payments made Changes in receivables, prepayments and deferred charges Changes in short-term provisions and accruals Changes in advance payments received Changes in liabilities and deferred income Cash flow from operating activities Payments received for asset disposals Payments made for investments in fixed tangible and intangible assets Payments made for investments in financial assets Cash flow due to purchase of minority interests and business acquisitions Cash flow from investing activities Changes in interest bearing borrowings Dividends paid by Andritz AG Dividends paid to minority shareholders Acquisition of own shares Amounts due to capital increase Payments made by associated companies Cash flow from financing activities Change in cash and cash equivalents Changes in cash and cash equivalents resulting from exchange rate fluctuations Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period thereof marketable securities thereof cash-in-hand, cheques, bank deposits and cash equivalents
45,735 (321) 35,723 46 7,846 (323) (10,017) 6,647 (6,495) 78,841 2,287 19,362 63,517 (21,476) (36,874) (29,821) 75,836 2,440 (21,657) (1,338) (7,029) (27,584) (56,482) (11,700) (321) (1,663) 0 409 43,207 91,459
60,111 (3,093) 39,811 (393) (420) (1,482) (19,244) 12,670 (10,941) 77,019 (10,962) (1,912) (21,264) 19,104 41,618 (31,713) 71,890 9,197 (24,058) (1,778) (58,449) (75,088) (41,877) (3,000) (962) 0 39,745 184 (5,910) (9,108)
(9,672) 125,743 207,530 19,401 188,129
(457) 135,308 125,743 7,908 117,835
The following notes to the consolidated financial statements form an integral part of this consolidated cash flow statement.
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Consolidated Statement of Shareholders Equity

Amounts due to agreed Share (in TEUR) Notes capital Capital reserves capital increase Retained earnings IAS 39 Currency translation Total reserve adjustments
Status as at 1 January 2001 Adjustment 1.1.2001 due to IAS 39 Net income excluding minority interests Dividend payments Currency translation adjustments Capital increase Initial public offering Costs of initial public offering Changes to IAS 39 reserve Other changes Status as at 31 December 2001
72,700
1,931
27,000
40,259
0 (372)
18,768
160,658 (372) 33,594 (3,000)
33,594 (3,000) 1,910 7,270 14,540 19,730 27,460 (3,155) (1,498) 193 94,510 45,966 0 71,046 (1,870) 20,678 (27,000)
1,910 0 42,000 (3,155) (1,498) 193 230,330
Status as at 1 January 2002 Net income excluding minority interests Dividend payments Currency translation adjustments Acquisition of own shares Changes to IAS 39 reserve Other changes Status as at 31 December 2002 8. 8.
94,510
45,966
71,046
(1,870)
20,678
230,330
26,458 (11,700) (30,735) (1,663) 10,471 (224) 94,510 45,966 0 83,917 8,601 (10,057)
26,458 (11,700) (30,735) (1,663) 10,471 (224) 222,937
The following notes to the consolidated financial statements form an integral part of this consolidated statement of shareholders equity.
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Notes to the Consolidated Financial Statements as at December 31, 2002 and 2001
A. General
Andritz AG ("Andritz) is incorporated under the laws of the Republic of Austria and is listed on the Vienna Stock Exchange since June 2001. The Andritz Group (the "Group) is a leading producer of high technology industrial machinery and operates in four main strategic business areas: Pulp and Paper, Rolling Mills and Strip Processing Lines, Environment and Process Technologies and Feed Technology. The average number of employees in the Group was 4,497 in 2002 and 4,498 in 2001. The registered office address of the Group is located at Stattegger Strasse 18, 8045 Graz, Austria. The consolidated financial statements are the responsibility of the management and will be acknowledged by the Supervisory Board. Various amounts and percentages set out in these consolidated financial statements have been rounded and accordingly may not total.
B. Summary of significant Accounting Policies

The principal accounting policies adopted in preparing the financial statements of Andritz are as follows:
a. General
The accompanying financial statements are prepared in accordance with the standards formulated by the International Accounting Standards Board (IASB). The accompanying financial statements have been prepared under the historical cost convention, except for marketable securities which are stated at their fair values. For these financial statements prepared in accordance with IFRS based on 245a of Austrian Commercial Code the legal requirements are met for the exemption of the obligation of preparing group financial statements.
b. Reporting Currency
The Group financial statements are prepared in EURO.
c. Principles of Consolidation
The consolidated financial statements of the Group include Andritz and the companies that it controls. This control is normally evidenced when Andritz owns, either directly or indirectly, more than 50% of the voting rights of a companys share capital and is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. The equity and net income attributable to minority shareholders interests are shown separately in the balance sheets and income statements, respectively. The purchase method of accounting is used for acquired businesses. Companies acquired or disposed of during the year are included or excluded, accordingly, in the consolidated financial statements from the date of acquisition or from the date of disposal. Joint Ventures with equal voting rights are consolidated on a proportionate basis.
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Notes to the Consolidated Financial Statements
d. Major Differences between Austrian and IFRS Accounting Principles

Goodwill: In accordance with IAS 22, goodwill from capital consolidation is capitalised and amortised over the useful life. The Austrian Commercial Code allows a credit to reserves, with no effect on the income statement. Construction contracts: According to Austrian accounting regulations, sales and profits are first realised upon takeover by the customer (completed contract method). Under IAS 11, order completion is accounted using the percentage of completion method in accordance with progress and pro rata profit realisation. The extent of completion is established by considering the ratio of accumulated costs to estimated total costs to complete each contract (cost-to-cost method). Deferred taxes: The Austrian Commercial Code requires the creation of deferred tax provisions for temporary differences if a tax liability is expected to arise when these differences are reversed. IFRS require the creation of deferred taxes for all temporary differences which arise between financial statements prepared for tax purposes and IFRS financial statements, measured at actual or enacted tax rates. Deferred tax assets must also be recorded for unused loss carry forwards and unused tax credits which are expected to be offset against taxable profits in the future. Other provisions: In contrast to the Austrian Commercial Code, IFRS interprets the principle of prudence differently with respect to provisions. IFRS tends to place stricter requirements on the probability of an event occurring and on estimating the amount of the provisions. According to Austrian Commercial Code certain amounts reported as liabilities under IFRS would be normally shown as provisions. Provisions for pensions: In keeping with the Austrian Commercial Code, provisions for pensions are calculated by an actuary. Under IFRS, provisions for pensions are calculated using the projected unit credit method, based on a discount rate determined by reference to market yields on high quality corporate bonds and an expected compensation increase. Marketable securities: Austrian accounting principles require securities to be recorded at the lower of acquisition costs or market value. Under IFRS marketable securities available for sale are to be valued at fair values, and there is a choice for the treatment of changes in the fair value. Foreign currency transactions: These two accounting systems require different treatments for unrealized profits arising from the valuation of foreign exchange items as of the balance sheet date. According to Austrian law, only unrealized losses are recorded, whereas IFRS also requires the recognition of unrealized profits of monetary items. Non-current securities: In accordance with IFRS non-current securities of the Group are classified as "available for sale" and are valued at their quoted market price at the balance sheet date. The Austrian Commercial Code requires a valuation at acquisition costs or a lower market value if there is a sustainable decrease of monetary items. Hedging: With the adoption of IAS 39, the Group has designated its forward exchange contracts as cash flow hedges and carries them at fair value. Changes in the fair value of a hedging instrument that qualifies as a highly effective cash-flow hedge are recognised directly in the hedging reserve in shareholders' equity. The Austrian Commercial Code does not require a valuation of hedging contracts at fair value as of the balance sheet date.
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C. Acquisitions and Other Changes in Scope of Consolidation

The remaining 50% of shares of Guinard Centrifugation SA, France were acquired in June 2002 for a purchase price of EUR 5,175 thousand. Guinard has already been fully consolidated in the last years. Therefore the minority interests have been reduced by EUR 4,546 thousand and the difference to the purchase price of EUR 628 thousand has been shown as goodwill. In December 2002 the Andritz Group acquired the pulp and paper drying business from ABB as well as the technology for hot-dip galvanizing from the French company Selas SAS. Certain assets and liabilities related to the described business have been acquired and are included in the consolidated financial statements of the Andritz Group for 2002. For both acquisitions a purchase price of EUR 1,602 thousand has been paid. Mainly as a result of reserves for restructuring the goodwill of these transactions amounted to EUR 6,300 thousand of which EUR 1,600 thousand are related to the hot dip galvanizing and EUR 4,700 thousand are related to the pulp and paper drying. There is no material impact on other balance sheet items arising from these transactions and the effects on the income statement are also negligible. In addition, other minor business acquisitions and changes in scope of consolidation took place, which did not lead to material changes in the business position of the Group. Inter-company balances and transactions, including inter-company profits and unrealized profits and losses have been eliminated. The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances. These uniform accounting policies are not used for the financial statements of associated companies.
D. Accounting and Valuation Principles

a. Intangible Assets Intangible assets are accounted for at acquisition cost. After initial recognition, intangible assets are accounted for at cost less accumulated amortization and any accumulated impairment losses. Intangible assets are amortised on a straight-line basis over the best estimate of their useful lives. The amortisation period and the amortisation method are reviewed annually at each financial year-end. Concessions, industrial rights and similar rights and values Amounts paid for concessions, industrial rights and similar rights and values are capitalised and then amortised on a straight-line basis over the expected periods of benefit. The expected useful lives vary from 3 to 15 years. Goodwill The excess of the cost of an acquisition over the Companys interest in the fair value of the net identifiable assets and liabilities acquired as at the date of the exchange transaction is recorded as goodwill and recognised as an asset in the balance sheet. Goodwill is carried at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis over its useful life. The amortisation period is determined at the time of the acquisition based upon the particular circumstances and ranges from 7 to 15 years. The unamortised balances are reviewed at each balance sheet date by assessing the probability of continuing future benefits. If there is an indication that goodwill may be impaired, the recoverable amount is determined for the cash-generating unit to which the goodwill belongs. If the carrying amount is higher than the recoverable amount, an impairment loss is recognised. Goodwill and negative goodwill arising from business combinations before 1 January 1995 were written off against reserves.
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b. Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the income statement. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to income in the period in which the costs are incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Buildings Machinery and technical equipment Tools, office equipment and vehicles 20 50 years 4 10 years 3 10 years
The useful life and depreciation methods are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Assets in the course of construction represent plant and properties under construction and are stated at cost. These include costs of construction, plant and equipment and other direct costs. They are not depreciated until such time as the relevant assets are completed and put into operational use.
c. Financial assets and investments in associated companies

These long-term investments consist primarily of shares in associated companies and non-current securities. Investments in associated companies (generally investments of between 20% to 50% in a companys equity) where a significant influence is exercised by the Group are accounted for by using the equity method. An assessment of investments in associates is performed when there is an indication that the asset has been impaired or the impairment losses recognised in prior years no longer exist. Other non-current securities held on a long-term basis are classified as available-for-sale investments and valued at fair value. Changes of these fair values are recognised as gains or losses in the income statement.
d. Finished Goods, Work in Progress, Raw Materials

Inventories, including work in progress, are valued at the lower of cost and net realisable value, after provision for obsolete and slow moving items. Net realisable value is the selling price in the ordinary course of business, less the costs of completion, marketing and distribution. Cost is determined primarily on the basis of the FIFO method. For processed inventories, cost includes the applicable allocation of fixed and variable overhead costs. Unrealisable inventory has been fully written off. Contracts other than construction contracts are valued at production costs. For these contracts the revenue is recognised when the ownership of the goods is transferred ("completed contract method).
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e. Construction Contracts
Receivables from construction contracts and the related sales are accounted for using the percentage of completion method. The construction contracts are determined by the terms of the individual contract, which are agreed at fixed prices. The extent of completion ("stage of completion) is established by the cost-to-cost method. Reliable estimates of the total costs and sales prices and the actual figures of the accumulated costs are available on a monthly basis. Estimated contract profits are recorded in earnings in proportion of recorded sales. In cost-to-cost method sales and profits are recorded after considering the ratio of accumulated costs to estimated total costs to complete each contract. Changes to total estimated contract costs and losses, if any, are recognised in the income statement of the period in which they are determined. For remaining technological and financial risks which might occur during the remaining construction period, an individually assessed amount is included in the estimated contract costs. Impending losses out of the valuation of construction contracts are recognised at the time of occurrence. Impending losses are recognised when it is probable that the total contract costs will exceed the contract revenues. For possible customer warranty claims provisions are accounted for according to the profit realisation. At the completion of a contract the remaining warranty risk is reassessed.
f. Trade Accounts Receivable

Receivables are stated at face value, after allowances for doubtful accounts.
g. Marketable Securities
Marketable securities consist of governmental bonds and bonds of first-class banks that are traded in liquid markets. They are held for the purpose of investing in liquid funds and are not generally intended to be retained on a long-term basis. Marketable securities are stated at the market value. Adjustments in valuation are included in the income statement. Interest received on trading securities is reported as interest income. On a disposal of an investment, the difference between the net disposal proceeds and the carrying amount is included in the income statement.
h. Cash and Cash Equivalents

Cash includes cash in hand and cash with banks. Cash equivalents might include short-term deposits with non-banks with original maturities of three months or less and that are not subject to any risk of change in value.
i. Share Capital
Only ordinary shares exist and all shares are issued and have the same rights. At the extraordinary shareholders meeting of the Company held on 6 September 2000 the shareholders resolved to authorize the Managing Board to increase the nominal value of the Companys share capital with prior approval of the Supervisory Board by an amount of up to EUR 36,350,000 through the issue of up to 5,000,000 shares in bearer or registered form and for a contribution in cash or in kind. This increase has been authorized for a maximum of five years from the registration of the amendment to the Articles of Association in the commercial register which took place on 19 September 2000. Out of this authorization Andritz issued 1,000,000 shares at the end of 2000. For these shares an amount of EUR 27.0 million was paid by the shareholders (thereof EUR 24.8 million before 31 December 2000). This increase was registered in the commercial register on 26 January 2001. At the 94th ordinary shareholders meeting held on 19 March 2001 the shareholders resolved to authorize the Managing Board to increase the nominal value of the Companys share capital with prior approval of the Supervisory Board by a further amount of up to EUR 10,905,000 through the issue of up to 1,500,000 shares in bearer form and for contribution in cash or kind, so that authorized capital was increased to EUR 39,985,000 or 5,500,000 shares respectively.
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In the course of the Companys IPO out of this authorization Andritz issued 2,000,000 shares in June 2001, the issue price was fixed at EUR 21 per share. This increase was registered in the commercial register on 23 June 2001. Consequently the share capital amounts to EUR 94,510,000 divided into 13,000,000 shares of non par value. Based on the authorization of the shareholders meeting and with approval from the Supervisory Board the Managing Board has decided a program for acquisition of own shares up to 650,000 shares between 16 May 2002 and 27 June 2003 within a price range of 10 to 35 Euro per share. Until 31 December 2002 76,897 own shares have been acquired in several steps at an average price of 21.62 per share. It is planned to use these shares for delivery of shares within the framework of the Management Share Option Plan. The bookvalue of the own shares equals approximately the fair value.
j. Capital Reserves
Capital Reserves are created in accordance with Austrian requirements and include share premium amounts.
k. Provisions
A provision is recognised when, and only when, an enterprise has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.
l. Other Accounting and Valuation Principles

Financial Instruments Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, marketable securities, trade and other accounts receivable and payable, long-term receivables, borrowings and investments. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in these notes. Financial instruments are classified as assets or liabilities in accordance with the substance of the contractual arrangement. Therefore interest, dividends, gains and losses relating to these financial instruments classified as an asset or a liability are reported as expense or income. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
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Hedging The Group uses forward exchange contracts to mitigate exposure to foreign currency risk out of projects and regularly business in foreign currency. According to the Groups hedging policy all forward contracts are used for highly probable future Cash flows for these projects or regularly sales and can therefore be classified as cash flow hedges. Changes in the fair value of a hedging instrument that qualifies as a highly effective cash-flow hedge are recognised directly in the hedging reserve in shareholders equity. If the hedged cash flow results in the recognition of an asset or a liability, all gains or losses previously recognised directly in equity are transferred from equity and included in the initial measurement of the cost or carrying value of the asset or liability. Otherwise, for all other cash-flow hedges, gains and losses initially recognised in equity are transferred from hedging reserve to net profit or loss in the same period or periods during which the hedged firm commitment or forecast transaction affects the income statement. When the committed or forecast transaction is no longer expected to occur, any net cumulative gain or loss previously reported in equity is transferred to the income statement. All investments in a foreign entity are long-term investments and presently a sale of such investments is not expected to occur in the foreseeable future. According to the Groups hedging policy there are no hedges of net investments in foreign currencies. Derivative financial instruments All derivative financial instruments are designated as hedging instruments. Fixed forward exchange rate contracts are used for hedging of currency risks and interest swaps are used for hedging of interest risk. Research and development costs Expenditures for research and development are charged against income in the period incurred because the criteria for capitalisation (IAS 38) are not met. In 2002 EUR 30,135 thousand and in 2001 EUR 18,425 thousand have been recognised as an expense. Revenue recognition (except for construction contracts) Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Sales are recognised net of sales taxes and discounts when delivery has taken place and transfer of risks and rewards has been completed. Interest is recognised on a time proportion basis that reflects the effective interest rate of the asset. Dividends are recognised when the shareholders right to receive payment is established. Borrowing costs Borrowing costs are generally expensed as incurred. Impairment of assets Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in income for items of property, plant and equipment and intangibles carried at cost. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit.
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m. Foreign currency
Foreign currency transactions Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Exchange rate differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the periods are recognised in the income statement in the period in which they arise. Foreign entities Foreign consolidated subsidiaries are regarded as foreign entities since they are financially, economically and organisationally autonomous. Their reporting currencies are their respective local currencies. Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the balance sheet. Expense and revenue items are translated using the average exchange rates for the year. All resulting translation differences are included in a currency translation reserve in equity. Any goodwill arising on the acquisition of a foreign entity is recorded using the exchange rate at the effective date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part of the Groups net investment in a foreign entity are classified as equity in the consolidated financial statements until disposal of the net investment.
n. Employee Benefits
Defined benefit plans (provisions for pensions) Some Group companies provide defined benefit pension plans for certain employees. The funds are valued every year by professionally qualified independent actuaries. The obligation and costs of pension benefits are determined using a projected unit credit method. The projected unit credit method considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognised on a straight-line basis over the average period until the amended benefits become vested. Gains or losses on the curtailment or settlement of pension benefits are recognised when the curtailment or settlement occurs. Actuarial gains or losses are amortised based on the expected average remaining working lives of the employees. The pension obligation is measured at the present value of estimated future Cash flows using different discount rates for different countries. In 1999 part of the pension obligations were transferred to a multi-employer pension fund. These pension obligations were accounted as a defined contribution plan, although the obligations met the criteria of a defined benefit plan. All surplus or deficit in the plan will affect the future contributions of the Group. No material amounts are expected out of future deficits, as the initial funding seems to be sufficient to cover future deficits. Other Group companies provide defined contribution plans for certain employees. The related costs are expensed as they occur. Severance payments In certain countries the Group is also obliged by law to pay termination indemnities in some cases of termination of employment. No termination indemnities are payable for voluntary termination at the request of the employee. Expenses related to termination indemnities are accrued.
o. Income taxes
The income tax charge is based on profit for the year and considers deferred taxation. Deferred taxes are calculated using the balance sheet liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
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Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, based on tax rates (and tax laws) that have been
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enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the enterprise expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are recognised regardless of when the timing difference is likely to reverse. Deferred tax assets are recognised when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be utilised. At each balance sheet date, the Group reassesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The enterprise recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity, including exchange differences arising on the translation of inter-company loans.
E. Segments
Business segments For management purposes the Group is organised on a worldwide basis into four major operating businesses. The strategic business units are the basis upon which the Group reports its primary segment information. Financial information on business and geographical segments is presented in section I (see "segment information below). There are no material inter-segment transactions. All consolidation entries are included in the relevant segment. According to the monthly reporting scheme, which is the basis for the primary segment information, all sales and all direct and indirect expenses (including overhead and administrative costs) are allocated to business segments. Net segmental assets consist of: intangible fixed assets, property, plant and equipment; current assets not including cash and cash equivalents and marketable securities; and liabilities not including interest bearing borrowings of each segment.
F. Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.
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G. Notes to the Balance Sheet

1. Changes in fixed and financial assets
Acquisition or Production Costs
(in TEUR) Concessions, industrial rights and similar rights and values Advance payments on intangible assets Total intangible assets Goodwill Land and buildings Technical equipment and machinery Other equipment, factory and office equipment Assets in course of construction Advance payments on tangible assets Total property, plant and equipment Shares in affiliated companies Other investments (participations) Shares in associated companies Loans to associated companies Other loans Non-current securities Advance payments on financial assets Total financial assets Total fixed and financial assets
Balance as at 1 January 2002
Currency translation differences
Additions
Changes due to business Disposals acquisitions Transfers
Balance as at 31 December 2002
27,226 0 27,226 260,176 133,607 140,278 79,391 426 112 353,814 333 188 3,276 0 488 11,141 4 15,431 656,647
(1,395) 0 (1,395) (23,475) (5,897) (8,617) (4,516) (33) (1) (19,064) 0 (1) 15 0 (4) (240) 0 (231) (44,165)
2,469 0 2,469 7,514 4,621 5,001 8,117 2,544 235 20,518 0 0 496 164 2 1,639 0 2,301 32,802
1,341 0 1,341 0 1,013 6,440 6,588 177 0 14,218 1 0 403 0 38 16 0 458 16,017
0 0 0 0 0 381 0 0 0 381 0 0 0 0 0 0 0 0 381
36 0 36 0 1,041 9,850 (9,889) (128) (111) 763 0 27 0 0 0 (1,239) 0 (1,212) (413)
26,995 0 26,995 244,215 132,359 140,453 66,515 2,632 235 342,194 332 214 3,384 164 448 11,285 4 15,831 629,235
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Depreciation and Amortisation
(in TEUR) Concessions, industrial rights and similar rights and values Advance payments on intangible assets Total intangible assets Goodwill Land and Buildings Technical equipment and machinery Other equipment, factory and office equipment Assets in course of construction Advance payments on tangible assets Total property, plant and equipment Shares in affiliated companies Other investments (participations) Shares in associated companies Loans to associated companies Other loans Non-current securities Advance payments on financial assets Total financial assets*) Total fixed and financial assets
Depreciation Changes Balance and amortidue to as at sation for business 31 December the year Disposals acquisitions Transfers 2002
21,317 0 21,317 112,194 61,467 104,434 61,137 0 0 227,038 307 50 0 0 358 (132) 0 583 361,133
(1,261) 0 (1,261) (15,133) (3,460) (6,323) (3,655) 0 0 (13,438) 0 0 0 0 1 0 0 1 (29,832)
2,548 0 2,548 13,467 3,406 8,063 8,124 0 0 19,593 0 0 0 0 7 108 0 115 35,723
1,297 0 1,297 0 812 5,326 6,260 0 0 12,398 0 0 0 0 0 0 0 0 13,695
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
37 0 37 0 1,039 9,552 (9,871) 0 0 720 0 0 0 0 0 0 0 0 757
21,344 0 21,344 110,528 61,640 110,400 49,475 0 0 221,515 307 50 0 0 366 (24) 0 699 354,086
*) Impairment losses
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Net book value
(in TEUR)
Costs as at 31 December 2002
Accumulated depreciation
Net book value Net book value as at 31 Decem- as at 31 December 2002 ber 2001
Concessions, industrial rights and similar rights and values Advance payments on intangible assets Total intangible assets 26,995 0 26,995 21,344 0 21,344 5,651 0 5,651 5,909 0 5,909
Goodwill
244,215
110,528
133,687
147,982
Land and buildings Technical equipment and machinery Other equipment, factory and office equipment Assets in course of construction Advance payments on tangible assets Total property, plant and equipment
132,359 140,453 66,515 2,632 235 342,194
61,640 110,400 49,475 0 0 221,515
70,719 30,053 17,040 2,632 235 120,679
72,140 35,844 18,254 426 112 126,776
Shares in affiliated companies Other investments (participations) Shares in associated companies Loans to associated companies Other loans Non-current securities Advance payments on financial assets Total financial assets
332 214 3,384 164 448 11,285 4 15,831
307 50 0 0 366 (24) 0 699
25 164 3,384 164 82 11,309 4 15,132
26 138 3,276 0 130 11,273 4 14,848
Total fixed and financial assets
629,235
354,086
275,149
295,514
Impairment Loss In 2001 certain units including buildings, machinery and equipment met the tests for impairment and these assets were written down to their recoverable value which is their net selling price. Net selling price was determined using the best estimate available for the disposal of these assets on an arm's length basis between knowledgeable willing parties. In addition, impairment loss has been recognised in 2001 for intangible assets (patents and industrial rights) due to changed production processes and changed market outlook. In 2002 no additional write-offs due to impairment of assets have been considered but the existing write-offs remained unchanged.
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Goodwill
(in TEUR) Andritz Ahlstrom Acquisition of Andritz AG Other
2002 47,609 71,515 14,563 133,687
2001 60,174 77,474 10,334 147,982
2. Inventories
(in TEUR) Finished goods Work in progress Raw materials
2002 36,103 57,255 19,848 113,206
2001 37,815 58,019 22,300 118,134
The shown inventories are valued at cost.
3. Advance payments made
The advance payments made and presented in the balance sheet relate to open purchase orders for contracts.
4. Trade Accounts Receivable
(in TEUR) Accounts receivable Allowance for doubtful accounts
2002 191,130 (2,886) 188,244
2001 216,413 (3,468) 212,945
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5. Construction contracts
(in TEUR) Contract revenue recognised as sales in the period Contract costs incurred and recognised profits (less recognised losses) to date Advances received and progress billings Amount of retentions
2002 675,097 902,772 954,853 1,118
2001 858,147 1,023,539 806,560 860
The billings in excess of costs and earnings of projects under construction represent, primarily, payments from customers for work, which is not performed yet.
6. Other Receivables
(in TEUR) Receivables from associated companies Other
2002 122 39,871 39,993
2001 17 34,187 34,204
7. Statement of Receivables
2002
Thereof remaining term under 1 year 188,074 56,351 39,936 284,361 Thereof remaining term over 1 year 170 5,060 57 5,287
(in TEUR) Trade accounts receivable Cost and earnings of projects under construction in excess of billings Other receivables
Total 188,244 61,411 39,993 289,648
2001
Thereof remaining term under 1 year 205,904 98,939 34,082 338,925 Thereof remaining term over 1 year 7,041 453 121 7,616
(in TEUR) Trade accounts receivable Cost and earnings of projects under construction in excess of billings Other receivables
Total 212,945 99,392 34,204 346,541
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8. Retained Earnings
Dividends For 2002 a dividend of EUR 0.90 per outstanding share is proposed by the Managing Board. The dividend for 2001 of EUR 11,700 thousand which is equal to EUR 0,90 per share was proposed by the Managing Board and has been resolved at the 95th ordinary shareholders meeting on 17 April 2002. The dividend has been paid to the shareholders on 24 April 2002. On 17 February 2003 the Managing Board authorised the consolidated financial statements for the year ended 31 December 2002 according to IFRS. On 25 February 2002 the management authorised the consolidated financial statements for the year ended 31 December 2001 according to IFRS to be issued to its Supervisory Board. The Supervisory Board is made up solely of nonexecutives and includes representatives of employees. The consolidated financial statements were presented for information purposes only to the Supervisory Board and subsequently acknowledged by the meeting of shareholders. The Supervisory Board and the meeting of shareholders acknowledged the consolidated financial statements. Currency translation adjustment Equity and shareholder loans in foreign currency are not hedged against currency risks because the investments are considered to be permanent and the conversion to the reporting currency is not planned. Exceptions are made for planned disposal of investments or planned repayments of shareholder loans. In 2002 a negative currency translation adjustment arose from investments in foreign currency amounting to EUR 30,735 thousand mainly due to the change of the currency exchange rate between Euro and Dollar compared to previous year. This currency translation adjustment has been directly recognized in equity without income effect.
9. Provisions
(in TEUR) Provisions for severance payments Provisions for pensions Longterm provisions Other provisions Total
Reclassification
Use
Reversal
Balance as at 31 December Addition 2002
23,467 14,424 37,891 140,552 178,443
(6) (441) (447) (6,265) (6,712)
32 2,472 2,504 (195) 2,309
33 442 475 35,140 35,615
10 151 161 15,837 15,998
3,395 2,759 6,154 38,853 45,007
26,845 18,621 45,466 121,968 167,434
Other provisions consist primarily of order related provisions (2002: EUR 101,746 thousand; 2001: EUR 119,592 thousand). The provisions for order related costs consist primarily of provisions for warranties and contingencies and are expected to be incurred within the next three financial years.
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10. Employee Benefit Obligations
Defined benefit plan for pensions Some Group companies in Austria, USA, Germany and Sweden provide defined benefit pension plans for some classes of employees. Provisions for pension obligations are established for benefits payable in the form of retirement, disability and surviving dependant pensions. The benefits offered vary according to the legal, fiscal and economic conditions of each country. Benefits are dependent on years of service and in some cases on the respective employees compensation. The following table reconciles the funded status of defined benefit plans to the amounts recognised in the balance sheet:
(in TEUR) Present value of funded defined benefit obligations Fair value of plan assets
2002 16,562 (398) 16,164 4,118 (1,668) 7 18,621
2001 16,437 (2,904) 13,534 1,613 (740) 16 14,424
Present value of unfunded defined benefit obligations Unrecognised actuarial gains/losses Unrecognised past service costs Net liability in balance sheet
Pension expense is comprised of the following:
(in TEUR) Current service costs Interest expense on obligations Expected return on plan assets Net actuarial gains/losses recognised Past service costs Effect of any curtailment or settlement Payments to defined contribution plans
2002 1,251 902 (7) 126 26 858 3,156 12,843 15,999
2001 278 861 0 (90) 182 (344) 889 12,813 13,702
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Principal actuarial assumptions used to determine pension obligations as of 31 December were as follows:
(in per cent) Discount rate Expected return on plan assets Wage and salary increases Retirement benefit increases
2002 5.75% 6.0% 3.0% 2.5%
2001 6.5% 8.5% 3.0% 2.5%
In 1999 Andritz transferred some of the pension liabilities to a multi-employer pension fund. This pension plan is accounted as a defined contribution plan although the obligations meet the criteria for a defined benefit plan. The plan covers some full-time employees and provides for contribution ranging from 3% to 5% of salary.
Severance Payments (in TEUR) Present value of unfunded defined benefit obligations Net liability in balance sheet 2002 26,845 26,845 2001 23,468 23,468
Severance expense is comprised of the following:

(in TEUR) Current service costs Interest expense on obligations Net actuarial gains/losses recognised Effect of any curtailment or settlement Payments to defined contribution plans 2002 1,105 1,433 2,784 0 5,322 0 5,322 2001 1,263 1,335 (141) 0 2,458 397 2,855
Principal actuarial assumptions used to determine severance obligations as of 31 December were the same as used for pension obligations.
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Management Share Option Plan A selected group of executives employed by the Group as at 1 June 2001 were eligible to participate in a Management Share Option Plan in connection with the Initial Public Offering. Each eligible executive who has subscribed shares having an aggregate subscription value calculated at the Offer Price (21 EUR per share) of at least 20,000 EUR (each such subscription a "Private Investment) is eligible for a special remuneration in the form of option rights. These option rights can be exercised provided that the average price of the shares during two separate assessment periods exceeds a certain percentage of the Offer Price. The first assessment period will run for a period of three months preceding the second anniversary of the initial listing of the shares on the Vienna Stock Exchange, whereas the second assessment period will run for a period of three months preceding the third anniversary of the initial listing of the shares on the Vienna Stock Exchange. If the average market value of the shares exceeds the Offer Price by 15% in the first assessment period (Option 1) or by 20% in the second assessment period (Option 2), the eligible executive will be entitled to purchase up to a maximum of 1,500, 2,500 and 5,000 shares with respect to Option 1 or Option 2 at the Offer Price depending on the seniority of the relevant executive, provided that the relevant executive can prove uninterrupted ownership of his Private Investment until the end of the assessment period. The options can be exercised only once and are not transferable. Option 2 can only be exercised if during the first assessment period the average market value of the shares does not exceed the Offer Price by 15%, making the exercise of Option 1 impossible. The options can only be exercised at given times. Each participant may subscribe up to 50% of the number of shares stated in the Average Price Notice immediately after exercise of the option and payment of the pro-rata subscription price, the relevant participant can subscribe up to the remaining 25% of the shares set out in the notice on the exercise of the option. At the end of a six-month term from the exercise of the option and payment of the remaining subscription price, the relevant participant can subscribe up to the remaining 25% of the shares set out in the notice on the exercise of the option. Due to legal requirements, executives in the United States will not be allowed to make a Private Investment but will be granted option rights. 35 executives are participating in the Management Share Option Plan, together they are eligible to exercise options for the purchase of 113,000 shares. Andritz may either provide these shares by issue of new shares out of authorised share capital or by repurchase of own shares.
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11. Statement of Liabilities 2002

Thereof remaining term under 1 year 0 0 4,292 81,173 97,965 30,931 8,298 123,497 346,156 Thereof remaining term between 1 and 5 years 610 0 0 2,956 15,528 0 0 1,846 20,940 Thereof remaining term over 5 years 0 100,000 0 0 0 0 0 357 100,357
(in TEUR) Non-current interest bearing borrowings Bond Interest bearing borrowings Trade accounts payable Billings in excess of costs and earnings of projects under construction Advance payments received Liabilities for current taxes Other liabilities
Total 610 100,000 4,292 84,129 113,493 30,931 8,298 125,700 467,453
2001
Thereof remaining term under 1 year 0 47,494 140,880 94,440 73,618 3,540 119,776 479,748 Thereof remaining term between 1 and 5 years 960 0 1,499 383 0 0 1,121 3,963 Thereof remaining term over 5 years 16 0 0 0 0 0 274 290
(in TEUR) Non-current interest bearing borrowings Interest bearing borrowings Trade account payable Billings in excess of costs and earnings of projects under construction Advance payments received Liabilities for current taxes Other liabilities
Total 976 47,494 142,379 94,823 73,618 3,540 121,171 484,001
The interest bearing borrowings consist primarily of current bank loans at floating interest rates and fixed rates. Property, plant and equipment amounting to EUR 375 thousand and EUR 419 thousand as at 31 December 2002 and 2001, respectively, has been pledged as security for long-term debt.
12. Other Liabilities

(in TEUR) Payables to affiliated companies Payable to associated companies Other personnel related costs Other order related costs Deferred income Other 2002 0 42 31,538 32,473 875 60,772 125,700 2001 51 436 30,436 31,985 3,200
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55,063 121,171
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H. Notes to the Consolidated Income Statement
13. Sales
(in TEUR) Contract revenue recognised as sales in the period Other
2002 675,097 435,013 1,110,110
2001 858,147 460,554 1,318,701
14. Other Operating Income
(in TEUR) Profit on disposal of fixed assets excluding financial assets Exchange rate gains Rental income Other
2002 502 8,411 1,303 5,957 16,173
2001 1,749 2,487 1,268 13,514 19,018
15. Personnel Expenses
(in TEUR) Wages Salaries Pension expenses Severance and termination expenses Social security and payroll related duties Other social payments
2002 51,215 173,478 15,999 5,322 31,549 9,753 287,316
2001 65,320 167,084 13,702 6,627 30,247 6,953 289,932
16. Other Operating Expenses
(in TEUR) Exchange rate losses Sales expenses Administration expenses Other
2002 7,706 71,823 19,996 41,120 140,645
2001 4,899 75,186 22,455 58,175 160,715
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17. Financial Results
(in TEUR) Income / expenses from associated companies Other interest and similar income Interest and similar expenses Interest result Income / expenses from investments Impairment losses of financial assets Income from write-ups of financial assets Profit and disposal on disposal of short-term securities Adjustment to market sales of short-term securities Other income / expenses from financing activities
2002 (46) 6,996 (6,675) 321 138 (195) 79 0 172 194 469
2001 325 10,495 (7,401) 3,093 7 (30) 163 2.184 (218) 2.105 5,523
18. Income Tax
(in TEUR) Current tax expense Deferred tax income relating to the origination and reversal of temporary differences
2002 (15,078) (3,010) (18,088)
2001 (16,985) (5,650) (22,635)
Changes in the deferred income tax account consist of the following:

(in TEUR) Tax assets Tax provision for deferred taxes Balance as at 31 December, as previously stated Deferred taxes from changes in consolidation range Deferred tax expense relating to the origination and reversal of temporary differences income statement charge foreign exchange differences Tax effect on IAS 39 reserve Tax effect of foreign exchange translation differences Reclassification without income effect thereof Deferred tax assets Provisions for deferred taxes 2002 21,114 (39,605) (18,491) 0 2001 22,131 (37,011) (14,880) 1,399
(3,010) (2,938) (5,394) 2,298 (572) (28,107) 17,696 (45,803)
(5,650) 274 938 (572) 0 (18.491) 21,114 (39,605)

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The reconciliation of the effective tax rate to the statutory tax rate is as follows:
(in TEUR) Earnings before taxes (EBT) Tax at the applicable tax rate (34% in 2002 and 2001) Tax effect of income not taxable in determining taxable profit (non-temporary differences) Tax effect of changes in valuation allowance adjustment of using new tax rates
2002 45,735 (15,550) (5,478) 3,355 (415) (18,088) 15,078 (3,010)
2001 60,110 (20,437) (977) (2,421) 1,200 (22,635) 16,985 (5,650)
Tax charge per statutory book Changes in deferred taxes
Income tax effects related to tax deductible IPO costs are directly recognised in capital reserve in equity. Deferred tax assets and provisions for deferred taxes as at 31 December 2002 and 2001 are the result of the following temporary valuation and accounting differences between book values in the IFRS consolidated financial statements and the relevant tax bases:
(in TEUR) Intangible assets Tangible assets Financial assets Inventories Receivables Short-term securities and shares Other assets Provisions Liabilities Deferred income Tax loss carry-forwards Deferred tax assets/provisions Valuation allowance for deferred tax assets Other deferred taxes from consolidation IAS 39 reserve Offset within legal tax units and jurisdiction Net deferred tax assets and provisions
2002 Deferred tax asset provision 1,431 1,455 13 127,794 3,125 0 0 133,818 16,129 4,542 8,015 28,686 6,793 169,297 (13,616) 695 0 (138,680) 17,696 (502) (10,034) (92) (348) (13,792) (3,742) (3) (28,513) (13,813) (137,314) (387) (151,514) 0 (180,027) 0 0 (4,456) 138,680 (45,803)
2001 Deferred tax asset provision 2,197 2,797 249 140,946 2,993 0 1,562 150,744 18,250 4,876 1 23,127 8,429 182,300 (6,502) 0 938 (155,622) 21,114 (467) (9,702) (150) (363) (22,239) (537) (22) (33,480) (5,804) (152,649) (687) (159,140) 0 (192,620) 0 (2,607) 0 155,622 (39,605)
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19. Earnings per Share

Basic earnings per share (see Consolidated Income Statement) are calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
I. Segment Information
Segment information is prepared on the following basis: Business Segments The Andritz Group conducts the majority of its business activities in the following areas: a. Pulp and Paper (P+P) b. Rolling Mills and Strip Processing Lines (WB) c. Environment and Process Technologies (EP) d. Feed Technology (FT) All other minor business activities are included in "Other. Geographical Segments The Groups activities are conducted predominantly in Europe, North America and Asia.
2002 Business Segment Data (in TEUR)

Sales Segment result before amortisation of goodwill Net segmental assets Capital expenditure Depreciation and amortisation of tangible and intangible fixed assets Share of net profit / loss of associates Investment in associates P+P 672,176 39,248 74,043 11,497 14,216 (46) 3,384 WB 177,397 8,538 (3,635) 1,613 2,536 0 0 EP 122,774 984 48,654 1,913 1,789 0 0 FT 108,409 4,228 37,071 5,342 1,916 0 0 Other 29,354 5,735 17,136 2,621 1,684 0 0 Total 1,110,110 58,733 173,269 22,986 22,141 (46) 3,384
Geographical Segment Data

Rest of the world and consolidation 140,657 (488,506) 103
(in TEUR) External sales Total assets Capital expenditure
Europe 498,749 1,177,885 18,403
North America 280,509 206,408 4,023
Asia 190,195 14,078 457
Total 1,110,110 909,865 22,986

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2001 Business Segment Data (in TEUR)

Sales Segment result before amortisation of goodwill Net segmental assets Capital expenditure Depreciation and amortisation of tangible and intangible fixed assets thereof impairment losses Share of net profit / loss of associates Investment in associates P+P 882,992 53,852 166,658 10,772 15,943 2,730 325 3,276 WB 167,391 6,131 2,996 3,445 2,560 0 0 0 EP 135,309 7,225 43,161 1,919 1,825 79 0 0 FT 107,000 920 35,238 6,704 3,773 315 0 0 Other 26,009 (136) 8,223 863 2,439 1,213 0 0 Total 1,318,701 67,992 256,275 23,703 26,539 4,337 325 3,276
Geographical Segment Data

Rest of the world and consolidation 155,943 (383,342) 347
(in TEUR) External Sales Total Assets Capital expenditure
Europe 607,485 1,161,553 20,070
North America 367,563 158,581 3,208
Asia 187,711 4,932 78
Total 1,318,701 941,724 23,703
J. Notes to Cash Flow Statements
Cash flows from Acquisition of Subsidiaries

(in TEUR) Cash and cash equivalents Receivables Inventories Property, plant and equipment Accounts payable and accrued expenses Net assets/liabilities acquired Cash and cash equivalents Goodwill Changes in minority interests Net cash flow 2002 (432) (11,290) (4,363) (1,644) 22,015 4,286 432 (7,201) (4,546) (7,029) 2001 0 0 0 0 0 0 0 (2,807) (55,642) (58,449)
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K. Financial Instruments
a. Foreign exchange risk management The Group only enters into fixed forward foreign exchange contracts in managing its foreign exchange risk resulting from Cash flows from current business activities. Transaction risk is calculated in each foreign currency and includes currency denominated assets and liabilities and certain off-balance sheet items such as highly probable future Cash flows for firm commitments and highly probable purchases and sales. The currency risks of the Group occur due to the fact that the Group operates and has production and sales in different countries worldwide. With the adoption of IAS 39, the Group has designated its forward exchange contracts as cash flow hedges and carries them at fair value. b. Liquidity risks The Groups policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of credit facilities to meet its commitments. Any excess cash is invested mostly in listed securities which are actively traded. c. Credit risks Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring procedures. Where appropriate, the corporation obtains guarantees from governmental export agencies or similar private institutions to reduce the risk of a counterpart defaulting. Credit risk associated with the investment of liquid funds and securities is limited by the fact that the Group works only with financial partners who can demonstrate sound creditworthiness. For some financial assets and financial liabilities the Group has a legally enforceable right to set off. These amounts are only reported on a net basis. For all existing risks, valuation allowances are included, so that the Managing Board believes that no other credit risk will occur. d. Interest risk In June 2002 the company has issued a bond for a nominal value of 100 MEUR with a repayment period of 6 years and nominal interest rate of 6% p.a. For this bond an interest swap has been used to hedge the risk from the fixed interest rate of the bond. By this interest swap the fixed interest rate has been changed for the whole repayment period to a variable interest rate based on 1 months Euribor. The Managing Board believes that the exposure to interest rate risk of remaining financial assets and liabilities is negligible. Consequently, additional derivative instruments for hedging of these interest risks are not used within the Group. The weighted average effective interest rates at the balance sheet date were as follows:
2002 Cash on current accounts Short-term deposits Securities, short-term Securities, long-term Overdraft on current accounts Short-term loans Long-term loans Bond 0.8% 3.0% 3.7% 5.2% 4.7% 1.0% 3.7% 4.2%
2001 1.4% 3.3% 4.8% 6.1% 5.1% 3.5% 2.5% -
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e. Fair Value of Financial Instruments

Fair Value Estimation The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. The fair values of the forward contracts are confirmed to the Group by financial institutions. At the balance sheet date, the fair values of forward contracts designated as cash flow hedges were as follows:
Remaining period not exceeding more than Total 2002 Total 2001
(in TEUR) Forwards used to hedge anticipated sales US dollars Swedish crowns Singapore dollars Other currencies US dollars Other currencies
1 year
1 year
8,706 27 185 20 322 (11) 9,249
889 0 2,959 9 0 0 3,857
9,595 27 3,144 29 322 (11) 13,106
(3,874) 1,361 0 (198) 368 (416) (2,759)
Forwards used to hedge firm purchase commitments
Fair values of forward contracts designated as cash flow hedges are classified as current assets or liabilities.
(in TEUR) Forward contracts with positive fair values Forward contracts with negative fair values
2002 13,328 (222) 13,106
2001 2,749 (5,508) (2,759)
The Groups principal financial instruments not carried at fair value are trade receivables, other current assets, other non current assets, trade and other payables, bank overdrafts, long-term borrowings. Cash and cash equivalents, current investments and other non-current financial assets The carrying amount of cash and other financial assets approximates fair value due to the relatively short-term maturity of these financial instruments. Non-current and current securities The fair values of publicly traded instruments are stated based on quoted market prices. For all other instruments for which there are no quoted market prices, a reasonable estimate of fair value has been calculated based on the expected cash flows or the underlying net asset base for each investment. Non-current securities of the Group are classified as "available for sale and are valued at their quoted market price at the balance sheet date. Receivables and payables
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The historical cost carrying amounts of receivables and payables which are all subject to normal trade credit terms approximate their fair values.
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Short-term borrowings The carrying amount approximates fair value because of the short period to maturity of those instruments. Long-term borrowings The fair value of the long-term debts is based on the current rates available for debt with the same maturity profile. The fair value of non-current borrowings and other payables with variable interest rates approximates their carrying amounts. The carrying amount is equal to the estimated fair value of the Groups financial instruments. The interest risk of the bond has been hedged by an interest swap. Management believes that the exposure to interest rate risk of the remaining financial assets and liabilities is negligible. IAS 39 reserve The table below shows the movements in the hedging reserve in equity in respect to gains and losses on forward contracts designated as cash flow hedges during the period.
(in TEUR) Balance as at 1 January Movements in the period: Gains and losses from changes in fair value Deferred income taxes thereon Transfers to income statement Deferred income taxes thereon Balance as at 31 December
2002 (1,821)
2001 (325)
13,227 (4,497) 2,638 (897) 8,650*
(2,708) 921 441 (150) (1,821)*
*) In the hedging reserve acc. to the Consolidated Statement of Shareholders Equity, an additional amount of EUR 49 thousand is included which arises from the valuation of available-for-sales investments.
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L. Leases
The Group and its subsidiaries have entered into various operating lease agreements for machinery, offices and other facilities as lessees. Lease terms do not contain restrictions on the Groups activities concerning dividends, additional debt or further leasing. Rent expense amounts to EUR 8,143 thousand in 2002 and EUR 7,850 thousand in 2001 respectively. Future lease payments under non-cancelable operating lease are as follows:
(in TEUR) Next year 1 year to 5 years After 5 years
2002 3,651 7,739 157 11,547
2001 2,892 6,969 160 10,021
M. Commitments
Commitments arising from contracts for expenditure on property, plant and equipment are only in the normal course of business. For 2002 these commitments amount to EUR 862 thousand and for 2001 to EUR 1,523 thousand.
N. Contingent Liabilities
a. Litigation
Various legal actions and claims are pending or may be asserted in the future against Group companies from litigations and claims incidental to the ordinary course of business. These mainly include matters relating to warranties and infringement on intellectual property rights. Related risks have been analysed as to likelihood of occurrence. Although the outcome of these matters cannot always be ascertained with precision the Managing Board believes that no material liabilities are likely to result. Andritz Inc. is one of many defendants in thirty multi-plaintiff lawsuits pending in courts of two states of the United States alleging personal injury, wrongful death and related claims from exposure to asbestos. No plaintiff alleges any specific exposure to any product supplied by Andritz. However, the claims against Andritz appear to involve alleged exposure to asbestos at pulp and paper mills. The Directors do not believe that these lawsuits against Andritz are meritorious in that any asbestos that may have been contained in certain components enclosed within products it supplied to pulp and paper mills was totally encapsulated thereby preventing the release of asbestos fibers. Nevertheless, little or no discovery has been taken in the pending cases, and the actual facts with respect to individual claims are not known. Nine earlier multi-plaintiff suits against Andritz were voluntarily dismissed, and Andritz obtained summary judgment against plaintiffs in two others. There have been no verdicts or judgments against Andritz nor has it paid any amount to settle any asbestos lawsuit. The Directors further believe that any liability of Andritz in connection with these lawsuits is within the terms of indemnity obligations to Andritz from prior owners of the relevant businesses and one or more insurance policies.
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b. Other
(in TEUR) Outstanding bank guarantees concerning contracts with customers Other contingent liabilities
2002 108,532 7,520
2001 167,697 15,505
According to several contracts the customer is entitled to hold retention until the end of the warranty period. In order to redeem these retentions bank guarantees were submitted to the customer. In addition, other bank and company guarantees were issued as guarantees for advance and progress payments from customers. The management believes that the provisions for warranties and the shown liabilities are sufficient. No additional financial outflows from these guarantees are expected. In some cases Andritz has similar retention agreements with suppliers. In order to settle these retentions Andritz receives bank guarantees from the suppliers.
O. Related Party Transactions

Only minor business relations exist with the shareholders. The shareholders are:
Carlyle Europe Partners LP Certus Beteiligungs-GmbH Unternehmens Invest AG and Univest GE Capital Equity Holdings BV Deutsche Beteiligungs AG Management Free Float 31% 25% 13% 6% 6% 3% 16%
Emoluments of the Managing Board A provision of EUR 4,165 thousand in 2002 (EUR 3,948 thousand in 2001) has been recorded for pensions of former members of the Managing Board and their dependants; the current year expense for these pensions amounted to EUR 504 thousand (EUR 231 thousand in 2001). Directors total remuneration for 2002 amounted to EUR 3,772 thousand (thereof EUR 2,791 thousand for profit related bonuses) and for 2001 to EUR 2,351 thousand.
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P. List of Consolidated Subsidiaries
Place of Incorporation
Ownership interest direct indirect
Material Affiliated Companies Andritz Denmark A/S Sprout-Matador A/S Andritz (USA), Inc. Andritz Inc. Andritz-Ruthner, Inc. Durametal Corporation Guinard Centrifugation S.A. Andritz S.A. Andritz Selas S. A. S. Andritz Ingeniera S.A. Andritz GmbH Sundwig GmbH Andritz Ltda. Andritz Oy Andritz Ltd./Lte. Andritz Fiber Drying Ltd. Andritz AB Andritz Fiber Drying AB Andritz Ltd. Andritz-Kenflo Foshan Pump Co. Ltd. U.M.T. Limited U.M.T. Deurne B.V. U.M.T. Boxtel B.V. Andritz Brasil Ltda. Esbjerg/Denmark Esbjerg/Denmark Arlington/Texas (USA) Muncy/Pennsylvania (USA) Arlington/Texas (USA) Tualatin/Oregon (USA) Vlizy/France Vlizy/France Gennevilliers/France San Sebastian/Spain Hemer/Germany Hemer/Germany Sao Paulo/Brazil Hollola/Finland Montreal/Canada Lasalle/Canada rnskldsvik/Sweden Vxj/Sweden Chesterfield/UK Foshan/China Hull/UK Deurne/Netherlands Boxtel/Netherlands Curitiba/Brazil 100% 100% 60% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Graz, 17 February 2003 Wolfgang Leitner Markku Hnninen Franz Hofmann Friedrich Papst Bernhard Rebernik
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Report of the Supervisory Board of Andritz AG

The Supervisory Board was regularly informed by the Managing Board both verbally and in writing of the situation of the company and of its development as well as of major business transactions. The transactions that were subject to approval by the Supervisory Board were investigated and reviewed together with the Managing Board. The Financial Statement of Andritz AG and the Consolidated Financial Statements as of December 31, 2002 as well as the Status Reports for 2002 were audited (also including the accounts) by AUDITOR TREUHAND GMBH, Vienna, who had been appointed as auditors by the Meeting of Shareholders and who certified the Financial Statements. The Supervisory Board has examined the Financial Statements certified by the Auditors as well as the proposed appropriation of profit and the report of the Managing Board and concurs with the result of the Audit. The Supervisory Board has approved the Financial Statement, which is herewith adopted in compliance with Article 125 para. 2 of the Corporation Act. Graz, February 2003 Kurt Stiassny Chairman of the Supervisory Board
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Andritz Group Companies

Pulp Mill Technologies Activities*)
EUROPE
Pulp and Pape
Wood Processing
Kraft Mill Systems
Services

Mecha Pulpin
Austria Denmark England
Finland
France
Germany
Netherlands
Poland Russia Spain Switzerland Sweden
AMERICAS
Brazil
Chile Canada
USA
ASIA
China
India
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Indonesia Japan Singapore Thailand

AUSTRALIA AFRICA
New Zealand South Africa
Andritz AG, Graz Andritz AG, Vienna Sprout-Matador A/S, Esbjerg Sprout-Matador A/S, Vejle Andritz Ltd., Chesterfield UMT Ltd., Hull Frisby Extrusion Services Ltd., Corby Andritz Selas Engineering Ltd., Belper Andritz Oy, Helsinki Andritz Oy, Hollola Andritz Oy, Kotka Andritz Oy, Savonlinna Andritz Oy, Varkaus Andritz-Guinard S.A.S., Vlizy Andritz-Guinard S.A.S., Schweighouse Andritz-Guinard S.A.S., Chteauroux UMT S.A., St. Martin Le Beau Andritz Selas S.A.S., Gennevilliers Andritz GmbH, Hemer Andritz GmbH, Haan Andritz GmbH, Kirchheim/Teck UMT, Mettmann Sundwig GmbH, Hemer UMT Deurne B.V., Deurne UMT Boxtel B.V., Boxtel Thermtec B.V., Rotterdam Andritz AG, Warsaw LLC Andritz, St. Petersburg Andritz Ingeniera S.A., Madrid Andritz Ingeniera S.A., Barcelona Andritz 3Sys AG, Wohlen Andritz AB, rnskldsvik Andritz AB, Hedemora Andritz AB, Karlstad Andritz AB, Stockholm Andritz Fiber Drying AB, Vxj Andritz Ltda., So Paulo Andritz Ltda., Curitiba Andritz Ltda., Carapina Sprout-Matador do Brasil Ltda., Porto Alegre/RS Sprout-Matador A/S Chile Ltda., Puerto Montt Andritz Ltd./Lte., Montreal, QC Andritz Ltd./Lte., Brantford, ON Andritz Ltd./Lte., Edmonton, AB Andritz Fiber Drying Ltd., La Salle, QC Andritz Inc., Alpharetta, GA Andritz Inc., Muncy, PA Andritz Inc., Glens Falls, NY Andritz Inc., Springfield, OH Andritz Inc., Pell City, AL Andritz Inc., Lenexa, KS Andritz Inc., Ventura, CA Andritz-Ruthner, Inc., Arlington, TX Andritz-Ruthner, Inc., Canonsburg, PA Andritz Inc., Tualatin, OR Voith Andritz Tissue LLC, Janesville, WI Andritz-Kenflo Foshan Pump Co., Ltd., Foshan Andritz AG Representative Office Beijing Andritz Technologies Ltd., Foshan Andritz Technologies Pvt. Ltd., Bangalore Andritz Oy India Liaison Office, New Delhi Enmas Andritz Private Limited, Chennai PT. Andritz, Jakarta Andritz K.K., Tokyo Andritz Singapore Pte. Ltd. Andritz Oy, Bangkok Andritz Pty. Ltd., Dandenong South Andritz Australia Pty. Ltd, Auckland Andritz (Pty) Ltd., Durban
S, M, SE, S, R, SE S, M, SE, S, R S, SE S, M, SE S, M, SE SE S, SE S, M, SE, S, M, SE, S, M, SE, S, M, SE, S S, SE M, SE, R S, SE SE S, SE S, SE S, SE S, SE S, M, SE, S, M, SE, S, M, SE, S, SE, R S S, SE S, SE S, SE S, SE, R S, SE S, SE SE S, SE S, SE, R S S, SE SE S, SE S, SE S, SE SE SE S, M, SE, S, SE S, M, SE S, SE, R R SE, M SE SE S, M, SE, S, SE M, SE S, SE S, M, SE S, SE S, M, SE S S, SE S, M, SE S, SE S, SE S SE S, SE S, SE S, SE
R R
R R R R
R R R
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*) S=Sales, M=Manufacture, SE=Service, R=Research & Development
er Business Area
Paper Mill Technologies Fiber Preparation Systems
anical ng Systems

Tissue Machines
Services

Feed Technology
Hydraulic Machines
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Addresses of the Andritz Group

Europe
Austria
Andritz AG Stattegger Strasse 18 8045 Graz Austria Phone: +43 316 6902 0 Fax: +43 316 6902 415 E-Mail: welcome@andritz.com Andritz AG Eibesbrunnergasse 20 1120 Vienna Austria Phone: +43 1 81 195 0 Fax: +43 1 81 37 645 E-Mail: welcome@andritz.com - Rolling Mills and Strip Processing Lines Phone: +43 1 81 195 0 Fax: +43 1 81 37 645 - Mechanical Pulping Systems Phone: +43 1 81 195 0 Fax: +43 1 81 55 358 - Kraft Mill Systems Phone: +43 1 81 195 6235 Fax: +43 1 81 195 6301 Anstalt fr Strmungsmaschinen Gesellschaft mbH Andritzer Reichsstrasse 68B 8045 Graz Austria Phone: +43 316 692 728 0 Fax: +43 316 691 575 E-Mail: welcome@astroe.at
Denmark
Sprout-Matador A/S Glentevej 5-7 6705 Esbjerg Denmark Phone: +45 72 160 300 Fax: +45 72 160 301 E-Mail: welcome@sprout-matador.dk Sprout-Matador A/S Skomagervej 12 7100 Vejle Denmark Phone: +45 72 160 300 Fax: +45 72 160 390 E-Mail: welcome@sprout-matador.dk
England
Andritz Ltd. Unit B, Sheepbridge Centre Sheepbridge Lane, Chesterfield Derbyshire, S41 9RX England Phone: +44 1246 260660 Fax: +44 1246 260760 E-Mail: welcome@andritzltd.com UMT Ltd. Stockholm Road, Sutton Fields, Industrial Estate Hull, HU7 0XL England Phone: +44 1482 825119 Fax: +44 1482 839806 E-Mail: sales.equipment.hull@ umt-group.com Frisby Extrusion Services Ltd. Tyson Courtyard, Cronin Road Weldon South Ind. Est. Corby, Northants, NN18 8AZ England Phone: +44 1536 263 545 Fax: +44 1536 205 184 E-Mail: welcome@fes-ltd.com Andritz Selas Engineering Ltd. Suite 5L, Business Centre North Mill, Bridgefoot Belper, Derbyshire, DE56 1YD England Phone: +44 1773 829954 Fax: +44 1773 829985 E-Mail: selasuk@compuserve.com
Finland
Andritz Oy Tammasaarenkatu 1 00180 Helsinki Finland Phone: +358 20 450 5555 Fax: +358 20 450 5109 E-Mail: finland@andritz.com Andritz Oy Keskikankaantie 9 15860 Hollola Finland
/ andritz 2002
Phone: +358 20 450 5555 Fax: +358 20 450 6711 E-Mail: woodprocessing@ andritz.com Andritz Oy Kyminlinnantie 6 48600 Kotka Finland Phone: +358 20 450 5555 Fax: +358 20 450 5540 E-Mail: finland@andritz.com
- Kraft Mill Systems Fax: +358 20 450 5190 - Fiber Preparation Systems Fax: +358 20 450 5422 - Pulp and Paper Mill Services Address: Lasimestarintie 5 Fax: +358 20 450 5048
126
Andritz Oy Lypsyniemenkatu 5 57200 Savonlinna Finland Phone: +358 20 450 5555 Fax: +358 20 450 6220 E-Mail: finland@andritz.com - Works Fax: +358 20 450 6239 - Kraft Mill Systems Fax: +358 20 450 6336 - Fiber Preparation Systems Fax: +358 20 450 6384
- Pulp and Paper Mill Services Fax: +358 20 450 6446 Andritz Oy Relanderinkatu 2 78200 Varkaus Finland Phone: +358 20 450 5555 Fax: +358 20 450 5974 E-Mail: finland@andritz.com - Kraft Mill Systems Relanderinkatu 2 Fax: +358 20 450 5974
- Pulp and Paper Mill Services Relanderinkatu 2 Fax: +358 20 450 5975 - Pivrinne Works Kiertotie 21-23 Fax: +358 20 450 5977 - Heat Exchanger Business Kiertotie 21-23 Fax: +358 20 450 5970
France
Andritz-Guinard S.A.S. 2-4 Avenue de lEurope Bt. A 78140 Vlizy-Villacoublay France Phone: +33 1 39 26 05 50 Fax: +33 1 39 26 05 60 E-Mail: welcome.fra@andritz.com Andritz-Guinard S.A.S. Z.I. Zinsel 67590 Schweighouse sur Moder France Phone: +33 3880 72730 Fax: +33 3880 72732 E-Mail: welcome.fra@andritz.com Andritz-Guinard S.A.S. Alle de la Garenne Z.I. Le Buxerioux 36000 Chteauroux France Phone: +33 2 54 61 3333 Fax: +33 2 54 61 3300 E-Mail: welcome.fra@andritz.com UMT S.A. Site dActivits des Grillonnires 37270 Saint Martin Le Beau France Phone : +33 247 50 6364 Fax : +33 247 50 2066 E-Mail: sales.france@umt-group.com Andritz Selas S.A.S. Parc Technologique des Barbanniers 3/5, Place du Village 92632 Gennevilliers, Cedex France Phone : +33 1 46 13 99 99 Fax : +33 1 40 85 84 33 E-Mail: sales@selas.fr
Germany
Andritz GmbH Stephanopeler Strasse 22 58675 Hemer-Sundwig Germany Phone: +49 2372 96 96 0 Fax: +49 2372 96 96 50 E-Mail: welcome@hem.andritz.com Andritz GmbH Bro Haan Pfalzstrae 1 42781 Haan Germany Phone: +49 2129 3750-0 Fax: +49 2129 3750-50 E-Mail: welcome.haan@andritz.com Andritz GmbH Zweigniederlassung Kirchheim Heinkelstrasse 19-21 73230 Kirchheim/Teck Germany Phone: +49 7021 50 74 0 Fax: +49 7021 50 74 10 E-Mail: roswitha.ruckdaschel@ andritz.com Universal Milling Technology eine Zweigniederlassung der Andritz GmbH Industriestrasse 15a 40822 Mettmann Germany Phone: +49 2104 91970 Fax: +49 2104 12054 E-Mail: sales.germany@umtgroup.com Sundwig GmbH Stephanopeler Strasse 22 58675 Hemer-Sundwig Germany Phone: +49 2372 54 0 Fax: +49 2372 54 200 E-Mail: welcome@sundwig.de
Netherlands
UMT Deurne B.V. Indumastraat 9 -13 5753 RJ Deurne Netherlands Phone: +31 493 314344 Fax: +31 493 310030 E-Mail: sales.deurne@umtgroup.com UMT Boxtel B.V. Ladonkseweg 1b 5281 RN Boxtel Netherlands Phone: +31 411 653500 Fax: +31 411 653505 E-Mail: sales.equipment.boxtel@ umt-group.com Thermtec B.V. Wijnhaven 76 3011 WT Rotterdam Netherlands Phone: +31 10 413 7628 / 10 280 1660 Fax: +31 10 404 7356 E-Mail: welcome@thermtec.nl
Europe
Finland
127
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Europe
Poland
Andritz AG Splka Akcyjna Przedestawicielstwo w Polsce Aleje Jerozolimskie 214 02 - 486 Warsaw Poland Phone: +48 22 87399 40 Fax: +48 22 87399 39 E-Mail: jacek.kabat@andritz.com
Russia
LLC Andritz 4th Krasnoarmeiskaya Street 4A 198005 St. Petersburg Russia Phone: +7 812 316 0913 Fax: +7 812 110 1582
Spain
Andritz Ingeniera S.A. Agustin y Antonia, 12 28700 S. Sebastin de los Reyes Madrid Spain Phone: +34 91 663 6409 Fax: +34 91 651 1931 E-Mail: andritz@andritz.net Andritz Ingeniera S.A. Calle Riera, 11-bajos 08190 Sant Cugat del Valls Barcelona Spain Phone: +34 93 674 9482 Fax: +34 93 674 9315
Switzerland
Andritz 3Sys AG Oberdorfweg 9 5610 Wohlen Switzerland Phone: +41 56 618 46 80 Fax: +41 56 618 46 81 E-Mail: mail@3sys.ch
Sweden
Andritz AB Artullsvgen 1 891 21 rnskldsvik Sweden Phone: +46 660 29 53 00 Fax: +46 660 29 53 99 E-Mail: info.swe@andritz.com Andritz AB Ivarshyttevgen 4 776 33 Hedemora Sweden Phone: +46 225 635 50 Fax: +46 225 635 51 E-Mail: info.swe@andritz.com Andritz AB Grsdalsgatan 7 653 43 Karlstad Sweden Phone: +46 54 55 54 50 Fax: +46 54 55 54 59 E-Mail: info.swe@andritz.com Andritz AB Gvlegatan 22 100 31 Stockholm Sweden Phone: +46 8 736 25 00 Fax: +46 8 736 25 29 E-Mail: info.swe@andritz.com Andritz Fiber Drying AB Kvarnvgen 351 87 Vxj Sweden Phone : +46 470 874 00 Fax : +46 470 876 44 E-Mail: flakt.drying@andritz.com
Americas
Brazil
Andritz Ltda. Rua Tabapu, 627 - Cj. 92 Itaim Bibi 04533-012 - So Paulo - SP Brazil Phone: +55 11 3168 6114 Fax: +55 11 3078 5098 Andritz Brasil Ltda. Rua Presidente Faria, 248 10th Floor 80020-290 - Curitiba, PR Brazil Phone: +55 41 304 7611 Fax: +55 41 224 0014 Andritz Ltda. Av. Presidente Castelo Branco, 1577, Sala 203 Caixa Postal 32 CEP 29.160-970 Carapina Serra Espirito Santo Brazil Phone: +55 27 9941 8107 Fax: +55 27 3318 1761 E-Mail: woodservice@attglobal.net Sprout-Matador do Brasil Ltda. Rua Dona Eugenia, 811 CEP 90630-150, Porto Alegre/RS Brazil Phone: +55 51 3219 9281 Fax: +55 51 3217 3307 E-Mail: esoffioni@hotmail.com
Chile
Sprout-Matador A/S Chile Ltda. Seminaro 202 Puerto Montt Chile Phone: +56 65 434 366 Fax: +56 65 434 367 E-Mail: smchile@sprout-matador.cl
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Andritz Ltd./Lte. 3339 rue Griffith Street Ville St-Laurent, Montreal Quebec H4T 1W5 Canada - Mechanical Pulping Systems Phone: +1 514 731 0404 Fax: +1 514 731 8558 E-Mail: maria.westaway@ andritz.com - Wood Processing Phone: +1 514 738 3707 Fax: +1 514 731 9422 E-Mail: bernard.oconnor@ andritz.com
Andritz Ltd./Lte. Service Center 45 Roy Blvd. Brantford Ontario N3R 7K1 Canada Phone: +1 519 754 4590 Fax: +1 519 754 4594 E-Mail: ross.scott@andritz.com Andritz Ltd./Lte. Service Center 3448-78 Avenue Edmonton Alberta T6B 2X9 Canada Phone: +1 780 465 3344 Fax: +1 780 440 4354
Andritz Fiber Drying Ltd. 8300 St. Patrick La Salle Quebec H8N 2H1 Canada Phone: +1 514 366 5160 Fax: +1 514 366 3608 E-Mail: jim.mclean@andritz.com
USA
Andritz Inc. 10745 Westside Parkway Alpharetta, GA 30004 USA Phone: +1 770 640 2500 Fax: +1 770 640 9454 E-Mail: welcome.atlanta@ andritz.com - Kraft Mill Systems Fax: +1 770 640 2603 - Pulp and Paper Mill Services Fax: +1 770 640 2455 - Wood Processing Fax: +1 770 640 2595 - Feed Technology Fax: +1 770 667 5222 Andritz Inc. 35 Sherman Street Muncy, PA 17756 USA Phone: +1 570 546 8211 Fax: +1 570 546 1306 - Pulp and Paper E-Mail: pp&b@andritz.com - Engineered Wear Products / Pulp and Paper Fax: +1 570 546 1312 E-Mail: info@durametal.com - Feed Technology E-Mail: sm@andritz.com Andritz Inc. 101 Ridge Street Glens Falls, NY 12804 USA Phone: +1 518 793 5111 Fax: +1 518 793 1917 - Fiber Preparation Systems Fax: +1 518 745 2858 - Pulp and Paper Mill Services Fax: +1 518 745 7005 - Fiberline R&D Facility Fax: +1 518 745 2971 Andritz Inc. R&D Facility 3200 Upper Valley Pike Springfield, OH 45504 USA Phone: +1 937 390 3400 Fax: +1 937 390 6827 Andritz Inc. Service Center 101 Bamberg Drive Pell City, AL 35125 USA Phone: +1 205 338 3331 Fax: +1 205 338 3334 Andritz Inc. TS Division 8259 Melrose Drive Lenexa, KS 66214 USA Phone: +1 913 541 1703 Fax: +1 913 541 1631 Andritz Inc. Service Center 1565 Callens Road Ventura, CA 93003 USA Phone: +1 805 642 7419 Fax: +1 805 642 7476 Andritz-Ruthner, Inc. 1010 Commercial Blvd. South Arlington, TX 76001 USA Phone: +1 817 465 5611 Fax: +1 817 468 3961 E-Mail: andritz@andritz-arl.com Andritz-Ruthner, Inc. 125 Technology Drive, Southpoint Industrial Park Canonsburg, PA 15317 USA - Rolling Mills and Strip Processing Lines Phone: +1 724 745 7599 Fax: +1 724 745 9570 E-Mail: welcome@andritz-na.com Andritz Inc. Engineered Wear Products / Pulp and Paper 9560 S.W. Herman Road Tualatin, OR 97062 USA Phone: +1 503 692 0850 Fax: +1 503 692 1169 E-Mail: info@durametal.com Voith Andritz Tissue LLC 101 South Main Street, Suite 400 Janesville, WI 53545 USA Phone: +1 608 758 5920 Fax: +1 608 758 5935 E-Mail: brad.dolbey@ voithandritz.com
Americas
Canada
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Asia
China
Andritz-Kenflo Foshan Pump Co., Ltd. 14 He Bin Road Foshan, Guangdong 528000 China Phone: +86 757 280 2050 Fax: +86 757 281 7010 E-Mail: welcome@fsh.andritz.com Andritz AG Representative Office Beijing 2702-03 CITIC Building 19 Jian Guo Men Wai Daije 100004 Beijing China E-Mail: andritz@public.bta.net.cn - Pulp Mill Technologies Phone: +86 10 6500 6413 Fax: +86 10 6500 6415 - Paper Mill Technologies, Rolling Mills and Strip Processing Lines, Hydraulic Machines Phone: +86 10 8497 0637 Fax: +86 10 8497 0638 Andritz Technologies Ltd. 14 He Bin Road Foshan, Guangdong 528000 China Phone: +86 757 280 2046 Fax: +86 757 280 2047 E-Mail: welcome@fsh.andritz.com
India
Andritz Technologies Pvt. Ltd. Makam Plaza, 2nd Floor No. 63/1, 3rd Main Road 18th Cross, Malleswaram Bangalore - 560 055 India Phone: +91 80 346 5995 Fax: +91 80 346 5997 E-Mail: andritz@vsnl.com Andritz Oy India Liaison Office 7, M.G. Bhawan, Flat No. 202-206 Local Shopping Centre, Madangir Road New Delhi 110 062 India Phone: +91 11 2608 3324 Fax: +91 11 2608 1227 Enmas Andritz Private Limited lV Floor, Guna Building Annexe 443, Anna Salai, Teynampet, Chennai 600 018 India Phone: +91 44 2 433 8050/51 Fax: +91 44 2 432 2412 E-Mail: eal@vsnl.com
Indonesia
PT. Andritz Gedung Bank Panin Pusat, 3rd Floor JI. Jend. Sudirman 1 Senayan, Jakarta 10270 Indonesia Phone: +62 21 725 0137 Fax: +62 21 571 0896
Japan
Andritz K. K. Toyo-cho, Shinei Bldg., 7F 4-chome 3-1 Toyo, Koto-ku, Tokyo 135-0016 Japan Phone: +81 3 5634 3450 Fax: +81 3 5634 3460
Singapore
Andritz Singapore Pte. Ltd. 171 Chin Swee Road #05-04 San Centre Singapore 169877 Phone: +65 6538 0093/94 Fax: +65 6538 0940 E-Mail: who@wwpe.com.sg
Thailand
Andritz Oy Pulp Mill Services c/o Ahlstrom Alcore 6th Floor, Yada Building 56 Silom Road, Bangrak Bangkok 10500 Thailand Phone: +66 2632 6873 Fax: +66 2632 6875 E-Mail: ja.chaweng@andritz.com
Australia
New Zealand
Andritz Pty. Ltd. 56-58 Gaine Road Dandenong South, Victoria 3175 Australia Phone: +61 38 795 9800 Fax: +61 39 799 4899 E-Mail: andritz@andritz.com.au Andritz Australia Pty. Ltd. 1450 Alfriston Road Alfriston Auckland 1750 New Zealand Phone: +64 9 266 2641 Fax: +64 9 266 2645
Africa
South Africa
Andritz (Pty) Ltd. Suite 105 A, York House, Aubrey Drive Glenashley 4022 Durban South Africa Phone: +27 31 562 8909 Fax: +27 31 562 8936
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Wood Processing
Wood processing plants and equipment Turnkey woodyards LogPorterTM portal cranes PowerFeedTM drum infeed conveyors De-icing conveyors Slasher decks Debarking drums Drum - chipper process lines HHQ-ChipperTM and other disc chippers Breakage chippers Chip and bark processing plants and equipment JetScreenTM Chip screens HQ-SizerTM for oversize chips Rechippers Bark shredders Bark presses Conveying, stacking and reclaiming systems for chip and bark Screw reclaimers like PowerScrewTM, CenterScrewTM, ParaScrewTM, and CantiScrewTM HelpTM presteaming bins and dischargers Groundwood processing plants and equipment Automatic grinder charging systems LogScanTM log sorting system Automation systems for woodyards DrumMaticTM for debarking process optimization LogScanTM for automatic log sorting BarkScanTM for wood loss measurement WoodScanTM for debarking degree measurement
Kraft Mill Systems

Fiberlines and fiberline equipment EPC fiberlines (cooking, washing, screening and bleaching) Digesters Washers Knot separation and screens Oxygen delignification systems Bleach plants Bleached pulp screens Chemical recovery plants and equipment EPC chemical recovery islands Black liquor evaporators Effluent evaporators Condensate stripping systems Heat recovery systems Chemical recovery boilers NCG handling systems Cooking liquor chemical preparation plants and equipment Recausticizing plants Lime reburning kilns White liquor oxidation systems

Refiner systems Complete systems for mechanical pulping: chip washing, feeding, impregnation, pretreatment, refining, screening, cleaning, dewatering and heat recovery Refiners for high, medium, and low-consistency Control, simulation and training systems for all types of refiners and refiner systems Production systems for the panelboard industry Complete mechanical pulping systems incl. chip washing and pressurized refining for fiber production for HDF and MDF board Atmospheric refiner systems for the production of raw material for the particleboard industry Laboratory refiner systems Pulp washing and bleaching systems Medium and high-consistency bleach plants for mechanical pulp and annual fibers Bleaching stages based on peroxide, oxygen, ozone and dithionite Wash presses Medium and high-consistency mixers Medium and high-consistency tower feed and discharge systems Medium-consistency pumps Dewatering systems Twin-wire presses Screw presses Disc filters
Pulp and Paper

131
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Product Range
Product Range
Product Range
Pulp and Paper

Systems for dewatering and drying market pulp Complete sheet drying plants Flash drying plants Screening systems Wet lap systems Dewatering machines for sheet and flash drying plants Heavy duty presses, shoe presses Wet cross cutters and layboys Cutters/Layboys for pulp Bale transport and finishing lines Pulp dryers Dryers for market pulp Dryers for flash drying plants
Fiber Preparation Systems

Stock preparation systems for paper, board and tissue machines Bale and UTM pulpers Deflakers Refiners Cleaners Deaeration systems Headbox screens Broke handling systems Filler recovery systems Savealls and water management systems Recycled fiber systems, deinking and industrial grades LC/HC pulpers, drum pulpers Fine and coarse screens Flotation systems Washing/Deashing systems Cleaners Disc filters, thickeners Twin-wire and screw presses Dispergers Bleaching systems Water management systems Sludge handling for pulp and paper industry Gravity tables Sludge screw presses Continuous pressure filters
Tissue Machines
(in cooperation with Voith Paper)

Crescent formers, S-Wrap and C-Wrap twin-wire formers for single-ply or multi-layer sheet formation Through-Air Dryers, TissueFlexTM shoe press
Greenfield tissue machines, new components, machine modernizations
Ventilation and Drying Equipment

High-efficiency Yankee dryer hoods (300C - 700C) Compact hoods for larger tissue and paper dryers Impingement dryers for paper and board machines Web stabilizers and steam blow boxes Paper and board machine ventilation systems Dust extraction systems Hall ventilation systems
Pulp & Paper Mill Services

OPETM Services - Overall production efficiency programs for pulp and paper mills - Equipment service to mill maintenance outsourcing Automation & controls - Tools for measuring, diagnosing and optimizing processes Upgrades - Modernization of existing equipment for improved reliability and efficiency Rebuilds - Reconditioning of machinery through Andritz facilities or certified partner rebuild/service shops Parts and consumables - OEM spare and wear parts - Inventory optimization - Spare part hotels Engineered wear products - DurametalTM refiner plates - FiberSentryTM screen baskets Field services - 24-hour emergency support - Troubleshooting, optimization - Operator and maintenance training - Inspections, mill and process improvement studies - Shutdown planning, coordination and implementation Dynamic process simulation
132
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Rolling mills Turnkey cold rolling mills Two-high, four-high, combined mills and S-high mills 6, 12, 20-high rolling mills Skin-pass mills Roll adjustment and strip thickness regulation systems Flatness measuring and adjustment systems Strip processing lines Push pickling lines Continuous pickling lines for carbon steel Annealing and pickling lines for hot-rolled stainless steel strip for cold-rolled stainless steel strip for hot and cold-rolled stainless steel strip - with electrolytic or acid pickling (horizontal or vertical design) - with horizontal furnaces Degreasing plants Electrolytic galvanizing lines (Gravitel) Electrolytic tinning lines
Hot-dip galvanizing systems Carbon-steel coating lines Combined aluminium annealing and coating lines Stainless steel bright annealing lines with vertical muffle furnace Grinding, sandblasting, polishing and customized surface treatment systems Finishing systems Slitting lines Cut-to-length lines Packing lines for narrow and wide coils and for plates Large levelling machines and precision levelling machines Regeneration and oxide plants Plants for regeneration of waste acid and rinse water from pickling carbon steel (hydrochloric acid) based on spray roasting and fluidized bed technologies Plants for regeneration of waste acid and rinse water from pickling stainless steel (Pyromars mixed acid process)
Plants for producing high-purity metal oxide and mixed oxide Plants for ore treatment (TiO2, Ni) Plants for waste acid purification (WAPUR) Annealing furnaces Vertical furnaces (including muffle furnaces) Horizontal furnaces Turnkey systems for producing Foils for screen masks Thermostatic bimetals Razor blade strip Special material for the electronics industry Stainless steel strip
Water treatment Sand filtration systems Waste water treatment Raked and perforated plate screens Static and rotary screens and sieves Sludge thickening Belt thickeners Drum thickeners Decanter centrifuges Sludge dewatering Belt filter presses High-performance decanter centrifuges FlocSave flocculent preparation system
Sludge drying Drum drying plants Fluidized bed drying plants Belt drying plants Thermal sludge utilization EcoDry granulate burning plants Industrial solid/liquid separation Hyperbaric pressure filters Vacuum filters Belt filter presses Decanter centrifuges Screen centrifuges
Equipment for the steel, stainless steel, non-ferrous metals and aluminium industry
133
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Product Range
Feed Technology
Product Range
Raw material size reduction Hammermills Disc mill refiners Roller mills Crumblers Mixing of feed ingredients Horizontal ribbon mixers Horizontal paddle mixers Vertical mixers Weighing and metering Hopper scales Loss-in-weight weighing systems Micro ingredients weighers Belt weighers Liquid dosing equipment Conditioning and expanding Single-shaft conditioners Twin-shaft conditioners Thermal feed expanders Pelleting Pellet mills, gear driven Pellet mills, belt driven Extrusion Single-screw extruders Drying and cooling of pellets Horizontal belt dryers Horizontal belt coolers Counter-flow coolers
Coating of pellets Drum coaters Vacuum coaters Micro fluid systems Dust separation filters Filters for conveyor aspiration Rectangular free standing filters Modularly built filters Cylindrical free standing filters Intake hopper filters Material separation and cleaning Roto-Shaker screeners Rotary feed dressers Conveying equipment Chain conveyors Bucket elevators Screw conveyors Rotary valves Process controls Pellet mill/Feed expander controls Extruder controls Dryer/Cooler controls Hammermill controls Weight controls Wear and spare parts Pellet mill dies and rolls Expander and extruder screws Extruder dies and barrels Hammermill screens and hammers
Water turbines Kaplan turbines Francis turbines Pelton turbines Storage pumps Shut-off devices Compact turbines Turbine governors Large-scale pumps Axial-flow pumps Mixed-flow pumps Volute casing pumps Pumping stations Centrifugal pumps Stock pumps Medium-consistency pumps Fan pumps Pumps for flue-gas desulphurization systems
Reactor pumps Main-coolant pumps Secondary-loop pumps Components for handling fuel elements Space technology Components for launcher rockets
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Annealing
Process in which metal is heated, retained at a suitable temperature, then cooled rapidly or slowly to reduce internal stress. As a result, the metal becomes softer and more workable, particularly in cold processes.
APMP/P-RC
Alkaline Peroxide Mechanical Pulping/Preconditioning Refiner Chemical treatment: A refiner process in which the bleaching chemicals are added right away during chip impregnation. First the chips are pressed, then the pressure is relieved and the chemicals added at the same time. This process does not require a secondary bleaching stage and is thus much cheaper for standard brightness degrees than conventional CTMP processes.
Bright annealing
Annealing process, particularly for stainless steel, carried out in an oxygen-free environment in order to avoid oxidation.
Calendering
Process in which untreated paper is passed between two rolls at very high pressure to give the paper a glazed finish.
CTMP
Chemo Thermo Mechanical Pulping: Process based on the TMP process, with additional chemicals being used to soften the lignin and reduce the energy input required to produce mechanical pulp.
Debarking drum Deinking Disperging
Machine for removing the bark from logs. A core process in waste paper treatment, used to remove printer's ink from the fibers. Disperging is a process stage in treatment of recycled fibers. Several process stages are needed to remove the impurities, e.g. glue, ink, from the fibers. It is impossible, however, to eliminate all impurities. What the disperging process does is to reduce these particles to such a small size that they are no longer detrimental.
Extruder
A continuous process in which animal feed components are cooked under pressure in a combination of frictional and steam heat in order to expand the resulting product and convert it into feed granulate. This process is very common in production of pet food, fish feed, and cereals.
Galvanizing
Process in which a support metal, such as iron or steel, is coated with a thin layer of zinc by electrolysis or hot dipping (in molten zinc) to provide protection against corrosion.
Hammermill
Plant for pulverizing raw materials for animal feed; the raw materials are hammered against the sides of a metal drum by steel hammers.
Kraft mill MDF Mechanical pulp
Facility in which pulp is produced using the sulphate chemical process. Medium Density Fiberboard (board made of mechanical pulp from the refiner process) Pulp containing lignin, made by grinding wood mechanically or by refining wood chips, mainly used to make newspaper and other printing grades containing wood pulp.
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Glossary of Technical Terms
Microfluid dosing system OSB Pickling
System for treating feed pellets, in which the pellets are coated with micro-amounts of liquids, such as enzymes and vitamins. Oriented Strand Board Process for chemical treatment of oxidized steel, applied to obtain a clean, metallic surface. Here, the steel is dipped into a hot bath of diluted sulphuric or hydrochloric acid.
Pulp
The raw material for making paper, produced either chemically or mechanically by removing the cellulose fibers from the structure of the wood or from other materials, such as used/recycled rags, bagasse, and straw.
Refiner
Machine for breaking down wood chips into fibers between two rotating surfaces, used in production of mechanical pulp.
Rolling mill
Plant in which steel strip is formed between two rolls rotating at the same speed in opposite directions.
RTS
Retention Time, Temperature, Speed: Refiner process that produces a better quality of mechanical pulp at lower energy consumption. Better fiber properties are obtained with a precisely controlled retention time in the refiner, higher temperature, and higher pressure at the chipper before the refiner, which is operated at high speeds of up to 2,300 rpm.
Stock pump Thickener
Special centrifugal pump for water and fiber suspensions. Device for removing water from a pulp suspension. The fibers are collected on the surface of a perforated cylinder.
TMP
Thermo Mechanical Pulping: Process in which chips are steamed under pressure to break up the wood structure, then refined to produce fiber pulp.
Wet end
Section at the beginning of a paper or pulp dewatering machine. At the wet end, the pulp enters the machine and the bulk of the water is removed by dewatering, suction, and press rolls in order to obtain a paper web that can be fed through a drying section.
Vacuum coater
System used in the fish feed and pet food industry to soak the core of the feed particle with liquid by means of vacuum infusion.
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Order Intake reaches record level Sales and Earnings below previous year Continuation of complementary acquisitions Andritz

Pulp and Paper

Rolling Mills and Strip Processing Lines

Environment and Process Technologies

Other Operations / Hydraulic Machines

We engineer the future

Highlights of the 2002 Business Year

space technology: Other Operations / Hydraulic Machines.

The Company Boards

150th Anniversary of Andritz - The Milestones

The Year 2002 at Andritz

Letter from the Managing Board

Friedrich Papst Wolfgang Leitner (President and CEO)

Markku Hnninen Franz Hofmann / andritz 2002

Letter from the Managing Board

Letter from the Managing Board

Rolling Mills and Strip Processing Lines

Pulp and Paper

Sources: OECD, WIFO

Environment and Process Technologies

60% 16% 11% 10% 3%

Order Intake reaches record level in 2002

2002 1,110.1 80.9 7.3% 58.7 5.3% 45.3 45.7 27.6

2001 1,318.7 94.5 7.2% 68.0 5.2% 54.6 60.1 37.5

% change -15.8% -14.4% -13.7% -17.0% -24.0% -26.4%

Net Income for the Year (including minorities)

Andritz expects increase in Sales and Net Income in 2003

The Business Areas of the Andritz Group at a Glance

Environment and Process Technologies

Other Operations / Hydraulic Machines

Space technology components

The Business Areas of the Andritz Group at a Glance

Pulp and Paper

Pulp and Paper

Pulp and Paper

Pulp and Paper

Increase in Order Intake

Pulp and Paper

Pulp and Paper

Pulp Mill Technologies

Wood Processing Division

Pulp and Paper

Pulp and Paper

Pulp Mill Technologies

Kraft Mill Systems Division

Pulp and Paper

Pulp and Paper

Pulp and Paper

Pulp and Paper

Pulp Mill Technologies

Pulp Mill Services Division

Pulp and Paper

Pulp and Paper

Mechanical Pulping Systems

Pulp and Paper

Paper Mill Technologies

Pulp and Paper

Pulp and Paper

Pulp and Paper

Pulp and Paper

Pulp and Paper

Paper Mill Technologies

Fiber Preparation Systems Division

This order features several newly developed