annual report würth group 2007 · klaus hurrle p.04 sabrina walz p.08 urs straumann p.12 würth...

2007 WITH A PASSION …

ANNUAL REPORTWürth Group 2007

KLAUS HURRLE P.04 SABRINA WALZ P.08 URS STRAUMANN P.12

Würth people with a passion –

at Würth Solergy and on his

boat, which he has lovingly

restored.

Würth people with a passion.

Always in motion – on the

Würth training program and in

her jazz dance group.

Würth people with a passion

and ambitious goals. His

goal-directed approach and

stamina are put to the test

as a sales representative and

in alpine marathons.

WORKING FOR OUR CUSTOMERS – WITH HEART AND SOUL:

FRANK DE BEUKER P.16

Würth people with a passion.

As manager of the vehicle

fl eet or gliding through the

air – he is committed body

and soul.

Wür

th p

eopl

e w

ith

a pa

ssio

n.

>>

>>

--CONTENTS--

68 GROUP MANAGEMENT REPORT OF THE WÜRTH GROUP (2) The operational units of the Würth Group

70 REPORTS FROM THE DIVISIONS OF THE WÜRTH LINE

70 Auto Division 71 Metal Division 72 Wood Division 73 Construction Division 74 Industry Division

75 REPORTS FROM THE ALLIED COMPANIES

75 Electrical Wholesale 76 Tools 77 reca Group 78 Trade 79 Production 80 Electronics 81 Screws and Standard Parts 82 Financial Services

83 THE WÜRTH LINE COMPANIES 86 ALLIED COMPANIES

92 MILESTONES IN THE COMPANY‘S HISTORY

94 CONSOLIDATED FINANCIAL STATEMENTS

IMPRINT/CONTACT DETAILS

02 WÜRTH AT A GLANCE

04 WÜRTH PEOPLE WITH A PASSION

24 REPORT OF THE ADVISORY BOARD

27 THE SOURCE OF OUR STRENGTH IS RESPECT

31 FOREWORD BY THE CHAIRMAN OF THE CENTRAL MANAGING BOARD

34 THE BOARDS OF THE WÜRTH GROUP

37 GROUP MANAGEMENT REPORT OF THE WÜRTH GROUP (1)

37 Economic environment 38 Business development 38 Sales by region 40 Results of operations, net assets and fi nancial position 45 Employees 46 Research and development 47 Risk report 48 Corporate governance report 49 Subsequent events 50 Outlook

51 WÜRTH COMMITMENT

52 Interview with Prof. Dr. h. c. mult. Reinhold Würth 58 The Charitable Würth Trust 60 Art at Würth 62 Art and culture calendar 64 Akademie Würth 66 Representative offi ces

May we introduce you to Würth people with a passion ...

… WHETHER CLIMBING THE HIGHEST MOUNTAINS OR LOVINGLY

RESTORING EVEN THE TINYEST OF DETAILS, WHETHER THEY ENJOY

THE CHALLENGE OF FINDING THE RIGHT WORD OR MANAGE

CARS WITH DEVOTION – THEY ALL HAVE ONE THING IN COMMON:

IT IS PASSION THAT DRIVES THEM – A PASSION FOR WHAT THEY DO.

True, we are the largest supplier of assembly and fastening materials for trade and industry worldwide. What is

not true is that money is our only incentive. Making a profit is not what drives us. It is passion. We love selling.

We want to inspire our customers. We want our enthusiasm to be contageous. We want to provide ideas that

advance our customers’ business. We do what we do with a passion, whole-heartedly, never losing sight of our goal.

-- WÜRTH PEOPLE with a passion --

2

2003 2004 2005 2006 2007

Sales in millions of EUR 5,453 6,203 6,914 7,748 8,489

Employees number 41,952 46,973 50,767 54,906 63,699

Pre-tax operating result* in millions of EUR 330 395 455 515 640

Net income for the year in millions of EUR 225 263 335 307 419

Gross cash flow in millions of EUR 431 484 571 605 745

Capital expenditure in millions of EUR 217 237 310 425 479

Equity in millions of EUR 1,502 1,715 2,049 2,278 2,402

Total assets in millions of EUR 3,127 3,619 4,138 5,083 5,680

Würth Group

The consolidated financial statements of the Würth Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) since 1999.* Earnings before taxes, impairment of goodwill and financial assets, and changes recognized in profit or loss of minority interests disclosed as liabilities

Pre-tax operating result and return on sales Würth Group

150

300

450

600

330

2003

455

640

2005 20072004

6.0

3.0

9.0

12.0

6.67.5

SalesWürth Group

in millions of EUR

1998 1999 2000 2001 2002 2003

4,110

5,136 5,277

2004

2,000

4,000

6,000

8,000

2005

6,914

2007

8,489

2006

7,748

6,203

5,453

--WÜRTH AT A GLANCE--

515

2006

6.73,620

5,360 395

6.46.1

Operating result in millions of EUR

Return on sales as a percentage

3

Würth family trusts

Adolf Würth GmbH & Co. KG*

Germany

Würth Promotion Ges.m.b.H.*

Austria

Würth Beteiligungs-GmbH & Co.KG*

Germany

German subsidiaries German subsidiaries Subsidiaries outside Germany Subsidiaries outside Germany

Würth International AG

Switzerland

Würth FinanceInternational B.V.

Netherlands

Reinhold Würth Holding GmbH

Germany

The Würth Group has its origins in the sale and distribution of assembly and fastening materials. The Würth Line

companies continue to serve this segment in which Würth is the world market leader.

In addition, the Würth Group comprises the Allied Companies trading under their own name. With business

activities closely related to the core business or diversified, these companies are developed further and expanded

successfully.

In addition to the traditional range of screws, screw accessories, dowels and plugs, tools and chemical pro-

ducts, the Würth Group also sells protective clothing, products for DIY and hardware stores, electrical installation

materials, electronic components such as printed circuit boards, financial services and solar modules. Strict quality

standards apply for all products of this range.

The parent company of the Würth Group, Adolf Würth GmbH & Co. KG, was founded by Adolf Würth in 1945

in the town of Künzelsau in Baden-Württemberg, Germany. After the sudden death of his father in 1954, Prof.

Dr. h. c. mult. Reinhold Würth, today Chairman of the Supervisory Board of the Würth Group’s Family Trusts, took

over the business and steadily enlarged it, making it a group with worldwide operations. In the fiscal year 2007

the Würth Group had 400 companies serving the markets in 86 countries. More than 2.9 million customers place

their trust in the Würth Group. But Würth stays a family business at heart. Bettina Würth has been the Chairwoman

of the Advisory Board of the Würth Group since March 1, 2006.

--LEGAL STRUCTURE OF THE WÜRTH GROUP (simplified chart)

--

--SUCCESS THROUGH DYNAMIC GROWTH ANDINNOVATIVE POWER--

* Parent companies within the Würth Group

WÜRTH AT A GLANCE FOREWORDS THE BOARDS GROUP MANAGEMENT REPORT(1) WÜRTH COMMITMENT GROUP MANAGEMENT REPORT (2) COMPANIES

“’If you want to build a ship, …

… don’t drum up the men to gather wood, divide the work and give orders. Instead, teach them to yearn for the

vast and endless sea.’ Like for Antoine de Saint-Exupéry, for me the passion for what I do is my greatest moti-

vation. Being a member of the technical in-house staff at Würth Solergy means being fl exible and open to new

developments to keep pace with the rapid changes in technology. And the same applies to restoration work – the

attempt to preserve the old and make it useable at the same time calls for the same qualities of openness and

fl exibility.”

>> Not giving up on a dream, that’s what passion means for me.

WHAT IS PASSION FOR YOU?

--SETTING SAIL FORTHE UNKNOWN--


-- 05 --

Klaus Hurrle works in the in-house technical service at Würth Solergy. He designs photovoltaic plants with CIS modules from Würth Solar. He devotes all his free time to restoring a sailing yacht.

KLAUS HURRLETechnical consultant and boat builder/restorer

--STEP BY STEP

TOWARDS THE BIG GOAL--

>> THROUGH CREATIVITY AND PERSEVERANCE, A CONSTRUCTION PLAN BECOMES A SAILING YACHT.

AN INTERVIEW WITH KLAUS HURRLE

01 -- How long have you been working on the boat? -- I bought a regatta yacht built in 1923 back in 1999, almost

ten years ago that is. But it will probably take another fi ve years until I can sail in it. ------

02 -- What do you fi nd so fascinating about old boats? -- I love working with wood. Wood is a warm material,

which is used to make simple things as well as the most beautiful sailing yachts. I must admit that the idea of

preserving something that would otherwise be left to rot and be lost forever if I didn’t do anything does make

me proud. ------

03 -- And when the restoration work is all done? -- I look forward to seeing the yacht in the water and taking my

family and friends on many a sailing trip. ------

04 -- There can’t be much overlap between working as a technical consultant at Würth Solergy and ship-

building. Where did you get the know-how? -- Many years ago, I helped to restore a pirate vessel. I learnt loads

about working with wood in the process. I read up a lot about it and am not afraid to ask experts for advice if

necessary. ------


“I support our service partners and our customers at Würth Solergy with the installation of solar power plants.

I am the contact person for technical questions and make sure that any problems are solved quickly and unbu-

reaucratically as they arise. No working day is like another. This fl exibility in adapting to new challenges also

stands me in good stead when restoring my boat. I thrive on tackling new questions and enjoy bringing projects

to a successful conclusion.”

--ENJOYING NEW CHALLENGES--

>> MAKING DREAMS COME TRUE

-- 07 --

“When dancing in a group …

… the main thing is for each individual to integrate themselves in the group and accept the opinion of others.

During my training period at Würth, I have discovered that the situation in a company is very similar. I appre-

ciate the support from my colleagues in my work and also that I can contribute ideas and thoughts myself.”

--THIS IS TEAMWORK – LINKING UP IDEAS--

>> Putting my heart in what I’m doing and having fun

without missing a beat.



-- 09 --

Sabrina Walz is a trainee at Adolf Würth GmbH & Co. KG, the parent company of the Würth Group. She is training to become a wholesale and foreign trade clerk. She lives out her passion for dancing as leader of a jazz dance group.

SABRINA WALZTrainee and dancer

--SHOWING WHAT YOU’RE MADE OF--

“When preparing for competitions, two factors are decisive. One is enjoying dancing. The other is the desire to get a

good placing or perhaps even win the competition. When choosing what to train for, it was important for me to fi nd

something that I like doing. At the same time, I sincerely want to fulfi ll all expectations placed in me – partly also

because I know that I can shape my own future that way.”

>> GETTING THINGS MOVING – AND PEOPLE


-- 11 --

>> REACHING NEW HEIGHTS WITH WÜRTH

--BEING CREATIVE

TOGETHER--

01 -- Do you do jazz-dancing just for fun or do you take part in competitions? -- Well, we don’t just go in for

competitions. We also want to have fun together and try things out. At the moment, we are in training for

the Württemberg championships. It’s good to have a goal to work towards. After all, we want to show what we

can do. ------

02 -- How do you manage to keep your group motivated? -- Through variety. For me, the main thing is that I

enjoy dancing. I always welcome suggestions from others when it comes to planning our training sessions.

We might even just play a round of volleyball, for example, if we feel like it. ------

03 -- So you all decide about the music and the choreography together? -- Yes. We all get on really well.

Sometimes we start going round in circles and then I intervene to reach a decision. ------

AN INTERVIEW WITH SABRINA WALZ

--THE WILLPOWER TO GO RIGHT TO THE TOP--

>> When you’re standing at the top: this feeling of having made it brings me back time after time.


“In sport, you need...

… motivation and stamina to keep you on track to reach your goal. Once you have reached your goal, all the hard

work is forgotten. The same applies to my job: As area manager working in the sales force, my team of ten and

I face a new challenge every day. Sometimes, you fi nd yourself in a situation where you feel like you’re facing

a huge mountain. But we tackle such situations as a team and it soon becomes clear that you can successfully

master any challenge regardless of how big it may be if you have the right attitude.”


-- 13 --

Area manager at Würth Switzerland, Urs Straumann tours the eastern Switzerland/Graubünden region together with ten sales represen-tatives for the Auto Division. His passion is running.

URS STRAUMANNArea manager and endurance sportsman

--POSITIVE THINKING

SPURS YOU ON--

01 -- You run alpine marathons. Were traditional marathons not enough? -- (laughs) I wanted to test my limits

and through training and willpower discovered great reserves that I didn’t know I had. That’s how I came to do

extreme sports after being an ordinary marathon runner. You want more, want to go higher, farther. The next

challenge after running traditional marathons was an alpine marathon, then the ultramarathon over 100 km.

I also take part in long-distance triathlons: swimming 3.8 km, cycling 180 km and running 42.195 km. ------

02 -- How do you manage to keep motivation going after 20 km? -- I always think positively. I don’t start thinking

how many kilometers I have yet to run, but how far I’ve come. ------

03 -- Do you see any connection between a person’s choice of hobby and their job? -- It must surely play a role.

For me, the same applies to marathons as to my job; it’s not about being always the fi rst past the post, but

about giving everything. ------

AN INTERVIEW WITH URS STRAUMANN

>> OVER SUCH A LONG DISTANCE, ANYTHING CAN HAPPEN – IT’S AN ADVENTURE.


“I started out at Würth as sales representative for the Auto Division. In January, I was made area manager.

Many individual sales representatives in a region make up a team that works together to achieve success.

As I see it, my job is to give each individual the support they need and to be approachable.”

--CROSSING THE FINISHING LINE TOGETHER--

>> THE TEAM VISITING A CUSTOMER

-- 15 --

“As head of the vehicle fl eet, I manage ...

… something like 450 vehicles for Belgium and Luxembourg. Like in a small company, I am responsible for

purchasing the cars, negotiating prices and rebates, analyzing the market and also negotiating with leasing

partners. The principle is quite simple. In order to succeed, I take certain calculated risks. The more successful

I am, the more freedom I am given to make decisions. The same applies in the air. Up there, I have to take full

responsibility for myself. Only if I’m prepared to accept that, and make the most of wind and thermal conditions

will I experience a fl ight never to be forgotten.”

>> Doing something with heart and soul.



--ASSUMING RESPONSIBILITY –AN UPLIFTING EXPERIENCE --

-- 17 --

Frank de Beuker works for Würth Belux as vehicle fl eet manager. When he took up hang-gliding, it was a childhood dream come true. His hang-glider has a wingspan of ten meters. Two or three times a year, he packs it onto the roof rack of his motor home to go fl ying.

FRANK DE BEUKERVehicle fl eet managerand hang-glider

--BEING PART OF THE SUCCESS--

“The Würth sales force needs cars to get to the customers every day. The vehicle fl eet gives them this mobility.

The feeling that I can contribute to the company’s success if I do my job well motivates me every day.”

>> THE FREEDOM THAT I HAVE FOUND IN FLYING IS ALSO THERE IN MY WORK AT WÜRTH.


-- 19 --

>> IT FEELS AS IF YOU WERE BEING CARRIED ALONG BY A THOUSAND LITTLE HANDS.

--DOWN TO EARTH

--

01 -- Why did you choose hang-gliding? -- Flying has always been one of my dreams, ever since my childhood;

originally I wanted to be a jet pilot. I also always wanted to have a motor home – and the fantastic thing is, my

dreams have come true. ------

02 -- What does it feel like to fl y? -- It’s absolutely stunning! You glide along above the ground, everything is be-

low you and you get this feeling of boundless freedom. Everything around you suddenly becomes so unimportant.

You are nothing but a leaf fl oating through the air. ------

03 -- Are you not afraid that something could happen? -- I have been fl ying for almost ten years now. When

I go to a take-off point, I can tell immediately from experience whether I can fl y or not. If the elements don’t

want you to fl y, you don’t fl y. It makes you realize that we can’t control everything. It’s all about calculating and

weighing risks. ------

INTERVIEW WITH FRANK DE BEUKER

24

--REPORT OF THE ADVISORY BOARD--

Bettina Würth

Ladies and Gentlemen,

The Würth Group again achieved record sales and operating result in the fiscal year 2007, as in the

prior year. It is therefore a great pleasure for me to have the opportunity to present this Report of

the Advisory Board for 2007 to you. On behalf of the Advisory Board of the Würth Group, I would

like to report on the business development and the work of this Advisory Board.

The past year started out rather sluggishly in the euro area. We had to wait until mid-year for

growth to accelerate again and were pleased to see that the economy had grown by 2.6 percent by

year-end. Despite this positive development, economists across the board agree that the economic

development in the euro area has peaked.

The economies will have a number of factors to contend with in 2008. First and foremost, there

is the global credit crisis, ignited by the dramatic development on the U.S. mortgage market in the

second half of 2007. It is not yet possible to assess the damage that it will cause for the economy

as a whole. Then, there are the lending standards which have become much stricter as a result of

the subprime crisis, coupled with liquidity bottlenecks, which are putting a damper on companies.

In addition, for companies in the euro area, the strong appreciation of the European key currency

against the U.S. dollar is hampering exports. Although oil prices have reached record levels once

again, experts are already talking about crude oil prices doubling again in the near future. Never-

theless, global economic output improved by 4.7 percent in 2007 on the prior year.

The emerging Asian countries such as China and India in particular displayed a strong econo-

mic development. The Chinese economy, for example, is still growing at an extremely fast pace – in

spite of political efforts to avoid overheating. The increase in production was stronger than ever.

The driving forces behind this rapid economic growth in China are still exports and capital expen-

ditures. India, too, continued on its course for rapid economic expansion, here mainly on the back

of strong domestic demand.

The German economy has gained much momentum over the past two years, closing the year

2007 with growth of 2.5 percent. This healthy development also benefited the labor market. Still,

the increase in value added tax from 16 to 19 percent at the start of 2007 had a significant impact

on spending in some areas, for example on new vehicle registrations. The surge in major commodity

and energy prices, the noticeable increase in demand for agricultural products and calls for substan -

25

tial pay raises in various sectors of the economy unfortunately also fuel fears of rising inflation rates.

For the current year 2008, we expect international demand to cool off and domestic demand to rise.

The German economy will therefore probably continue on its course for expansion with somewhat

less momentum.

The Advisory Board was particularly pleased to see that the Würth Group succeeded once again

in setting new records in sales and operating result in the past year. The group raised its annual

sales by 9.6 percent to EUR 8.49 billion. The operating result came to EUR 640 million, an increase

of 24.3 percent.

The 81 German companies in the Würth Group contributed EUR 3.45 billion, which corresponds to

sales growth of 10.4 percent. Particular mention should be made of the parent company Adolf

Würth GmbH & Co. KG, which succeeded for the first time in December 2007 in recording annual

sales in excess of one billion euros. The foreign entities of the Würth Group increased their sales

by 9.0 percent to EUR 5.04 billion.

Across the Würth Group, it is above all our employees whose motivation and creativity is

de ci sive for the group’s success and paves the way for future growth. In this respect, we feel that

creating and safeguarding jobs is an investment decision of fundamental importance. For the

second year in a row, the Würth Group has managed to create more than 1,000 new jobs in Germany.

As of year-end 2007, it employed 63,699 persons worldwide – 8,793 or 16.0 percent more than

in the prior year.

Following the acquisition of the U.S. company Midcom, a manufacturer of transformers, for the

first time in 16 years the Würth Group had more in-house staff than sales staff in 2007. Our head-

count of in-house staff went up by 27.7 percent to 33,049 employees. Our sales force was enlarged

by 1,630 sales people, bringing the total number of employees representing our companies at the

customer to 30,650. This is an increase of 5.6 percent.

The Würth Group is thus represented by 400 independent entities in 86 countries (prior year:

370 companies). Most recently, sales companies were founded in Costa Rica and Pakistan.

Work of the Advisory Board

The Advisory Board of the Würth Group had three in-depth meetings in 2007. It was regularly

informed by the Central Managing Board on a timely and in-depth basis of all issues of relevance

for planning, business development and risk management. All transactions subject to approval

pursuant to the company statutes were submitted to the Advisory Board for decision in good time,

considered in detail, and then approved.

The Chairwoman of the Advisory Board also attended numerous meetings of the Central Mana-

ging Board, providing advice on important planning and strategy matters. The Chairwoman of the

Advisory Board visited 22 Würth Group companies in 2007.

The Advisory Board’s investment committee met on December 6, 2007 to discuss the investment

proposals for fiscal 2008. The Advisory Board afterwards approved capital expenditures for 2008

with a total volume of EUR 590 million.

> Report of the Advisory Board

WÜRTH AT A GLANCE FOREWORDS THE BOARDS GROUP MANAGEMENT REPORT (1) WÜRTH COMMITMENT GROUP MANAGEMENT REPORT (2) COMPANIES

26

The Advisory Board’s audit committee met four times in 2007. It discussed in detail the consolidated

financial statements and group management report, as well as the audit report issued by the audit

firm Ernst & Young. The chairman of the audit committee reported in detail to the Advisory Board

on the results of the committee’s work, which also included the separate financial statements of

major companies. Ernst & Young AG in Stuttgart audited the consolidated financial statements

and the group management report, and issued an unqualified opinion thereon.

The Advisory Board’s personnel committee held two meetings to discuss issues including per-

sonnel development, upcoming managers and succession planning.

The Advisory Board also performed an efficiency examination in accordance with No. 5.6 of the

German Corporate Governance Code in order to review its own work and discover potential for

future improvement.

The Advisory Board of the Würth Group would like to thank the Central Managing Board and

the Supervisory Board of the Würth Group’s Family Trusts for the good working relationship, espe-

cially Robert Friedmann, Chairman of the Central Managing Board of the Würth Group and Prof.

Dr. h. c. mult. Reinhold Würth, Chairman of the Supervisory Board of the Würth Group’s Family

Trusts. A special thank you goes to all employees of the Würth Group for their excellent work and

loyalty in the new record year 2007.

Bettina Würth

Chairwoman of the Advisory Board

of the Würth Group

27

--THE SOURCE OF OUR STRENGTH IS RESPECT--

> The source of our strength is respect

Dear readers,

The year 2007 is a year of records for us. Both sales and the operating result increased nicely. Our

largest company – Adolf Würth GmbH & Co. KG – recorded total sales, including intra-group sales,

in excess of one billion euros for the first time in 2007.

The German economy also closed the year 2007 as export champion once again. This led not

only to good growth rates, but also heralded a sweeping turnaround on the labor market.

The positive economic development for the year was crowned by the political respect that the

German government gained during its presidency of the Council of the EU and presidency of the

G8 group of leading industrial nations. At the same time, however, the G8 summit in the Heiligen-

damm seaside resort on the Baltic Sea showed that there is a growing need to inform the people

in our own country.

Particularly in the context of global cooperation, it becomes clear how much respect Germany

and German companies enjoy internationally – and how little of this recognition is felt in the country

itself. Why is that?

Respect – a scarce resource?

Respect, as the American sociologist Richard Sennett once said, seems to be a scarce resource in

our society dominated by market economy, “as though there were not enough of this precious

resource to go around. Respect costs nothing. Why then, should it be in short supply?”

We can contemplate this question under two different aspects. Is our society lacking achieve ment

and personalities that deserve respect? I.e. is the scarcity attributable to the fact that there are not

enough occasions for it? Or are we becoming less inclined to pay respect to others – for instance,

because our values are changing?

Without achievement, no respect

The first question indirectly presupposes that you cannot request respect as a matter of course.

Recognition presupposes achievement. The desire to perform spurs musicians, artists and athletes

on, for example. It creates personal and economic prosperity. It motivates people to do voluntary

work. Conversely, every sign of recognition spurs people on. Athletes standing on the winners’

platform or musicians eliciting applause from their audience experience that moment not only as

acknowledgement, but as extra motivation, too.

Respect leads to willingness to work and vice versa. Without achievement, no respect, and with out

recognition a person’s performance will sooner or later fail to live up to the expectations.

Not every achievement produces the same level of respect. Not every person has the same

talents or opportunities. Nevertheless, I am convinced that we all have the same opportunity of

winning our fellow human beings’ respect. Based on his social studies, Richard Sennett identified

three characteristics that give practically anyone access to this “scarce resource”: self-development,

the ability to be self-sufficient and, finally, a desire to help others.

The development of one’s own abilities and talent as musician, artist, athlete or in one’s job

serve not only an economic purpose, but to some extent also personal development. The ability to


28

be self-sufficient is not just related to material aspects and a desire to earn a living. It also means

consciously developing one’s personality.

By desire to help, Sennett means the desire to give something back to the community: “This

probably is the most universal, timeless, and deepest source of esteem.” Richard Sennett empha -

sizes especially the importance of a reciprocal asymmetry for long-term relationships. Respect

emerges from a willingness to give more than the other expects in return.

To summarize, we can say that everyone can earn the respect of others – irrespective of their

sphere of activity, social status or abilities. It’s just up to them to earn it.

Anyone going through life with their eyes open, cannot fail to see those people who, by setting an

example, not only enhance our prosperity with their wealth of ideas and willingness to perform, but

also help our society as a whole to advance, be it in social, cultural, political or ecological respects.

Are we moving towards a society without respect?

But what about the willingness in our society to respect achievement and give those responsible

for it the recognition that they deserve? I am sure there are a number of different answers to this

question. The thoughts penned here can therefore not be more than an attempt to address this

multifaceted topic.

To me, one central question seems to be what basic attitude and what intentions we have when

we face our fellow human beings. What effect does it have on society, for example, if personal rela-

tions are based solely on the desires and expectations of the individual?

The French philosopher and author Jean-Paul Sartre attempted to answer this question in his

probably most well-known play “No exit”. Three people who in their lifetime destroyed other people’s

lives face the challenge in the hereafter of getting on with each other. These three people make

their own lives in the underworld a misery through their different needs and ideas. Incapable of

taking a step towards each other and incapable of reflecting on themselves – unwilling to recognize

the strengths of the others and put them to use for each other –, they finally reach the conclusion

that leads straight to a vicious circle: “Hell is other people.” Life together thus becomes a destructive

spiral with no way out, with no chance of a happy end.

Thankfully, this development is not a set course in real life, although there are tendencies in

our western society that indicate that the importance of the individual’s social skills is dwindling.

Richard Sennett proved that people nowadays tend to withdraw into their private sphere much

more than they used to. Yet if they turn their back on society, they not only lose social skills like the

ability to express themselves, consideration and patience; they also forfeit the chance of experiencing

recognition from others. Withdrawing means choosing not to participate. Had Robinson Crusoe

not experienced the respect of his servant Friday on the desert island, he would probably not have

survived the shipwreck for very long.

So how willing is our society to increase that “scarce resource” respect?

Anyone who has followed the reports in the media over the last few months could come to the

conclusion that there is a growing disinclination. The heated debate about managers’ salaries, for

instance, temporarily got out of control and turned into a broad-based debate fuelled by envy. The

lack of respect is by no means limited to economic aspects though. The newspapers are full of

reports on the desolate state of schools, brutal attacks by youngsters, and parents who, seemingly

indifferent, leave their children to their own devices.

And yet the craving for respect plays such an important role in difficult social environments.

People who feel that they have no hope of ever changing their life and no chance of education or

29

getting a job, seek other ways of earning other people’s respect: an aggressive manner, “nicking”

(i.e. stealing) from other kids or mistreating them. This pattern of behavior becomes a habit, or

even a kind of ritual. Even the most severe punishment – several years of imprisonment, for example –

does nothing to deter them anymore. On the contrary, it is considered to boost the delinquent’s

reputation. Joachim Kersten, head of a training division at the German police academy in Münster:

This street code serves as protection and self-esteem for those who don’t have any resources other

than their male honor.” Instead of the fruitless attempt to combat such developments by punishing

them more severely, we need society to take a holistic approach.

Corporate culture – assuming responsibility

The increasing desire for recognition is therefore not a need of individual marginal groups only, but

a phenomenon spanning the whole of society. Without a doubt, there is no simple recipe for how

to deal with this desire. Yet I am convinced that taken together, a combination of many good initiatives

can lead to a solution.

And people who hold eminent positions in society or who, as business people or executives,

have the possibility to pave the way within their sphere of influence, have a special responsibility.

One example that comes to my mind in this context is establishing an appropriate corporate

culture. Every company draws most of the strength for healthy growth from its employees’ willing-

ness to work. My father Reinhold Würth realized this many years ago and it was very important to

him that the “genes” of willingness to work and respect should be anchored in the corporate prin -

ciples accordingly. To this day, that goes far beyond merely granting incentives. The results of our

annual employee surveys thus regularly show top results for the identification of our employees with

the aims of our company.

It goes without saying that this sets high standards for our executives. This applies both to imple-

menting aims that concern the employees directly and internal communication, which must at all

times convey credibility and openness. Of course we have always followed the principle that good

work deserves to be paid well, as does top performance.

In my opinion, this standard also applies to the men and women who bear responsibility for

society in prominent positions; for example in politics. Their economic or social contribution should

be reflected in adequate payment. The awareness that hard work is worthwhile is firmly entrenched

in our corporate group and has stood the test of time over the past decades. The work of those

who are successful deserves the respect of all employees because they help to safeguard the company

and its jobs.

Mutual recognition creates not only the prerequisite for a person to do their job as best they can,

thus creating economic success. It also helps to achieve job satisfaction by acknowledging the value

of the work. This aspect seems to have been ignored lately in the public debate.

No to a debate based on envy!

I was rather alarmed when I noticed the tendency in our society to disparage our own overall eco-

nomic success or spoil the individual success of others with envy-driven debates. In the latter case

in particular, exorbitant exceptions are presented as being representative of all high performers.

Let me ask the following question: Who do such stereotypes serve? And who do they harm?

In the political debate, the fact is often ignored that owner-managed small and medium-sized

businesses make up the backbone of Germany‘s economy. Most of these companies are managed

with a long-term, generation-spanning strategy and play a major role in stabilizing economic growth.

> The source of our strength is respect


“

30

They involve a high degree of a personal willingness to take risks. In the imminent amendment of

inheritance law, this long-term generation-spanning strategy has unfortunately not been taken into

account to the extent necessary. The short-term focus on taxes thus becomes a real risk for the

continued existence of companies, especially for small and medium-sized family businesses.

Undoubtedly, it would be desirable for political and social opinion-forming to be based on a mini-

mum of objectivity and mutual respect. Otherwise there is a risk that dark clouds may mean that the

delicate flower of economic prosperity will not grow so fast anymore or even wither and die.

In times in which economic success is measured primarily based on a company’s profitability

and employees are mostly referred to in terms of costs; the call for respect within a company may

seem somewhat unusual. Yet the Würth Group has proved for more than six decades that there is

no contradiction between ambitious entrepreneurial targets, and the recognition given to employees.

On the contrary! In our company, the interconnection between performance and respect is our most

important source of strength!

As Chairwoman of the Advisory Board of the Würth Group, I am proud of the work of our over

63,000 employees. I would like to say thank you to all of them, and also to our executives, for their

outstanding commitment. The same applies for our business associates, some of whom we have

worked with closely and fruitfully for many years. And last, but not least, I would like to thank my

father Reinhold Würth who, actively and passively, still helps us to keep the spirit of our group alive.

With this knowledge, we face 2008 with the curiosity and enthusiasm to make it another record

year for our group.

And I am pleased about everyone who shares in this.

Sincerely,

Bettina Würth

31

Ladies and Gentlemen,

The fiscal year 2007 was a very successful year for the Würth Group. We managed to top the

successful business development with new records in sales and operating results of EUR 8.49

billion and EUR 640 million respectively.

It is true that our aim of double-digit sales growth was thwarted above all by the unfavorable

currency effects of the U.S. dollar and a strong underlying effect from the positive business in

2006. Nevertheless, we achieved sales growth of 9.6 percent – and adjusted for currency effects,

we even grew by 10.5 percent. The operating result rose again more than sales, climbing 24.3

percent. This shows the earnings power of the Würth Group is high and sustainable.

Würth – a people business

These figures are an indication that the Würth Group is tackling a challenge of vital importance

for the group. In many respects, Würth is a people business! People work for people, and it is

there fore our duty to concentrate on our customers and our employees. That is the only way to

make the cooperation successful for both sides.

Let me take this opportunity to say a big thank you, also on behalf of my colleagues on the

Central Managing Board, for the trust our customers have placed in us and the tireless work and

commitment of all employees in the Würth Group, as well as the Works Council and Council of

Confidence as well as the Customer Advisory Board.

For our clients

The business figures that you will find in this annual report are simply a reflection of our custo-

mers’ satisfaction, for which we worked hard again in the past fiscal year. We were able to

expand our customer base in 2007 and look forward to serving our three millionth customer

in 2008.

“We are the employees of our customers.” In line with this quote from Prof. Dr. h. c. mult.

Reinhold Würth, customer management in the Würth Group is not some meaningless manage -

ment tool. Instead, for us it means concentrating on people and providing them with concrete

benefits through our range of services.

As a top quality supplier offering the best service for customers in the trades and industry we

do not make any compromises. At this level, we continue to evolve and supply our customers

with innovative products, systems, and solutions. An indication of our innovative power is the

fact that we generate 20 percent of sales with products that are not even two years old yet. At

the same time, we consistently develop our distribution systems as a complement to our sales force.

Robert Friedmann

> Foreword by the Chairman of the Central Managing Board


32

Within the Würth Line, the trading business with assembly and fastening materials, we success -

fully expanded the concept of Würth sales branches on a global scale. We had more than 800

sales branches worldwide as of December 31, 2007. In Germany alone, there are already more

than 250. Based on the immediate needs of our customers, especially in the building

trades, the pick-up branches are an ideal addition to our sales force. Customers should be able

to choose how much interaction with us they want, based on their specific procurement situation.

Entrepreneurial ideas

Continuous advancement of the Würth Group requires a flexibility of minds and operations.

We ensure this through entrepreneurship, which is promoted at all our entities. Equipped with a

maximum of local decision-making powers, the companies in the Würth Group serve their

markets. This even extends to the practice that profits are essentially retained by the entities so

that they can be invested there. The combination of economic power and entrepreneurship

characte rized by creativity is reflected by the dynamic sales growth of an average of 24 percent

per year which the Würth Group has recorded ever since Prof. Dr. h. c. mult. Reinhold Würth

took over in 1954.

Würth people with a passion

This feat is not achieved by anonymous companies, but by Würth employees who identify with

their job. This is what the Central Managing Board requires of all staff. At the same time, we

believe that as the employer we have the duty to create a working atmosphere in which all em -

ployees enjoy working. Straightforwardness, predictability, recognition, gratitude and transparency

are truly decisive factors.

As the largest employer in the world for salaried sales representatives, we also have a duty to

enhance the image of sales people as a profession. Therefore, the Würth Group offers its sales

representatives not only an intricate system of financial incentives, but also personal career oppor -

tunities. Combined with a long-term HR policy and the promotion of high potentials, we provide

a whole range of development opportunities and, ultimately, motivation. The Würth Group is

an attractive employer. This is illustrated, for example, by the number of employees who decide

to stay in the employment of the group after completing their training at Adolf Würth GmbH &

Co. KG: 79 percent of all trainees over the last 20 years.

33

A family business

The Würth Group, including its corporate culture, has the special support of the Würth family,

which has given the company its fundamental values and ensures that they are held alive. For this

I would like to sincerely thank the Chairman of the Supervisory Board of the Würth Group’s

Family Trusts, Prof. Dr. h. c. mult. Reinhold Würth, and the Chairwoman of the Advisory Board of

the Würth Group, Bettina Würth.

It is the passion for putting visions into practice that sets the Würth® brand apart. On that

note, we are optimistic about the future and look forward to making use of the scope for action

that we find in our business segments to continue our course for growth in the long term.

Sincerely,

Robert Friedmann

> Foreword by the Chairman of the Central Managing Board


34

--THE BOARDS OF THE WÜRTH GROUP--

CENTRAL MANAGING BOARD

The Central Managing Board – comparable to the management board of a group holding – is

the most senior decision-making board of the Würth Group and comprises five members. Its

most important duties include corporate strategy planning, the selection of executives as well

as the management of strategic business units and functions.

Robert Friedmann

Chairman of the Central Managing

Board of the Würth Group

Dr. Reiner Specht

Member of the Central Managing


Rolf Bauer

Deputy Chairman of the Central

Managing Board of the Würth Group

Prof. Dr. Harald Unkelbach

Member of the Central Managing


Dr. Roland Hartmann

Member of the Central Managing Board

of the Würth Group (until April 15, 2008)

Joachim Kaltmaier

Member of the Central Managing Board

of the Würth Group (since April 16, 2008)

Robert Friedmann

Dr. Reiner Specht Prof. Dr. Harald Unkelbach Joachim Kaltmaier

Rolf Bauer Dr. Roland Hartmann

35

Bettina Würth

Chairwoman of the Advisory Board,

Künzelsau-Gaisbach

Dr. Bernd Thiemann

Deputy Chairman of the Advisory

Board Partner Leonardo & Co.

GmbH & Co. KG, Frankfurt/Main

Peter Edelmann

Member of the Management Board

of Voith AG, Heidenheim

Hans G. Güldenberg

Member of the Supervisory Board of

Brauns-Heitmann, Warburg

ADVISORY BOARD

The Advisory Board is the supreme supervisory and controlling body of the Würth Group. It

advises on strategy, approves corporate planning as well as the use of funds. It appoints the

members of the Central Managing Board, of the Executive Board, as well as the managing

directors of the companies generating high sales.

Dr. Frank Heinricht

Deputy Chairman of the

Management Board of

Heraeus Holding GmbH,

Hanau

Axel C. A. Krauss

Member of the Supervisory Board

of Unilever Deutschland,

Hamburg

Dr. Bernd-Albrecht von Maltzan

Divisional Board Member

Private Wealth Management

Deutsche Bank AG, Frankfurt/Main

Dr. Martin H. Sorg

Certified Public Accountant, Partner

of the law firm Binz & Partner,

Stuttgart

Dr. h. c. Uwe Zimpelmann

Former Spokesman of the Management

Board of Landwirtschaftliche

Rentenbank, Frankfurt/Main

Honorary Chairman of the

Advisory Board

Prof. Dr. h. c. mult. Reinhold Würth

Chairman of the Supervisory Board of

the Würth Group’s Family Trusts,

Künzelsau-Gaisbach

Honorary Member of the

Advisory Board

Dr. Michael Rogowski

Chairman of the Supervisory Board of

Voith AG, Heidenheim

> Central Managing Board> Advisory Board


36

Michael Coffey

Würth Line UK,

Ireland, Scandinavia (without

Finland), Würth South Africa

(until March 31, 2008)

Jürgen Graf

Logistics

Helmut Gschnell

Würth Line Italy,

Würth Albania,

Specialists in Italy

Bernd Herrmann

Information Technology

Michel Kern

Würth International AG

Central Purchasing

Jürgen Klohe / Jörg Murawski

Würth Elektronik Group

Jürg Michel

Finance

EXECUTIVE BOARD

The 20 members of the Executive Board as of December 31, 2007 constitute the operational

management of the group and are each in charge of one strategic business unit.

Svein Oftedal

Würth Line UK, Ireland,

Scandinavia (without Finland),

Würth South Africa

(since April 1, 2008)

Juan Ramírez

Würth Line Spain,

France, Central America

and South America

Wolfgang Rampmaier

Industry Division (Würth Line),

Tools Trade

(since January 1, 2008

Deputy Member of the Central

Managing Board)

Pentti Rantanen

Würth Group Finland and

Baltic Countries

Werner Rau

Purchasing,

Standard/DIN Parts and

Stainless Steel

Peter Schneider

reca Group

Hans Sigrist

Würth Line Switzerland,

Oceania and Sub-region Asia

Robert Stolz

Würth Line Auto USA,

Würth Line Wood USA and Canada

Zekeriya Uluca

Würth Line Turkey

and Sub-region Asia

C. Sylvia Weber

Director of the Museum/Kunsthalle

Würth, Curator of the Würth Collection

Alois Wimmer

Production of Screws,

Dowels and Plugs

Markus Würth

Wood Division (Würth Line),

Construction Division (Würth Line),

Belgium, Netherlands, Portugal

(Würth Line)

Peter Zürn

Chairman of Adolf Würth GmbH & Co. KG,

Auto Division (Würth Line), Sales

37

In the German economy, the recovery perceived in the prior year

continued, albeit at a slower pace. The reasons for the loss of

impetus included the burden placed on consumer spending by

the increase in VAT at the start of the year. However, the growth

rate of GDP in Germany still reached 2.5 percent in 2007 (2006:

2.9 percent). A very favorable development was recorded in the

labor market in Germany. The number of persons in employment

covered by social security rose to around 26.9 million (+1.9 per-

cent), which is the highest it has been in more than four years. At

the same time, the number of unemployed fell by around 711,000

to 3.8 million.

By and large, the main sectors for the Würth Group, the trades

and industry, saw a positive development in Germany in 2007.

In the trades, however, the upswing continued only with

re spect to the development of employment situation. 53,000 jobs

were created in the course of the year. In total, the trades employed

4.84 million in permanent positions. The net sales of the compa-

nies, by contrast, fell by one percent in 2007. The main reason for

this is the less favorable development in the fourth quarter.

The German metal and electrical industry was extremely dyna-

mic in 2007, displaying growth of more than eight percent. This

favorable development in the industry was reflected by a rising

Sales Würth Group

in millions of EUR

1998 1999 2000 2001 2002 20052003

3,6204,110

5,136 5,277 5,360 5,453

6,914

2007

8,489

2006

7,748

2004

6,203

2,000

4,000

6,000

8,000

> Economic environment> Executive Board

-- WÜRTH GROUP CLOSES FISCAL YEAR 2007 SUCCESSFULLY--

ECONOMIC ENVIRONMENT

The Würth Group found itself in a stable economic environment

in the fiscal year 2007. Although the global economy slowed

down, it still remained robust, with an increase of 4.7 percent in

the gross domestic product (GDP) (2006: 5.4 percent).

One challenge for 2007 was presented by the world markets

for raw materials: the oil price alone went up by 57 percent. World

market prices for industrial raw materials also rose sharply at a

rate of 15.4 percent (U.S. dollar basis). The expansion of interna-

tional trade continued at a moderate pace of 5.3 percent (2006:

9.2 percent).

The economic development varied dramatically from one

region to another. While the pace of expansion remained practically

unchanged or increased in the developing and emerging coun-

tries; the momentum slowed in the developed industrial nations.

In the United States in particular, the economy cooled off owing to

the adjustments on the real estate market and the following marked

decline in residential building investments. The GDP in the US

grew by 2.2 percent in (2006: 2.9 percent). In the euro area, the

upswing slowed down as well, but it still has a sound base. The

growth in GDP came to 2.6 percent here (2006: 2.8 percent).


38

Sales of the Würth Group

in millions of EUR 2006 2007 %

Würth Line Germany 960 1,071 + 11.6

Allied Companies Germany 2,162 2,376 + 9.9

Würth Group Germany 3,122 3,447 + 10.4

Würth Group International 4,626 5,042 + 9.0

Würth Group total 7,748 8,489 + 9.6

number of jobs, with 120,000 new permanent jobs added. At 3.5

million, the number of persons employed in the metal and electrical

industry reached its highest level since 2001.

The positive trend, which began in the German building industry

in 2006, continued throughout 2007 with less vigor. Whereas the

residential construction industry entered a period of stagnation

after the positive effects of the anticipated VAT increase, invest-

ments in commercial construction picked up rapidly and were five

percent above the prior-year level. For the months from January to

October the orders on hand were up 8.5 percent in nominal terms.

BUSINESS DEVELOPMENT

Successful fiscal year for the Würth Group

For the Würth Group, the fiscal year 2007 was very successful for

all key indicators. Irrespective of the global economic conditions,

the group invested in its own growth drivers within the various

divisions and markets.

Top-quality products and first-class service, a powerful sales

organization with a focus on customer service, the international

structure combined with a local organization of the group, and a

strong brand are the success factors of the Würth Group, which

has been generating an average sales growth of 24 percent per year

ever since Prof. Dr. h. c. mult. Reinhold Würth took over in 1954.

Sales climbed by 9.6 percent in 2007 to a record level of EUR

8.49 billion. Especially seen against the backdrop of a weak eco-

nomy in the United States and, on top of that, strong currency

effects due to the US dollar exchange rate, we are very pleased

with the business development. Adjusted for currency effects,

sales even grew by as much as 10.5 percent.

The Würth Group recorded a substantial rise in headcount in

2007, both within and outside Germany. Overall, the number of

employees rose by 16 percent to 63,699 worldwide. We are parti-

cularly happy that the Würth Group managed to add more than

1,000 new jobs in Germany for the second year in a row.

SALES BY REGION

At the end of fiscal year 2007, the Würth Group comprised 400

com panies in 86 countries, and is present on all continents. The

group has set itself the long-term target of evolving from a pre-

dominantly European to an international company. At present, 86

percent of sales are generated in Europe.

The Würth Group aims for steady growth across all regions.

The entities place their focus on different strategies to generate

growth, based on the maturity of the individual markets. While in

very young markets the focus is on expanding the sales force,

established entities concentrate on refining their sales channels

through segmentation, a regional approach and customer-speci-

fic segments.

On aggregate, the German Würth Group entities did very well

in 2007 and achieved double-digit sales growth. The international

entities of the Würth Group increased their sales by 9.0 percent to

EUR 5.04 billion.

In an international sales ranking – without Germany – the Würth

entities in the countries Spain, France, Italy and Finland generated

the highest sales in the Würth Group. The highest growth rate of

18.6 percent was recorded by Würth Finland.

39

> Business development> Sales by region

Germany

The German market plays a special role for the Würth Group for

two reasons. On the one hand, it is the group’s home market and,

on the other, it is the market with the largest number of employees

in the Würth Group and still accounts for more than 40 percent of

total sales. Together, the 81 German group entities increased their

sales by 10.4 percent to EUR 3.45 billion in 2007. A special highlight

in the business development are 1,262 new jobs created by the Würth

Group in Germany, which brought the headcount here to a total of

16,560 by the end of 2007. Of these, 4,834 work in the sales force.

The parent company in the group reached an important mile-

stone in 2007. Adolf Würth GmbH & Co. KG was the first group

entity to record sales in excess of one billion euros in a fiscal

year, including intragroup sales. Adolf Würth GmbH & Co. KG

thus takes the lead in the Würth Group in terms of staying power

and dynamism over its corporate history of more than 60 years,

setting an example for all other entities.

Western Europe

A key success factor for the Würth Group was international expan-

sion and entering new markets in new countries at a very early

stage. Owing to the geographical situation, international Würth

entities were established first in the Netherlands in 1962, then in

Switzerland and in Austria. The Würth direct sales companies in

the region Western Europe, which includes among others France,

the UK and the Benelux states, have all been serving the market

for 25 years or more. The development of these entities focuses

on creating customer segments and regions to allow different

approaches to the markets. Overall, the companies in this region

made sales of EUR 1.54 billion in the fiscal year 2007, an increase

of 9.2 percent.

Southern Europe

Although this region ranks third in sales behind Germany and

Western Europe with sales of EUR 1.37 billion, it leads the field in

Sales in millions of EUR 417

Share in % 4.9

Employees 5,834

Sales staff 3,406

Eastern Europe


Share in % 11.0

Employees 6,719

Sales staff 3,645

The Americas

Sales in millions of EUR 1,543

Share in % 18.2

Employees 10,589

Sales staff 5,760

Western Europe


Share in % 40.6

Employees 16,560

Sales staff 4,834

Germany


Share in % 16.1

Employees 12,277

Sales staff 9,218

Southern Europe


Share in % 6.2

Employees 2,581

Sales staff 1,159

Scandinavia


Share in % 3.0

Employees 9,139

Sales staff 2,628

Asia, Africa, Oceania


40

terms of the number of sales staff. The Würth Group, the largest

employer in the world for salaried sales representatives, has 9,218

sales representatives in this region alone. Besides Würth Italy, our

sales company in Spain is also one of the large, established entities

in the region of Southern Europe. Würth Spain was one of the top

performers of the entire Würth Group in 2007, making a substantial

contribution to the success of the region which includes other enti-

ties in Spain, Portugal, Italy, Greece, Cyprus, Turkey and Malta.

The Americas

The sales of our U.S. companies decreased by 4.7 percent to EUR

746 million in 2007. On the one hand, this reflects the weak deve-

lopment of the U.S. dollar against the euro. On the other, it shows

the unease triggered on the U.S. market by the crisis on the real

estate market. Measured in U.S. dollars, the U.S. entities recorded

growth of just 3.9 percent. Adjusted for the U.S. entity acquired in

2007 Wurth Electronics Midcom, Inc., sales stagnated with a

growth rate of 0.6 percent. Wurth Electronics Midcom, Inc. has

two locations in China, 4,965 employees and generated sales of

EUR 24 million in 2007.

The development of the South American entities continued on

a very high level. With sales growth of 28.4 percent, this subregion

is top of the table in the Würth Group. Würth Brazil was the most

successful entity in South America, supporting the region’s posi-

tive development with a lion’s share of 71 percent in the region’s

sales. The formation of our new sales company in Costa Rica allowed

us to enter new markets and put another country on the Würth map

of the world.

Asia

The Asian subregion has enjoyed above-average growth rates over

the last few years. We believe that the markets of the future, China

and

India, hold

enormous mar-

ket potential yet for

the Würth Group, and

the establishment and

acquisition of 23 entities over

the last five years clearly evi-

dences this. With sales of EUR 256

million, our smallest region in terms

of sales was able to improve its share

in total sales of the Würth Group to

3.0 percent. As a large number of the

Asian entities are still in the start-up

phase, we expect sales growth to

remain above average in the next few

years.

RESULTS OF OPERATIONS, NET ASSETS AND FINANCIAL POSITION

Increase in operating result overtakes sales – new record

operating result

The successful development of the Würth Group is secured in the

long term by generating sustainable revenue. Like in the past, this

principle was again observed in the fiscal year 2007. The Würth

Group’s operating result increased significantly on the prior year

to EUR 640 million, overtaking sales in terms of the rate of in -

crease, which reached 24.3 percent. This corresponds to absolute

growth of EUR 125 million. The operating result is defined as earnings

before taxes, impairment of goodwill and financial assets,

The Würth Group around the world� Countries in which

Würth is represented

41

> Results of operations, net assets and financial position

and changes recognized in profit or loss of minority interests

disclosed as liabilities. The acquisitions made in 2007 played only

a minor role for both sales growth and the increase in the opera-

ting result, i.e. the operating result was largely attributable to

organic growth.

The development of operating result in Germany is particularly

noteworthy where an increase of 31.3 percent to EUR 176 million

was achieved (2006: EUR 134 million). On the one hand, this is

attributable to the excellent economic development in Germany.

On the other, it was due to the highly efficient and successful mar-

ke ting, optimization of internal processes and cost management

at the German entities. By far the largest share in the operating

result of the German group is accounted for by the parent com-

pany, Adolf Würth GmbH & Co. KG.

Outside Germany, the operating result went up to EUR 464

million (2006: EUR 381 million). This is an increase of 21.8 percent.

The international Würth Group entities made up 72.5 percent of

the total operating result of the Würth Group.

With a rate of increase of 8.7 percent, cost of materials

rose at a lower rate than sales despite the increase in purcha-

sing prices on our procurement markets around the world.

Personnel expenses grew in proportion to sales. We

have in creased our headcount significantly by 8,793

employees or 16.0 percent. The acquisition of the

U.S. company Midcom, Inc. added 4,965

employees, some 4,900 employees of whom

work at the two locations in China. We con-

sider our investments in personnel an

important basis for the future growth

of the Würth Group.

Amortization and depreciation

rose at a higher rate than sales and

are proof of the Würth Group’s conti-

nued positive capital expenditure policy.

Other operating expenses rose at a much slower rate than

sales. This is thanks to optimized processes which create econo-

mies of scale in the area of operating and general administrative

costs.

The tax rate is lower than in the past. The Würth Group has

benefited in this respect from the exceptionally high increase in

earnings in Germany and the associated decrease in the average

tax rate. Most of the entities in Germany are partnerships and as

such only subject to trade tax. Expenses relating to other periods

for the ongoing tax offense investigations and tax field audits in

process had the opposite effect.

On aggregate, the Würth Group managed to keep the increase

in costs to a moderate level which, in combination with the sales

growth, made it possible to raise the net income for the year by a

remarkable 36.4 percent to EUR 419 million.


42

Purchasing

The Würth Group’s purchasing function was faced with three signi-

ficant challenges in 2007. First, to keep the price structure stable

in spite of the major disruptions on the procurement markets.

Then, supply reliability had to be ensured as transport capacities

were scarce and prices spiraled. And, finally, new tasks emerged

with respect to optimization of stocks and stock turnover as sales

branches were added to the sales structure.

The price rally on the procurement markets continued through-

out 2007. Nonferrous metals, steel, nickel and oil saw unpreceden-

ted price increases. The rise in commodity prices led to rocketing

prices demanded by manufacturers. The most important task for

the purchasing function was to explore all possibilities in an

attempt to keep the cost increases to a tolerable level. We had to

face increased prices for the first time in years, but were able to

keep them to an acceptable level overall.

In the face of all these adversities, the purchasing function

succeeded in maintaining a high level of inventory availability in

2007. Our service level was at 98.0 percent in 2007. This means

close to 100 percent of all products in a range were available for

immediate delivery to our customers. The purchasing function is

Capital expenditures and cash flow

The Würth Group spent a total of EUR 479 million on property,

plant and equipment, financial assets and intangible assets in fiscal

2007. This is EUR 54 million more than in the prior year. EUR 227

million or 47 percent was spent in Germany. This roughly matches

the share in sales generated by the Würth Group in Germany.

Capital expenditures focused on the construction of new ware-

houses and the expansion of existing ones at our sales companies

as well as machines and technical equipment for our production

facilities. For example, a second logistics center for Würth France

S.A. was commissioned, and the screws production at REISSER-

Schraubentechnik GmbH in Germany was modernized and ex -

panded. As a whole, the investments serve to secure profitable

growth of the Würth Group in the future.

As in prior years, all capital expenditures were made from funds

earned by the group itself. The gross cash flow of the Würth

Group amounted to EUR 745 million (2006: EUR 605 million).

The ratio of capital expenditures to gross cash flow improved

slightly on the prior year to 64.3 percent (2006: 70.2 percent). The

cash flow from operating activities increased by 23.0 percent on

the prior year to EUR 506 million.

395

Pre-tax operating result and return on sales Würth Group

in Mio. EUR

150 3.0

6.0

9.0

12.0

300

450

600

1998 1999 2000 2001 2002 2005

6.5

237268

305270 281

455

20042003

330

Operating result in millions of EUR

Return on sales as a percentage

5.95.1 5.2

6.1 6.4

2007

640

6.6

7.5

2006

515

6.7

6.5

43

therefore in a strong position for 2008, and fully aware that the

next challenges are just around the corner. The main target for

2008 will be to safeguard the company’s earnings through a

smart and effective pricing strategy despite high cost prices and

continuing pressure on the margins.

Inventories and receivables

The ‘big five’ indicators of the Würth Group – the indicators which

receive our closest attention – include not only gross profit, pro-

ductivity and staff turnover, but also accounts receivable collection

days and stock turnover. A considerable amount of capital is tied

up in receivables and inventories and optimization of these posi-

tions is therefore a core management task. The aim is to have

stock turn over as frequently as possible within one year. The

Würth Group’s stock turnover fell from 5.9 times in the prior year

to 5.6 times in 2007. The reasons for this marginal decrease inclu-

ded the price developments on the global commodity markets,

which affected our stock levels. Stock levels also increased when

the sales structure of the Würth Line was supplemented by the

concept of sales branches as a result of the stocks held at the

sales branches. On top of that, acquisitions increased stocks by

EUR 13.6 million. We aim to improve this indicator in 2008 by

intensive benchmarking within the Würth Group with the help of

our sophisticated controlling systems and optimized materials

management processes. At year-end 2007, we had already reached

our target of keeping the increase in stocks below that of sales.

While accounts receivables rose in 2007 on the back of the

dynamic sales growth, we managed to keep collection days to an

average of less than 50 days. Strict receivables management and

intensified communication with the sales organization have helped

to keep collection days on a par with prior years at 49.8 days.

Financing

The equity of the Würth Group climbed by EUR 124 million to EUR

2.40 billion in fiscal 2007. The Würth Group thus has a remarka-

ble equity ratio of 42.3 percent (2006: 44.8 percent), which is still

far above the average of European trading companies.

150

300

450

2003 2007

Capital expenditure Würth Group

in millions of EUR

479

2006

425

310

2005

237

2004

217

250

500

750

2003 2007

Gross cash flow Würth Group

in millions of EUR

2006

605571

20052004

431484

800

1,600

2,400

2003 2007

EquityWürth Group

in millions of EUR

20052004

2,402

2006

2,278

2,049

1,715

1,502

745


In June 2007, the Würth Group issued a bond of EUR 300 million.

Subscription offers totaled approximately EUR 700 million. This

reflects the positive assessment of Würth by the capital market as a

strong and financially robust company. The funds received were

used for further investments in the market and business acquisi-

tions. The bond has a maturity of seven years and the nominal inte-

rest rate is 4.75 percent.

The financial situation of the Würth Group was again appraised

by the leading rating agencies Standard & Poor’s and Fitch Ratings

in 2007. They have confirmed our rating of “A/outlook stable”

ever since 2003. This not only documents the positive credit rating

by the agencies, at the same time it is proof of the continuous and

successful development of our corporate group. In addition, the

development opportunities and the development potential of the

Würth Group were rated positive. This excellent rating ensures

favorable refinancing conditions for us and boosts the confidence

of our customers and suppliers.

Startups and acquisitions

The Würth Group pursues a strategy of expansion with the aim of

double-digit growth; 80 percent of this growth is to be achieved

organically and 20 percent through acquisitions. The dynamism

that the Würth Group has displayed in this respect is illustrated by

the fact that a new group entity has been established or purchased

on average every other week for the last eleven years.

Subsidiaries are established to multiply the successful Würth

sales concepts for technical consumables and supplies. This

applies mostly to the Würth Line companies. New national com-

panies started operations in Pakistan and Costa Rica in 2007.

Since we are already present in numerous South American coun-

tries and in the neighboring country of Panama, this is a step

towards closing the geographical gap to North America. Subsidia-

ries are also increasingly being founded worldwide by the profi-

table Allied Companies, which are well-established on the market.

Examples are the companies in the Screws and Standard Parts

business unit – WASI in Poland and Ferrometall in Estonia – and

HAHN+KOLB in Bulgaria in the tools trade business unit.

Besides establishing new companies, our growth strategy also

involves purchasing companies. This way, we can reinforce the

international orientation of our business activities, open up new

markets on an ongoing basis and tap future growth potential.

Acquisitions in the Würth Group always involve the question:

What added value can we provide to these companies? What can

we do better than the previous owners?” In most cases, we

believe that the answer is our core competency selling, customer

management and service. At the same time, the potential for opti-

mizing our range of products as a result of the acquisition is a

decisive factor.

On this basis, one of the companies that the Würth Group

decided to acquire in 2007 was the U.S. company Midcom, Inc.

with production facilities in China. Through this acquisition the

Würth Elektronik eiSos Group, which develops and manufactures

passive components, storage choke coils and electromechanical

components, not only gained a leading American brand, but also

won innovative technological know-how in the area of transformers.

Another strategically important acquisition in 2007 was the

Hetal Group in Germany, which will strengthen our furniture fit-

tings unit. With its expertise in the development and production

of complex fittings mechanisms, Hetal is an ideal addition to the

production companies Mepla-Alfit and GRASS, which have been

part of the Würth Group since 1996 and 2004 respectively. The

companies’ product ranges complement each other perfectly, and

following this acquisition Würth can now offer a full range of fit-

tings produced in-house.

44

“

45

EMPLOYEES

The Würth Group creates jobs in Germany and around the world

When the 60,000th employee was hired in March 2007, this marked

another positive milestone for the Würth Group. The 30,000th

sales representative was welcomed in June.

As of December 31, 2007, the Würth Group had 63,699 emplo yees

around the world. That is 8,793 or 16.0 percent more than at the

end of the prior year. Business acquisitions added 5,282 emplo yees

to the group.

The largest employer in the world for salaried sales representa-

tives, the Würth Group raised the number of sales representatives

by 5.6 percent to 30,650. The number of in-house staff in the Würth

Group rose by 27.7 percent to a total of 33,049 persons, above all

as a result of the acquisitions.

In Germany, the headcount in the Würth Group increased by

1,262. Internationally, another 7,531 employees were hired. We are

particularly happy that the Würth Group managed to add more

than 1,000 new jobs in Germany for the second year in a row.

Sustainable investment in training

The Würth Group attaches great importance to both vocational

training and continued training. We believe that furthering the

development of our employees is a decisive factor for the group’s

success.

In Germany alone, 1,023 trainees are currently working in the

Würth Group. The outcome of an internal survey of how many

employees decide to stay in the employment of the group after

completing their training at Adolf Würth GmbH & Co. KG con-

firms the appeal of the Würth Group as an employer: 79 percent

of all trainees over the last 20 years.

This loyalty confirms that we offer our employees a pleasant

working environment, but it also spurs us on to continue develo-

ping as an attractive employer.

A thank-you from the Central Managing Board

In the fiscal year 2007, the success of the Würth Group was once

again due to the extraordinary commitment of all employees.

Their loyalty, professional work and motivation are what make the

> Employees

Employees Würth Group

Employees thereofSales staff

1998 1999 2000 2001 2005 2007

28,80915,553

31,19116,616

36,16118,459

37,40719,240

50,76727,488

63,69930,650

2006

54,90629,020

2004

46,97326,085

2003

41,95223,488

2002

39,80921,969

20,000

40,000

60,000

as of December 31


46

Würth Group so dynamic. For this, the entire Central Managing

Board would like to say thank you.

Let us also say a word of thanks to the Works Council and Council

of Confidence for the constructive working relationship. Their

commitment has been vital in shaping the group’s business policy.

RESEARCH AND DEVELOPMENT

For the Würth Group, it is of central importance to keep our distri-

bution systems and our product portfolio in line with the needs of

the market, and thereby of our customers. That is why innovation

management plays such a key role in the Würth Group. Cooperation

with independent research institutes and universities, a customer

advisory board and practical ideas developed through personal

customer contact are the basis for active product development, to

which we accord great importance despite being a trading com-

pany.

In the group’s core business, trading with assembly and faste-

ning materials, product development and product management

are the cornerstones of innovation and quality management. The

importance accorded to these areas is emphasized by the fact that

about 40 percent of our sales are generated with products that are

less than five years old. More than 300,000 customer contacts

per day help us to keep in close touch with customers and the

market. Often it is the little developments that help customers

most. In this respect we are constantly seeking to develop ideas

and implement them in our products.

A perfect example for successful product innovation at Würth,

which also helped to strengthen several distribution systems, is

ORSY® (ORder and SYstem). What started out as a simple shelf

for the workshops of our trade customers 30 years ago has been

continuously refined and is now a sophisticated system for the

efficient storage, retrieval and procurement of a wide range of

technical consumables and supplies. All the products are clearly

arranged in the individually designed shelf system, which has

tangible advantages for our customers. It ensures quick access to

the materials and avoids capital being unnecessarily tied up in

excessive stocks. The ORSY® system is supplemented by the

ORSY®scan easy scanner system. Simply by scanning the barcode

on the empty packaging, an item can be effortlessly reordered

from Würth’s internet catalog (WÜKO). In addition, the shelving

system is maintained directly at the customer by the Würth sales

force. The system is in use at more than 285,000 Würth custo-

mers worldwide.

But the Würth Group does not only develop innovations in its

core business. The business activities of the Allied Companies are

also highly dynamic where innovation is concerned. One example

is Würth Solar, an entity of the Würth Elektronik Group, which is

the first company worldwide to produce CIS (copper indium sele-

nide) solar power modules on an industrial scale. Würth Solar is

thus a leading innovator in a pioneering market.

Based on the latest research results, Würth Solar continuously

seeks to extend its lead in CIS technology even further. Würth

Elektronik Research GmbH was established for this purpose in

2007. It has hired engineers and scientists to work on enhancing

the degree of efficiency and energy output of CIS modules. Another

declared aim is to reduce production costs steadily by optimizing

production technology.

RISK REPORT

Extensive risk management

The Würth Group has a risk management system which enables

us to identify, record and assess opportunities and risks systema-

tically. It comprises the internal audit function, management

accounting and an adequate early warning system that looks at

the future development of the markets. Risk management – inclu-

ding in particular the installation of a functioning and efficient risk

management system – is the responsibility of the management of

each entity in the group. At the group level, there is also a risk

manager, who reports to the Chairman of the Central Managing

Board. The risk manager coordinates the management of risks at

group level and is in close contact with the risk controller of the

Headcount development (as of December 31)

2006 2007 %

Würth Line Germany 5,183 5,628 + 8.6

Allied Companies Germany 10,115 10,932 + 8.1

Würth Group Germany 15,298 16,560 + 8.2

Würth Group International 39,608 47,139 + 19.0

Würth Group total 54,906 63,699 + 16.0

thereof:

Sales staff 29,020 30,650 + 5.6

In-house staff 25,886 33,049 + 27.7

Würth Group, who reports directly to the Chairwoman of the Advi-

sory Board of the Würth Group. The existing rules and procedures

are updated on an ongoing basis and adapted to changes in the

group. They allow the Advisory Board and the Central Managing

Board of the Würth Group to be appropriately informed on a

timely basis of the development and management of the risks.

We have identified potential risks which could jeopardize the

net assets, financial position and results of operations of an entity

in the Würth Group in the medium or long term in the following

risk areas.

Internal risks

Internal risks tend to concern the personnel area and IT in particular.

Since about 50 percent of the employees in the Würth Group

are sales staff, the largest risks involve staff turnover in the sales

organization together with motivation of the sales staff. Thanks to

efficient incentive systems and career development opportunities,

combined with a motivating working environment and corporate

culture, the level of staff turnover in the sales force of the Würth

Group was relatively low in 2007 compared to the industry as a

whole. Würth is and will stay an attractive employer worldwide.

IT risks are minimized in the Würth Group by its own IT com-

panies and IT specialists, who investigate the risks and issues

concerning information technology at the individual entities as

part of regular IT checks.

External risks

With regard to sales, we consider our risks to be relatively low due

to the overall stable global economy. Würth spreads the market

risks with a very extensive range in its core business of more than

100,000 products, comparatively low order values and a broad

customer base in a market that is organized in a polypolistic way.

This is supported by the decentralized structure of the Würth

Group. Through the individual entities we have a sufficiently ba -

lanced position in all the regions of the world to allow us to counter

any economic market weaknesses.

Naturally, there are always also political factors outside our

sphere of influence which impact our risks with regard to sales and

therefore need to be considered. There is also indirect risk potential

inherent in international terrorism.

Procurement risks are minimized through efficient risk mana ge-

ment. We apply a defined code of conduct to all suppliers of the

Würth Group, which includes as social standards aspects of human

rights, children’s rights and core labor standards; as ecological

standards aspects of environmental protection, and from a legal

perspective compliance with national and international laws and

regulations.

From today’s perspective, the procurement of raw materials is secure.

Those risks that can be insured on an economically reasonable

scale are covered by master programs. This applies both for the

trading companies and the manufacturing companies in the

Würth Group.

To a large extent the financial risks of the Würth Group are

measured, monitored and managed centrally by Würth Finance

International B.V. In addition, receivables from customers outside

the group are monitored by an extensive receivables management

system.

In order to ensure that the Würth Group has unrestricted liqui-

dity at all times, the group has at its disposal liquid funds and

securities portfolios (EUR 393 million as of December 31, 2007),

unused lines of credit at the company’s banks in excess of EUR

300 million in total and, thanks to the “A/outlook stable” rating

(Standard & Poor’s and Fitch Ratings), excellent access to the

public and private capital market to procure further financial

resources.

Our global procurement and selling activities also help to

reduce our currency risk. Würth Finance International B.V. uses

derivative financial instruments to hedge against financial risks

and optimize return on investment.

Risks from the regulatory environment are becoming more

and more important for us as a global player. In particular, they

arise from the increasing complexity of tax law, for which we have

experts in-house and recourse to external consultants on a case-by-

case basis.

Quality and environment

It is the declared aim of the Würth Group to meet, or even exceed,

the highest quality standards. Our customers experience the qua-

lity of our products as a help in their day-to-day work. Therefore,

making sure that we fulfill these quality standards is an integral

part of our risk management.

The Würth Line companies have implemented consistent pro-

cess management systems so that we can meet customer ex -

pectations reliably. One core element, for example, is the additional,

central validation of new product candidates by the quality manage-

ment function at the parent company and Würth International AG.

The accredited Würth test laboratory is an important part of

Würth quality assurance. This central test center bundles the

information received from the international Würth companies via

a reporting system. The largest test laboratories of the Würth

47

> Research and development> Risk report


48

Group, located in Germany, Switzerland, Italy, Brazil, Slovakia and

China, are all linked up via this system.

The Allied Companies have also implemented quality manage-

ment systems that are consistently geared to the specific customer

needs and, within those parameters, always to the top quality

range.

The risk management in our company also includes ecological

aspects. Ecology is a decisive component of the Würth Group’s

corporate philosophy. When selecting our range of products and

suppliers as well as when designing our internal processes, we

consequently always aim to ensure the best possible protection of

the environment based on the state of the art.

Overall assessment

The risks for the Würth Group are limited via the risk management

system that is in place. There are no recognizable risks specific

to the net assets, financial position or results of operations that

jeopardize the ability of the Würth Group to continue as a going

concern. We also will continue to identify, assess and seize our

opportunities throughout the group in a targeted manner.

CORPORATE GOVERNANCE REPORT

With more than 63,000 employees, the Würth Group needs cer-

tain rules to govern the behavior of people and the way they work

together as well as to provide a framework for entrepreneurial

decisions.

The corporate constitution of the Würth Group is made up of

the following components in addition to the fixed regulations pro-

vided by its legal structure:

� Corporate philosophy

� Corporate culture

� Corporate ethics

� Corporate governance

The corporate philosophy, lived and defined by Prof. Dr. h. c. mult.

Reinhold Würth, determines the understanding and image the

Würth Group has of itself. Together with corporate ethics, the cor-

porate culture deals with questions of which values and standards

should underlie entrepreneurial decisions and actions as well as

the behavior of people working together. Würth's corporate cul-

ture is described by terms such as dynamism, performance-orien-

tation, openness, honesty, reliability and responsibility. Corporate

ethics provides the answer to questions about doing the right

thing within the regulatory framework.

Würth operates worldwide. This means that we need to set out

binding standards and rules of conduct without infringing on values

prevailing in various countries and cultures. On the basis of our

corporate philosophy and corporate culture, our PAP rules (Policy

and Procedure Manual) set out a code of conduct to guide execu-

tives and employees with respect to the behavior and attitudes we

expect of them.

Corporate governance provides rules and standards for good

and responsible management and monitoring of companies. It is

thus closely related to corporate ethics. With the aim of conti-

nuing the successful development of the Würth Group and safe-

guarding our more than 63,000 jobs and even creating new positions,

many years ago we already defined rules, codes of conduct and

standards for management and monitoring functions within the

Würth Group. Our Central Managing Board is comparable to the

management board and our Advisory Board to the supervisory

board of a stock corporation. Shareholders in the sense of the

Corporate Governance Code are the Würth family trusts.

Corporate governance in the Würth Group is ensured by the

following rules and systems:

� Dual management system, i.e. segregation of operative

management and supervisory bodies

� Internal audit department

� Audit of the separate financial statements and the consolidated

financial statements by independent auditors

� Risk management and risk controlling

� Target setting and planning process at company and group level

� Refined controlling methods to create transparency in operating

units

� Rating by two international rating agencies

We consider these interacting elements to be a good basis for

corporate governance practiced in the Würth Group.

The Advisory Board of the Würth Group decided on November

24, 2006 to measure efficiency based on recommendation 5.6 of

the German Corporate Governance Code, starting as of fiscal 2006.

Paragraph 4.2.4 of the German Corporate Governance Code refers

to the content of Sec. 286 (5) HGB [“Handelsgesetzbuch”: German

Commercial Code]. It allows the exemption of the management

board from the obligation to present the individual remuneration

of each board member. On November 23, 2006 the Würth family

trusts as the shareholders of the Würth Group unanimously voted

for exempting the Central Managing Board from the obligation to

publish its individual members’ remuneration.

49

> Corporate governance report > Subsequent events

Declaration of compliance:

On December 7, 2007 the Central Managing Board and the Advi-

sory Board of the Würth Group issued the following joint declara-

tion of compliance for 2007 with the German Corporate Gover-

nance Code as amended on June 14, 2007.

Declaration of compliance pursuant to Sec. 161 AktG [“Aktienge-

setz”: German Stock Corporations Act]:

We declare that Würth complied with the recommendations of the

government commission for the German Corporate Governance

Code as published by the German Federal Ministry of Justice in

the official part of the electronic Bundesanzeiger (‘Federal Gazette’)

with the following exceptions in 2007 and will continue to comply

with them in 2008.

Exceptions:

We see the recommendations of the Corporate Governance Code

as guidelines for our entrepreneurial action. Notwithstanding

this, some of the rules contain requirements which do not seem

appropriate for family businesses that are not listed on the stock

exchange or which prove to be too rigid in terms of time or con-

tent requirements. Specifically, these concern the following para-

graphs of the German Corporate Governance Code designed for

entities listed on the stock exchange or for stock corporations:

5.4.7 Incentive-based remuneration of the Advisory Board

6.7 Publication of a financial calendar

7.1.1 Publication of interim reports

7.1.2 Publication of consolidated financial statements within

90 days of the close of the fiscal year

7.1.5 Relationships to shareholders

The Corporate Governance Code includes further recommendations

which would constitute too severe a restriction of the individual

rights of certain board members, and we have therefore given pre-

cedence to the latter. Specifically, these concern the following

sections of the German Corporate Governance Code:

4.2.5 Publication of total compensation in a remuneration report

5.4.7 Detailed and individualized publication of the remunera-

tion of the Advisory Board members in the corporate gover-

nance report

SUBSEQUENT EVENTS

The Würth Group took over the Danish trading company Arvid

Nilsson A/S on January 3, 2008. The Arvid Nilsson Group, domiciled

in Hvidvore near Copenhagen, is a leading trader for assembly

and fastening materials in Scandinavia, with a focus on industrial

customers and resellers. The company has 350 employees. Arvid

Nilsson A/S supplements the Würth Industrial Network (WIN-

WORK®) and will expand the global supply network for industrial

customers in the Scandinavian countries. WINWORK® comprises

35 companies on all continents and ensures that globally opera-

ting Würth customers in particular can access the infrastructure

to manage procurement of assembly and fastening material at an

international level.

On January 8, 2008, the Würth Group then acquired the U.S.

trading company Marine Fasteners Inc. domiciled in Sanford,

Florida, and other locations in Indiana, Missouri and Wisconsin.

Marine Fasteners Inc. is a specialist for stainless steel fastening

materials used primarily in shipping and shipbuilding. The com-

pany is also a supplier for industry in general. These are important

markets for the Würth Group in the USA, whose potential we have

yet to tap. The company currently has more than 60 employees.

The Würth Group issued a promissory note loan of EUR 150

million with a term to maturity of five years on March 19, 2008 to

secure corporate growth. The transaction was received very well

by investors in the generally difficult financial market environment

and enabled the Würth Group to borrow long-term funds at

attractive terms. This shows the high level of trust that the capital

market places in the Würth Group.

As of April 16, 2008, Joachim Kaltmaier will become a member

of the Central Managing Board of the Würth Group. He will be in

charge of finance and accounting. He succeeds Dr. Roland Hart-

mann, who is leaving the company of his own volition after 13 years

of successful work.

In the first quarter of 2008 the Würth Group was not able to

fully match the pace of growth displayed in 2007. Sales increased

by 5.2 percent to EUR 2.24 billion. One reason for this development

is the fact that we have 1.5 fewer billing days in the first three

months of 2008 than the year before. Since the number of wor-

king days correlates with sales in the Würth Group, we are very

sensitive even to the smallest of changes. Adjusted for the num-

ber of billing days, the growth recorded in the first three months

amounts to 8.6 percent. The operating result developed as sche-

duled over this period.


50

OUTLOOK

Economic forecast

The economies in the industrial nations – including Germany – are

expected to continue to cool off in 2008. Nevertheless, we anticipate

sound growth rates for us. However, the effects of the subprime

crisis and the continuing weakness of the U.S. dollar are factors that

are difficult to assess.

In any case, in the Würth Group we always plan for the future with

the awareness that economic recovery does not continue for ever.

For the Würth Group, positive economic impetus is never the sole

guarantee for growth, and this fact is attributable to our core busi-

ness, direct selling. In this business, we can never allow ourselves

to rest on a comfortable order backlog. We have to make an effort

to win customer orders every day. And every day, the clocks are

reset to start from zero again. The awareness of these conditions

keeps us on our toes and makes sure that we always strive to deve-

lop further, irrespective of the economic situation.

Direct selling is what sets us apart

The people business is a special strong point of the Würth Group.

More than 30,000 sales representatives have well over 70 million

customer contacts per year around the world. Direct selling is what

sets us apart and we have no plans to change that. To supplement

it, we continually develop our distribution channels geared towards

the different customer groups in trade and industry.

In 2008, one such measure will be the expansion of sales bran-

ches in the Würth Line worldwide. Such sales branches offer our

trade customers the possibility of meeting their needs in the direct

vicinity of where they are working. The secret for this concept’s

success lies in the combination with our sales force, which means

that our customers can choose between various points of contact

based on their needs. Through personal service and intensive pro-

fessional consulting Würth meets the ambitious aim of being both

problem-solver and competent contact all in one.

Market focus of the Würth Group

In the Würth Group, we see globalization not as a danger, but as

an opportunity. Besides exploiting the potential of our established

companies in Western and Southern Europe, we will place our focus

on expanding the markets in Eastern Europe and Asia. Our activi-

ties are still at a relatively low level in absolute terms, but we are

recording very dynamic growth. As the international contribution

to total sales increases, the percentage share accounted for by Ger-

many will decrease accordingly. However, as our highly successful

home market, Germany will remain at the heart of our business

activities and continue to grow in absolute terms.

For the fiscal year 2008 and thereafter, the Würth Group aims to

achieve profitable double-digit growth, 80 percent of which is to be

generated organically and 20 percent through acquisitions. In

order to reach this target, we plan to spend a total of EUR 590 mil-

lion worldwide to expand our core competencies, primarily in the

areas sales and distribution as well as logistics. We will increase

our headcount within and outside Germany in line with business

development. Provided there are no global economic or political

crises, we are optimistic about the future – a future in which we

expect sustainable sales and earnings growth to continue in the

medium term.

--WÜRTH COMMITMENT--

52

Wide-ranging cultural and social involvement has always been part of Würth’s corporate culture. The

Charitable Würth Trust was founded in 1987 to ensure the continuity of these activities. But Würth’s

work in the areas of art, culture, research, science as well as education extend beyond the Würth Trust.

It is important to the company to assume social responsibility.

Prof. Ernst Elitz, Director of Deutschlandradio and Chairman of the Art Advisory Council of the State

government of Baden-Württemberg, spoke to Prof. Dr. h. c. mult. Reinhold Würth, Chairman of the

Supervisory Board of the Würth Group’s Family Trusts about this commitment.

--INTERVIEW WITH PROF. DR. H. C. MULT. REINHOLD WÜRTH--

Elitz The Würth Collection has grown to some 11,000 works of art.

If you devote even just a quarter of an hour to each of these works,

with a 12-hour day, that would be 229 days – a lot of unproductive

time for a busy person …

Würth That calculation seems a bit exaggerated to me. Many works

are in my office, at least temporarily. If we’re considering making a

large acquisition for the collection, I want to see them myself. I try

to get a feel for them and consult experts before making the pur-

chase.

Elitz The name Würth stands not only for your company’s traditio-

nal products and for forward-looking technology, but also for art,

social commitment and a broad educational program. Is that a

philanthropic hobby of yours?

Würth More an expression of our idea of humankind. An employee

should not be just a cog in the machine. And we want to offer our

customers more than just an efficient product. A company needs to

have a soul, too …

Elitz … but surely it is mainly interested in its own economic deve-

lopment.

Würth Otherwise we couldn’t afford all these nice things. And expe-

rience has shown that the two aspects go together very well. The

> Prof. Dr. h. c. mult. Reinhold Würth talking to Prof. Ernst Elitz

53

> Interview with Prof. Dr. h. c. mult. Reinhold Würth

Emil Nolde

Wolkenspiegelung in der Marsch,

(Cloud Reflections in the Marsh), c. 1935

Watercolors on paper

35 x 48 cm

Würth Collection, Inv. 3


54

seminars offered by our academy are geared towards basic and

further training for our employees and customers. More than

26,000 customers have attended the seminars at our trades cen-

ters to date – the end of 2007. The course programs also include

business competencies and personal development. What started

out as an internal business school for our company, where

employees could obtain the German university-level degree of

Diplomkaufmann or a Bachelor of Arts while working full-time

and, after that, an MBA, is now open to applicants from outside

the company, too.

Elitz Würth is a company with operations around the world. Are

the seminar and cultural offers a privilege for employees and cus-

tomers in Germany?

Würth No, that’s not the way we do things. Our business school

has an academic partner in the United States. One of the prizes for

literature that we award is a prize for European literature. As an

international company, we need to school the intercultural compe-

tencies of our employees. Art and culture play a big role in this

respect. And the paintings and sculptures of the Würth Collection

are not just on display in Künzelsau or Schwäbisch Hall, or in our

large representative offices in Berlin and Brussels, but all over the

world – either in our own buildings or on loan to museums.

Elitz What was your first painting?

Würth A watercolor by Emil Nolde. My best friend, the photogra-

pher Paul Swiridoff, had a house on the Lake of Lugano, and he

introduced me to the art dealer Ketterer there. This Nolde was my

first purchase of note.

Elitz Simply liking a painting and buying the first one is one thing,

but being a collector is quite another. Was that a conscious deci-

sion?

Würth I have traveled a lot in my lifetime and visited many galleries

on my travels. At the start, I made a few rather amateurish purchases –

a painting here or a sculpture there if it took my fancy. But it turned

out later that I hadn’t chosen too badly. And as the collection conti-

nued to grow, I decided to combine business with pleasure, that

was back in 1985. At the time, we were planning a new office buil-

ding in Künzelsau. I wanted to have a public museum integrated

into the office building. It was inaugurated in 1991.

Elitz You don’t charge any entrance fees to most of your museums.

That’s not a very business-minded approach.

>> A COMPANY NEEDS TO HAVE A SOUL, TOO …

> “A business consultant would want to calculate the art coefficient as an indication

of the employees’ creativity. Is that possible?”

55

Würth Well, we don’t do it purely out of the goodness of our hearts –

all these activities are very good PR for the company. I am quite

pragmatic in that respect. When we opened up the museum in

Erstein, south of Strasbourg, recently, all newspapers from Frank-

furter Allgemeine Zeitung to Le Figaro and Süddeutsche Zeitung

printed an article about it. You can’t even begin to quantify such

publicity in terms of money.

Elitz Is the Würth Collection like a brand for the company Würth?

Würth It gives the company an open-minded, broader, cosmopolitan

image, makes it a global player if you like. And it is always very well

received by the public in the regions concerned.

Elitz In spite of all specialist knowledge, the market for art always

remains unpredictable. What is the difference between the art

business and screws?

Würth There is always a need for screws and fastening materials,

otherwise the world would fall apart. And you don’t need art to

survive. But it adds a little quality of life.

Elitz An artist works intuitively. Art is an emotional experience,

while business is rational. Or do you also use intuition as a busi-

nessman, do you run the gamut of emotions?

Würth Business does involve a certain level of intuition. Gut reac-

tions can be just as good as intellectual decisions and vice versa.

Gut reactions are often better than decisions based on large analy-

ses and charts.

Elitz The paintings from your collection are not only found in mu-

seums, they are also put up in the employees’ workplace. Do the

employees actually still see a piece of art that’s hanging in their

office as something special, or does it become part of the furniture

at some point?

Würth There’s no denying that you get used to it. It’s the same at

home. Some don’t even notice if you take the paintings down.

Others complain if a work that used to hang in their office is gone

on tour over a long period of time. They call up the curator and ask:

‘Where has my little Chillida got to?’ The level of awareness for art

varies greatly from one person to another.

Elitz A business consultant would want to calculate the art coeffi-

cient as an indication of the employees’ creativity. Is that possible?

Würth Oh, I don’t know. There is some truth in it; our seminars, our

concerts and literary readings certainly promote our employees’

creativity. But how do you measure pleasure, love or hope – with

math? I don’t think so.

> “But how do you measure pleasure, love or hope –

with math? I don’t think so.”


56

Elitz At the Freie Schule Anne-Sophie that your daughter founded,

the educational concept includes experiencing art.

Würth Yes, it is offered, but there is no pressure. Those who want

to, have the opportunity. We love art, but we are a profit-oriented

company and not an arts society. The same holds true for our Cha-

ritable Würth Trust’s educational work for society. In Baden-Würt-

temberg we support above all school projects that are designed to

encourage entrepreneurial and business-minded action among

teachers and pupils.

Elitz Würth has a complex incentive system involving different clas-

ses of company car, trips, honor pins. But what is a reward for one,

is demotion for the other one who didn’t win. That doesn’t seem to

be the right atmosphere for relaxing and enjoying things or lear-

ning for pleasure.

Würth There’s a right time for everything. Work is work and pleasure

is pleasure. We are in fact a very performance-oriented company,

but that has some extremely positive aspects. In the 58 years of my

working life, I have seen people start to grumble and be unhappy in

companies if the atmosphere wasn’t right anymore. But in 95 per-

cent of the cases this is due to the demands made of employees

being too low, rather than too high. So performance is a great thing.

The limit is reached when people are forced to use their reserves

due to mental or social strain. We are a company that is quick to

celebrate. We were ecstatic here in Künzelsau when an individual

entity in the Group recorded sales of more than a billion euros for

the first time. We sent a band through the offices and toasted the

milestone together with all employees. A few days later, we threw a

big party with fireworks.

Elitz Your museums in Künzelsau and Schwäbisch Hall, concerts,

the Freie Schule Anne-Sophie, seminars – is that your way of saying

thank you to the people who you grew up with?

Würth Yes, it is. But not only to them, it is above all a feeling of

gratitude to the employees in the company.

Elitz Looking back, do you feel more pride for what you have achieved

or more humility?

Würth Well, I would be lying if I didn’t admit that I am a bit proud of

what I have achieved. Having said that, I am fully aware that this

was all achieved together with the now more than 63,000 employees.

I don’t think success has caused me to lose touch with reality. I

have always sought to be modest because I haven’t forgotten my

roots. I remember the times when I was packing the boxes myself

and taking them to the station.

Elitz Thank you very much for the interview.

>> YOU DON’T NEED ART TO SURVIVE.BUT IT ADDS A LITTLE QUALITY OF LIFE.

> “... it is above all a feeling of gratitude to the employees

in the company.”

57

Edvard Munch

Strandmystik,

(Mystical Shore), 1892

Oil on canvas

98 x 138 cm



It is the declared purpose of the Charitable Würth Trust established by Reinhold and Carmen Würth

in 1987 to sponsor art and culture, research and science, as well as education projects. In 2007, the

endowment of the trust was again increased and now stands at EUR 4.17 million.

The Charitable Würth Trust

--SPONSORING ART AND CULTURE, RESEARCH AND THE SCIENCES--

Würth Prize of Jeunesses Musicales Germany

The Würth Prize of Jeunesses Musicales Germany has been awar-

ded since 1991 to outstanding young ensembles or individuals in

the music world who have contributed to the aims of Jeunesses

Musicales in a special way.

In 2007, the prize went to the Artemis Quartett. The Berlin-based

ensemble sees itself as a living mediator of music in the most

emphatic sense of the word. It picks up every detail in the score, pro-

ducing a breath-taking synthesis. In particular, the string quartet

was also chosen as winner of the prize money of EUR 15,000 for the

many years it has dedicated to training special talent.

Assisted projects

The Charitable Würth Trust does not concentrate solely on its own

projects, but also supports other event organizers. Whether the

Würth Trust decides to support an individual project depends

mostly on its significance in terms of the trust’s purpose and also

on its value for the region, quality and a certain unique quality.

Projects of particular importance that have won the trust’s regular

support are the Hohenlohe Cultural Summer and the International

Competition for Violin, which is held as part of it every two years by

the Kulturstiftung Hohenlohe. The winner of the competition in

2007 was Dalia Kuznecovaite, aged 18, from Lithuania. The Rein-

hold Würth scholarship prize was conferred on her and the prize

money of EUR 5,000 is to help her fund her further training.

Foundation for the promotion of the Reinhold Würth University

of Heilbronn University in Künzelsau

Since its establishment in 2005, this foundation has sponsored

research and teaching at the Reinhold Würth University, which is

part of Heilbronn University in Künzelsau. It is managed by the

Charitable Würth Trust. The foundation makes the results of research

projects accessible to the general public. The foundation has up to

EUR 500,000 at its disposal per year, and the list of assisted pro-

jects is very diverse as a result. It includes purchasing equipment

for research purposes, financing research projects and field trips as

well as scholarships for students. In addition, the foundation will

help to set up new courses of study in Künzelsau in future.

In order to make sure that the sponsorship policy is always

adapted to the current situation and needs, the board of the founda-

> The school Kirbachschule from Sachsenheim-Hohenhaslach wins the Würth

Education Award for tending their school’s own vineyard and marketing the

wine in a student company. Prof. Dr. h. c. mult. Reinhold Würth and Baden-

Württemberg’s Minister for Culture Helmut Rau at the wine-tasting.

> Würth Prize of Jeunesses Musicales Germany

goes to the Artemis Quartett from Berlin.

58

> Dalia Kuznecovaite from

Lithuania wins the International

Competition for Violin hosted by

Kulturstiftung Hohenlohe.

tion, the foundation’s principal body, meets twice a year. It is chaired

by Prof. Dr. h. c. mult. Reinhold Würth and the Science Minister of

the state of Baden-Württemberg, Prof. Dr. Peter Frankenberg.

Competence Center Economic Education in Baden-Württemberg

The purpose of the Competence Center for Economic Education in

Baden-Württemberg, founded in October 2005, is to introduce

school classes to the world of business. One of its principal activi-

ties is the Würth Education Award for future-oriented economic

projects at schools. The patron for the prize is Baden-Württem-

berg’s Prime Minister Günther H. Oettinger, and the prize money

totals EUR 42,000. The prize was awarded for the first time in

2007. A total of six schools received awards. The first prize went to

Kirbachschule from Sachsenheim-Hohenhaslach.

Freie Schule Anne-Sophie

Every child should leave the school as a winner.” This is the motto

underlying the reform pedagogic teaching methods developed for

the Freie Schule Anne-Sophie in 2006. The aim is to support every

student right from the start based on their individual situation.

Bettina Würth, Chairwoman of the Advisory Board of the Würth

Group and initiator of the school, broke the ground for the new

school in June 2007 in the Taläcker district in Künzelsau. One pre-

school class and the years one to eight will be able to move into

the new school building in the fall of 2008.

> The Charitable Würth Trust

59


“

60

Art and culture at Würth are part of the Würth company. Their strong presence and the diverse

activities are a product of a corporate culture filled with life. The museums at the company’s

headquarters in Künzelsau as well as the art forums of the international Würth Group entities are

proof of this special commitment.

--ART AT WÜRTH--

> A glimpse of the opening exhibition “Christo

and Jeanne-Claude” of the new art forum Würth

Turnhout at Würth Belgium

> Würth Spain inaugurated the Museo

Würth La Rioja for contemporary art

in Agoncillo in 2007.

It all started with the Museum Würth, opened at the headquarters

in 1991 and followed ten years later by Kunsthalle Würth, situated

just 20 kilometers away in Schwäbisch Hall. And then there is

Hirschwirtscheuer in Künzelsau, which offers exhibitions on a

smaller scale. These museums and galleries are owned by Adolf

Würth GmbH & Co. KG.

Since 1999, further art forums have successively been added at

the international companies in Belgium, Denmark, France, Italy,

the Netherlands, Norway, Austria, Spain and Switzerland.

The exhibitions – always integrated into the context of the com pany

hosting them – form an inspiring juxtaposition and blend of art

and ordinary business. Accompanying cultural events and active

art instruction, aimed chiefly at children and teenagers, complete

the picture. The exhibition program is put together drawing solely

on the Würth Collection, located for the most part in Germany,

which Prof. Dr. h. c. mult. Reinhold Würth started in the 1960s. It

includes some 11,000 works of modern and contemporary art.

61

> Art at Würth

Pablo Picasso

Homme à l’épée,

(Swordsman), 1969

Oil on wood

146 x 114 cm

Würth Collection, Inv. 10,200


62

01 -- JANUARY -- WÜRTH CULTURAL AND

CONGRESS CENTER

David Chipperfield Architects from Berlin win the

international architectural competition for the

planned Würth Cultural and Congress Center in

Künzelsau-Gaisbach. 13 architect’s offices from

Germany and abroad took part in the competition.

The models of all proposals are presented in the

Museum Würth.

03 -- MARCH -- MUSEUM WÜRTH

“Love at First Sight – One Hundred New Acquisitions

in the Würth Collection” shows the major new acqui-

sitions of the last three years that were added to the

company’s collection. A highlight of the exhibition is

the addition of “Homme à l’épée” (Swordsman) by

Pablo Picasso.

03 -- MARCH -- KUNSTHALLE WÜRTH

The national museums in Berlin put over 200 master-

pieces on display at Kunsthalle Würth in Schwäbisch

Hall for the exhibition “Circle Sphere Cosmos”.

05 -- MAY -- WÜRTH BELGIUM OPENS THE

KUNSTFORUM WÜRTH TURNHOUT

Würth Belgium opens Würth Turnhout, one of the

largest art forums of the Würth Group with an exhibi-

tion space of more than 400 square meters. The first

exhibition is dedicated to the husband and wife artists

Christo and Jeanne-Claude. It is the first time that

almost all of the roughly 90 original works of the wrap

artists in the Würth Collection are on display.

05 -- MAY -- REINHOLD WÜRTH IS GIVEN AN HONO-

RARY DOCTORATE BY THE UNIVERSITY OF PALERMO

Prof. Dr. h. c. mult. Reinhold Würth is given an

honorary doctorate in art history and museography

by the University of Palermo for his diverse cultural

commitment.

01----

02----

03----

04----

05----

06----

----

------------------------------------

--------------------

Model of the planned WürthCultural and Congress Center byDavid Chipperfield Architects

Fascinating insights in art fromits origins to the present day at the “Circle Sphere Cosmos”exhibition

Christo and ReinholdWürth at the newKunstforum WürthTurnhout at WürthBelgium

63

> Art and culture calendar

07 -- JULY -- WÜRTH INTERNATIONAL IN CHUR

BUILDS SCULPTURE PARK

Würth International in Chur expands its museum by

1,200 square meters with an outside sculpture park.

The park’s cubic style integrates permanent installa-

tions by Niki de Saint Phalle, Bernhard Luginbühl and

Jean Tinguely into the open and transparent structure

of the building and its surroundings.

08 -- AUGUST -- RETROSPECTIVE EXHIBITION OF

EDVARD MUNCH AT KUNSTHALLE WÜRTH

Kunsthalle Würth hosts a comprehensive exhibition

under the motto “Edvard Munch – Signs of Modern

Art”, concentrating on the major Norwegian artist’s

important contribution to the development of modern

painting. The deepest human emotions are like a

theme running through his works. This exhibition

draws more than 106,000 visitors to Kunsthalle Würth.

This record number of visitors alone emphasizes the

great interest in Edvard Munch and his unconventional

choice of motifs and material.

09 -- SEPTEMBER -- MUSEO WÜRTH LA RIOJA

OPENED IN SPAIN

Würth Spain opens a new gallery for international art

of the 20th and 21st century in Agoncillo near Logroño.

Besides works of art from Würth Spain’s collection,

which focuses on up-and-coming Spanish art, the

opening exhibition also shows works from the German

Würth Collection.

09 -- SEPTEMBER -- HIRSCHWIRTSCHEUER

KÜNZELSAU

The exhibition “Contemporary Glass in the Würth

Collection” at the Hirschwirtscheuer – Museum für

die Künstlerfamilie Sommer in Künzelsau gives an

insight into contemporary artistic glass design.

10 -- OCTOBER -- THE ONE MILLIONTH VISITOR TO

KUNSTHALLE WÜRTH

Kunsthalle Würth in Schwäbisch Hall welcomes the

millionth visitor since its inauguration in May 2001.

07----

08----

09----

10----

11 12----

----

----------------------------------

------------------------------------ ---- -----

The “Doolittle” sculpture byBernhard Luginbühl in the sculpturepark at Würth International in Chur Museum director C. Sylvia Weber

welcomes the one millionth visitorto Kunsthalle Würth.

Museo Würth La Rioja inAgoncillo, Spain


64

In the corporate philosophy of Würth, everything revolves around people. This belief is translated into

concrete action. Accordingly, there are numerous institutions in the Würth Group that further the

personal and professional development of our employees and help to enhance their quality of life,

while on the other hand also addressing our customers and the wider public.

--THE FOCUS IS ON PEOPLE--

Trades centers – an offer for Würth customers

A direct sales company, Würth maintains close contact with its

customers, which gives it a close insight into the requirements of

the market. Adolf Würth GmbH & Co. KG has used this knowledge

to develop a practice-driven training offering for the trades. In

2007, more than 10,000 persons attended seminars at the trade

centers of Akademie Würth or on location at the customer. The

training courses covering a wide range of product, business and

personal development topics are tailored precisely to the needs of

the trades. A total of 900 seminars were held throughout Germany

over the same period.

Opportunities for lifelong learning

As an employer, we feel that it is our duty to offer our employees

adequate training and development opportunities. We specifically

promote our employees’ management qualities through various

career development programs. Würth has set up international pro-

grams to promote high potentials. A program called MC Würth

offers employees with high development potential the opportunity

to qualify for managerial responsibilities and establish a network

in the long term. For employees who already have a few years of

experience as an executive in the Würth Group, we have the High

Potential Program. It is aimed at qualifying excellent employees

with potential at the right time to ensure that they can assume top

management positions in their company or at Group level.

The range offered also includes training programs for working

professionals to obtain recognized academic qualifications. Owing

to the demand, these are now also open to individuals outside the

Würth Group. An MBA course was designed in collaboration with

the University of Louisville in Kentucky (USA). This course is com-

pleted with an internationally recognized American university

degree in Global Business. A special feature of this program is that

it has been accredited by two institutions – the AACSB (Association

to Advance Collegiate Schools of Business) and the FIBAA (Founda-

> Prof. Dr. h. c. mult. Reinhold Würth during a lecture

for the Master of Business Administration course

> High Potential Symposium 2007: Team work put to

the test in practice – at the start of the soapbox derby

Akademie Würth

65

> Akademie Würth

tion of International Business Administration Accreditation). Over

13.5 months in Germany and the United States, the working stu-

dents are prepared for future international management responsi-

bilities. This course has been expanded to offer two further options,

the Master of Engineering (M.Eng.) and the Master of Science

(M.Sc.). Cooperation between Hamburger Fern-Hochschule, a dis-

tance-learning institution, and Würth offers students working full-

time the possibility of obtaining a Bachelor of Arts (B.A.) in business

or a Bachelor of Engineering (B.Eng.).

In addition, Akademie Würth helps to ensure that our employees

can acquire further qualifications as required. Each year, a multi-

tude of training classes and seminars are held on specific technical

topics, working to produce the desired results, productive processes

and intercultural competence.

Creating quality of life

Beyond promoting the diverse qualifications of our employees, we

take responsibility for making a significant contribution to our

employees’ quality of life. This includes offers for health promotion

as well as cultural events. The cultural program of Akademie Würth,

with distinguished artists from the areas of classical music, special

events and jazz, is also an offer for the general public. The three-

day Würth Open Air festival in particular has become firmly estab-

lished as a major event in the Heilbronn-Franken region.

Georg Baselitz

Donna via Venezia, 2004/06

Bronze cast and oil paint (unique work of art)

264.5 x 84.4 x 93.5 cm



66

The Würth Group expanded its international market presence in the fiscal year 2007, notably by

opening up new companies in Costa Rica and in Pakistan. This promises new, growing markets

while, at the same time, obliging us to strengthen the company’s role as neighbor and citizen in the

new markets, too.

--AT THE HEART OF THE CITIZENS’ SOCIETY – WÜRTH HAUSBERLIN AND WÜRTH OFFICE BRUSSELS--

As a trading company with global operations, the Würth Group is

affected by the ever-changing currents in economy and politics.

The challenge is to combine the necessary flexibility with regard to

new topics and changes in business and politics with a corporate

philosophy that is in line with the principles of corporate responsibi-

lity and corporate governance. Our representative offices in Berlin

and Brussels are a conscious effort on our part to do justice to this

responsibility.

The fact that Würth assumes responsibility has been proven by

the corporate culture throughout the history of the group, which

is characterized by fundamental values such as straight-forward-

ness, predictability and reliability. More than 63,000 employees

and over 2.9 million customers worldwide show the magnitude of

the responsibility.

Supported by the local structure of the group, which has 400 com-

panies in 86 countries around the world, every subsidiary is in a

position to make decisions and take action as it sees fit in the

respective political situation and society. Embedded in a country’s

political, economic and cultural conditions, a multitude of expe -

riences are made in relation to local and cross-border issues.

These interests are all compiled by topic in the two representa-

tive offices of the Würth Group: the Würth Haus Berlin in the capital

of Germany and the Würth Office Brussels at the heart of the Euro-

pean Union. Away from day-to-day politics and party politics, these

representative offices are intended as a platform for dialog between

prominent persons from the world of politics and business. Reports

from the field and topics addressed by the Würth Group with its

global operations will doubtlessly provide some helpful impetus.

> Jour fixe at Würth Haus Berlin: Podium discussion on

the topic of “Economy – Art – Justice” between Andreas

Veiel and Matthias Lilienthal (members of Akademie

der Künste), Heinz Dürr (CEO of Dürr AG) and Prof. Dr.

Wolfgang Huber (Council Chair of the Protestant Church

in Germany and Bishop in Berlin), facilitated by Manfred

Kurz (Director of the Würth Representative Offices)

Würth representative offices

67

> Representative offices

The purpose is to make a decisive contribution towards the conti-

nued prosperity of the European community.

In 2007, the Würth Haus Berlin was host to the Federalism Reform

Commission II, one of the major commissions of the present.

Made up of 16 representatives at federal and state level respectively,

the commission’s mandate is to modernize the financial relations

between the federation and the individual states in an attempt to

adapt to changed conditions in growth and employment politics.

Würth thus accepted the invitation to comment on the federalism

reform from the perspective of a business enterprise.

In February 2007, the 4th German-Spanish Forum was held at

Würth Haus Berlin.

The German-Spanish Forum was established based on the

insight that the countries willing to take the lead within the Euro-

pean Union have to work together closely in order to meet the global

challenges. A group of high-ranking experts from the two countries’

scientific, political, economic and cultural sectors debated the

major questions of the future for the European Union. The guests

included Germany’s Federal Minister of the Interior Dr. Wolfgang

Schäuble, former chancellor Gerhard Schröder and Jesús Caldera

Sánchez-Capitán, the Spanish Minister for Labor and Social Affairs.

As part of a regular series of events hosted by the Würth represen-

tative offices, a jour fixe is held every two months on a variety of

topics or as a cultural event. In June 2007, for example, shortly

before the end of Germany’s term of presidency of the Council of

the EU, the Pasadena Roof Orchestra was invited to the Würth

Office Brussels’ jour fixe. On September 11, 2007, the Würth Haus

Berlin opened its doors for a podium discussion on the topic of

“Economy – Art – Justice. An attempt of reconciliation between

centrifugal powers”.

> The Würth Haus Berlin: The representative office of the

Würth Group on the Schwanenwerder island in Berlin was

the venue chosen for the 4th German-Spanish Forum in

February 2007.


-- THE OPERATIONAL UNITS WITHIN THE WÜRTH GROUP--

68

Auto Division Metal Division Wood Division Construction Division Industry Division

Household Technology and Maintenance, the Wood Division, the

Construction Division, and the Industry Division.

The Allied Companies, which do not trade under the name of

Würth, operate independently of the Würth Line companies. They

are divided into nine strategic business units. With the exception

of a small number of manufacturing companies, the majority are

sales companies operating in related areas. The Diversification

group comprises service companies operating at regional level

(such as hotels and restaurants, Würth logistics operators, and

a company set up as a training program).

As of December 31, 2007, the Würth Group had 400 companies

serving the markets in 86 countries. The companies are divided into

two units: 136 (three German and 133 international) companies

belong to the Würth Line and 264 (78 German and 186 international)

companies are Allied Companies.

Würth Line operations focus on assembly and fastening materials,

supplying customers in the trades, the construction sector, and

industry. Internationally, the operational business units within the

Würth Line comprise the Auto Division with the Car and Cargo

subdivisions, the Metal Division with the subdivisions Metal,

WÜRTH LINE

>>> Car subdivisionOur customers are automobileservice garages, vehicle fleets,automotive refurbishers anddealers. They include authorizeddealerships of car manufacturersand independent workshops aswell as special shops and serviceproviders. The products sold inthis customer segment rangefrom consumables for repairs tochemical-technical products formaintenance, servicing and body-work, and tools for pneumatic andelectrical machines.

>>> Cargo subdivision

The customer segments of theCargo subdivision can be brokendown into authorized dealersand independent workshops aswell as specialized workshopsand commercial vehicle serviceproviders. We mainly sell faste-ning, assembly and cleaning pro-ducts required especially for themaintenance, repair and servi-cing of commercial vehicles inthese segments.

>>> Metal subdivision This subdivision directly servescustomers in the metalworkingand metal processing industriessuch as metal and steel fabrica-tors, fitters, machine and vehiclemanufacturers. The Metal subdi-vision focuses on the provision ofproducts such as anchor anddowel systems, tools and electri-cal machines as well as DIN andstandard parts for working andprocessing various metals.

>>> The Wood Division servescustomers in the entire wood-working and wood processingtrade, typically joiners/carpen-ters and window makers (woodand vinyl). The product spectrumcovers furniture fittings, theentire range of fastening mate-rials and sealing technology aswell as tools, machines, abrasivesand chemical-technical products.

>>> The Construction Divisionencompasses all sales unitsresponsible for serving custo-mers in the building and civilengineering industry and finis-hing trades. Marketing activityfocuses on construction compa-nies, roofers, plasterers, stuccomasons, dry construction firmsand direct supplies to buildingsites. Customized logistics solu-tions such as building site con-tainers filled with products arealso provided.

>>> The Industry Divisioncompanies are specialized com-panies with a complete range ofassembly and connecting mate-rial for industrial production, aswell as maintenance and repair.In addition to the comprehensivestandard range offered by thesecompanies, their strength lies incustomized logistics conceptsfor supply and service.

>>> Household Technology subdivision

The Household Technology sub-division concentrates on electri-cians, gas, heating and waterinstallation firms, plumbers aswell as air conditioning and ven-tilation system firms. The pro-ducts offered here range fromrapid assembly systems, insula-ting materials for plumbing andcable laying-out systems toinstallation materials in theelectrical area.

>>> Maintenance subdivision

This subdivision addresses awide range of customers: in-house repair shops of indus-trial enterprises, facility andinstallation maintenance ofhotels, airports, sewage plants,clinics and hospitals, recyclingcompanies as well as gardenand landscape specialists. Thefocal point is a complete productrange for minor repairs and products for servicing, main te-nance and care.

>>> Car subdivision

>>> Cargo subdivision

>>> Metal subdivision

>>> Household Technology subdivision

>>> Maintenance subdivision

69

> The operational units within the Würth Group

The Allied Companies showed a very dynamic development in the

fiscal year 2007, exhibiting sales growth of 10.1 percent to sales of

EUR 3.55 billion. The Electronics unit, for example, improved its

sales by 26.1 percent to EUR 362 million. The companies in the

Screws and Standard Parts unit grew even faster, recording 27.2

percent growth to EUR 257 million.

An analysis by division shows that the Metal and Auto Divisions

recorded the strongest sales in the fiscal year 2007. In relative

terms, the Construction Division and the Metal Division had the

highest sales growth of 13.9 percent and 12.4 percent respectively.

ALLIED COMPANIES

Electrical Wholesale Tools reca Group Trade

>>> The companies in thisgroup specialize in trade withelectrical installation materials,installation systems, communi-cation technology, cables andlines, tools, data and networktechnology, lighting and illumi-nation, household appliancesand a wide range of multimediaproducts.

>>> The Electronics unit includesthose companies in the WürthGroup that are involved in theproduction and sale of electroniccomponents such as printed cir-cuit boards and passive compo-nents as well as full componentry.With Würth Solar, the manufac-turer of innovative CIS photovol-taic modules, and Würth Solergy,a provider of complete solutions,the Würth Elektronik Group ope-rates on the market for renewableenergies.

>>> The majority of the Würthtools companies are located inCentral Europe and chiefly sup-ply the metalworking and metal-processing industries. Withmore than 60,000 productscovering metal cutting, tool andworkpiece clamping, measuringand testing, hand tools, factoryequipment, industrial safety andmachines, the companies offer afull range backed by high availa-bility and same-day order proces-sing and delivery.

>>> The reca Group companiessupply fastening and assemblymaterials direct to metal and carbusinesses as well as customersof the Cargo subdivision. Specia-lists for professional clothing,advertising materials and theindustrial area complement andadd to the reca Group.

>>> The companies belongingto this unit sell fastening andassembly materials, gardeningequipment, electrical tools andfurniture fittings, mainly to spe-cialist dealers and DIY and hard-ware stores.

Production

>>> This group comprises themanufacturing companies of theWürth Group. The product port-folio ranges from fasteners forthe application area wood andmetal and for the automotiveand electrical industry to punchand press fasteners, stampedand bent parts right through todowels, iron and furniture fit-tings, and tools.

>>> These companies are pro-duct specialists with concepts forsupplying industry. The unit’smain business activity is the saleof DIN and standard parts. Mostof the companies specialize in thesale of stainless steel parts.

>>> The companies in this unitoffer products and services in thefinancial services sector bothwithin the Würth Group and forexternal customers.

Electronics Screws and Standard Parts Financial Services Diversification

>>> This category covers com-panies operating primarily inlines of business other thanthose served by Würth itself.

17.3 % Metal Division

5.9 % Construction Division

41.8 % Allied Companies

15.5 % Auto Division

12.7 % Wood Division

6.8 % Industry Division

Share in total salesDivisions of the Würth Line and Allied Companies


70

Global automotive production rose in 2007 above all owing to the

continuing economic growth in Asia. The Auto Division proved to

be very successful in this overall economic situation. It grew by 8.4

percent, generating sales of EUR 1,315 million. We are particularly

pleased about the double-digit sales growth achieved by the Cargo

subdivision – the subdivision increased its sales by 11.0 percent on

the prior year to EUR 323 million. The Car subdivision enjoyed a

sound development with a growth rate of 7.6 percent to sales of

EUR 992 million. The Auto Division has 89 companies serving the

markets in 80 countries and a sales force of more than 10,000 as

of December 31, 2007. In terms of the sales force, it is the largest

division within the Würth Group. Besides the Eastern Europe

region, which recorded the highest growth in 2007, the regions of

Southern Europe and Western Europe were the mainstays of sales.

Targeted expansion of the product range

Sensitive to its customers’ needs, the Auto Division consistently

develops its product range in line with their requirements. One

focus in 2007 was the enlargement of the range offered by WOW!

Würth Online World GmbH. In that segment, Würth develops and

sells online-based vehicle information and diagnostic systems in

cooperation with the subsidiary. In 2007, the product range was

expanded to include traditional garage equipment, including lifting

technology and tire service. For truck diagnosis, a high-end multi-

brand system was developed for the division’s customers. A second

area of expansion in the Auto Division in 2007 was the product

spectrum for agriculture, geared especially towards the require-

ments of subcontractors, repair and forestry workshops as well as

gardening and landscape gardening. The third area of focus were

products in the field of nanotechnology: an innovative range of

disc, rim and paint coatings.

Outlook for 2008

The primary focus in the fiscal year 2008 will be on expanding the

Cargo subdivision. At present, there are plans to establish another

eleven companies in this area. The importance of key accounts for

marketing activities is on the rise, and the Auto Division will there-

fore consistently promote the conclusion of cooperation agreements

with automotive manufacturers in 2008.

PRODUCT RANGE GEARED CONSISTENTLY TOWARDS CUSTOMER REQUIREMENTSAuto Division

900

1,300

2003 2007

SalesAuto Division

in millions of EUR

1,315

2005

1,049

2004

987

Sales staffAuto Division

Non-insulated cable connector and matching

unlocking tool2006

1,213

1,134

8,000

9,000

10,000

2003 2007

10,054

20052004

7,695

2006

9,447

8,988

Share in total salesAuto Division

15.5%

8,505

1,100

71

> Würth Line

Outlook for 2008

In 2008, the Metal Division will start operations in Uruguay,

Panama, Slovenia, Malta, northern Australia, Montenegro, Israel

and the Ukraine. We will steadily expand our sales force. The

emphasis will be placed on increasing customer productivity

through suitable customer loyalty programs including ORSY®,

specialization of our sales representatives, pick-up branches

and subdivisions.

SUCCESS THROUGH TOP QUALITY AND SYSTEMS SOLUTIONSMetal Division

ZEBRA® Speed plus cutting wheel for

stainless steel

1,000

1,200

1,400

2003 2007

SalesMetal Division

in millions of EUR

1,019

1,469

20052004

Sales staffMetal Division

2006

1,307

1,088

Share in total salesMetal Division

17.3 %

1,198

6,000

7,000

8,000

2003 2007

6,086

8,064

20052004 2006

7,731

6,901

7,325

As the Metal Division is largely independent of the economic deve-

lopment and, with Europe accounting for over 90 percent of its

sales, remained largely unscathed by the currency effects, 2007

proved to be a highly successful fiscal year with sales growth of

12.4 percent and sales of EUR 1,469 million. This positive result

was achieved by a total of 8,064 sales representatives, serving the

division’s 689,000 customers.

Continued expansion of the markets

The move towards creating new subdivisions and the establishment

of metal divisions were two of the factors that contributed to the suc-

cess in 2007. New subdivisions were created mostly in the fields of

household technology and maintenance. In South America and Asia

in particular, sales per customer at the workshops of industrial custo-

mers were raised considerably by broadening the product range.

Further market potential was tapped in Costa Rica, Western Australia

and India in fiscal 2007 where new Metal divisions were established.

Added value for customers

The Metal Division’s product strategy is geared strictly towards

first-class quality. In the fiscal year 2007, we expanded our range of

products in the field of chemical products, DIN and standard parts

as well as fastening materials.

We also offer our customers true added value in the area of sys-

tems solutions. One example is the ORSY® case system (ORder

and SYstem), which allows our customers to individually manage

their product needs. In the fiscal year 2007 alone, the sales force in

the Metal Division served more than 100,000 ORSY® customers.


72

In the fiscal year 2007 the Würth Group had 33 wood divisions

serving the markets in 29 countries. On aggregate, the division

improved its sales by 4.4 percent to EUR 1,080 million. The inter-

national divisions’ share in sales remained at the prior-year level

of 86 percent. Our 3,819 sales representatives served a total of

376,700 customers.

International Wood divisions

The international Wood divisions felt the currency effects very

strongly in 2007, as 45 percent of total sales are generated in

North America. Despite this, the international divisions still

reported record sales of EUR 935 million, up 4.2 percent. The

expansion of the international sales network made further pro-

gress with the establishment of Wood divisions in the UK and

Montenegro, bringing the number of customers served by 3,417

sales representatives in the international Wood divisions to a total

of 310,800.

Wood division in Germany

The Wood division in Germany achieved sales of EUR 145 million

with sales growth of 5.8 percent. The German Wood division

employed 402 sales representatives as of December 31, 2007 to

serve the 65,900 customers.

In Germany, the Wood division comprises the areas of interior

finishing and window makers. In interior finishing, and store con-

struction in particular, we enjoyed double-digit growth rates across

the board. For these customer groups, we attach great importance

to the expansion of a broad, customer-oriented range of fittings.

Our sales organization will in future be reinforced specifically in

this segment.

Although the window makers sector has been buffeted by a crisis

for several years, the Wood division in Germany recorded growth

in that area. The development in the past fiscal year was again

highly satisfactory, and we recorded a sound growth rates. Innova-

tive fastening technology is the key to success here.

Outlook for 2008

For the international Wood divisions, the primary growth markets

in 2008 will again be North America as well as Central and Eastern

Europe. In addition, we aim to achieve greater market penetration

in the existing Wood divisions, among other things by expanding

our international sales network.

EXPANSION OF THE INTERNATIONAL SALES NETWORKWood Division

600

800

1,000

2003 2007

SalesWood Division

in millions of EUR

825

1,080

2005

946

2004

875

Sales staffWood Division

ASSY®plus decking screw – the screw for fastening deck

floorboards2006

1,034

1,500

2,500

3,500

2003 2007

3,221

3,819

2005

3,653

2004

3,590

2006

3,748

Share in total salesWood Division

12.7 %

73

> Würth Line

The Construction Division was able to continue the growth trend

from the prior year in fiscal 2007 – partly thanks to the mild winter

in Europe –, recording growth of 13.9 percent and sales of EUR 500

million. 2,495 sales representatives serve 252,000 customers in

the building industry the whole world over.

International Construction divisions

Following the boom year 2006, the pace of growth slowed some -

what in the European building sector in the past fiscal year. However,

this did not affect the international Construction divisions. The

share of the 21 international Construction divisions in total sales

remained stable compared to the prior year at 65 percent. With sales

growth of 15.1 percent, the international Construction divisions gene-

rated record sales of EUR 328 million. There was a clear concentra-

tion of sales on Southern Europe. The geographical expansion was

continued in 2007 by the formation of Construction divisions in

Brazil, China, Poland, Russia, Serbia, India and Turkey. 175,000

customers were served by 1,996 sales representatives in the inter-

national Construction divisions.

Construction division in Germany

The German Construction division achieved sales growth totaling

11.7 percent, increasing sales to EUR 172 million. The mild weather

and a positive economy created high order backlogs at our customers

in the building industry in Germany. The German Construction

division had 499 sales representatives looking after 77,000 custo-

mers in the past fiscal year.

The fiscal year 2007 was also an excellent one in the Construction

Sites subdivision, which enjoyed double-digit growth once again.

The growth rates recorded in the market for project business also

remained positive. In contrast to the decrease in the number of

planning permissions applied for in the private construction sector,

investments in the construction of residential and commercial real

estate as well as industrial properties remained stable. In line with

this trend, calls for individual building site logistics solutions and

rationalization drives are getting louder in the building trade.

Outlook for 2008

A further slight decrease in growth rates on the European building

sector has been forecast for 2008. A more positive economic deve-

lopment is not expected until 2009. For the fiscal year 2008, we

intend to expand our market position by creating additional new

subdivisions and by enhancing specialization in the international

Construction division. Plans also include an expansion of the sales

network to more than 2,800 sales representatives and tapping new

growth potential by establishing new Construction divisions in

Croatia, Slovakia and Australia.

NATIONAL AND INTERNATIONAL GROWTHConstruction Division

master right angle grinder with ZEBRA® diamond

blade – tools for heavy duty purposes

300

400

500

2003 2007

SalesConstruction Division

in millions of EUR

500

2005

341

2004 2003 200720052004

1,500

2,000

2,500

Sales staffConstruction Division

1,772

2006

439

365

2,006

311

2,495

2006

2,2732,111

Share in total salesConstruction Division

5.9 %


74

The economic environment in which the Industry Division found

itself in 2007 was rather contradictory. While the development of

the European economy boosted operations considerably, we were

faced with a slowing economy in the United States. As a result,

sales growth was lower than in prior years, with a rate of 8.3 per-

cent and sales of EUR 577 million. However, these indicators do

not reflect the actual sales performance of the 463 sales represen-

tatives, as a high share of sales was affected by the weak dollar.

Adjusted for exchange rate effects, the Industry Division achieved

a growth rate of 11.4 percent.

The business development was also highly diverse in terms of

the customer groups. While the demand from capital goods manu-

facturers was high, the volume purchased by manufacturers of

consumer goods was in decline in 2007. Moreover, business was

burdened by a drop in demand from customers in the truck industry,

which was more severe than anticipated on account of new emission

laws.

WINWORK® reinforced further

The Würth Industrial Network (WINWORK®), which ensures that

our customers with international operations can manage supplies

worldwide, was enlarged further by the acquisition of Nordiska

Bult Holding AB in Sweden in 2007. The start-ups incorporated in

2006 in Asia also developed extremely well.

Market share expanded in Germany

In Germany, the Industry division generated above-average growth,

above all in its strategic core business of on-demand small parts

via two-container just-in-time Kanban systems. This development

has helped us to expand our market share further. To ensure further

growth, another high-bay warehouse was integrated in the logistics

process of Würth Industrie Service in Bad Mergentheim in 2007 to

house an additional 27,000 pallets.

Investing in personnel development

The Reinhold-Würth-Haus in Bad Mergentheim was inaugurated in

January 2007 as the communication and training center of Würth

Industrie Service specifically for intensive employee training. Our

target of ensuring economical and reliable production supplies for

our customers through productive processes will require intensive

HR work over the next few years.

Outlook for 2008

Start-ups and acquisitions in Eastern European countries and Asia

will help us to expand our outstanding offer in terms of availability,

quality and costs to emerging markets worldwide.

ABOVE-AVERAGE GROWTH IN GERMANYIndustry Division

350

450

550

2003 2007

SalesIndustry Division

in millions of EUR

303

577

2005

463

2004

391

Sales staffIndustry Division

Tote boxes help to cut processing costs

in production.2006

533

250

350

450

2003 2007

312

463

2005

361

2004

343

2006

424

Share in total salesIndustry Division

6.8 %

75

> Würth Line> Allied Companies

With 6.9 percent growth to sales of EUR 805 million, the Electrical

Wholesale unit managed to expand its market position further in

the fiscal year 2007. The companies outside Germany in particular

enjoyed substantial growth in the double-digit region. 2,398 em -

plo yees in the business unit, 323 of whom were sales staff, are at

our customers’ service on a daily basis. The number of customers

was increased further in 2007 to 91,800.

Continuous updating of the range

The Electrical Wholesale unit was operating in an industry still en -

joying an economic upswing in the fiscal year 2007. The only cloud

on the horizon was the contracting residential construction area,

while refurbishing work in the residential construction industry con-

tinued to boom. The situation was similar for functional buildings,

where there was a slight rise in the construction of new buildings

which did not, however, by any means match the volume of re fur-

bishing work. The companies in the Electrical Wholesale unit res-

ponded to these developments by designing their product range

accordingly. This included radio-based solutions in the field of

switches and controls as well as design-oriented products used

specifically for renovation work.

A further pillar that is gaining in importance for the electrical

wholesale companies are energy-saving products and systems

such as energy-saving lighting systems and heat pumps as well as

photovoltaic modules.

Entering the Russian market

The unit was also expanded in regional terms. One company

started operations in Moscow in 2007. The small company with

eight employees and annual sales of one million euros looks after

our customers’ needs in Moscow and is to be expanded considera-

bly over the next few years.

Outlook for 2008

Following the successful year 2007, the companies in the Electrical

Wholesale unit plan to expand the business model further in 2008.

One focus will be placed on intensifying customer relationships.

Organic growth in the double-digit region will bring the unit within

reach of the EUR 900 million threshold for sales.

MARKET POSITION EXPANDED FURTHERElectrical Wholesale

Fuses, CEE coupling and measuring device for

electrical installations

EmployeesElectrical Wholesale

400

600

800

2003 2007

SalesElectrical Wholesale

in millions of EUR

805

2005

664

2004

607

2006

753

523

1,500

2,000

2,500

2003 2007

2,398

2005

2,225

2004

2,124

2006

2,305

2,027


76

In a stable economic environment the Tools unit, which is located

mostly in Central Europe, was able to capitalize on its success of

the prior year. The Tools unit’s sales increased by a total of 11.2 per-

cent to EUR 417 million, exceeding expectations regarding growth

and revenue across all regions. The companies in the Tools unit

have a total of 1,534 employees, 568 of whom work as sales repre-

sentatives.

Continued expansion on the international markets

The business development in Germany was the main driver of sales

growth. The unit benefited from the positive economic conditions

here and managed to expand its market share by the increasing

number of new customers acquired. This brought the growth rate

at year-end to 14.5 percent.

Growth far in excess of the average was recorded by the three

Chinese companies in the unit. Thanks to its subsidiary HAHN+KOLB

and the facilities in Tianjin, Guangzhou and Chongqing, the Würth

Group has become the supplier with the largest number of locations

for precision tools in the growth market China. In Eastern Europe,

the Tools unit’s presence was expanded by the new Würth subsidiary

HAHN+KOLB incorporated in Bulgaria.

Growth through innovation

Besides regional market penetration, another focus of the Tools

unit’s strategic alignment is on the innovative development of the

product range. The companies invest in the development of inno-

vative products as well as demand-based logistics concepts, with

the aim of enhancing their customers’ productivity. This includes

refining the systems to reduce procurement costs in e-commerce.

The ATORN® quality brand in particular was expanded to more

than 10,000 products. A large number of new products were added

in metal cutting and measuring technology. Full-range product

lines were developed, which offer quality-conscious customers an

unparalleled option in terms of technical maturity, availability and

product mix. ATORN® is now thus at the heart of the complete range

offered by all tools companies in the Würth Group.

Outlook

The companies in the Tools unit expect the economy to support

growth in all major markets in 2008. In addition, we will meet the

international trend of relocation of production capacity by expan-

ding selling and logistics activities in the volume markets of Asia

and South America. We will continue to place our attention on

expanding the ATORN® quality brand to become a highly innovative

range of tools that provides users with the benefits of state-of-the-

art production technology.

INTERNATIONAL MARKET EXPANSION AND INNOVATIVE PRODUCT RANGETools

EmployeesTools

Quality ATORN® brand measuring instruments

200

300

400

2003 2007

SalesTools

in millions of EUR

333

417

2005

336

2004

328

2006

375

1,000

1,250

1,500

2003 2007

1,344

1,534

2005

1,392

2004

1,323

2006

1,462

77

> Allied Companies

The reca Group companies supply fastening and assembly mate-

rials direct to metal and car businesses as well as customers of the

Cargo subdivision. Specialists for industrial customers, professional

clothing and advertising materials serve a number of other business

fields. As of December 31, 2007, the reca Group consisted of 41

companies in 24 countries. The group extended operations on the

market in another new country in 2007, in Turkey.

The companies of the reca Group employ a total of 3,941 per-

sons, more than 3,000 of whom are sales representatives, serving

some 303,000 customers. 2007 was an absolute record year for

the unit, with sales growing 11.1 percent to EUR 471 million.

Strong brands under one roof

Work progressed on the reca Group’s brand positioning in 2007

under the motto “Strong brands under one roof”. The implemen-

tation phase, which is designed to support the positioning of the

individual companies, will be with us for some time yet.

Strategically, we address our target groups with the different

brands in order to meet their individual requirements in the best

possible way. The Normfest® brand, for instance, is designed for

the automotive industry, the Scar brand for the trucks sector and

the reca® brand for trade and industry. What all brands have in

common are the core competences direct selling, customer deve-

lopment, process and product strategy as well as supply concepts

and logistics.

Investments in personnel and warehouse capacities

In the fiscal year 2007, the reca Group invested in the enlargement

of its sales organization as well as of its warehouses as illustrated

by the new warehouse built by the Austrian company Kellner &

Kunz AG with total investments of around EUR 18 million. The first

of three construction phases will be completed in 2008. The enlarge-

ment of the warehouse at the German company Reca Norm has

been completed and was commissioned in December 2007.

Outlook for 2008

We are optimistic about the future in all business fields of the reca

Group. The market share is still very low, but this means that there

is potential in all countries for both organic growth and acquisitions.

Incorporations are currently being prepared for reca St. Petersburg

and reca Portugal. Further expansion in Asia, South America and

India is planned for the next three to five years.

ABSOLUTE RECORD YEARreca Group

A new twist: the reca® ultra screwdriver adapts to the

user’s hand, not the other way round.

Employeesreca Group

250

350

450

2003 2007

in millions of EUR

328

471

2005

384

2004

353

2006

424

3,000

3,500

4,000

2003 2007

3,062

3,941

2005

3,572

2004

3,380

2006

3,730

Salesreca Group


78

Despite the general economic situation, the Trade unit continued

its course for growth in 2007, increasing sales to EUR 671 million.

The unit comprises 51 companies in 20 countries. It has 2,742 em -

ployees serving a total of 55,000 customers.

The customers of our Trade unit are heavily dependent on the

building and civil engineering industry and finishing trades, which

experienced low growth or even moved sideways in the last six

months of the year. In Germany, growth can therefore only be

achieved by crowding out competitors.

Focus on high-quality products

The expansion of the Trade unit in the Benelux countries was pur-

sued further in the fiscal year 2007 by acquisition of another

competitor. The Dutch Würth subsidiary Van Roij Fasteners pur-

chased Falnim B.V.

By focusing on the sale of high-quality products of the REISSER

premium product line “YOUR BEST”, the companies in the REISSER

Group generated excellent growth rates in the Eastern European

markets such as Romania and Hungary. With the same strategy,

the Würth subsidiary REISSER-Schraubentechnik GmbH success-

fully held its own on the German market, as in the past.

Outlook for 2008

The unit is well positioned across the board to deal with the structural

changes in trading. The German market for DIY and hardware stores

is characterized by increasing competitive pressure and cut-throat

competition, together with falling sales per unit area. We are coun-

tering this trend by international expansion, and will align our

growth strategy for 2008 in the European countries outside Germany

accordingly. With strong brands that stand for high quality stan-

dards and excellent service, we are optimistic about the future.

GROWTH RATES ACHIEVED THROUGH HIGH-QUALITY PRODUCTSTrade

EmployeesTrade

Hardwood screw, A4 stainless steel

200

400

600

2003 2007

SalesTrade

in millions of EUR

305

671

2005

560

2004

459

2006

630

1,500

2,000

2,500

2003 2007

1,290

2,742

2005

2,163

2004

2,049

2006

2,542

79

> Allied Companies

Buoyed by the good overall economic situation, the Production unit

achieved considerable sales growth on the prior year in all market

segments in fiscal 2007. The increase in the rate of VAT in Germany

did not have an adverse effect on business. As the Production unit’s

principal market, in geographical terms, is Europe, it hardly suffered

any negative exchange rate effects. As a result, sales were increased

by 6.0 percent to EUR 424 million. The order backlog remained at a

record level throughout the year. As of December 2007, this unit had

a total of 3,956 employees.

International and national growth

The Würth Industrial Park in Shenyang in northern China played a

major role in the Production unit’s entry on the Asian market. The

foundation stone was laid in August 2007 and work is scheduled to

continue at a fast pace. In the first expansion phase, production

halls and technical office buildings of Arnold Fasteners (Shenyang)

Co. Ltd. will be built on an area of 13 hectares. In the final stage of

expansion, these will include all stages of the value added chain of

state-of-the-art screw production. From 2010 onwards, it is planned

to gradually erect buildings for further manufacturing companies of

the Würth Group on the remaining 17 hectares of the industrial park.

In Germany, two investments were completed before the end of

2007. In October, SWG Schraubenwerk Gaisbach GmbH celebrated

the opening of a new production hall at its location in the town of

Waldenburg in Baden-Württemberg.

The Würth subsidiary REISSER-Schraubentechnik GmbH doubled

its previous production area in Ingelfingen for the production of

screws. The plans for the new electroplating shop were completed in

2007. It is to be built in 2008.

Arnold Umformtechnik GmbH & Co. KG commissioned the new nuts

production facility plant in Dörzbach at the end of 2007/start of 2008,

thus effectively splitting its production activities into two parts.

The challenge of materials management

The unit successfully managed the risks on its main procurement

markets. Rising prices for steel and the overall upward trend of

fluctuating electricity costs called for urgent changes in the procure-

ment structure. One example was structured procurement in the

area of energy.

Outlook for 2008

Prices for raw materials and energy are expected to continue to rise

in the next fiscal year. In order to ensure an upwards trend in profita-

bility, the unit will concentrate on measures to improve productivity

and reduce costs in the production process. In addition, the pro-

duction program will in future focus increasingly on fastening parts

subject to approval by building authorities and on innovative new

products worthy of patent protection. This way, we hope to compen-

sate for our higher costs on the input side by sales prices which

reflect the quality, degree of innovation and customer benefit that

our products offer.

EXPANDING CAPACITY IN GERMANY AND ABROADProduction

ASSY®plus VG: the universal screw for a broad range

of applications in timber engineering

EmployeesProduction

200

300

400

2003 2007

in millions of EUR

424

2005

348

2004

297

2006

400

SalesProduction

1692,000

3,000

4,000

2003 2007

3,956

2005

3,517

2004

3,087

2006

3,653

1,652


80

INCREASING GLOBALIZATIONElectronics

EmployeesElectronics

Würth Elektronik creates connections around the world –

WE high-speed LAN transmitter for internet-based networks

150

250

350

2003 2007

SalesElectronics

in millions of EUR

139

362

2005

238

2004

183

2006

287

2,500

5,000

7,500

2003 2007

1,093

7,637

2005

2,065

2004

1,209

2006

2,436

The Würth Elektronik Group found itself in a largely stable competi-

tive and market situation in the fiscal year 2007, which saw the con-

solidation of the general economic situation at a high level. The

unit’s sales development was excellent, with growth of 26.1 percent

to EUR 362 million. For the Würth Elektronik Group, 2007 was above

all a year of further globalization and thus for all unit companies a

year of increasing growth rates in countries outside Germany.

Midcom complements Würth Elektronik eiSos product range

The acquisition of the U.S. company Midcom, Inc. with two pro-

duction facilities in China gave the headcount in the entire Würth

Elektronik Group a strong boost, bringing it up to 7,637 employees.

Through this acquisition Würth Elektronik eiSos, which develops

and manufactures passive components, storage choke coils and

electromechanical components, not only gained a leading American

brand, but also won innovative technological know-how in the area

of transformers.

Innovative ideas for circuit boards and full componentry

In addition to the continuing trend towards miniaturization, the

“intelligent circuit board” is posing a challenge. Würth Elektronik’s

answer are innovative solutions in the field of FLATcomp. Yet Würth

Elektronik wins customers not only with technical solutions. Enginee-

ring services relating to the development of full componentry com-

prising, for example, rapid prototyping have become a key success

factor in the Intelligent Connecting Systems business.

Würth Solar CISfab is running at full power

In the field of photovoltaics, the CISfab in Schwäbisch Hall

implemented projects for private home owners as well

as for renowned major customers, including the world’s

largest open space photovoltaic plant with CIS (copper

indium selenide) photovoltaic modules which is being

built in Spain. The first company in the world to produce

innovative CIS modules on an industrial scale, Würth Solar

has the technological lead in a market of the future.

Outlook for 2008

With a market share of less than one percent, Würth Solar

has excellent opportunities for growth. In Germany, the

Renewable Energies Act (EEG) will be an engine for growth

in the field of photovoltaics again in 2008. At the same

time, the German Renewable Energies Act will serve as an

example for similar legislation in other European countries.

Against this backdrop, it is already planned to increase the

CISfab’s capacity in 2008 from 15 to 30 megawatts. The

other companies in the Würth Elektronik Group are also

planning to expand and create additional production capa-

city for circuit boards and full componentry.

81

> Allied Companies

The Screws and Standard Parts unit comprises 32 companies in

23 countries. Of these, six are headquartered in Germany. Their

principal business purpose is trade with stainless steel parts.

The business activities are divided into three areas:

� Sale of DIN and standard parts, as well as of stainless steel

products

� Manufacture and sale of specialty fastening parts

� Repairs and maintenance of high pressure hydraulic lines

and components

The unit closed the fiscal year 2007 with sales of EUR 257 million,

an increase of 27.2 percent on the prior year. The unit employed

211 sales representatives in 2007.

This successful business development is all the more impres-

sive considering how the developments on the procurement mar-

kets seen in 2006 continued throughout the fiscal year 2007. After

prices for raw materials started into the year at a level that was

already much higher than in previous years, further – in some

cases considerable – price hikes were still to follow. These increa-

ses automatically had an effect on our suppliers’ production costs,

and our purchasing function was therefore confronted with

demands of in some cases huge price increases.

The demand for services for industrial high-pressure facilities

recorded especially strong growth, above all in the heavy industry

sector. Customization of special tailored solutions in the segment

of high-pressure pipes for the industry is developing into an

important pillar of Indunorm Hydraulik GmbH.

Sonderschrauben Güldner GmbH & Co. KG invests in new building

In November 2007, Sonderschrauben Güldner GmbH & Co. KG

moved its headquarters to its product location in Niederstetten.

In December, the opening ceremony for the new offices and pro-

duction halls was held.

After years of steady growth, this company in the special parts

business had decided to combine the administration and sales

functions at the same location as the production in Niederstetten.

With capital expenditures of EUR 3.8 million, the new complex was

built in just eight months on an area of 4,500 square meters. Sonder-

schrauben Güldner GmbH & Co. KG aims to double its headcount

by 2017 from currently 38 employees and to increase annual sales

threefold compared to the current level of approximately EUR 10

million.

Outlook for 2008

The Screws and Standard Parts unit expects the situation on the

procurement markets to ease at least to some extent in 2008.

Nevertheless, it is clear that the cost of raw materials is not

expected to be reduced significantly. The international markets

are too volatile to allow any reliable forecasts to be made.

THE CHALLENGES OF THE STAINLESS STEEL PROCUREMENT MARKETScrews and Standard Parts

Products made of stainless steel

EmployeesScrews and Standard Parts

150

200

250

2003 2007

in millions of EUR

2005

155

2004

600

800

1,000

2003 2007

1,052

2005

776

2004 2006

920

SalesScrews and Standard Parts

138

116

257

2006

202

656

706


82

The past year showed once again that the strategic decision to

establish a financial services provider within the Würth Group was

a good one.

Bank

At the heart of the unit is IBB (Internationales Bankhaus Bodensee

AG), our successful bank which is registered in Friedrichshafen. The

bank has been majority-owned (88.55 percent) by the Würth Group

since 2006. For many years, IBB has recorded strong, stable growth.

It increased its pre-tax profits in the past fiscal year 2007 by a dou-

ble-digit rate. IBB has become known for its successful concept of

short decision paths and high consulting competence well beyond

the Lake Constance region.

Leasing

With a focus on small and medium-sized enterprises, the Würth

Group is well on the way to becoming a major provider in the area of

capital goods leasing. The successful concept of the existing leasing

companies in Switzerland and Germany was multiplied by the crea-

tion of a new company in Denmark, Würth Leasing Danmark A/S.

Insurance, provisioning, property

Led by the Würth Group’s in-house bank Würth Finance Internatio-

nal B.V., the Würth Finance Group operates on the market via Ober-

hänsli & Partner AG, one of the oldest insurance brokers in Switzer-

land, and Würth Financial Services AG. To be within easy reach of

private and corporate customers, the Würth Group has set up nine

branches which provide them with professional advice on all impor-

tant aspects of insurance, provisioning and property. In Germany,

the insurance services are covered by Waldenburger Versicherung

AG and the insurance broker Würth-Kirsch GmbH & Co. KG.

Outlook for 2008

Based on a preference for security over return, we have generated

steady growth in our Financial Services unit in recent years. Our aim

for the future is to continue to multiply the success and minimize

risks – especially in view of the present uncertain economic forecasts.

Owing to the enormous growth potential of our young Financial

Services unit, we are optimistic about the future.

FINANCIAL SERVICES UNIT EXPANDSFinancial Services

EmployeesFinancial Services

Würth multiplies success even in its young financial

services sector

80

160

2003 200720052004

87

263

2006

238

133

64

240

83

> Allied Companies > Würth Line

AlbaniaWürth Albania Ltd.,Tirana

ArgentinaWürth Argentina S.A.,Villa Lynch

ArmeniaWürth Co. Ltd.,Kasakh

AustraliaEDL Fasteners Pty. Ltd.,Sydney

Thomas Warburton Pty. Ltd.,Mulgrave

Wurth North Pty. Ltd.,Monterey Keys

Wurth South Pty. Ltd.,Dingley

Wurth West Pty. Ltd.,Malaga

AustriaWürth Handelsgesellschaft m.b.H.,Böheimkirchen

Würth Modyf Handelsgesellschaft m.b.H.,Böheimkirchen

AzerbaijanWurth Aztur Ltd.,Baku

BelarusFE WuerthBel,Minsk

BelgiumMarc-Gérard S.A.,Liège

Würth Belux N.V.,Turnhout

Würth-Modyf N.V.,Turnhout

Bosnia and HerzegovinaWURTH BH d.o.o.,Hadzici

BrazilSó W. Diesel, Indústria e ComércioParafusos Peças Importação Exportação Ltda.,São Paulo

Wurth do Brasil Peças de Fixação Ltda.,Cotia

BulgariaWürth Bulgarien EOOD,Sofia

CambodiaWürth Cambodia Ltd.,Phnom Penh

CanadaMcFadden's Hardwood & Hardware Inc.,Oakville, Ontario

Würth Canada Ltd.,Mississauga, Ontario

ChileWürth Chile Ltda.,Santiago de Chile

ChinaWürth Construction Tools Commercial (Beijing) Co., Ltd.,Beijing

Würth Fasteners Trading (Shanghai) Co., Ltd.,Shanghai

Würth (Guangzhou) InternationalTrading Co., Ltd.,Guangzhou

Würth Hongkong Co. Ltd.,Hong Kong

Würth (Shanghai) Hardware &Tools Co. Ltd.,Shanghai

Wuerth Tianjin International Trading Co., Ltd.,Tianjin

ColumbiaWürth Colombia S.A.,Bogota

Costa RicaWürth Costa Rica, S.A.,La Uruca

CroatiaWürth-Hrvatska d.o.o.,Zagreb

CyprusWurth Cyprus Ltd.,Lefkosia

Czech RepublicWürth, spol. s r.o.,Mladá Boleslav

DenmarkWürth Danmark A/S,Kolding

Würth Modyf Danmark A/S,Kolding

Dominican RepublicWürth Dominicana S.A.,Santo Domingo

EcuadorWurth Ecuador Wurthecuador S.A.,Quito

EstoniaWürth AS,Harjumaa

FinlandWürth Oy,Riihimäki

FranceWürth France S.A.,Erstein

Würth Industrie France S.A.S.,Erstein

Würth Modyf France S.a.r.l.,Erstein

GeorgiaWürth Georgia Ltd.,Tiflis

-- THE WÜRTH LINE COMPANIES--


84

GermanyAdolf Würth GmbH & Co. KG,Künzelsau

Würth Industrie Service GmbH & Co. KG,Bad Mergentheim

Würth Modyf GmbH & Co. KG,Künzelsau

GreeceWürth Hellas S.A.,Krioneri

HungaryWürth Szereléstechnika KFT,Budaörs

IcelandWürth á Íslandi ehf.,Garðabær

IndiaBettina Würth Auto India Pvt. Ltd.,Mumbai

Marion Würth India Pvt. Ltd.,Delhi

Reinhold Wuerth India Pvt. Ltd.,Kilpauk

Wuerth India Pvt. Ltd.,Navi Mumbai

Wuerth Industrial Services India Pvt. Ltd.,Pune

IndonesiaPT Wuerth Indah,Jakarta Barat

LatviaSIA Wurth,Riga

LebanonWurth Lebanon SAL,Choeifat

LithuaniaWurth Lietuva,Vilnius

MacedoniaWuerth-Macedonia d.o.o.e.l.,Skopje

MalaysiaWuerth (Malaysia) Sdn. Bhd.,Petaling Jaya

MaltaWürth Ltd.,Qormi

MartiniqueWürth Caraïbes S.a.r.l.,Ducos

MexicoWürth México S.A. de C.V.,Morelos

MoldovaWürth Moldova Ltd.,Chisinau

MongoliaWuerth Mongolia LLC,Ulaanbaatar

MontenegroWurth Podgorica d.o.o.,Podgorica

NetherlandsWürth Modyf NL B.V.,’s-Hertogenbosch

Würth Nederland B.V.,’s-Hertogenbosch

New ZealandEDL Fasteners Ltd.,Auckland

Global Fasteners Ltd.,Auckland

Würth New Zealand Ltd.,Manukau City

NorwayWürth Modyf Norge AS,Hagan

Würth Norge AS,Hagan

PakistanWürth Pakistan Pvt. Ltd.,Karachi

PanamaWürth Centroamérica S.A.,Panama City

PeruWürth Perú S.A.C.,Lima

PhilippinesWuerth Philippines, Inc.,Cabuyao, Laguna

PolandWürth Polska Sp. z o.o.,Warsaw

IranWürth Teheran Ltd.,Tehran

IrelandWürth Ireland Ltd.,Limerick

IsraelWürth Israel Ltd.,Caesarea

ItalyModyf GmbH,Termeno

Würth S.r.l.,Egna

JapanWürth Japan Inc.,Yokohama

JordanWurth al-Urdun Co. Ltd.,Amman

KazakhstanWuerth Kazakhstan Ltd.,Almaty

KenyaWuerth Kenya Ltd.,Nairobi

KosovoWuerth Kosova,Prishtine Unmik Kosova

KyrgyzstanWürth Foreign Swiss Company Ltd.,Bishkek

85

> Würth Line

PortugalWürth Modyf Lda.,Sintra

Würth (Portugal) Técnica de Montagem Lda.,Sintra

RomaniaWürth Romania S.R.L.,Otopeni

RussiaWürth North-West,St. Petersburg

Würth Russia,Moscow

ZAO „Würth-Ural“,Yekaterinburg

SerbiaWurth d.o.o.,Krnjaca-Belgrade

SlovakiaWürth s.r.o.,Bratislava

SloveniaWürth d.o.o.,Trzin

South AfricaAction Bolt Pty. Ltd.,Durban

Würth South Africa Co. Pty. Ltd.,Isando

South KoreaWurth Korea Co., Ltd.,Seoul

SpainW Altos Servicios Industriales, S.A.,Palau-solità i Plegamans, Barcelona

Würth España, S.A.,Palau-solità i Plegamans, Barcelona

Würth Modyf, S.A.,Palau-solità i Plegamans, Barcelona

Sri LankaWurth Lanka Pvt. Ltd.,Nugegoda

SwedenNordiska Bult Holding AB,Hisings Backa

Würth Svenska AB,Örebro

SwitzerlandWürth AG,Arlesheim

Würth MODYF AG,Arlesheim

TaiwanWürth Taiwan Co. Ltd.,Taipei Hsien

ThailandWuerth Verbindungstechnik Co., Ltd., Ladprao, Bangkok

TurkeyWürth Sanayi Ürünleri Tic. Ltd. Sti.,Istanbul

For more detailed contact information, please referto our webpage at www.wuerth.com.

UkraineWürth Ukraine Ltd.,Vyshgorod

United Arab EmiratesWürth Gulf FZE,Dubai

United KingdomWinzer Würth Industrial Ltd.,Godalming

Würth U.K. Ltd.,Erith

UruguayWurth del Uruguay S.A.,Montevideo

USABaer Supply Company,Vernon Hills, Illinois

Louis and Company,Brea, California

Trend Distributors Inc.,Ft. Lauderdale, Florida

Würth Action Bolt & Tool Co.,Riviera Beach, Florida

Würth Adams Nut & Bolt Co.,Maple Grove, Minnesota

Würth Eastern Maintenance and Industrial Supplies, Inc.,Berlin, Connecticut

Würth McAllen Bolt & Screw Co.,McAllen, Texas

Würth RevCar Fasteners Inc.,Roanoke, Virginia

Würth Snider Bolt & Screw Inc.,Louisville, Kentucky

Wurth Red Label Inc.,Charlotte, North Carolina

Wurth/Service Supply Inc.,Indianapolis, Indiana

WURTH USA Inc.,Ramsey, New Jersey

Wurth Wood Group Inc.,Charlotte, North Carolina

VietnamVu Viet Co. Ltd.,Ho Chi Minh City


86

-- THE ALLIED COMPANIES--

Electrical Wholesale

AustriaEichmann Elektrofachgroßhandel GmbH,Linz

Czech RepublicElfetex spol. s r.o.,Plzen

EstoniaTalger-Elektrotehnika OÜ,Tallinn

GermanyFEGA Elektro-Großhandels-GmbH,Ansbach

LICHT Zentrale Lichtgroßhandel GmbH,Ansbach

Luxero GmbH & Co. KG,Dreieich

nordberliner Elektro-Großhandels-Gesellschaft mbH,Eschborn

Schmitt Elektrogroßhandel GmbH,Fulda

UNI ELEKTRO FachgroßhandelGmbH & Co. KG,Eschborn

Walter Kluxen GmbH,Hamburg

LatviaSIA Baltjas Elektro Sabiedriba,Riga

LithuaniaUAB ELEKTROBALT,Vilnius

PolandFEGA Poland Sp. z o.o.,Wroclaw

RussiaFEGA GmbH,Moscow

Tools

AustriaHommel & Seitz GmbH,Vienna

Metzler GmbH & Co. KG,Rankweil

BulgariaHAHN+KOLB Instrumenti EOOD,Sofia

ChinaHAHN+KOLB (Chongqing) Tools Co. Ltd.,Chongqing

HAHN+KOLB (Guangzhou) Tools Co. Ltd.,Guangzhou

HAHN+KOLB (Tianjin) International Trade Co. Ltd.,Tianjin

Czech RepublicHHW Hommel Hercules Werkzeughandel CZ s.r.o.,Prague

FranceHAHN+KOLB Soveco S.a.r.l.,Courtabœuf

GermanyHAHN+KOLB Werkzeuge GmbH,Stuttgart

Hommel Hercules WerkzeughandelGmbH & Co. KG,Viernheim

Sartorius Nachf. GmbH & Co. KG,Ratingen

HungaryHAHN+KOLB Hungária Kft.,Budapest

PolandHAHN+KOLB Polska Sp. z o.o.,Poznan

Hommel Hercules PL Sp. z o.o.,Katowice

RomaniaHAHN+KOLB Romania S.R.L.,Otopeni

RussiaHAHN+KOLB OOO,Moscow

SerbiaHAHN+KOLB Beograd d.o.o.,Krnjaca-Belgrade

SlovakiaHHW Hommel Hercules Werkzeughandel SK s.r.o.,Bratislava

SpainHHW Hommel Hercules Ibérica S.L.,Molins de Rei (Barcelona)

SwitzerlandHHW (Schweiz) AG,Tagelswangen

United KingdomMonks and Crane Industrial Group Ltd.,Wednesbury

reca Group

AustriaKellner & Kunz AG,Wels

Normfest Austria GmbH,Vienna

BelgiumNormfest Benelux S.A./N.V.,Zaventem

reca Belux S.A.-N.V.,Ternat

Bosnia and Herzegovinareca d.o.o.,Sarajevo

Bulgariareca Bulgaria EOOD,Sofia

Chinareca (Shanghai) Intern. Trading Co. Ltd.,Shanghai

87

> Allied Companies

Croatiareca d.o.o.,Varazdin

Czech RepublicNormfest s.r.o.,Prague

reca spol. s r.o.,Brno

Denmarkreca Danmark A/S,Taastrup

FranceNormfest France S.A.S.,Le Blanc Mesnil

reca Union France S.a.r.l.,Mundolsheim

GermanyBaier & Michels GmbH & Co. KG,Ober-Ramstadt

CODESI GmbH,Oberhausen

dress + safe GmbH & Co. KG,Oberhausen

Normfest GmbH,Velbert

Reca Norm GmbH & Co. KG,Kupferzell

Siller & Laar GmbH & Co. KG,Augsburg

Greecereca Hellas E.P.E.,Athens

Sloveniareca d.o.o.,Maribor

SpainFime Hispania S.A.,Massalfaas (Valencia)

Normfest Hispania S.A.,Alicante

reca Hispania S.A.,Aldaya (Valencia)

Servicios Completos Automoción Y Repuestos S.A.,Ribarroja del Turia Valencia

Swedenreca Sverige AB,Helsingborg

Switzerlandreca AG,Dietikon

Turkeyreca Vida Alet ve Makine Parc. Tic. Ltd. Sti.,Istanbul

United KingdomAnchorfast Ltd.,West Bromwich

Trade

BelgiumCONMETALL N.V.,Mechelen

Duvimex Belgien BVBA,Wommelgem

BrazilAP Winner Indústria e Comércio de Produtos Químicos Ltda.,Ponta Grossa, Paraná

ChinaDIY Products Asia Ltd.,Hong Kong

CroatiaExtramont d.o.o.,Zagreb

Czech RepublicCONMETALL spol. s r.o.,Oslavany

GermanyArnold & Shinjo GmbH & Co. KG,Dörzbach

CONMETALL GmbH & Co. KG,Celle

CONPAC GmbH & Co. KG,Celle

DIY World GmbH, Sortimente und Service,Wuppertal

Glessdox GmbH & Co. KG,Bad Mergentheim

IMS-Verbindungstechnik GmbH & Co. KG,Neuenstein

IVT Installations- und Verbindungs-technik GmbH & Co. KG,Rohr

KERONA GmbH,Ingelfingen

Hungaryreca Kft.,Budapest

ItalyFIME S.r.l.,Belfiore

FINK S.r.l.,Termeno

SCAR S.r.l.,Bussolengo

SO.FIM S.r.l.,Gazollo

NetherlandsA.J. Steenkist-Rooijmans B.V.,Eindhoven

Normfest Nederland B.V.,Well

PolandNormfest Polska Sp. z o.o.,Poznan

reca Polska Sp. z o.o.,Krakow

Romaniareca Bucuresti S.R.L.,Bucharest

Serbiareca Beograd d.o.o.,Novi Belgrade

Slovakiareca Slovensko s.r.o.,Bratislava


88

Kisling Deutschland GmbH,Schwäbisch Hall

REISSER-Schraubentechnik GmbH,Geschäftsbereich Handel(Business unit Trade),Ingelfingen

Schössmetall GmbH & Co. KG,Freilassing

SWG Schraubenwerk GaisbachGmbH, Geschäftsbereich Handel(Business unit Trade),Waldenburg

Teudeloff GmbH & Co. KG, Waldenburg

HungaryREISSER-CSAVAR Kft.,Szár

Schössmetall Hungária Kft.,Budapest

Van Roij Fasteners Hungária Kft.,Dunaharaszti (iparterület)

ItalyEuroviti S.r.l.,Padua

Glessdox GmbH,Termeno

Masidef S.r.l.,Caronno Pertusella

Safepont GmbH,Termeno

Unifix SWG GmbH,Terlano

VAJA GmbH MASTEN COLOR,Bolzano

Viterie Venete S.r.l.,Padua

ChinaArnold Fasteners (Shenyang) Co. Ltd.,Shenyang

Grass (Shanghai) International Trading Co. Ltd.,Shanghai

SWG Fasteners (Shanghai) Co. Ltd.,Shanghai

Czech RepublicHetal DC s.r.o.,Decin

Mepla, s.r.o.,Cesky Krumlov

FranceArnold Technique France S.A.,Anneyron

GermanyAdolf Menschel Verbindungstech-nik GmbH & Co. KG,Plettenberg

Arnold Umformtechnik GmbH & Co. KG,Forchtenberg

BB-Stanz- und Umformtechnik Produktions- und Handels GmbH,Berga

Dringenberg GmbH Betriebsein-richtungen,Obersulm

Grass GmbH & Co. KG,Verl

Hetalco GmbH,Alpirsbach

Hetal-Werke Franz Hettich GmbH & Co. KG,Alpirsbach

MEPLA-Werke LautenschlägerGmbH & Co. KG,Reinheim

REISSER-Schraubentechnik GmbH, Geschäftsbereich Produktion(Business unit Production),Ingelfingen

SWG Schraubenwerk Gaisbach GmbH, Geschäftsbereich Produktion(Business unit Production),Waldenburg

Werkzeugtechnik Niederstetten GmbH & Co. KG,Niederstetten

PolandDringenberg Polska Sp. z o.o.,Zagan

South AfricaMepla ZA Pty. Ltd.,Chempet

SwedenMepla-Alfit Nordiska AB,Jönköping

SwitzerlandKisling AG,Tagelswangen

KMT Kunststoff- & Metallteile AG,Hinwil

United KingdomTooling International Ltd.,Solihull

USAArnold and Shinjo Corp.,Sterling Heights, Michigan

Grass America Inc.,Kernersville, North Carolina

Mepla-Alfit Inc.,High Point, North Carolina

NetherlandsVan Roij Fasteners Europe B.V.,Deurne

RomaniaMetalife S.R.L.,Bucharest

Reisser Tehnic S.R.L.,Cluj-Napoca

Viterie Venete Balkan S.R.L.,Cluj-Napoca

SerbiaExtramont Beograd d.o.o.,Belgrade

SwitzerlandAirproduct AG,Oberwil-Lieli

United KingdomAdvanced Fastener Technology Ltd.,Solihull

Production

AustriaAlfit AG,Götzis

Grass GmbH,Höchst

MEPLA-Werke Lautenschläger Ges. mbH & Co. KG,Salzburg

Schmid Schrauben HainfeldGmbH,Hainfeld

CanadaMepla-Alfit Canada,Toronto

89

Electronics

BrazilWurth Energia Solar do Brasil Ltda.,Cotia

BulgariaWürth Elektronik iBE BG EOOD,Belozem

ChinaWuerth Electronic Tianjin Co., Ltd.,Tianjin

Wurth Electronics (HK) Limited,Hong Kong

Wurth Electronics Midcom Fuling Inc.,Changping

Wurth Electronics Midcom Longgang Inc.,Shenzhen

Wurth Electronics (Wuxi) Co., Ltd.Wuxi

Czech RepublicWürth Elektronik iBE CZ s.r.o.,Ceske Budejovice

FranceWürth Elektronik Radialex S.a.r.l.,Saint Priest

Germanyimt engineering GmbH,Ingelfingen

Würth Elektronik GmbH & Co. KG, Niedernhall, Circuit Board Technology

Würth Elektronik Italia s.r.l.,Egna, EMC & Inductive Solutions

Würth Elektronik Italia s.r.l.,Egna, Intelligent Connecting Systems

Würth Elektronik Italia s.r.l.,Elektronik Solergy, Egna

MexicoWurth Elektronik México S.A. de C.V.,Irapuato

SingaporeWurth Electronics Singapore Pte. Ltd.,Singapore

TaiwanWurth Electronics Ltd.,Taipei

United KingdomWurth Electronics UK Ltd.,Manchester

USAWurth Electronics Inc.EMC & Inductive Solutions,Ramsey, New Jersey

Wurth Electronics Midcom Inc.,Watertown, South Dakota

Screws and Standard Parts

AustraliaJames Glen Pty Ltd.,Lidcombe

AustriaWASI-Rostfrei Schraubenhandels-gesellschaft m.b.H.,Vienna

BelgiumFASTINOX N.V.,Turnhout

BulgariaWASI Bulgarien GmbH,Sofia

ChinaWASI Tianjin Fastener Co., Ltd.,Tianjin

CroatiaWASI d.o.o.,Zagreb

DenmarkWASI Inox Denmark ApS,Kolding

EstoniaFerrometal Baltic OÜ,Tallinn

FinlandFerrometal Oy,Nurmijärvi

Würth Elektronik Oy,Nurmijärvi

FranceINTER-INOX S.a.r.l.,Meyzieu

GermanyAtrion GmbH & Co. KG,Wolpertshausen

HSR GmbH Hochdruck Schlauch + Rohr Verbindungen,Duisburg

INDUNORM Hydraulik GmbH,Duisburg

Würth Elektronik Pforzheim GmbH & Co. KG, Pforzheim, Circuit Board Technology

Würth Elektronik Rot am SeeGmbH & Co. KG,Rot am See, Circuit Board Technology

Würth Elektronik SchopfheimGmbH & Co. KG,Schopfheim, Circuit Board Technology

Würth Elektronik eiSos GmbH & Co. KG,Waldenburg, EMC & InductiveSolutions

Würth Elektronik iBE GmbH,Thyrnau

Würth Elektronik ICS GmbH & Co. KG,Öhringen, Intelligent ConnectingSystems

Würth Elektronik GmbH & Co. KG,Würth Solergy,Schwäbisch Hall

Würth Elektronik Research GmbH,Stuttgart

Würth Solar GmbH & Co. KG,Schwäbisch Hall

IndiaWuerth Elektronik India Pvt. Ltd.,Bangalore

ItalyWürth Elektronik Italia s.r.l.,Egna

> Allied Companies


90

John & Molt GmbH,Glinde

Sonderschrauben Güldner GmbH & Co. KG,Niederstetten

Wagener & Simon WASI GmbH & Co. KG,Wuppertal

GreeceInox Mare Hellas S.A.,Krioneri

ItalyHSR Italia S.r.l.,Bussolengo

Inox Tirrenica S.r.l.,Fiumicino-Roma

Nuova Inox Mare S.r.l.,Rimini

Spinelli S.r.l.,Terlano

NorwayWürth Inox AS,Skytta

PolandWASI Polska sp. z o.o.,Poznan

RomaniaWASI Romania S.R.L.,Otopeni

RussiaInox Mare RUS LLC,St. Petersburg

SerbiaWASI d.o.o.,Krnjaca-Belgrade

ItalyWürth Leasing Italia S.r.l.,Egna

LiechtensteinWürth Financial Services AG,Triesen

LuxembourgWürth Reinsurance Company S.A.,Luxembourg

NetherlandsWürth Finance International B.V.,‘s-Hertogenbosch

Branch: Würth FinanceInternational B.V.,Zurich branch, Küsnacht

SwitzerlandOberhänsli & Partner AG,Thalwil

Würth Financial Services AG,Küsnacht

Würth Invest AG,Chur

Würth Leasing AG,Küsnacht

IT service and holding companies

ChinaComgroup Information Technology Co. Ltd.,Shanghai

Reinhold Würth Trading (Shanghai) Co. Ltd.,Shanghai

Würth International Trading(Shanghai) Co. Ltd.,Shanghai

Würth Phoenix Information Technology (Shanghai) Co. Ltd.,Shanghai

GermanyComgroup GmbH,Bad Mergentheim

PORTOLAN Commerce Solutions GmbH,Ilsfeld

WOW! Würth Online World GmbH,Künzelsau

HungaryWürth Phoenix Kft.,Budaörs

ItalyWürth Phoenix S.r.l.,Bolzano

NetherlandsWürth Phoenix B.V.,‘s-Hertogenbosch

SlovakiaWürth International Trading s.r.o.,Bratislava

SwedenAutocom Diagnostic Partner AB,Trollhättan

SwitzerlandComgroup (Schweiz) AG,Biel

Würth International AG,Chur

Würth ITensis AG,Chur

SpainWASI Hispania S.A.,Barcelona

SwedenWASI Sverige AB,Örebro

SwitzerlandModal Inox AG,Arlesheim

TurkeyInox Ege MetalÜrünleri Dis Tic. Ltd. Sti.,Izmir

USABrikksen Inc.,Dallas, Texas

Financial Services

DenmarkWürth Leasing Danmark A/S,Kolding

GermanyInternationales Bankhaus Bodensee AG,Friedrichshafen

Waldenburger Versicherung AG,Künzelsau

Würth Immobilien-Leasing GmbH & Co. KG,Göppingen

Würth-Kirsch GmbH & Co. KGFinanzdienstleistungen,Künzelsau

Würth Leasing GmbH & Co. KG,Göppingen

91

USAWurth Central Purchasing America Inc.,Ramsey, New Jersey

Wurth Group of North America Inc.,Ramsey, New Jersey

Diversification

GermanyAHD Auto-Hifi & -Design GmbH,Ingelfingen

Flugplatz Schwäbisch Hall GmbH,Schwäbisch Hall

Hotel-Restaurant “Altes Amtshaus”,Mulfingen-Ailringen

Hotel-Restaurant “Anne-Sophie”,Künzelsau

marbet Marion & Bettina WürthGmbH & Co. KG,Künzelsau

Würth TeleServices GmbH & Co. KG,Künzelsau

Italymarbet Marion & Bettina WürthS.r.l.,Egna

Sales Academy S.r.l.,Termeno

Spainmarbet Eventos S.A.,Barcelona

marbet Servicios Creativos S.A.,Barcelona

marbet Viajes España S.A.,Barcelona

SwitzerlandWürth Logistics AG,Chur

Würth Promotional Concepts AG,Chur

marbet Reiseservice GmbH & Co. KG,Künzelsau

Panorama Hotel- und Service GmbH,Waldenburg

Panoramahotel Waldenburg,Waldenburg

Restaurant “Sudhaus an der Kunsthalle Würth”,Schwäbisch Hall

Swiridoff Verlag GmbH & Co. KG,Künzelsau

Wald- und Schlosshotel Friedrichsruhe,Friedrichsruhe/Zweiflingen

WLC Würth-Logistik GmbH & Co. KG,Adelsheim

Würth Promotional ConceptsDeutschland GmbH,Künzelsau

For more detailed contact information, please referto our webpage at www.wuerth.com.

> Allied Companies


92

-- MILESTONES IN THE COMPANY'S HISTORY--

> 1945 With 20 years’ experience in this line of

business, Adolf Würth establishes a wholesale

firm in Künzelsau, in the Hohenlohe region of

southern Germany, supplying screws, nuts, and

bolts.

> 1954 Death of Adolf Würth, founder of the

firm, at the age of 45. His 19-year-old son

Reinhold takes over the running of the business.

Annual sales at the time are around EUR 80,000.

> 1962 Prof. Dr. h. c. mult. Reinhold Würth

ventures outside Germany and sets up the

company's first foreign subsidiary, Würth Neder-

land B.V.

> 1965 Adolf Würth OHG is converted into a

limited commercial partnership (“KG”). The

general partner is Würth-Verwaltungs-GmbH.

The limited liability partnership capital is contri-

buted solely by the family.

> 1969 The firm’s premises at the railway sta-

tion in Künzelsau are bursting at the seams. The

offices are moved to a new building in the Gais-

bach district of Künzelsau.

The Wurth Screw and Fastener Corporation

is set up in the USA, Würth’s first company on

the American continent.

> 1970 Würth celebrates 25 years in the

business. Sales rise 50 percent to EUR 32.9

million. Würth establishes its first company

in South Africa.

> 1978 A new distribution center goes into

operation in Künzelsau-Gaisbach.

> 1981 Würth establishes its first company

in Australia.

> 1985 Adolf Würth GmbH & Co. KG cele-

brates 40 years in business.

> 1987 Würth enters the Asian market by

acquiring a company in Japan and establishing

its own subsidiary in Malaysia. Würth is now

represented on all five continents.

> 1989 Adolf Würth GmbH & Co. KG is awar-

ded the German Marketing Prize.

> 1990 The company opens its first branch

office in former East Germany, in Dresden.

> 1992 On May 15, 1992, the new headquar-

ters building in Künzelsau-Gaisbach is officially

opened. The modern office complex includes a

museum of art that is open to the public.

> 1994 On January 1, 1994, Prof. Dr. h. c. mult.

Reinhold Würth retires from operational mana ge-

ment and takes the chair of the Advisory Board

of the Würth Group. Dr. Walter Jaeger is appoin-

ted Chairman of the Executive Board of the

Würth Group. Rolf Bauer becomes Deputy

Chairman of the Executive Board.

> 1995 On April 20, 1995, Adolf Würth GmbH

& Co. KG celebrates its 50th anniversary. In the

anniversary year, the Würth Group achieves

record sales of EUR 2.2 billion.

> 1998 Two Würth Group companies steeped

in tradition, toolmakers HAHN+KOLB Werk-

zeuge GmbH in Stuttgart and the Arnold Um -

formtechnik GmbH & Co. KG screw factory in

Ernsbach, celebrate their 100th year in business.

194019411939 1942 1943 1944 1945 1946 1947 1948 1949 1951 1952 1953 1954 1955 1956 1957 1958 1959 1961 1962 1963 1964 1965 1966 1967 1968 1969 1971 1972 1973 1974 19

> > > > > >

1950 1960 1970

93

> 1999 Prof. Dr. h. c. mult. Reinhold Würth is

appointed Professor for Entrepreneurship at the

University of Karlsruhe in recognition of his

out standing entrepreneurial achievement and

teaches there until the end of the summer term

2003.

> 2000 The Würth Group rounds off an out-

standing fiscal year in the history of the com-

pany by setting new records, the company’s

sales exceeding EUR 5 billion. This represents

the fulfillment of the target set by Prof. Dr. h. c.

mult. Reinhold Würth. His “Vision 2000”, for-

mulated back in 1987 when group sales were

just EUR 700 million, becomes reality.

> 2001 On January 1, 2001, the Würth Group

is given a new management structure. The

members of the new Central Managing Board

are Dr. Walter Jaeger (Chairman), Rolf Bauer

(Deputy Chairman), and Bettina Würth.

> 2003 Despite the challenging economic

environment and a focus on consolidation, the

company continues to invest heavily in expan-

ding its worldwide sales force. This policy is

rewarded by record sales of EUR 5.45 billion.

Prof. Dr. Harald Unkelbach is appointed to

the Central Managing Board of the Würth Group

on January 1, 2003.

> 2005 Robert Friedmann takes over the role

of Chairman of the Central Managing Board

from Dr. Walter Jaeger when he retires on June

1, 2005. Dr. Roland Hartmann is appointed to

the Central Managing Board on June 1, 2005.

> 2006 Bettina Würth takes over the Chair of

the Advisory Board of the Würth Group from her

father on March 1, 2006. Prof. Dr. h. c. mult.

Reinhold Würth is now Honorary Chairman of

the Advisory Board and remains Chairman of

the Supervisory Board of the Würth Group’s

Family Trusts. At the same time, Bettina Würth

hands over her role as member of the Central

Managing Board to Dr. Reiner Specht.

Alma Würth, co-founder of Adolf Würth

GmbH & Co. KG, passes away on May 4, 2006.

Alongside her husband Adolf Würth, she was

the driving force behind the foundation of the

screw wholesale business in Künzelsau in 1945.

As a member of the Advisory Board, she sup-

ported the growth of the Würth Group until

1993 and continued to take a great interest in

the operating business as an honorary member

of the Advisory Board until the very end.

> 2007 The German parent company of the

Würth Group, Adolf Würth GmbH & Co. KG, is

the group’s first entity to record sales in excess

of one billion euros in a fiscal year, including

intragroup sales.

On May 10, 2007, Prof. Dr. h. c. mult.

Reinhold Würth receives an honorary doctorate

in art history and museography from the Uni-

versity of Palermo.

75 1976 1977 1978 1979 1981 1982 1983 1984 1985 1986 1987 1988 1989 1991 1992 1993 1994 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011

> > > > > > > > > > > > > > > > >

1980 1990 2000 2010

94

--CONSOLIDATED FINANCIAL STATEMENTS --

95 Consolidated income statement

96 Consolidated balance sheet

98 Consolidated cash flow statement

100 Consolidated statement of changes in equity

101 Consolidated value added statement

102 Notes to the consolidated financial statements of theWürth Group as of December 31, 2007

102 A. General information 102 B. Adoption of International Financial Reporting Standards108 C. Consolidated group110 D. Consolidation principles111 E. Foreign currency translation112 F. Accounting policies120 G. Notes to the consolidated income statement124 H. Notes to the consolidated balance sheet147 I. Other notes161 J. Notes to the consolidated cash flow statement161 K. Shareholdings162 L. The boards

165 Audit opinion of the group auditor

C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S O F T H E W Ü R T H G R O U P

95

--CONSOLIDATED INCOME STATEMENT--

Sales

Changes in inventories

Own work capitalized

Cost of materials

Cost of financial services

Other operating income

Personnel expenses


Other operating expenses

Finance revenue

Finance costs

Earnings before taxes

Income taxes

Net income for the year

Attributable to:

Equity holders of parent companies in the group

Minority interests

in millions of EUR

[1]

[2]

[3]

[4]

[5]

[6]

[7]

[7]

[8]

Share %

100.0

0.2

0.1

46.6

0.2

53.5

1.2

27.5

2.6

17.5

0.4

1.0

6.5

2.5

4.0

3.9

0.1

4.0

Share %

100.0

0.3

0.1

46.3

0.3

53.8

1.1

27.6

2.7

16.7

0.5

1.1

7.3

2.4

4.9

4.8

0.1

4.9

Change%

9.6

55.6

– 23.7

8.7

38.7

10.3

– 0.6

10.0

14.5

4.0

17.7

22.4

23.4

3.0

36.4

36.9

18.8

36.4

INC

OM

E S

TA

TE

ME

NT

* The figures presented diverge from the figures in the consolidated financial statements

for the fiscal year 2006 due to reclassifications.

2007

8,489.0

29.4

8.7

3,931.3

25.1

4,570.7

93.9

2,342.9

229.1

1,413.8

38.5

95.7

621.6

202.7

418.9

409.4

9.5

418.9

2006*

7,748.1

18.9

11.4

3,616.3

18.1

4,144.0

94.5

2,129.6

200.1

1,359.5

32.7

78.2

503.8

196.8

307.0

299.0

8.0

307.0

96

--CONSOLIDATED BALANCE SHEET--

Non-current assets

Intangible assets

including goodwill

Property, plant and equipment

Financial assets

Receivables from financial services

Other assets

Deferred taxes

Current assets

Inventories

Trade receivables


Income tax receivables

Other assets

Securities

Cash and cash equivalents

Assetsin millions of EUR 2007

179.0

1,840.2

48.4

368.7

20.3

103.0

2,559.6

1,065.4

1,153.0

315.5

20.4

173.4

68.9

324.0

3,120.6

5,680.2

[9]

[10]

[11]

[12]

[17]

[13]

[14]

[15]

[12]

[16]

[17]

[18]

[19]

Share %

3.7

31.1

1.1

6.8

0.4

2.1

45.2

19.1

21.6

5.3

0.4

3.7

1.5

3.2

54.8

100.0

Share %

3.2

32.4

0.9

6.5

0.3

1.8

45.1

18.8

20.3

5.6

0.3

3.0

1.2

5.7

54.9

100.0

Change%

– 5.7

16.5

– 17.5

6.5

14.0

– 2.6

11.4

9.5

4.8

17.2

12.7

– 7.8

– 9.7

102.0

12.1

11.8

2006

189.8

1,579.7

58.7

346.3

17.8

105.7

2,298.0

972.8

1,099.8

269.1

18.1

188.0

76.3

160.4

2,784.5

5,082.5

97


2006*

280.3

901.7

1,065.7

2,247.7

29.9

2,277.6

266.9

724.1

125.7

47.9

16.1

74.2

1,254.9

408.5

255.0

101.2

116.2

107.1

562.0

1,550.0

5,082.5

2007

277.2

1,059.6

1,028.8

2,365.6

36.7

2,402.3

246.0

903.2

125.8

50.9

15.4

78.0

1,419.3

395.2

314.0

188.2

136.2

141.0

684.0

1,858.6

5,680.2

[20]

[21]

[22]

[23]

[24]

[25]

[13]

[21]

[22]

[24]

[25]

Share %

5.5

17.7

21.0

44.2

0.6

44.8

5.3

14.2

2.5

0.9

0.3

1.5

24.7

8.0

5.0

2.0

2.3

2.1

11.1

30.5

100.0

Share %

4.9

18.7

18.1

41.7

0.6

42.3

4.3

15.9

2.2

0.9

0.3

1.4

25.0

7.0

5.5

3.3

2.4

2.5

12.0

32.7

100.0

Equity

Equity attributable to parent companies in the group

Share capital

Reserves

Retained earnings

Minority interests

Non-current liabilities

Liabilities from financial services

Financial liabilities

Obligations from post-employment benefits

Provisions

Other liabilities

Deferred taxes

Current liabilities

Trade payables



Income tax liabilities

Provisions

Other liabilities

Equity and liabilitiesin millions of EUR

Change%

– 1.1

17.5

– 3.5

5.2

22.7

5.5

– 7.8

24.7

0.1

6.3

– 4.3

5.1

13.1

– 3.3

23.1

86.0

17.2

31.7

21.7

19.9

11.8

BA

LA

NC

E S

HE

ET

* The figures presented diverge from the figures in the consolidated financial statements

for the fiscal year 2006 due to reclassifications.

98

--CONSOLIDATED CASH FLOW STATEMENT*--

621.6

– 164.0

86.0

– 50.3

– 34.3

23.9

– 6.5

229.8

4.1

– 7.6

42.7

745.4

– 98.2

– 89.2

– 69.2

– 16.2

38.2

– 5.0

505.8

– 21.4

– 455.1

– 2.8

– 15.6

0.0

14.0

28.9

– 452.0

503.8

– 145.6

69.2

– 47.6

– 30.4

27.7

– 7.4

201.4

2.9

– 4.6

35.4

604.8

– 145.6

– 153.2

– 130.2

54.9

102.1

78.5

411.3

– 24.5

– 368.6

– 32.3

– 52.8

– 2.0

– 9.4

22.9

– 466.7

Cash flowsin millions of EUR 2007


Income taxes paid

Interest and similar expenses

Interest paid

Interest and similar income

Interest received

Changes in obligations

from post-employment benefits


Losses on the disposal of non-current assets

Gains on the disposal of non-current assets

Other non-cash income and expenses

Gross cash flow

Change in inventories

Changes in trade receivables

Changes in receivables from financial services

Change in trade payables

Changes in liabilities from financial services

Changes in other net working capital

Cash flow from operating activities

Investments in intangible assets

Investments in property, plant and equipment

Investments in financial assets

Investments in newly acquired subsidiaries

net of cash acquired***

Acquisition of further shares in subsidiaries

Investments in securities classified as current assets

Cash received from the disposal of assets

Cash flow from investing activities

2006**

99


CA

SH

FL

OW

ST

AT

EM

EN

T

– 201.3

59.9

324.9

– 70.1

113.4

– 3.6

163.6

– 128.2

97.1

166.0

– 229.3

– 94.4

– 6.6

– 156.4

Cash flows in millions of EUR 2007

Distributions

Contributions to capital

Increase in financial liabilities

Decrease in financial liabilities

Cash flow from financing activities

Changes due to consolidation

(mainly due to exchange differences)

Changes in cash and cash equivalents

2006**

Changes in cash and cash equivalentsin millions of EUR

Change in2007 2006 millions of EUR

Short-term investments

Other cash equivalents

Cash on hand

Bank balances


1.1

3.4

3.3

316.2

324.0

0.6

3.8

11.2

144.8

160.4

* Reference to “J. Notes to the consolidated cash flow statement”

** The figures presented diverge from the figures in the consolidated financial

statements for the fiscal year 2006 due to reclassifications.

*** Reference to “C. Consolidated group”

0.5

– 0.4

– 7.9

171.4

163.6

100

--CONSOLIDATED STATEMENT OF CHANGES IN EQUITY*--

January 1, 2006

Foreign currency translation


Total income and expense

for the year

Capital increase/reduction

Transfer to/drawings

from reserves

Distributions

Acquisition of minority

interests

Changes in the

consolidated group

Other income and expense

recognized in equity

December 31, 2006

Foreign currency translation


Total income and expense

for the year

Capital increase/reduction

Transfer to/drawings

from reserves

Distributions

Changes in the

consolidated group

Other income and expense

recognized in equity

December 31, 2007

in millions of EUR

Reserves

Total equity

2,048.7

– 21.7

307.0

285.3

0.1

97.0

– 155.4

– 1.0

3.5

– 0.6

2,277.6

– 17.4

418.9

401.5

0.0

59.9

– 337.3

0.1

0.5

2,402.3

Minorityinterests

21.2

0.0

8.0

8.0

0.0

0.0

– 1.8

– 1.0

3.5

0.0

29.9

0.0

9.5

9.5

0.0

0.0

– 3.9

0.2

1.0

36.7

Total

2,027.5

– 21.7

299.0

277.3

0.1

97.0

– 153.6

0.0

0.0

– 0.6

2,247.7

– 17.4

409.4

392.0

0.0

59.9

– 333.4

– 0.1

– 0.5

2,365.6

Retainedearnings*

950.3

2.8

299.0

301.8

0.0

– 32.2

– 153.6

0.0

0.0

– 0.6

1,065.7

– 0.3

409.4

409.1

0.0

– 115.7

– 333.4

– 0.1

3.2

1,028.8

Other reserves

844.2

0.0

0.0

0.0

– 10.0

129.2

0.0

0.0

0.0

0.0

963.4

0.0

0.0

0.0

3.1

175.6

0.0

0.0

– 4.2

1,137.9

Differencesfrom

currency translation

– 37.2

– 24.5

0.0

– 24.5

0.0

0.0

0.0

0.0

0.0

0.0

– 61.7

– 17.1

0.0

– 17.1

0.0

0.0

0.0

0.0

0.5

– 78.3

Share capital

270.2

0.0

0.0

0.0

10.1

0.0

0.0

0.0

0.0

0.0

280.3

0.0

0.0

0.0

– 3.1

0.0

0.0

0.0

0.0

277.2

Equity attributable to parent companies in the group

* The figures presented diverge from the figures in the consolidated financial

statements for the fiscal year 2006 due to reclassifications.

101

--CONSOLIDATED VALUE ADDED STATEMENT* --

ST

AT

EM

EN

T O

F C

HA

NG

ES

IN

EQ

UIT

Y


Origin of value addedin millions of EUR 2007 2006 Change %

Sales

Changes in inventories and

own work capitalized for capital expenditure

Other operating income

Finance revenue

Less advance payments:

Cost of materials and

cost of financial services

Other operating expenses


Value added

8,489.0

38.1

93.9

38.5

8,659.5

3,956.4

1,413.8

229.1

5,599.3

3,060.2

7,748.1

30.3

94.5

32.7

7,905.6

3,634.4

1,359.5

200.1

5,194.0

2,711.6

9.6

25.7

– 0.6

17.7

9.5

8.9

4.0

14.5

7.8

12.9

Utilizationin millions of EUR 2007 2006 Change %

Employees (personnel expenses)

Public sector (tax expenses)

Entities

Equity holders**

Lenders

Value added

2,342.9

202.7

141.5

277.4

95.7

3,060.2

2,129.6

196.8

248.6

58.4

78.2

2,711.6

10.1

3.0

– 43.1

375.0

22.4

12.9

* Not part of the consolidated financial statements

** Distributions net of contribution to capital

102

--NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSOF THE WÜRTH GROUP AS OF DECEMBER 31, 2007A. GENERAL INFORMATION --

The headquarters of the Würth Group are located at Reinhold-Würth-Strasse 12 – 17,74650 Künzelsau, Germany.

The core business of the Würth Group involves trade in fastening and assembly materi-als worldwide. The companies that make up the Würth Group’s active sales operationsare divided into two units: Würth Line and Allied Companies.

Würth Line operations focus on fastening and assembly materials, supplying customersin the trades, the construction sector, and industry. The sales portfolio of the Würth Line comprises products sold under its own brandname and by its own sales organization. Its main business activity is the sale of screws,screw accessories, standard/DIN parts, chemical products, furniture and iron fittings,dowels, insulation, hand tools, power tools, cutting and pneumatic tools, service andcare products, connecting and fastening materials, stocking and picking systems as wellas the direct mailing of workwear.

The companies that do not trade under the name of Würth – our Allied Companies –operate independently of the Würth Line companies. They are divided into strategicbusiness units. With the exception of a small number of manufacturing companies, themajority are sales companies operating in related areas and electrical wholesalers. Inaddition, the Würth Group offers products and services in the financial services sector.

• Statement of complianceThe consolidated financial statements of the Würth Group were prepared according to the International Financial Reporting Standards (IFRS) issued by the InternationalAccounting Standards Board (IASB), London, as adopted by the EU, the additionalrequirements of German commercial law pursuant to Sec. 315a (1) HGB [“Handelsge-setzbuch”: German Commercial Code] and full IFRS. The consolidated financial state-ments consist of the consolidated income statement, consolidated balance sheet, con-solidated cash flow statement, consolidated statement of changes in equity and notes to the consolidated financial statements. The group management report has been pre-pared in accordance with Sec. 315 HGB.

• Basis of preparation All IFRSs whose adoption is mandatory as of December 31, 2007 have been applied.This also includes the International Accounting Standards (IAS) as well as the Interpre-tations of the International Financial Reporting Interpretations Committee (IFRIC) andthe Standard Interpretations Committee (SIC).

The financial statements have been prepared on the basis of historical cost, with theexception of financial assets at fair value through profit or loss and available-for-salefinancial assets, which are measured at fair value without effect on profit or loss.

--B. ADOPTION OF INTERNATIONALFINANCIAL REPORTING STANDARDS--

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The consolidated financial statements have been prepared in euro. All figures are repor-ted in millions of euro (EUR) unless otherwise indicated.

The balance sheet items were classified into current and non-current assets and liabili-ties in accordance with IFRS. Items not due within a year are disclosed as non-currentassets or non-current liabilities. In addition, deferred taxes are disclosed as non-currentassets or liabilities.

The consolidated income statement has been prepared using the nature of expensemethod.

In the consolidated income statement, the interest expense from pension plans amoun-ting to EUR 9.8 million (2006: EUR 9.0 million) and the expected return on plan assetsof EUR 3.7 million (2006: EUR 2.3 million) have been disclosed as finance costs andfinance revenue respectively to enhance the presentation of results of operations. In theprior year, the amounts were contained in personnel expenses. In addition, exchangerate gains of EUR 10.3 million (2006: EUR 9.7 million) were reclassified to finance reve-nue in the consolidated income statement and the exchange rate losses of EUR 12.3million (2006: EUR 10.4 million) to finance costs. The change helps to give a more accu-rate presentation of the financial result.

Another reclassification in the consolidated income statement was made concerningcost of materials of EUR 11.4 million (2006: EUR 7.4 million), which was transferred tochanges in inventories to improve the presentation of intra-group production output.The reclassification gives an accurate presentation of the total performance of the WürthGroup.

In the consolidated balance sheet, the liabilities of Internationales Bankhaus BodenseeAG were adjusted as follows with respect to the prior-year figures of the liabilities fromfinancial services:

This change in presentation reflects the nature of the liabilities of Internationales Bank-haus Bodensee AG more accurately.

A new consolidation system was introduced during the fiscal year. The appropriation ofprofits is now shown as part of the equity in the balance sheet instead of as an additio-nal item below the consolidated income statement as in the past. Cumulative exchangedifferences of EUR 12.6 million (2006: EUR 13.6 million) on retained earnings are nowfor the first time presented as part of the differences from currency translation in thestatement of changes in equity.

Liabilities from financial services (non-current)

Financial liabilities (non-current)

Liabilities from financial services (current)

Financial liabilities (current)

Total

Reclassificationcomparative period

2006

48.0

– 48.0

104.3

– 104.3

0.0

in millions of EUR

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The consolidated financial statements were authorized by the Central Managing Board ofthe Würth Group on April 3, 2008 for issue to the audit committee of the Würth Group’sAdvisory Board.

• Use of estimatesThe preparation of the consolidated financial statements pursuant to IFRS requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent liabilities and other financial obligati-ons as of balance sheet date and the reported amounts of income and expenses duringthe reporting period. The assumptions and estimates primarily relate to the determina-tion of uniform useful lives, accounting policies for capitalized development costs,inventories, receivables and provisions as well as the probability of future tax relief beingrealized from deferred tax assets. Actual amounts in future periods may differ from theestimates. Changes are recognized in income as and when better information is availa-ble.

The key assumptions concerning the future and other key sources of estimation uncer-tainty as of the balance sheet date which entail a risk of causing a material adjustment tothe carrying amounts of assets and liabilities in subsequent fiscal years are discussedbelow.

a) Impairment of goodwillThe Würth Group tests goodwill for impairment at least once a year. This involves anestimate of the value in use of the cash-generating units to which the goodwill is alloca-ted. Estimating the value in use requires the group to make an estimate of the expectedfuture cash flows from the cash-generating unit and also to choose a suitable discountrate in order to calculate the present value of those cash flows. As of December 31, 2007the carrying amount of goodwill totaled EUR 108.4 million (2006: EUR 118.2 million).Further details are presented in the notes to the consolidated balance sheet under “[9]Intangible assets including goodwill”.

b) Unused tax lossesThe Würth Group recognizes deferred tax assets for unused tax losses provided it issufficiently certain that the unused tax losses will be used based on the tax planning. Thetax planning involves estimates of the Würth Group of future taxable income. Deferredtax assets recognized on unused tax losses amount to EUR 27.7 million as of December31, 2007 (2006: EUR 40.6 million). Further details are presented in the notes to the con-solidated balance sheet under “[13] Deferred taxes”.

c) Obligations from post-employment benefits The cost of providing post-employment benefits under defined benefit plans is deter-mined using actuarial calculations. The actuarial valuation involves making assumptionsabout discount rates, expected rates of return on assets, future salary increases, morta-lity rates and future pension increases. Due to the long-term nature of these plans, suchestimates are subject to significant uncertainty. The net carrying amounts of the obligati-ons from post-employment benefits amount to EUR 125.8 million as of December 31,2007 (2006: EUR 125.7 million). Further details are presented in the notes to the consoli-dated balance sheet under “[23] Obligations from post-employment benefits”.

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d) Income tax liabilitiesThe calculation of income tax liabilities involves assumptions and estimates regardingtaxable income in view of the ongoing tax offense investigations and tax field audits.Income tax liabilities including those from current taxes totaled EUR 136.3 million as ofDecember 31, 2007 (2006: EUR 116.2 million).

• Effects of new accounting standardsThe accounting policies adopted are consistent with those of the prior fiscal year, exceptthat the group has adopted those new/revised standards that are mandatory for fiscalyears beginning on or after January 1, 2007.

The changes in accounting policies and in the disclosures in the notes result primarilyfrom the adoption of IFRS 7 “Financial Instruments: Disclosures”, IAS 1 (revised) “Pre-sentation of Financial Statements” – Capital Disclosures, IFRIC 8 “Scope of IFRS 2”,IFRIC 9 “Reassessment of Embedded Derivatives” and IFRIC 10 “Interim FinancialReporting and Impairment”.

IFRS 7 “Financial Instruments: Disclosures”IFRS 7 governs the disclosure requirements for financial instruments for industrial enti-ties as well as banks and similar financial institutions. IFRS 7 replaces IAS 30 “Disclosu-res in the Financial Statements of Banks and Similar Financial Institutions” and IAS 32“Financial Instruments: Disclosure and Presentation” and requires disclosures thatenable users of financial statements to evaluate the significance of the group’s financialinstruments for the financial position and performance of the group and the nature andextent of risks arising from those financial instruments. IFRS 7 did not have any effect onthe items of the balance sheet or the income statement of the Würth Group, but did leadto additional disclosures in the notes to the financial statements.

IAS 1 “Presentation of Financial Statements” – Capital Disclosures (revised 2006)IAS 1 sets forth the general framework and requirements for the presentation of financialstatements, guidelines for their structure and minimum requirements for the content offinancial statements. Rules for the recognition, measurement and disclosure of certaintransactions are contained in other standards and interpretations. This amendmentrequires the group to make new disclosures to enable users of the financial statementsto evaluate the Würth Group’s objectives, policies and processes for managing capital.The additional disclosure requirements were observed in the consolidated financialstatements of the Würth Group.

IFRIC 8 “Scope of IFRS 2”IFRIC 8 clarifies that IFRS 2 “Share-based Payment” applies to all arrangements in whichan entity makes share-based payments for no consideration or for insufficient considera-tion. This interpretation did not have an effect on the consolidated financial statementsof the Würth Group as of December 31, 2007.

IFRIC 9 “Reassessment of Embedded Derivatives”According to IFRIC 9, the assessment whether an embedded derivative is accounted forseparately from the host contract generally takes place when the contract is concluded. Areassessment during the term of the contract is only permitted if the underlying contrac-tual conditions and the associated cash flows change significantly. The extent to which

106

the payments from the embedded derivative and/or the host contract have changedcompared to the original cash flows is taken as the basis here. IFRIC 9 does not affectthe consolidated financial statements of the Würth Group as of December 31, 2007.

IFRIC 10 “Interim Financial Reporting and Impairment”IFRIC 10 states that an entity must not reverse impairment losses recognized in a pre-vious interim period on goodwill, investments in equity instruments or financial assetscarried at cost. IFRIC 10 does not affect the consolidated financial statements of theWürth Group as of December 31, 2007.

The group decided not to early adopt the following standards and IFRIC interpretationswhich have already been issued but have not entered into force yet. Generally speaking,the Würth Group intends to adopt all standards when their adoption becomes manda-tory for the first time.

• IFRSs and IFRIC interpretations adopted by the EU in the comitology procedures,which have not yet entered into effect, are:

IFRS 8 “Operating Segments” requires entities to disclose financial and narrative infor-mation on their reportable segments. IFRS 8 replaces IAS 14 “Segment Reporting” andrequires segments to be formed based on the management approach. It is effective forthe first time for fiscal years beginning on or after January 1, 2009. IFRS 8 will not affectthe consolidated financial statements of the Würth Group.

IFRIC 11 “IFRS 2 – Group and Treasury Share Transactions” contains guidance on theapplication of IFRS 2 in three situations:• Share-based payment arrangements involving an entity’s own equity instruments

where the entity chooses or is required to buy those equity instruments.• A parent grants rights to its equity instruments to the employees of its subsidiary.• A subsidiary grants rights to equity instruments of its parent to its employees. IFRIC 11 is effective for the first time for fiscal years beginning on or after March 1, 2007.Earlier adoption is encouraged. IFRIC 11 does not affect the consolidated financial state-ments of the Würth Group.

• IFRSs and IFRIC interpretations which have not yet entered into force and have notyet been adopted by the EU in the comitology procedures:

IAS 1 “Presentation of Financial Statements” One significant change compared to theprevious version is the presentation of changes in equity. IAS 1 now provides for allchanges other than those arising from transactions with owners to be presented eitherin a statement of comprehensive income or based on two separate statements. Compo-nents of comprehensive income are no longer permitted to be presented in the consoli-dated statement of changes in equity. In addition, IAS 1 requires income tax relating toeach component of other comprehensive income and reclassification adjustments to bedisclosed separately. Besides these content changes, IAS 1 introduces new titles for theindividual financial statement elements; however, entities may use other titles thanthose set forth in the standard. The revised IAS 1 is effective for fiscal years beginningon or after January 1, 2009. The new standard will have an effect on the form in whichthe Würth Group’s financial information is published, but not on the recognition andmeasurement of assets and liabilities in the consolidated financial statements.

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IAS 23 “Borrowing Costs” is effective for the first time for fiscal years beginning on orafter 1 January 2009. IAS 23 governs the treatment of borrowing costs when determiningthe cost of an asset. The content of IAS 23 relates to the accounting treatment of borro-wing costs that are directly attributable to the acquisition, construction or production ofqualifying assets and the treatment of the corresponding disclosures in the notes. Thestandard is not expected to have an effect on the consolidated financial statements ofthe Würth Group.

IFRIC 12 “Service Concession Arrangements” governs the accounting for arrangementsunder which a public sector entity awards contracts to private operators for the provi-sion of services to the public. IFRIC 12 is effective for fiscal years beginning on or afterJanuary 1, 2008. IFRIC 12 is not expected to affect the consolidated financial statementsof the Würth Group.

IFRIC 13 “Customer Loyalty Programmes” regulates the accounting of customer loyaltyprograms operated by manufacturers or service providers themselves or by third parties.The main statement of IFRIC 13 is that sales transactions that are considered for a cus-tomer loyalty program qualify as multiple-component sales in accordance with IAS 18.13and that, consequently, part of the revenue from the sales transaction must be allocatedto the award credits. IFRIC 13 is effective for fiscal years beginning on or after July 1,2008. IFRIC 13 is not expected to affect the consolidated financial statements of theWürth Group.

IFRIC 14 “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Require-ments and their Interaction”This interpretation was issued by the IFRIC in order to clarify the application and inter-pretation questions that have arisen for defined benefit obligations where plan assetscould arise in accordance with IAS 19. IFRIC 14 is effective for fiscal years beginning onor after January 1, 2008. IFRIC 14 is not expected to affect the consolidated financialstatements of the Würth Group.

Amendments of IAS 27 “Consolidated and Separate Financial Statements” and IFRS 3“Business Combinations” These two amended standards were published in January2008. The main changes compared to the previous standards concern the cost of abusiness combination, the full goodwill method, accounting for business combinationsachieved in stages, accounting for changes in investments in subsidiaries without theloss of control and the scope of IFRS 3. The amended versions of IAS 27 and IFRS 3 areeffective for fiscal years beginning on or after January 1, 2009. The amended standardswill have an effect on accounting for future business combinations. Consequently, theeffects cannot be assessed in full until a future business combination takes place.

The Würth Group does not intend to early adopt these standards.

108

The consolidated financial statements of the Würth Group include parent companies atthe same organizational level as well as all domestic and foreign entities in which theparent companies at the same organizational level hold a majority of the voting rights,either directly or indirectly, and thus have the possibility to exercise control over theseentities.

The major changes to the consolidated group in comparison to the prior year on accountof acquisitions are as follows:

As of January 1, 2007, the Würth Group acquired 100% of the shares in Airproduct AG,Oberwil-Lieli, Switzerland. The entity specializes in trade with ventilation componentsand components for fastening and assembly technology.

As of January 23, 2007, the Würth Group acquired 100% of the shares in Midcom Inc.,Watertown, USA, and thus also in its wholly owned subsidiaries Midcom Fuling Inc.,Changping, China, and Midcom Longgang Inc., Shenzhen, China. The entities manufac-ture and sell transformers and other passive components.

As of November 9, 2007, the Würth Group acquired 100% of the shares in Hetal-WerkeFranz Hettich GmbH & Co. KG, Alpirsbach, in Hetalco GmbH, Alpirsbach, and in Het-tich Verwaltungsgesellschaft mit beschränkter Haftung, Alpirsbach. This acquisition alsoincluded the wholly owned subsidiaries Hetal BV GmbH, Alpirsbach, and Hetal DC s.r.o.,Decin, Czech Republic. The Hetal Group produces and sells hinges, fittings and plasticprofiles.

Effective as of January 1, 2007, Würth Elektronik eiSos GmbH & Co. KG, Waldenburg,acquired the “exclusive distribution of RAFI products” operations of the company Tri-gress Elektro AG, Baar, Switzerland. The entity sells components for industrial automa-tion.

In addition the Würth Group took over the operations of the following entities:

As of June 1, 2007, Baer Supply Company, Vernon Hills, USA, acquired the operations ofthe group of Cabinet Supplier, Inc., Huntington, USA. The group consists mainly of tra-ding companies with direct sales to the wood processing industry and is intended toexpand the presence of the Würth Line’s Wood Division in the United States to WestVirginia, Kentucky and the southern part of Ohio.

--C. CONSOLIDATED GROUP --

The newly acquired entities and operations increased the assets and liabilities of theWürth Group as follows:


Assets

Intangible assets

Other non-current assets

Inventories

Receivables and

other assets

Cash and

cash equivalents

Equity and liabilities

Minority interests

Non-current liabilities

Current liabilities

Purchase prices

Share of sales

Share of profit or loss

Pro-forma sales 2007

Pro-forma earnings 2007

in millions of EUR Total

8.8

12.3

13.6

11.1

0.5

46.3

0.1

5.3

24.8

30.2

16.1

43.6

– 1.2

85.5

– 2.0

109

Other

0.9

0.2

0.7

0.6

0.2

2.6

0.0

0.5

0.4

0.9

1.7

0.3

0.2

1.8

0.1

Hetal Group

2.1

8.5

5.4

1.2

0.1

17.3

0.0

2.6

12.1

14.7

2.6

4.7

– 1.4

35.6

– 1.9

Cabinet Supplier, Inc.

1.7

1.8

2.0

1.6

0.0

7.1

0.0

0.7

1.2

1.9

5.2

10.3

– 0.3

17.7

– 0.5

MidcomGroup

2.0

1.7

4.5

7.3

0.1

15.6

0.1

0.9

10.6

11.6

4.0

23.2

0.2

25.3

0.2

Airproduct AG

2.1

0.1

1.0

0.4

0.1

3.7

0.0

0.6

0.5

1.1

2.6

5.1

0.1

5.1

0.1

If the date of acquisition had been at the beginning of the reporting period on January1, 2007 for all newly acquired entities and operations, they would have contributed the pro-forma sales and pro-forma earnings presented above to the Würth Group in thefiscal year 2007.

The net carrying amounts of the intangible assets amounted to EUR 0.5 million directlyprior to the acquisition. Revaluation gave rise to customer relationships of EUR 8.3 mil-lion and corresponding deferred tax liabilities of EUR 2.2 million. In addition, propertywas revalued at EUR 0.9 million. There were no other fair value adjustments.

The difference between total assets and total equity and liabilities of EUR 16.1 millioncorresponds to the sum of the purchase prices for the acquisitions including incidentalcosts. The purchase prices were paid in cash. Including the cash acquired of EUR 0.5million, net cash outflow for the new subsidiaries and operations amounted to EUR15.6 million.

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The consolidated financial statements are based on the financial statements of theparent companies and subsidiaries included in the group as of December 31, 2007,which have been prepared according to uniform standards.

Business combinations are accounted for using the purchase method in accordance withIFRS 3. Accordingly, capital consolidation is carried out as of the date of acquisition byoffsetting the purchase price against the revalued net assets of the subsidiaries andoperations acquired. Assets and liabilities as well as contingent liabilities of subsidiariesand operations eligible for recognition are recognized at their full fair value. Intangibleassets are presented separately from goodwill if they are capable of being separatedfrom the entity or arise from any contractual or other legal rights. Remaining debit diffe-rences are recognized as goodwill. Credit differences from purchase accounting arereleased through profit or loss.

Intercompany expenses and income as well as receivables and payables are eliminated.Intercompany profits and losses in non-current assets and inventories arising from inter-company deliveries are eliminated.

Minority interests represent the portion of profit or loss and net assets not attributableto the equity holders of the parent companies in the group. Minority interests are pre-sented separately in the consolidated income statement and the consolidated balancesheet. In the consolidated balance sheet, minority interests are disclosed in equity, sepa-rately from the equity attributable to the parent companies in the group.

--D. CONSOLIDATION PRINCIPLES--

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In the separate financial statements of the entities, non-monetary items denominated inforeign currency are recognized at the rate prevailing when they were first recorded.Monetary items are translated at the exchange rate as of the balance sheet date. Anyexchange rate gains generated and losses incurred as of the balance sheet date from themeasurement of monetary assets and monetary liabilities denominated in foreign cur-rency are recognized through profit or loss in finance revenue and finance costs respecti-vely.

The functional currency method is used to translate the financial statements of foreignentities. In the consolidated financial statements, the balance sheet items except forequity of all foreign entities are translated to the euro at closing rates, as the significantforeign entities included in the consolidated financial statements conduct their businessindependently in their local currency, which is the functional currency. Differences com-pared to the prior-year translation are offset against reserves directly in equity (totalincome and expense for the period recognized directly in equity). Goodwill is translatedat the closing rate as an asset of foreign entities. Acquisitions of foreign entities thatoccurred prior to January 1, 2005 are translated at the historical exchange rates.

Income and expense items are translated using average rates.

The financial statements of the major subsidiaries in countries outside the EuropeanMonetary Union were translated to the euro using the following exchange rates:

--E. FOREIGN CURRENCY TRANSLATION--

1 US dollar

1 pound sterling

1 Canadian dollar

1 Australian dollar

1 Brazilian real

1 Chinese renminbi yuan

1 Danish krone

1 Norwegian krone

1 Polish zloty

1 Russian rouble

1 Swedish krona

1 Swiss franc

1 Czech koruna

1 Hungarian forint

2006

0.75867

1.48943

0.65385

0.59948

0.35539

0.09717

0.13412

0.12136

0.26033

0.02921

0.11058

0.62189

0.03645

0.00397

2007

0.67953

1.36129

0.69252

0.59613

0.38161

0.09311

0.13408

0.12555

0.27833

0.02778

0.10599

0.60397

0.03763

0.00396

2006

0.79618

1.46702

0.70276

0.59991

0.36494

0.10175

0.13407

0.12413

0.25602

0.02947

0.10808

0.63580

0.03539

0.00378

2007

0.73090

1.46359

0.68266

0.61249

0.37523

0.09712

0.13422

0.12488

0.26428

0.02871

0.10809

0.60887

0.03622

0.00398

Average exchange rates for the fiscal year Closing rates

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The Würth Group uses transaction date accounting. The financial statements of all con-solidated companies have been prepared in line with uniform accounting policies for thegroup (IFRS).

Goodwill arising from a business combination is initially measured at cost, which is theexcess of the cost of the business combination over the group’s interest in the net fairvalue of the identifiable assets, liabilities and contingent liabilities acquired. After initialrecognition, goodwill is measured at cost less any accumulated impairment losses.

Recognized goodwill is tested for impairment on an annual basis and when there is anyindication that it may be impaired. The impairment test for goodwill is effected at thelevel of the cash-generating unit. The cash-generating unit is defined as the legal entity.

The impairment loss is determined by calculating the recoverable amount of the cash-generating unit to which goodwill relates. If the recoverable amount of the cash-genera-ting unit is lower than its carrying amount, an impairment loss is recorded.

Intangible assets acquired separately are initially measured at cost. The cost of an intan-gible asset acquired in a business combination is its fair value at the acquisition date.After initial recognition, intangible assets are carried at cost less any accumulated amor-tization and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortized over their useful life using the straight-line method and tested for impairment whenever there is any indication that the intangi-ble asset may be impaired. The amortization period and the amortization method for anintangible asset with a finite useful life is reviewed at least at each fiscal year end. Changesin the expected useful life or the expected pattern of consumption of future economicbenefits embodied in the asset are accounted for by changing the amortization period ormethod, as appropriate, and treated as changes in accounting estimates. Amortizationof intangible assets with a finite useful life is reported in the income statement underamortization and depreciation. Capitalized customer relationships, software, franchisesand other licenses are amortized over a useful life of three to five years.

Intangible assets with an indefinite useful life and intangible assets that are not ready foruse are tested for impairment individually at least once a year. Such intangibles are notamortized. The useful life of an intangible asset with an indefinite life is reviewed annuallyto determine whether indefinite life assessment continues to be supportable.

--F. ACCOUNTING POLICIES--

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If all prerequisites of IAS 38.57 are met, internally generated intangible assets are reportedat the amount of the directly attributable development costs incurred. Borrowing costsare not capitalized. Capitalization ceases when the product is finished and released.Pursuant to IAS 38.57 development costs may only be capitalized if an entity can demon-strate that all of the following six requirements are satisfied:

1. The technical feasibility of completing the asset so that it will be available for use or sale

2. The intention to complete the intangible asset and use or sell it3. The ability to use or to sell the intangible asset4. How the intangible asset will generate probable future economic benefits5. The availability of adequate technical, financial and other resources to complete the

development and to use or sell the intangible asset 6. The ability to measure reliably the expenditure attributable to the intangible asset

during its development

The company estimated the customary useful life of the recognized internally generatedintangible assets to be three years.

Costs of research and general development are immediately recorded an as expense inaccordance with IAS 38.54.

Property, plant and equipment are stated at amortized cost. Borrowing costs and repaircosts are offset directly as an expense. Cost contains directly allocable costs (such asdirect materials and labor) and fixed and variable production overheads (such as materi-als and production overheads) including appropriate depreciation of the productionplant based on ordinary capacity utilization. Except for land and land rights, property,plant and equipment are generally depreciated using the straight-line method unless adifferent depreciation method better reflects the pattern of consumption.

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Scheduled depreciation is computed according to the following uniform group usefullives:

An item of property, plant and equipment leased under a finance lease is recognized at fairvalue or the lower present value of the minimum lease payments and depreciated over theexpected useful life or the contractual term, whichever is shorter. Payment obligationsresulting from the lease payments are recorded as a liability at their present value.

The residual values of the assets, useful lives and depreciation methods are reviewed at theend of each fiscal year and adjusted if necessary.

An item of property, plant and equipment is derecognized upon disposal or when no futureeconomic benefits are expected from its use or disposal. Any gain or loss arising on dere-cognition of the asset (calculated as the difference between the net disposal proceeds andthe carrying amount of the asset) is included in the income statement in the year the assetis derecognized.

An impairment test is performed at the end of the fiscal year for all intangible assets andproperty, plant and equipment if events or changes in circumstances indicate that the car-rying amount of the assets exceeds their recoverable amount or if an annual impairmenttest is required. If the recoverable amount of the asset falls short of the carrying amount,an impairment loss is recognized. The recoverable amount is the higher of an asset’s netselling price and its value in use. The net selling price is the amount obtainable from thesale of an asset in an arm’s length transaction less the costs necessary to make the sale.Value in use is the present value of estimated future cash flows expected to arise from thecontinuing use of an asset and from its disposal at the end of its useful life. The recover-able amount is determined for each asset individually or, if that is not possible, for thecash-generating unit.

Impairment losses recognized for an asset in profit or loss in prior years are reversed whenthere is any indication that the impairment no longer exists or has decreased. Any reversalis posted to profit or loss. A reinstatement or reversal of the impairment loss recorded onan asset cannot, however, exceed the amortized cost that would have been recognizedwithout the impairment. Impairment losses recognized on goodwill are not reversed.

Buildings

Furniture and fixtures

Machines and technical equipment

25 – 40 years

3 – 10 years

5 – 15 years

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Financial assets are divided into the following categories: (a) held-to-maturity financialassets, (b) financial assets at fair value through profit or loss, (c) available-for-sale financialassets, and (d) loans and receivables originated by the entity.

Financial assets with fixed or determinable payments and fixed maturity that the entity hasthe positive intention and ability to hold to maturity other than loans and receivablesoriginated by the entity, are classified as held-to-maturity investments. Financial assetsclassified as ‘at fair value through profit or loss’ are (i) financial assets that are acquiredprincipally for the purpose of generating a profit from short-term fluctuations in price orexchange rates or (ii) financial assets designated upon initial recognition as at fair valuethrough profit or loss. All other financial assets apart from loans and receivables origi -nated by the entity are classified as available-for-sale financial assets.

Held-to-maturity investments are disclosed under non-current assets unless they are duewithin twelve months of the balance sheet date. Held-for-trading financial assets are dis -closed under current assets. Financial assets designated upon initial recognition as at fairvalue through profit or loss and available-for-sale financial assets are disclosed as currentassets if management intends to sell them within twelve months of balance sheet date.They are recognized at the date when the Würth Group enters into a contract.

The initial recognition of a financial asset is at cost, which corresponds to the fair value ofthe consideration given. Transaction costs are included, except for financial assets designa-ted upon initial recognition as at fair value through profit or loss or classified as held-for-trading.

Held-to-maturity investments are measured at amortized cost using the effective interestrate method. If it is likely that financial assets measured at amortized cost are impaired,the impairment loss is recognized in profit or loss. If an impairment loss recorded in aprior period decreases and the reversal of the impairment loss (or decrease in the impair-ment loss) can be objectively related to an event occurring after the impairment loss, thereversal is recognized in profit and loss. However, after reversal, an asset may not be car-ried at an amount exceeding the carrying amount that would have been recognizedwithout the impairment.

Available-for-sale and financial assets at fair value through profit or loss are subsequentlymeasured at fair value on the basis of market prices as of the balance sheet date withoutdeducting any transaction costs. For financial instruments where there is no active market,fair value is determined using valuation techniques. Such techniques include using recentarm’s length market transactions, discounted cash flow analysis or other valuation models.

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Gains and losses from measurement of an available-for-sale financial asset at fair value arerecognized directly in equity. Changes in the fair value of financial assets at fair valuethrough profit or loss are recognized in the net income or loss for the period.

Loans and receivables originated by the entity and not held for trading are recognized atamortized cost.

Derivative financial instruments are classified as held-for-trading financial assets or liabili-ties and measured at fair value. The fair value of open derivative financial instruments isdisclosed under other assets/liabilities.

Receivables and liabilities from financial services contain all receivables and liabilitiesarising from the financial services business. Bank receivables and loans as well as recei -vables or loans due from customers are financial investments with fixed or determinablepayments and fixed maturity that are not quoted in an active market. After initial recogni-tion, receivables and liabilities from financial services are carried at amortized cost usingthe effective interest method less any allowance for impairment. Internationales BankhausBodensee AG tests its non-performing loans for impairment.

Interest-free and low-interest loans are stated at present value.

Deferred taxes result from temporary differences between the IFRS carrying amounts andthe tax accounts of the individual entities and from consolidation entries. Deferred taxassets also include tax credits that result from the expected utilization of existing loss carry-forwards in subsequent years. Deferred tax assets for recognition and measurement diffe-rences and for unused tax losses are only taken into account if they are expected to berealized. Deferred taxes are measured on the basis of the respective local income tax rates.Deferred tax assets and deferred tax liabilities are offset if a group entity has a legally enfor-ceable right to offset current tax assets and current tax liabilities and these relate to incometaxes levied by the same taxation authority on the same taxable entity. Deferred taxes rela-ting to items recognized directly in equity are also posted directly to equity. Other deferredtaxes are posted to the income statement.

Inventories are stated at costs of purchase or costs of conversion. Costs of conversioncontain directly allocable costs (such as direct materials and labor) and fixed and variableproduction overheads (such as materials and production overheads) including appropriatedepreciation of the production plant based on ordinary capacity utilization. Borrowingcosts are recorded directly as an expense.

The carrying amounts are calculated using the weighted average cost method.

Risks inherent in inventories from reduced salability are accounted for by recognizingappropriate write-downs to the lower of cost or net realizable value.

117


NO

TE

S

Payments on account received from customers are recorded as liabilities.

Receivables and other assets are measured at amortized cost. Bad debt allowances arebased on individual risk estimates and past experience. To determine specific bad debtallowances, financial assets that could potentially be impaired are grouped together bysimilar credit risk characteristics and collectively evaluated for impairment. Impairmentlosses on trade receivables are recognized via a provision for impairment in some cases.The decision of whether to account for a credit risk by using a provision for impairment orby recognizing a loss directly on the receivable depends upon the ability to accuratelyassess the risk involved. On account of the different business fields and regional condi -tions, this assessment is at the discretion of the individuals in charge of the respectiveportfolios.

As a lessor, the Würth Group recognizes finance lease assets as receivables in the balancesheet equal to the unforfeited net investment in the lease. Financial income is recognizedto reflect a constant periodic rate of return on the lessor's net investment outstanding.Initial direct costs are immediately expensed. Income on unforfeited contracts is recogni-zed over the term of the lease.

Securities are classified as financial assets held for trading or designated upon acquisitionas financial assets at fair value through profit or loss and marked to market on the balancesheet date. Highly liquid securities classified as current assets are securities due withinthree months from the date of acquisition. They are reported as short-term investmentsunder cash and cash equivalents. Fluctuation in market value is posted to financial revenueor costs in the income statement.

Cash and cash equivalents include cash, demand deposits and short-term investments.

Minority interests include minority interests in share capital, reserves and retained ear-nings unless they qualify as debt capital within the meaning of IAS 32. If the latter is thecase, they are disclosed under financial liabilities.

Post-employment benefit obligations for defined benefit plans are calculated using theprojected unit credit method. Future obligations are measured using actuarial methods.Taking account of dynamic components, the future benefit obligations are spread over theentire period of service. Actuarial calculations and estimates must be obtained for all bene-fit plans.

The provisions for company pensions disclosed in the balance sheet represent the presentvalue of the benefit obligations less plan assets. Actuarial gains and losses are immediatelyposted to profit or loss in full.

118

In the case of defined contribution plans, the respective entity pays contributions to stateor private pension companies either on a voluntary or a legal basis. No further paymentobligations arise for the company from the payment of contributions. The amounts arerecognized in profit or loss in full.

Provisions are created for all legal or constructive obligations to third parties as of thebalance sheet date which relate to past events, will probably lead to an outflow of resourcesin future, and whose amount can be reliably estimated. Provisions are reviewed at eachbalance sheet date and adjusted to reflect the current best estimate. Where the effect of thetime value of the money is material, the amount of a provision is the present value of theexpenditures expected to be required to settle the obligation. In the discounting process,the increase in the provision reflecting the passage of time is recognized as borrowingcosts. Reversals of provisions are posted against the expense items for which the provisi-ons were set up.

When measuring financial liabilities, a distinction is made between (a) financial liabilities held for trading, and (b) other financial liabilities.

Derivative financial instruments are classified as held-for-trading financial liabilities andmeasured at fair value. However, an exception is made for derivatives related to non-listedequity instruments whose fair value cannot be reliably determined and that can only besettled through their delivery. These derivative liabilities are measured at cost. Other financial liabilities are measured at amortized cost, which usually corresponds to therepayment or settlement value or, in the case of obligations similar to pension obligations,to present value. If minority interests are classified as liabilities within the meaning of IAS32, they are measured at fair value.

Sales are recognized when it is probable that the economic benefits associated with thetransaction will flow to the entity and the level of sales can be measured reliably. Sales arerecorded net of general VAT and any price reductions and quantity discounts when deliveryhas taken place and the risks and rewards incidental to ownership have been transferred infull.

Revenue from financial services is recognized when it is realized or realizable and earned.Interest from interest-bearing assets and liabilities is recognized proportionately over theterm of the assets or liabilities concerned using the effective interest method and takinginto account any deferred charges and fees as well as premiums or discounts. Commissionis recognized when there is sufficient evidence that an agreement exists, the performancehas been rendered, the fee or commission has been fixed, and collectability is sufficientlycertain.

119


NO

TE

S

Lease payments under an operating lease are recognized as an expense in the incomestatement on a straight-line basis over the term of the lease unless another systematicbasis is more representative of the time pattern of the benefit for the entity as lessee. Alease is classified as an operating lease if the economic content of the lease does not trans-fer substantially all risks and rewards incidental to ownership to the entity.

Government grants are not recognized until there is reasonable assurance that the entitywill comply with the conditions attached to the grant and that the entity will in fact receiveit. Government grants are recognized in profit or loss as scheduled in line with the relatedexpenses which are subsidized by the grants. If grants are issued for the purchase of pro-perty, plant or equipment, the grants are treated as a reduction of the cost of those assets.

Contingent liabilities are possible or present obligations arising from past events whichare not likely to result in an outflow of resources and are thus not recorded in the balancesheet. The amounts stated correspond to the potential liability as of balance sheet date.

Subsequent events that provide additional information about the situation at the balancesheet date are reflected in the balance sheet. Subsequent events which do not lead toadjustments are mentioned in the notes where material.

120

[3 ] Cost of financial services

Cost of financial services primarily contains interest expenses of EUR 20.0 million(2006: EUR 14.6 million) and commission of EUR 3.7 million (2006: EUR 3.0 million)paid by Internationales Bankhaus Bodensee AG.

[4 ] Other operating income

Other operating income principally includes income from other sales and services aswell as income from the disposal of assets.

[5 ] Personnel expenses and number of employees

Personnel expenses:

For the 2006 comparative information, EUR 9.0 million was reclassified from personnelexpenses to finance costs and EUR 2.3 million to finance revenue.

Personnel expenses for 2007 contain expenses relating to other periods of EUR 12.6 mil-lion (2006: EUR 10.9 million).

--G. NOTES TO THE CONSOLIDATED INCOME STATEMENT --

[1 ] Sales

Revenue from the sale of goods and services

Revenue from financial services

Total

in millions of EUR 2006

7,703.1

45.0

7,748.1

2007

8,429.8

59.2

8,489.0

Cost of raw materials, consumables and supplies

and of purchased merchandise

Cost of purchased services

Total


3,493.4

122.9

3,616.3

2007

3,814.6

116.7

3,931.3

Wages and salaries

Social security

Pension and other benefit costs

Total


1,743.8

225.4

160.4

2,129.6

2007

1,923.7

253.1

166.1

2,342.9

Revenue from financial services primarily contains interest income of EUR 31.2 million(2006: EUR 20.9 million), similar income of EUR 3.0 million (2006: EUR 5.4 million) andcommission income of EUR 9.0 million (2006: EUR 7.6 million) of Internationales Bank-haus Bodensee AG.

[2 ] Cost of materials

121


NO

TE

S

Headcount development as of the balance sheet date:

The average headcount of the Würth Group totaled 61,022 in the fiscal year (2006:53,201). In Germany, the average headcount of the Würth Group totaled 16,577 (2006:14,870) and in other countries 44,445 (2006: 38,331).

[6 ] Other operating expenses

Other operating expenses mainly includes selling, administration and operating expenses,bad debts and other taxes.

Other operating expenses include expenses relating to other periods of EUR 6.9 million(2006: EUR 44.8 million).

Other operating expenses also include bad debt allowances from the banking business ofEUR 3.0 million (2006: EUR 4.5 million).

[7 ] Finance revenue/finance costs

The interest expense from pension plans and the expected return on plan assets werereclassified in 2007 from personnel expenses to finance costs and finance revenuerespectively to enhance the presentation of results of operations. The prior-year figureswere adjusted accordingly in compliance with IAS 8.

Würth Line Germany

Allied Companies Germany

Würth Group Germany

Würth Group International

Würth Group total

thereof:

Sales staff

In-house staff

2006

5,183

10,115

15,298

39,608

54,906

29,020

25,886

2007

5,628

10,932

16,560

47,139

63,699

30,650

33,049

Other interest and similar income

Investment income

Interest and similar expenses

Interest expenses from pension plans

Expected return on plan assets

Total financial result


30.4

0.0

69.2

9.0

2.3

45.5

2007

34.3

0.6

86.0

9.8

3.7

57.2

122

Current taxes

Deferred tax income

Deferred tax income from unused tax losses

Other deferred tax income

Deferred tax expense

Deferred tax expense from unused tax losses

Other deferred tax expenses

Total


174.9

7.7

36.6

11.2

55.0

196.8

2007

197.8

22.5

44.3

36.0

35.7

202.7

Gains from the translation of foreign currency items amount to EUR 10.3 million(2006: EUR 9.7 million), while losses from the translation of foreign currency itemscame to EUR 12.3 million (2006: EUR 10.4 million). To improve the presentation ofresults of operations, these items were reclassified from other operating income andexpenses to finance revenue and costs. The prior-year figures were adjusted accor -dingly in compliance with IAS 8.

Interest and similar expenses include expenses relating to other periods of EUR 13.1 million (2006: EUR 6.9 million).

[8 ] Income taxes

Income taxes include corporate income tax (including solidarity surcharge) and trade taxof German entities and comparable income taxes of foreign entities.

123



Theoretical tax rate as a %

Theoretical tax expense

Changes in theoretical tax expense due to:

– Unrecognized tax losses

of the current fiscal year

– Recognition of unused tax losses from prior years

– Write-down on recognized unused tax losses from prior years

– Deviating tax rates

– Tax reductions due to tax-free items

– Tax increases due to non-deductible expenses

– Income tax expense that cannot be derived from

earnings before taxes

– Non-deductible write-down of goodwill

– Taxes relating to prior periods

– Other

Income tax expense

Effective tax rate as a %


503.8

27.6

139.2

4.9

– 3.1

2.9

1.1

– 2.8

23.3

7.5

1.2

19.5

3.1

196.8

39.1

2007

621.6

23.1

143.7

3.3

– 1.7

8.9

1.8

– 1.9

21.0

5.6

2.8

18.4

0.8

202.7

32.6

A reconciliation from the theoretical to the current tax rate for the Würth Group isshown below:

The theoretical tax rate is based on the weighted average tax rate of all consolidatedentities.

Changes in income taxes arose as a result of shifts in profits to entities that are only sub-ject to trade tax, lower net income for the year recorded by Italian entities and different taxrates in Spain. The Business Tax Reform Act 2008 in Germany will reduce trade tax ratesand also the tax burden on corporations to an average of 13.5%. This adjustment wasalready considered when determining deferred taxes.

NO

TE

S

124

[9 ] Intangible assets including goodwill

--H. NOTES TO THE CONSOLIDATED BALANCE SHEET --

Cost

January 1, 2007

Exchange differences

Changes in the

consolidated group

Additions

Disposals

Reclassifications

December 31, 2007

Accumulated amortization

January 1, 2007


Amortization

Impairment losses

Disposals

Reclassifications

December 31, 2007

Net carrying amount

December 31, 2007


397.4

– 1.2

8.8

26.2

9.8

1.7

423.1

207.6

– 0.8

35.2

10.6

9.3

0.8

244.1

179.0

Payments onaccount

1.4

0.0

0.0

3.7

0.1

– 0.6

4.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

4.4

Goodwill

179.3

0.0

0.0

0.8

1.1

0.0

179.0

61.1

0.0

0.0

10.6

1.1

0.0

70.6

108.4

Customerrelationships

and similarrights

66.2

0.1

8.2

0.2

0.0

0.0

74.7

27.0

0.1

19.5

0.0

0.3

0.0

46.3

28.4

Internallygeneratedintangible

assets

42.3

– 0.2

0.0

5.9

3.6

0.1

44.5

32.5

– 0.1

5.1

0.0

3.3

0.1

34.3

10.2

Franchises,industrial

rights, licenses and

similar rights

108.2

– 1.1

0.6

15.6

5.0

2.2

120.5

87.0

– 0.8

10.6

0.0

4.6

0.7

92.9

27.6

125


NO

TE

SResearch and development costs (including amortization of capitalized developmentcosts) included in the expense totaled EUR 15.2 million (2006: EUR 20.7 million).

Goodwill contains amounts from asset deals as well as from capital consolidation.

Cost

January 1, 2006


Changes in the

consolidated group

Additions

Disposals

Reclassifications

December 31, 2006

Accumulated amortization

January 1, 2006


Amortization

Impairment losses

Disposals

Reclassifications

December 31, 2006

Net carrying amount

December 31, 2006


337.9

– 2.3

40.9

24.5

4.5

0.9

397.4

173.3

– 1.1

32.3

7.2

4.1

0.0

207.6

189.8

Payments onaccount

2.6

0.0

0.0

1.3

0.0

– 2.5

1.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

1.4

Goodwill

164.8

– 0.4

12.8

2.6

0.4

– 0.1

179.3

54.2

0.0

0.0

7.2

0.3

0.0

61.1

118.2

Customerrelationships

and similarrights

37.1

– 0.3

27.6

1.7

0.0

0.1

66.2

11.1

0.0

15.9

0.0

0.0

0.0

27.0

39.2

Internallygeneratedintangible

assets

33.6

– 0.2

0.0

8.5

0.2

0.6

42.3

26.3

– 0.2

6.6

0.0

0.2

0.0

32.5

9.8

Franchises,industrial

rights, licenses and

similar rights

99.8

– 1.4

0.5

10.4

3.9

2.8

108.2

81.7

– 0.9

9.8

0.0

3.6

0.0

87.0

21.2

126

Goodwill is tested for impairment annually. The test is based on estimated future cashflows derived from the business plan.

The impairment losses recorded on goodwill amounted to EUR 10.6 million in the fiscalyear 2007 (2006: EUR 7.2 million). Goodwill was reviewed for impairment in regularimpairment tests in accordance with IAS 36 in the fiscal year 2007. The impairment testswere based on value in use and conducted at the level of the smallest cash generatingunit. In the Würth Group this is the individual entity.

The table below provides a summary of the tested goodwill and the assumptions under-lying the impairment tests:

Write-downs were recognized mostly on entities that are exposed to increased competi-tive pressure on account of the wave of consolidation in the DIY and hardware storemarket.

The assumptions concerning sales growth and EBIT margins used for the impairmenttests in the planning period are based on internal records of past experience andassumptions by management.

Goodwill before

impairment test

Impairment

losses

Average sales

growth in the

planning period

EBIT margin in the

planning period

Length of the

planning period

Sales growth p.a.

after the end of the

planning period

EBIT margin after the end

of the planning period

Discount rate

in millions of EUR

Lichtzen-trale

ThurnerGmbH

6.8

–

6.8

2.2–3.2

4 years

1%

3.3

14.0

AP Win-ner LTDA

4.3

–

19.5

6.7–11.8

4 years

1%

12.0

12.9

UNI ELEKTROFachgroß-

handelGmbH &

Co. KG

23.1

–

8.8

3.0–3.7

4 years

1%

3.8

9.4

Tunap

9.2

–

8.6

4.7–6.7

4 years

1%

4.7

11.5

Louis andCompany

6.9

–

6.8

5.8–6.0

4 years

1%

6.0

13.1

Conmetall GmbH &

Co. KG

10.3

5.0

1.8

0.8–1.4

4 years

1%

0.8

8.0

EDL Fasteners

1.7

–

9.7

4.4–9.2

4 years

1%

9.3

13.0

Other

56.7

5.6

5.6–15.6

2.1–22.5

4 years

1%

2.3–22.7

9.1–14.7

127


NO

TE

S

[10 ] Property, plant and equipment

Cost

January 1, 2007


Changes in the

consolidated group

Additions

Disposals

Reclassifications

December 31, 2007

Accumulated depreciation

January 1, 2007


Depreciation

Disposals

Reclassifications

December 31, 2007

Net carrying amount

December 31, 2007


2,846.0

– 13.7

12.0

456.2

98.3

– 1.7

3,200.5

1,266.3

– 8.3

183.3

80.2

– 0.8

1,360.3

1,840.2

Payments onaccount andassets underconstruction

76.5

– 0.1

0.6

132.9

0.0

– 88.1

121.8

0.0

0.0

0.0

0.0

0.0

0.0

121.8

Other equip-ment, furniture

and fixtures

991.6

– 6.1

2.8

165.7

61.7

14.0

1,106.3

559.1

– 4.9

100.0

53.5

– 0.6

600.1

506.2

Technicalequipment and

machines

464.7

– 3.7

5.0

46.5

26.6

17.7

503.6

302.4

– 3.1

41.6

22.0

– 0.2

318.7

184.9

Land, land rights andbuildings incl.

buildings onthird-party land

1,313.2

– 3.8

3.6

111.1

10.0

54.7

1,468.8

404.8

– 0.3

41.7

4.7

0.0

441.5

1,027.3

128

There are restrictions on the rights of disposal of property, plant and equipment andassets assigned as collateral. They break down as follows:

There are payment obligations of EUR 35.9 million (2006: EUR 19.3 million) for capitalexpenditures on non-current assets.

Cost

January 1, 2006


Changes in the

consolidated group

Additions

Disposals

Reclassifications

December 31, 2006

Accumulated depreciation

January 1, 2006


Depreciation

Disposals

Reclassifications

December 31, 2006

Net carrying amount

December 31, 2006


2,566.7

– 15.8

14.7

368.6

87.3

– 0.9

2,846.0

1,182.8

– 8.9

160.6

68.2

0.0

1,266.3

1,579.7

Payments onaccount andassets underconstruction

84.5

– 0.5

0.5

82.1

7.2

– 82.9

76.5

0.0

0.0

0.0

0.0

0.0

0.0

76.5

Other equip-ment, furniture

and fixtures

855.0

– 6.2

2.8

143.8

60.1

56.3

991.6

514.1

– 3.9

84.9

52.0

16.0

559.1

432.5

Technicalequipment and

machines

431.5

– 4.9

1.7

59.5

17.3

– 5.8

464.7

299.6

– 3.9

37.6

14.7

– 16.2

302.4

162.3

Land, land rights andbuildings incl.

buildings onthird-party land

1,195.7

– 4.2

9.7

83.2

2.7

31.5

1,313.2

369.1

– 1.1

38.1

1.5

0.2

404.8

908.4

Mortgages

Land charges

Collateral assignment

Total


0.5

51.3

21.8

73.6

2007

0.0

49.7

12.6

62.3

129


NO

TE

S

[11 ] Financial assets

The investments disclosed under financial assets belong to the available-for-sale cate-gory. They are generally measured at fair value without effect on profit or loss. Therewere no adjustments to fair value in the fiscal year 2007 which would require unrealizedgains and losses to be recognized in equity. Where fair value could not be determined,the investment was measured at amortized cost. In addition, this item includes held-to-maturity investments, which are accounted for at amortized cost.

Internationales Bankhaus Bodensee AG has provided securities with a carrying amountof EUR 5.0 million and maturing in June 2010 as collateral for a loan of Kreditanstalt fürWiederaufbau, Frankfurt am Main. The maximum credit risk is the carrying amountrecognized in the balance sheet.

[12] Receivables from financial services

Receivables from the leasing business

Receivables from the insurance business

Receivables from the banking business

Receivables from customers

Receivables from banks

Other asset items

Total

in millions of EURthereof due

within one year

30.4

1.6

171.7

58.6

6.8

269.1

2006

68.5

1.6

479.7

58.8

6.8

615.4

thereof due within one year

64.8

1.5

205.2

32.0

12.0

315.5

2007

98.2

1.5

540.4

32.1

12.0

684.2

Receivables from financial services that are

neither past due nor impaired

Receivables past due but not impaired

– less than 120 days

– between 120 and 179 days


– more than 360 days

Total

Carrying amount (net)


580.4

1.5

0.1

0.8

0.1

0.5

581.9

615.4

2007

645.3

1.6

0.1

0.9

0.1

0.5

646.9

684.2

The following table provides information on the extent of the credit risk included inreceivables from financial services.

130

Movements in the provision for impairment of receivables from financial services wereas follows:

The income or expense from impairment losses and the derecognition of receivables fromfinancial services is disclosed under other operating expenses.

[13] Deferred taxes

Deferred tax assets and liabilities can be allocated as follows:

Non-current assets

Inventories

Receivables

Other assets

Provisions

Liabilities

Other liabilities

Unused tax losses

Netting

Total

in millions of EUR

Deferredtax liabilities

2006

54.3

19.6

3.5

3.1

2.2

1.9

26.1

110.7

–

– 36.5

74.2

Deferred tax liabilities

2007

29.9

21.1

8.2

14.0

4.0

2.5

41.4

121.1

–

– 43.1

78.0

Deferredtax assets

2007

11.6

24.9

24.1

3.4

29.8

21.3

3.3

118.4

27.7

– 43.1

103.0

Deferred tax assets

2006

11.7

23.8

15.1

3.0

29.1

14.6

4.3

101.6

40.6

– 36.5

105.7

Provision for impairment as of January 1

Amounts recognized as income or expense in the reporting period

Derecognition of receivables

Payments received and

unused amounts reversed

Provision for impairment as of December 31


21.4

– 0.2

0.0

0.0

21.2

2007

21.2

4.5

1.9

1.4

22.4

131


NO

TE

S

The unused tax losses include pre-fiscal unity unused losses of EUR 35.5 million (2006:EUR 35.5 million) that cannot be used until the existing profit and loss transfer agreementshave been terminated.

No deferred taxes were recognized for accumulated profits and losses of foreign subsidia-ries of EUR 593.0 million (2006: EUR 707.4 million). If deferred taxes had been recognizedfor these timing differences, they would have had to be calculated exclusively using thewithholding tax rate applicable in each case, possibly including the German tax rate of fivepercent on distributed dividends. The calculation of these unrecognized deferred tax liabili-ties would have been unreasonably time-consuming.

Future distributions to the shareholders do not otherwise have any income tax implicationsfor the Würth Group.

With the exception of the exchange differences of EUR 0.5 million (2006: EUR 1.9 million)which were recognized directly in equity and additions of deferred taxes of EUR 0.5 millionarising from new acquisitions (2006: EUR 8.5 million), the development of timing diffe-rences is reflected in full in income taxes.

Deferred tax assets of EUR 1.7 million (2006: EUR 3.1 million) were recordedsubsequently in fiscal 2007 on unused tax losses of EUR 6.1 million (2006: EUR 16.1 mil-lion), as the results of operations of the entities concerned have improved and it is proba-ble that they will be used in the future.

Deferred tax assets of EUR 159.4 million in total (2006: EUR 222.8 million) were recogni-zed on unused losses.

No deferred tax assets were recognized for unused losses of EUR 247.9 million (2006:EUR 229.1 million) as it is not sufficiently probable that they will be realized. Theseunused losses are classified by expiry period as follows:

Expiration of unused tax losses

– Nonforfeitable

– Expiration within the next five to ten years

– Expiration within the next one to five years

– Expiration within the next year

Total unused tax losses net of deferred tax assets recognized


161.4

32.7

29.3

5.7

229.1

2007

183.6

46.0

9.3

9.0

247.9

132

The write-down recorded on inventories, which was recognized under cost of materials inthe income statement, amounts to EUR 3.5 million (2006: EUR 3.4 million).

[15] Trade receivables

This item exclusively comprises receivables from third parties.

With respect to the trade receivables that were neither impaired nor past due, there wasno indication as of the balance sheet that the debtors would not meet their paymentobligations.

Trade receivables that are neither

past due nor impaired

Receivables past due but not impaired

– less than 120 days



– more than 360 days

Total

Carrying amount (net)


290.4

439.5

1.9

1.2

0.4

733.4

1,099.8

2007

301.6

444.5

1.8

1.2

0.5

749.6

1,153.0

Raw materials, consumables and supplies

Work in process and finished goods

Merchandise

Payments on account

Total


57.7

91.1

816.2

7.8

972.8

2007

56.1

118.3

887.0

4.0

1,065.4

[14] Inventories

133


NO

TE

S

Movements in the provision for impairment of trade receivables were as follows:

The following table presents the expenses from the derecognition of trade receivablesand the income from payments received on derecognized receivables:

The income or expense from impairment losses and the derecognition of trade receivab-les is disclosed under other operating expenses.

[16] Income tax receivables

This item records income tax receivables from tax authorities.

Expenses from the

derecognition of receivables

Income from payments received on derecognized receivables


37.4

3.7

2007

32.4

1.9

Provision for impairment as of January 1

Amounts recognized as income or expense in the reporting period

Derecognition of receivables

Payments received and recoveries

of amounts previously written-off

Currency translation effects

Provision for impairment as of December 31


94.9

9.9

6.3

1.5

– 0.9

96.1

2007

96.1

13.9

6.8

1.8

–0.5

100.9

134

[17] Other assets

Generally, other assets include supplier discounts and bonuses as well as VAT receivab-les. The non-current portion of other assets includes claims from employer's pensionliability insurance policies. Prepaid expenses mainly relate to prepaid insurance premi-ums and prepaid lease and rent payments.

Impairment losses were recognized on all other assets that were past due.

[18] Securities

The securities are investments in shares and bonds that are not actively traded, butmanaged at fair value on account of internal management and performance evaluationsas well as in accordance with a documented risk management and investment strategy.Changes in value are determined by reference to comparable market values. Incomefrom changes in fair value amounted to EUR 4.0 million in the fiscal year. A total amountof EUR 6.4 million has been recognized in profit or loss since the instruments weredesignated as financial assets at fair value through profit or loss. The maximum creditrisk corresponds to the carrying amounts recognized.

[19] Cash and cash equivalents

Balances denominated in foreign currency are measured at the closing rate. The compo-sition and development of cash and cash equivalents is presented in the consolidatedcash flow statement.

Receivables from

related parties

Other assets

Prepaid expenses

Total

in millions of EUR

thereof due within

one year

40.9

123.8

23.3

188.0

2006

40.9

141.6

23.3

205.8

thereof due within

one year

17.2

127.9

28.3

173.4

2007

18.5

146.9

28.3

193.7

135


NO

TE

S

While the limited partners’ capital paid into Würth Beteiligungs-GmbH & Co. KGamounts to EUR 2.1 million, the liable capital recorded in the commercial registeramounts to EUR 154.6 million.

Effective January 1, 2007, RW Beteiligungen GmbH was merged with Adolf Würth GmbH& Co. KG. For the group, this leads to a shift of EUR 3.1 million from share capital toother reserves. As a result of the merger, Adolf Würth GmbH & Co. KG, Künzelsau, isnow an indirect shareholder of the Würth international group via its holdings in ReinholdWürth Holding GmbH, Künzelsau, and Würth International AG, Chur, Switzerland.

The limited partners’ capital in the partnerships corresponds to the share capital.

Other reserves include the profits of parent companies in the group and consolidatedsubsidiaries earned in prior years and not yet distributed as well as capital contributions.Differences from foreign currency translation are also disclosed here.

The individual components of equity and their development in 2007 and 2006 areshown in the consolidated statement of changes in equity.

[20] Equity

Share capital comprises the share capital of following parent companies within the group:

Adolf Würth GmbH & Co. KG

Würth Finanz-Beteiligungs-GmbH

Würth Elektrogroßhandel GmbH & Co. KG

Waldenburger Beteiligungen GmbH & Co. KG

Würth Beteiligungs-GmbH & Co. KG

Würth TeleServices GmbH & Co. KG

Other (incl. 27 general partner companies)

Würth Promotion Ges.m.b.H.

Total

Parent companies within the group Shareholders

Family trusts

Family trusts

Family trusts

Family trusts

Family trusts

Family trusts

Adolf Würth Trust

Würth-Privatstiftung

Share capital in millions of EUR

215.5

32.0

19.5

5.1

2.1

0.1

2.9

0.04

277.2

Registered office

Germany

Germany

Germany

Germany

Germany

Germany

Germany

Austria

136

[22] Financial liabilities

The group has financial liabilities due in more than five years of EUR 545.8 million(2006: EUR 373.9 million).

For the 2006 comparative information, EUR 152.3 million was reclassified from liabilitiesto banks to liabilities from financial services.

[21] Liabilities from financial services

Liabilities from the leasing business

Liabilities from the insurance business

Liabilities from the banking business

Total

2007in millions of EUR

Due in more than five

years

0.0

0.0

152.4

152.4

Due in one to five

years

14.4

0.6

78.6

93.6

Due within one year

5.1

0.6

308.3

314.0

Total

19.5

1.2

539.3

560.0

Liabilities from the leasing business

Liabilities from the insurance business

Liabilities from the banking business

Total

2006in millions of EUR

Due in more than five

years

0.0

0.0

140.4

140.4

Due in one to five

years

18.3

0.0

108.2

126.5

Due within one year

1.7

0.4

252.9

255.0

Total

20.0

0.4

501.5

521.9

Bonds

Liabilities to banks

Liabilities to

minority interests

Liabilities from leases

Total

in millions of EUR

thereof due within

one year

0.0

63.7

29.1

8.4

101.2

2006

623.2

113.1

36.9

52.1

825.3

thereof due within

one year

90.6

51.6

35.4

10.6

188.2

2007

900.0

102.5

37.5

51.4

1,091.4

137


NO

TE

S

The maturities and terms of the bonds and their fair values are as follows:

Bearer bond

CHF bond

US private placement

Bearer bond


Bearer bond

Bearer bond

As of December 31, 2007

Type

Fair value in millions

of EUR

294.4

90.9

34.0

143.7

143.5

91.3

95.9

893.7

Carryingamount

in millions of EUR

298.5

90.6

34.0

144.9

135.8

96.8

99.4

900.0

Maturity

June 12, 2014

Feb 21, 2008

May 12, 2009

Mar 31, 2010

Sep 23, 2011

June 8, 2012

May 31, 2013

Effective interest

4.79%

4.05%

4.55%

4.44%

5.16%

3.53%

4.31%

Interest

4.75%

4.00%

4.55%

4.25%

5.06%

3.50%

4.25%

Amount

EUR 300 million

CHF 150 million

USD 50 million

EUR 150 million

USD 200 million

EUR 100 million

EUR 100 million

CHF bond


Bearer bond


Bearer bond

Bearer bond


Type

Fair value in millions

of EUR

98.0

37.9

151.1

155.0

96.6

103.8

642.4

Carryingamount

in millions of EUR

93.2

37.9

144.6

151.6

96.7

99.2

623.2

Maturity

Feb 21, 2008

May 12, 2009

Mar 31, 2010

Sep 23, 2011

June 8, 2012

May 31, 2013

Effective interest

4.05%

4.55%

4.44%

5.16%

3.53%

4.31%

Interest

4.00%

4.55%

4.25%

5.06%

3.50%

4.25%

Amount

CHF 150 million

USD 50 million

EUR 150 million

USD 200 million

EUR 100 million

EUR 100 million

Treasury stock of EUR 7.2 million (2006: EUR 7.3 million) that was treated as corporaterepurchase was offset against the bonds that were issued with an original value of EUR907.2 million (2006: EUR 630.5 million).

The capital borrowed though the US private placement is contingent on certain cove-nants being met. The Würth Group is required to meet certain debt service ratios suchas the ratio of net financial debt to EBITDA and senior liabilities to equity. They alsoinclude restrictions on disposals of assets.

138

The maturities and conditions of liabilities due to banks are as follows:

The carrying amounts of liabilities to banks reported in the balance sheet approximate fairvalue. Non-current liabilities from leases are subject to customary market interest rates.

The table below shows the contractually agreed remaining terms to maturity.

CurrencyCarryingamount

65.2

3.1

15.0

26.4

3.2

0.2

113.1

> 5 years

0.0

0.0

0.0

26.4

0.0

0.0

26.4

1–5 years

7.8

0.0

15.0

0.0

0.0

0.2

23.0

< 1 year

57.4

3.1

0.0

0.0

3.2

0.0

63.7

Remainingfixed interest

period

< 1 year

< 1 year

1 – 5 year

> 5 years

< 1 year

1–5 years

Interestterms

floating/fixed

floating/fixed

fixed

fixed

floating/fixed

fixed

Interest rate

1.7%–13.0%

1.0%– 6.8%

2.5%– 9.7%

1.0%– 6.9%

2.0%– 25.0%

3.5%– 14.8%

CurrencyCarryingamount

46.8

3.0

50.8

1.8

0.1

102.5

> 5 years

0.0

0.0

22.9

0.0

0.0

22.9

1–5 years

0.0

0.0

27.9

0.0

0.1

28.0

< 1 year

46.8

3.0

0.0

1.8

0.0

51.6

Remainingfixed interest

period

< 1 year

< 1 year

> 5 years

< 1 year

1–5 years

Interestterms

floating/fixed

floating/fixed

fixed

floating/fixed

fixed

Zinssatz

1.7%–13.0%

1.0%–6.1%

1.0%–6.8%

1.1%–13%

5.25%–13.5%

EUR

USD

EUR

EUR

Other

Other


EUR

USD

EUR

Other

Other


Primary financial liabilities

Bonds, liabilities to banks

Liabilities from leases

Trade payables

Derivative financial liabilities

Foreign currency derivatives

Interest derivatives

in millions of EUR > 5 years

519.7

29.8

0.0

0.0

0.0

1–5 years

340.6

11.0

0.0

0.5

6.4

< 1 year

142.2

10.6

395.2

3.9

1.9

Carryingamounts

December 31,2007

1,002.5

51.4

395.2

4.4

8.3

Cash flows

139


NO

TE

S

[23] Obligations from post-employment benefits

A pension plan is in place for employees of the Würth Group for the period after theyretire. The benefits vary according to local legal, tax and economic conditions. The obli-gations include vested benefits to future pensions as well as current pensions. Thecompany pension plan includes defined contribution plans and defined benefit plans.

In the case of defined contribution plans, the respective entity pays contributions tostate or private pension companies either on a voluntary basis or based on legal provi-sions. Current contributions (without contributions to the statutory pension insurance)in the Würth Group totaled EUR 10.5 million in 2007 (2006: EUR 8.9 million). Payments of EUR 125.0 million were made to the statutory pension insurance in fiscal2007 (2006: EUR 116.8 million).

Most of the Würth Group’s defined benefit plans are based on direct pension obliga -tions. The amount of the claims depend on the length of service and in many cases alsosalary increases.

The Würth Group’s benefit obligations in Germany guarantee the beneficiaries a life-long monthly old-age pension, provided that a vesting period of five years of servicecan be proven. The employee receives this pension either after leaving the respectiveentity at the minimum age of 65 or earlier if he/she simultaneously receives a full statepension. German employees are also offered another defined benefit plan in form of adeferred compensation arrangement under which gross cash compensation is conver-ted to a company pension plan based on individual contracts. This voluntary conver-sion of monthly compensation is limited to the higher of either 10% of one twelfth ofthe yearly income before commencement of the conversion or 4% of the respectivemaximum monthly contribution to the German pension system (western Germanstates). In total, obligations in Germany amount to EUR 63.0 million (2006: EUR 62.2million).

In Italy, an employer is required by law to provide its employees with an old-age pen-sion. Since 2007, the legislature provides for a capital option, i.e. the employees canchoose whether their individual claims should continue to be provided for in the com-pany or be paid into a pension fund instead. Obligations of EUR 30.9 million wererecognized in the fiscal year 2007 (2006: EUR 36.0 million).

For the indirect benefit obligations where the assets have been spun off, plan assets arerecognized net of the benefit claims provided the conditions of IAS 19 are satisfied.Most of these pension schemes are in place in Switzerland. The associated net liabilityamounts to EUR 0.8 million (2006: EUR 1.3 million).

140

The net benefit expense from defined benefit plans breaks down as follows:

The benefit obligations are derived as follows:

Discount rate

Future salary increases

Future pension increases


% 2007

3.75–5.60

1.00–4.50

1.50–3.15

2.00–5.75

2006

122.3

– 110.8

0.2

11.7

114.0

125.7

– 2.9

2.0

2006

3.75–5.29

1.00–4.00

1.50–3.10

3.00–6.87

2007

5.25

3.00

2.00

–

2006

4.50

3.00

1.50

–

2007

127.4

– 114.8

0.4

13.0

112.8

125.8

1.0

0.6

Germany Other countries

The 2005 G mortality tables from Dr. Klaus Heubeck are applied in Germany.

The obligations from post-employment benefits were determined based on the followingassumptions:

Current service cost

Past service cost

Interest cost

Expected return on plan assets (–)

Actuarial losses (+) and gains (–)

recognized on changes in assumptions


recognized on experience adjustments

Effect of the limit (IAS 19.58 b)

Other expense

Net benefit expense

Actual return on plan assets (–)


14.3

2.1

9.0

– 2.3

– 5.3

– 0.9

0.2

2.4

19.5

– 0.3

2007

9.7

0.5

9.8

– 3.7

– 2.8

1.6

0.2

0.0

15.3

– 3.1

Present value of funded benefit obligations

Fair value of the plan assets

Adjustments on plan assets in accordance with IAS 19.58 b

Net gain or loss on funded benefit obligations

Present value of unfunded benefit obligations

Net benefit liability recognized in the balance sheet

Experience adjustments

Present value of the obligations

Fair value of plan assets


60.1

– 72.5

0.0

– 12.4

132.4

120.0

4.6

0.6

141


NO

TE

S

With the exception of interest expenses and the expected return on plan assets, whichare included in the financial result; all other expense and income items are recognizedunder personnel expenses.

Changes in the present value of the defined benefit obligations are as follows:

Future adjustments in pension developments are taken into account in accordance withlegal provisions (e.g., in Germany Sec. 16 BetrAVG [“Gesetz zur Verbesserung derbetrieblichen Altersversorge”: German Company Pensions Act]).

Changes in the fair value of plan assets are as follows:

Fair value of plan assets at the beginning of the year

Additions due to changes in the consolidated group


Employer contributions

Employee contributions

Benefits paid

Actuarial losses (–) and gains (+)


Transfer of assets

Exchange difference on foreign plans

Other

Fair value of plan assets at the end of the year


72.5

1.2

2.3

12.0

2.3

– 2.5

– 2.0

1.2

– 0.1

23.9

110.8

2007

110.8

0.2

3.7

6.7

2.3

– 3.9

– 0.6

– 1.5

– 2.9

0.0

114.8

Defined benefit obligation at the beginning of the year

Additions due to changes in the consolidated group

Increase due to deferred compensation

Interest cost

Current service cost

Past service cost

Employee contributions

Benefits paid


recognized on changes in assumptions



Transfer of vested benefits

Exchange difference on foreign plans

Other

Defined benefit obligation at the end of the year


192.5

7.9

0.7

9.0

14.5

2.1

2.3

– 11.5

– 5.3

– 2.9

1.2

– 0.3

26.1

236.3

2007

236.3

0.8

0.6

9.8

9.7

0.5

2.3

– 13.3

– 2.8

1.0

– 1.8

– 2.9

0.0

240.2

The amount of employer’s contributions to funds are expected to be similar in the following year.

142

Breakdown of fair value of plan assets by asset category:

[24] Provisions

Shares/share-based investment funds

Fixed-interest securities

Real estate/real estate investment trusts

Other

Total


28.6

45.3

6.1

30.8

110.8

2007

26.8

47.4

6.6

34.0

114.8

Provisions

Credit notes

Long-service bonuses

Warranty obligations

Litigation and lawyers' fees

German phased retirement

Product liability

Other

Total other provisions

thereof: – current

– non-current

in millions of EURDecember 31,

2007

51.4

32.3

10.8

7.3

6.0

2.7

81.4

191.9

141.0

50.9

Addition

45.0

9.0

6.4

3.7

2.0

1.7

51.4

119.2

Reversal

3.9

2.1

0.9

0.6

0.4

0.7

5.4

14.0

Utilization

37.3

0.3

4.3

2.5

1.7

1.8

21.4

69.3

Additionsdue to

changes inthe consoli-dated group

0.1

0.1

0.0

0.0

0.6

0.0

0.6

1.4

Exchangedifference

– 0.2

0.0

0.0

0.0

0.0

0.0

– 0.2

– 0.4

January 1,2007

47.7

25.6

9.4

6.7

5.5

3.6

56.5

155.0

107.1

47.9

Provisions

Credit notes

Long-service bonuses

Warranty obligations

Litigation and lawyers' fees

German phased retirement

Product liability

Other

Total other provisions

thereof: – current

– non-current

in millions of EURDecember 31,

2006

47.7

25.6

9.4

6.7

5.5

3.6

56.5

155.0

107.1

47.9

Addition

42.3

0.5

5.0

4.8

1.7

1.7

27.7

83.7

Reversal

2.5

0.2

1.2

0.4

0.1

1.3

1.8

7.5

Utilization

35.4

0.2

2.6

0.6

1.3

1.4

21.5

63.0

Additionsdue to

changes inthe consoli-dated group

0.2

0.1

0.0

0.6

0.0

0.0

2.7

3.6

Exchangedifference

0.0

0.0

– 0.1

– 0.2

0.0

0.1

– 0.6

– 0.8

January 1,2006

43.1

25.4

8.3

2.5

5.2

4.5

50.0

139.0

98.1

40.9

143


NO

TE

S

The provision for credit notes is primarily attributable to obligations relating to discounts,bonuses, etc. granted that are allocable to the period after the balance sheet date, butcaused by sales prior to the balance sheet date. The provision for long-service bonusescontains bonuses awarded to employees that have been with the company for manyyears. The provision for warranty obligations accounts for risks from legal or constructi-ve obligations from trade with fastening and assembly materials involving trade custo-mers, the construction industry and industrial customers as well as the manufacture ofscrews and fittings. Other provisions relate to numerous identifiable specific risks andcontingent liabilities which were accounted for at the amount at which they are likely tobe incurred.

The cash outflow for provisions for long-service bonuses and the German phased retire-ment scheme (‘Altersteilzeit’) is mainly of a medium (two to four years) to long-term(five to 50 years) nature. In most cases other provisions are expected to lead to a cashoutflow in the next fiscal year.

The increase in other provisions was partly due to risk provisioning for the current taxfield audit.

[25] Other liabilities

Liabilities to

related parties

Liabilities on bills accepted and drawn

Sundry liabilities

Total

in millions of EURthereof due

within one year

33.5

1.2

527.3

562.0

2006

35.4

1.2

541.5

578.1

thereof due within one year

111.2

2.0

570.8

684.0

2007

121.2

2.0

576.2

699.4

Liabilities relating to social security amount to EUR 83.6 million (2006: EUR 72.3 million).

Sundry liabilities essentially include liabilities due from employees and outstanding pur-chase invoices as well as customers with credit balances.

144

[26] Additional disclosures on financial instrumentsNet book values, carrying amounts and fair values by measurement category

Assetsin millions of EUR

At fair valuethrough

profit or loss

4.1

68.9

Amortizedcost

48.4

684.2

1,153.0

59.8

129.8

324.0

Net bookvalue

December 31,2007

48.4

684.2

1,153.0

59.8

129.8

4.1

68.9

324.0

Fair valueDecember 31,

2007

48.4

684.2

1,153.0

59.8

129.8

4.1

68.9

324.0

560.0

395.2

1,085.1

304.2

382.5

12.7

10.6

10.0

63.0

37.8

961.6

12.7

1,085.1

Measurement category

under IAS 39

AfS/FAFVtpl/HtM

LaR

LaR

LaR

n./a.

FAHfT

FAHfT/FAFVtpl/HtM

LaR

Financial assets


Trade receivables

Other assets

Other financial instruments

Sundry assets

Derivative financial assets

Securities


Carrying amount in the balance sheet


12.7

10.0

63.0

12.7

560.0

395.2

1,091.4

304.2

382.5

10.6

37.8

961.6

1,091.4

LaR

LaR

FLAC

LaR

n./a.

FLHfT

560.0

395.2

1,091.4

304.2

382.5

12.7

10.6

10.0

63.0

37.8

961.6

12.7

1,091.4


Trade payables


Other liabilities

Other liabilities

Sundry liabilities

Derivative liabilities

thereof combined by measurement category

in accordance with IAS 39:

Held-to-maturity

investments (HtM)

Financial assets held

for trading (FAHfT)

Financial assets (designated as)

at fair value through

profit or loss (FAFVtpl)

Available-for-sale

financial assets (AfS)

Loans and receivables (LaR)


held for trading (FLHfT)


at amortized cost (FLAC)

145


NO

TE

S

Assetsin millions of EUR

At fair valuethrough

profit or loss

8.3

76.3

Amortizedcost

58.7

615.4

1,099.8

67.5

130.0

160.4

Net bookvalue

December 31,2006

58.7

615.4

1,099.8

67.5

130.0

8.3

76.3

160.4

Fair valueDecember 31,

2006

58.7

615.4

1,099.8

67.5

130.0

8.3

76.3

160.4

521.9

408.5

844.2

219.4

346.5

12.2

10.6

8.3

76.3

48.1

793.3

12.2

844.2

Measurement category

under IAS 39

AfS/FAFVtpl/HtM

LaR

LaR

LaR

n./a.

FAHfT

FAHfT/FAFVtpl/HtM

LaR

Financial assets


Trade receivables

Other assets

Other financial instruments

Sundry assets

Derivative financial assets

Securities


Carrying amount in the balance sheet


12.2

8.3

76.3

12.2

521.9

408.5

825.3

219.4

346.5

10.6

48.1

793.3

825.3

LaR

LaR

FLAC

LaR

n./a.

FLHfT

521.9

408.5

825.3

219.4

346.5

12.2

10.6

8.3

76.3

48.1

793.3

12.2

825.3


Trade payables


Other liabilities

Other liabilities

Sundry liabilities

Derivative liabilities

thereof combined by measurement category

in accordance with IAS 39:

Held-to-maturity

investments (HtM)

Financial assets held

for trading (FAHfT)


at fair value through

profit or loss (FAFVtpl)

Available-for-sale

financial assets (AfS)



held for trading (FLHfT)


at amortized cost (FLAC)

146

The table below presents the net gains or losses from financial instruments recogni-zed in the consolidated income statement:

The net gains or losses from financial assets/liabilities held for trading include the netgains or losses from changes in fair value as well as interest income and expenses fromthese financial instruments. The net gains or losses from loans and receivables chieflyinclude the effects of impairments and reversals of impairment losses.

Financial assets held for trading (FAHfT)


at fair value through profit or loss (FAFVtpl)


Financial liabilities at amortized cost (FLAC)

Net loss from financial instruments


0.6

2.4

0.4

35.3

31.9

2007

2.7

4.0

7.6

49.3

35.0

147


NO

TE

S

The operating leases mainly relate to rented buildings and leased vehicles. The interestrates stipulated in the lease agreements are customary market rates. There are no purchaseoptions upon expiry of the lease either for the rented buildings or the leased vehicles.

Payments under the operating leases in fiscal 2007 which were recognized in the incomestatement totaled EUR 208.1 million (2006: EUR 188.8 million).

Sundry financial obligations contain irrevocable credit commitments of InternationalesBankhaus Bodensee AG of EUR 111.7 million (2006: EUR 95.1 million).

The increase in guarantees and warranties relates to liabilities from guarantees and war-ranty agreements of Internationales Bankhaus Bodensee AG.

[2] Other financial obligations

--I. OTHER NOTES--

Contingencies from notes

Guarantees and warranties

Total


0.3

12.7

13.0

2007

0.2

15.7

15.9

[1 ] Commitments and contingencies

Obligations from operating leases

– due within 12 months

– due in 13 to 60 months

– due in more than 60 months

Purchase obligations


Income tax payments


Sundry financial obligations




Total


156.0

219.2

29.6

404.8

182.7

182.7

0.0

0.0

103.0

5.0

9.2

117.2

704.7

2007

182.7

266.1

38.2

487.0

176.5

176.5

19.0

19.0

116.4

5.3

7.9

129.6

812.1

148

[3] Contingent liabilities

As an international group with various areas of business, the Würth Group is exposed tomany legal risks. This is especially true of risks for warranties, tax law and other legaldisputes. It is not possible to conclusively assess whether the litigation currently pen-ding is likely to result in decisions or agreements that will significantly influence theresults of operations for the fiscal year 2008. However, according to the assessment bythe Central Managing Board, no decisions are expected that would have a significantinfluence on the net assets of the group. Furthermore, tax field audits at group entitieshave not been completed yet and the related audit findings have not been reported yet.

[4] Financial instruments

Financial risk managementThrough its financial activities, the Würth Group is subject to various risks that areassessed, managed and monitored by a systematic risk management system.

Details of the group’s management of market risks (exchange rates, interest rates, secu-rities), credit risks and liquidity exposures are presented below.

Exchange rate risksThe Würth Group is exposed to currency risks from financing and operating activities. By exchange rate risks, the Würth Group means the exposure of the assets and incomedisclosed resulting from exchange rate fluctuations between the transaction currencyand the functional currency in each case.

As far as operations are concerned, the individual group entities mainly carry out theiractivities in their own functional currency. The currency risk for the Würth Group fromcurrent operating activities is therefore classified as low. Exchange rate risks are counteredby forward exchange contracts and currency options. Derivative financial instruments areused to hedge future sales and goods purchases against exchange rate risks.

Regarding the presentation of market risks, IFRS 7 requires sensitivity analyses showinghow profit or loss and equity would have been affected by hypothetical changes in therelevant risk variable.

149


NO

TE

S

If the euro had appreciated (depreciated) against the US dollar, the pound sterling andthe Chinese renminbi yuan as of December 31, 2007, the hypothetical effect on profit orloss would have been as follows:

Equity would change accordingly.

Interest rate risksBy interest rate risk, the Würth Group means the negative effects on the net assets andresults of operations resulting from changes in interest rates. A large part of the externalfinancing consists of fixed-interest rate bonds. This is one of the methods used by Würthto manage this risk. In addition, derivatives are used in risk management (e.g., interestrate swaps).

The interest rate risk is mainly limited to the liabilities to banks with floating interestrates listed under “[22] Financial liabilities”, the receivables from finance leases presen-ted in note [12] and the liabilities from financial services presented in note [21].

Under IFRS 7, interest rate risks are presented using sensitivity analyses. These presentthe effects of changes in market interest rates on interest payments, interest income andexpenses, other components of profit or loss and, if applicable, on equity.

If the market interest level had been 100 base points higher (lower) as of December 31,2007, profit or loss would have been EUR 2.9 million lower (higher) (2006: EUR 1.4 mil-lion). The hypothetical effect on profit or loss is mainly attributable to overdraft facilitiesas well as receivables and liabilities from financial services. Equity would change accor-dingly.

Securities risksThe Würth Group is exposed to stock market risks because of its investments. Specifi-cally, there is a risk of financial loss due to changes in prices of (publicly traded) securi-ties. One way of countering this risk is through diversification of the investment portfo-lio. When selecting bonds, a minimum rating of BBB (Standard & Poor’s) is generallyrequired. If the bonds are downgraded by the rating agency, they are sold immediately. In addition, derivatives are used in risk management to hedge securities price risks.

US dollar

Pound sterling

Chinese renminbi yuan

Total

in millions of EURCurrency

Hypothetical effect on profit or loss

Depreciation Appreciation

– 2.2

– 0.4

– 0.6

– 3.2

2.2

0.4

0.6

3.2

150

Credit risksThe credit risk is countered by limiting business relationships to first class banks (a mini-mum rating of A– from Standard & Poor’s). Default risks from receivables are minimizedby continuous monitoring of the credit worthiness of the counterparty and by limitingthe aggregated individual risks from the counterparty. Standardized master agreementsof the International Swaps and Derivatives Association (ISDA master agreements) are inplace with those external counterparties of the Würth Group with whom it enters intotransactions as part of its financial risk management. The counterparty risks from thedel credere business were assigned in full to a first class reinsurance company.

The maximum credit risk is the carrying amount of the financial assets recognized in thebalance sheet. The credit risk from operating activities is accounted for by recognizing aportfolio-based specific allowance on trade receivables.

Liquidity risksThe Würth Group needs liquidity to meet its financial obligations. Group entities areobliged by group guidelines to deposit any excess cash not needed to meet current obli-gations with Würth Finance International B.V., ‘s-Hertogenbosch, the Netherlands, orAdolf Würth GmbH & Co. KG, Künzelsau, to make it available to the Würth Group tobridge liquidity bottlenecks. The high international credit rating received by the WürthGroup (Standard & Poor’s and Fitch Ratings issued an ‘A’ rating on the Würth Group’sbonds) means that the Group can obtain favorable terms for procuring funds on interna-tional capital markets. In addition, potential liquidity bottlenecks are covered by lines ofcredit with various banks.

Capital managementThe primary objective of the group’s capital management is to ensure that it maintains astrong credit rating and healthy equity ratio. The group manages its capital structure inlight of changes in economic conditions. In addition, the financial service providers withinthe group comply with the applicable regulatory capital requirements. No changes weremade to the objectives, policies or processes as of December 31, 2007 or December 31,2006. The equity ratio, calculated as equity in accordance with IFRS divided by totalassets, is 42.3%. The decrease in the equity ratio by 2.5 percentage points compared tothe prior year is due primarily to distributions made to the Würth family trusts. However,the equity ratio is still higher than the industry average, and ensures the Würth Group aninvestment grade A rating. Regarding a US private placement, the Würth Group is alsorequired to comply with certain ratios of senior liabilities to equity.

151


NO

TE

S

Fair value of financial instrumentsThe fair value of financial instruments that are included in the portfolio of available-for-sale financial assets and held-for-trading financial assets is estimated by comparingthem with the market price on the balance sheet date.

The fair value of financial instruments designated as at fair value through profit or loss isdetermined using the valuation methods presented under “[18] Securities”.

The gain resulting from adjusting the fair value of financial assets at fair value throughprofit or loss amounted to EUR 0.7 million in the fiscal year (2006: EUR 0.2 million) andwas recorded in full in profit or loss for the period.

The fair value of forward exchange contracts is measured using the closing rates on theforward exchange markets. Interest rate swaps are measured at fair value on the basis ofestimated future cash flows. The fair value of options is measured using option-pricingmodels. The Würth Group has a policy of obtaining confirmation of the fair value of allthe above instruments by the banks that arranged the respective contracts for the WürthGroup.

The financial instruments not recognized at fair value within the Würth Group primarilycomprise certain cash equivalents, trade receivables, other current assets, other non-current assets, trade payables, and other liabilities, overdraft facilities, long-term loansand held-to-maturity investments.

The carrying amount of cash equivalents and overdrafts approximates fair value due tothe high liquidity of the financial instruments.

The historical cost carrying amount of receivables and payables subject to normal tradecredit terms usually approximates fair value.

The fair value of non-current liabilities is based on the market price for these liabilities orsimilar financial instruments or on the current interest rate for borrowing at similarterms and conditions. The amounts reported in the balance sheet approximate fair valueand are presented separately in note “[26] Additional disclosures on financial instru-ments”.

152

Derivative financial instrumentsAs of the balance sheet date, the fair value of derivate financial instruments classified asfair value hedges was as follows:

The currency instruments are principally used to hedge pending purchase and delivery trans-actions in US dollar, Swiss francs and pound sterling. An amount of EUR 329.4 million(2006: EUR 210.0 million) is due within twelve months, and EUR 24.2 million (2006: EUR8.1 million) matures in one to three years.

The interest instruments primarily serve to hedge currency and interest exposures related toincongruent asset and liability items denominated in euros, US dollars and Swiss francs.Their term to maturity is usually less than twelve months and the maximum term is threeyears and nine months.

Currency instruments

Forward exchange contracts

Currency options (OTC)

Total currency instruments

Interest instruments

Interest rate swap

Cross-currency swaps

Caps/floors (interest options)

Total interest instruments

Net replacement value

in millions of EURType 2006

7.5

0.0

7.5

0.3

4.2

0.2

4.7

2007

4.2

0.2

4.4

0.4

7.9

0.0

8.3

2006

6.8

0.0

6.8

1.4

0.1

0.0

1.5

– 3.9

2007

0.9

0.1

1.0

3.1

0.0

0.0

3.1

– 8.6

2006

349.0

3.0

352.0

162.4

84.9

30.0

277.3

2007

353.6

32.0

385.6

266.9

86.8

0.0

353.7

Contract value or nominal value

Positive replacement value

Negative replacement value

153


NO

TE

S

[5 ] Leases

LesseeThe net carrying amount of assets leased under finance leases breaks down as follows:

Real estate

Machines, equipment, furniture and fixtures

Vehicles

Other

Total


78.7

4.4

1.6

0.0

84.7

2007

64.9

3.1

1.8

4.9

74.7




Minimum lease payments from finance leases

less expected future interest payments




Present value of minimum lease payments

thereof:





11.2

23.6

41.7

76.5

3.5

6.7

14.2

52.1

7.7

16.9

27.5

2007

12.4

16.7

39.0

68.1

1.8

5.7

13.1

47.5

10.6

11.0

25.9

The vast majority of finance leases relate to real estate. These agreements are generallydesigned to include a purchase option and a renewal option. Furthermore, some con-tain price adjustment clauses based on the Euribor. There are no significant restrictionsimposed by lease agreements.

Minimum lease installments over the remaining terms of the finance lease agreementsand their present value are as follows:

154

LessorThe consolidated group also contains some entities that specialize in leases. These enti-ties are generally responsible for intercompany lease transactions. These entities alsohave finance lease agreements with third parties. These are leases primarily for machi-nes, equipment, furniture and fixtures, and vehicles.

Reconciliation of the total gross investment to the present value of finance leases – lessor:

The finance leases are mainly hire-purchase arrangements or full payout lease agreementswith a maximum term of over 90% of the leased assets’ estimated useful life. The con-tracts can only be terminated for due cause for which the counterparty is responsible.Upon expiration, the contracts offer a right of purchase or a guaranteed purchase price.Thus the lessor generally has no guaranteed residual value.

As in the prior year, no valuation allowances were recognized in the fiscal year for uncollec-tible outstanding minimum lease payments.

Total lease installments

(gross total investments

in the lease)

Lease installments already received

Lease installments (future

minimum lease payments)

thereof: already forfeited

lease installments

Unearned finance income

Present value of the outstandingminimum lease payments


2.4

1.5

0.1

0.8

2007

2.0

1.9

0.0

0.1

2006

61.9

49.3

1.6

11.0

2007

81.1

65.2

1.8

14.1

2006

38.4

32.2

1.5

4.7

2007

48.1

40.2

1.8

6.2

2006

176.4

73.7

102.7

83.0

3.2

16.5

2007

224.9

93.7

131.2

107.3

3.6

20.4

due in more than 60 months

due in 13 to 60 months

due within 12 monthsDecember 31,

155


NO

TE

S

[6] Related parties

Basically, related parties are members of the Würth family, key management personnel(members of the Würth Group’s Central Managing Board and Executive Board), mem-bers of the Advisory Board of the Würth Group, the Management Board of the WürthGroup’s Family Trusts, the Supervisory Board of the Würth Group’s Family Trusts andclose family members of the aforementioned group of persons. Related parties alsoinclude the family trusts. Related party transactions were all conducted at arm’s length.

In the fiscal year 2007, payments of EUR 197.4 million (2006: EUR 128.2 million) weremade to members of the Würth family and the family trusts for distributions and usu-fructuary rights. Of the payments made, an amount of EUR 59.9 million was paid back asa capital contribution (2006: EUR 97.0 million).

The transactions and interest income and expenses listed below were effected betweenthe Würth Group and the Würth family:

The following receivables and liabilities arose from these transactions:

Purchased services

Services rendered

Interest expenses

Interest income

Lease/rental expense


0.0

0.0

2.3

0.7

0.6

2007

1.5

0.7

2.5

2.5

0.7

Loan receivables


Other assets

Loan liabilities

Other liabilities


0.0

3.7

0.0

32.1

0.0

2007

15.5

2.3

0.5

0.4

1.7

156

The transactions and interest income and expenses listed below were effected betweenthe Würth Group and members of the Central Managing Board, the Executive Board aswell as the Management Board and the Supervisory Board of the Würth Group’s FamilyTrusts and the Advisory Board of the Würth Group:


The receivables and liabilities from financial services are subject to market interestrates.

In addition, close family members of key management personnel received wage andsalary payments of EUR 0.9 million in 2007 (2006: EUR 1.3 million). In addition,there are receivables from financial services amounting to EUR 0.2 million (2006:EUR 0.0 million) due from this group of persons and loan liabilities of EUR 1.1 mil-lion (2006: EUR 0.0 million) due to them.

The interest income and expenses listed below were transacted between the WürthGroup and the family trusts:


The receivables and liabilities are subject to market interest rates.

Loan receivables

Other receivables

Loan liabilities



34.7

5.5

0.0

0.0

2007

1.0

0.0

107.7

10.5

Interest income

Interest expenses


0.6

0.8

2007

0.9

1.2

Purchased services and other assets

Interest expenses

Interest income

Lease/rental expense

Remuneration of the Management Board and Supervisory Board

of the Würth Group’s Family Trusts, the Advisory Board


0.7

0.0

0.0

4.3

3.5

2007

1.0

0.3

0.1

3.6

3.6




0.5

0.6

2007

1.0

0.5

157


NO

TE

S

[7] Compensation of key management personnel

Individual members of the Central Managing Board and the Executive Board have a rightto pension benefits with a total present value of EUR 7.5 million as of December 31, 2007(2006: EUR 7.6 million). Former members and their surviving dependants are also entit-led to benefit payments. The present value of these benefit obligations totaled EUR 4.3million as of December 31, 2007 (2006: EUR 4.0 million).

[8] Government grants

The Würth Group received government grants of EUR 6.9 million in the form of invest-ment subsidies for infrastructure projects (2006: EUR 8.1 million). EUR 4.7 million thereof (2006: EUR 5.1 million) was deducted from the assets’ carrying amounts andEUR 2.2 million (2006: EUR 3.0 million) was immediately recognized in profit or loss.

[9] Subsequent events

As of January 3, 2008, the Würth Group acquired 100% of the Danish trading companyArvid Nilsson A/S. The Arvid Nilsson Group, domiciled in Hvidvore near Copenhagen,trades in assembly and fastening materials in Scandinavia, with a focus on industrialcustomers and resellers. The preliminary purchase price was EUR 72.0 million.

On January 8, 2008, the Würth Group acquired the U.S. trading company Marine Faste-ners Inc. domiciled in Sanford, Florida, USA, and other locations in Indiana, Missouriand Wisconsin. Marine Fasteners Inc. is a specialist for stainless steel fastening materialsused primarily in shipping and shipbuilding. The purchase price was EUR 12.2 million.

The purchase price allocation cannot be finalized for the acquisitions made sinceJanuary 1, 2008 until after conversion of the group’s internal reporting of the acquiredentities to IFRS. This process is still underway.

The Würth Group issued a promissory note loan of EUR 150.0 million with a term tomaturity of five years on March 19, 2008 to finance corporate growth.

As of April 16, 2008, Joachim Kaltmaier will become a member of the Central ManagingBoard of the Würth Group. He will be in charge of finance and accounting. He succeedsDr. Roland Hartmann, who is leaving the company of his own volition on April 30, 2008.

Short-term employee benefits

Post-employment benefits

Termination benefits

Total


19.8

0.4

2.1

22.3

2007

19.2

0.7

0.3

20.2

158

[10] Exemption from the duty of partnerships and stock corporations to prepare financialstatements

The following German group entities organized as partnerships made use of the exemp-tion clause according to Sec. 264b HGB for the fiscal year 2007:

Entity Registered office

Adolf Menschel Verbindungstechnik GmbH & Co. KG


AHS Autohaus und -Service GmbH & Co. KG

Arnold & Shinjo GmbH & Co. KG

Arnold Umformtechnik GmbH & Co. KG

Atrion GmbH & Co. KG

Baier & Michels GmbH & Co. KG

Conmetall GmbH & Co. KG

Conpac GmbH & Co. KG

dress + safe GmbH & Co. KG

ENZINAS Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs KG

GAVIA Grundstücksverwaltungsgesellschaft mbH & Co. Objekte Ratingen und Ingolstadt OHG

Glessdox GmbH & Co. KG

Hommel Hercules-Werkzeughandel GmbH & Co. KG

IVT Installations- und Verbindungstechnik GmbH & Co. KG

LOGO Grundstücksverwaltungs-GmbH & Co. OHG

Marbet Marion & Bettina Würth GmbH & Co. KG

Marbet Reiseservice GmbH & Co. KG

Mepla-Werke Lautenschläger GmbH & Co. KG

Panorama Grundstücksverwaltung mbH & Co. Objekt Waldenburg oHG

Pirus Grundstücksverwaltungsgesellschaft mbH & Co. OHG

Reca Norm GmbH & Co. KG

Sartorius Nachf. GmbH & Co. KG

Schössmetall GmbH & Co. KG

Siller & Laar GmbH & Co. KG

Sonderschrauben Güldner GmbH & Co. KG

Sonderschrauben Hamburg GmbH Eiben & Co.

SWG Schraubenwerk Gaisbach Besitz-GmbH & Co. KG

Swiridoff Verlag GmbH & Co. KG

Teudeloff GmbH & Co. KG

Tunap Deutschland Vertriebs GmbH & Co. Betriebs KG

Tunap Industrie Chemie GmbH & Co. Produktions KG

Uni Elektro Fachgroßhandel & Co Grundstücksverwaltungsgesellschaft OHG

Plettenberg

Künzelsau

Ingelfingen

Forchtenberg

Forchtenberg

Wolpertshausen

Ober-Ramstadt

Celle

Celle

Oberhausen

Mainz

Mainz

Bad Mergentheim

Viernheim

Rohr

Grünwald

Künzelsau

Künzelsau

Reinheim

Göppingen

Grünwald

Kupferzell

Ratingen

Freilassing

Augsburg

Niederstetten

Hamburg

Waldenburg

Künzelsau

Waldenburg

Wolfratshausen

Wolfratshausen

Eschborn

159


NO

TE

S

UNI ELEKTRO Fachgroßhandel GmbH & Co. KG

Wagener & Simon WASI GmbH & Co. KG

Waldenburger Beteiligungen GmbH & Co. KG

WLC Würth-Logistik GmbH & Co. KG

Werkzeugtechnik Niederstetten GmbH & Co. KG

Würth Beteiligungs-GmbH & Co. KG

Würth Elektrogroßhandel GmbH & Co. KG

Würth Elektronik Rot am See GmbH & Co. KG

Würth Elektronik eiSos GmbH & Co. KG

Würth Elektronik GmbH & Co. KG

Würth Elektronik ICS GmbH & Co. KG

Würth Elektronik Pforzheim GmbH & Co. KG

Würth Elektronik Schopfheim GmbH & Co. KG

Würth GmbH & Co. KG Grundstücksgesellschaft

Würth Immobilien-Leasing GmbH & Co. KG

Würth Industrie Service GmbH & Co. KG

Würth IT International GmbH & Co. KG

Würth TeleServices GmbH & Co. KG

Würth Leasing GmbH & Co. KG

Würth MODYF GmbH & Co. KG

Würth Nippon GmbH & Co. KG

Würth Solar GmbH & Co. KG

Würth-Kirsch GmbH & Co. KG Finanzdienstleistungen


Eschborn

Wuppertal

Künzelsau

Künzelsau

Niederstetten

Künzelsau

Künzelsau

Rot am See

Waldenburg

Niedernhall

Öhringen

Pforzheim

Schopfheim

Künzelsau

Göppingen

Bad Mergentheim

Bad Mergentheim

Künzelsau

Göppingen

Künzelsau

Künzelsau

Schwäbisch Hall

Künzelsau

160

The following German group entities organized as corporations made use of the exemptionclause according to Sec. 264 (3) HGB for the fiscal year 2007:

AHD Auto-Hifi & -Design GmbH

comgroup Gesellschaft für Systemintegration mbH

DIY World GmbH Sortimente und Service

Flugplatz Schwäbisch Hall GmbH

HAHN+KOLB Werkzeuge GmbH

John & Molt GmbH

KERONA GmbH

Panorama Hotel und Service GmbH

PORTOLAN Commerce Solutions GmbH

Reinhold Würth Holding GmbH

Schmitt Elektrogroßhandel GmbH

UNI ELEKTRO Handels- und Beteiligungs-GmbH

WOW! Würth Online World GmbH


Ingelfingen

Bad Mergentheim

Wuppertal

Schwäbisch Hall

Stuttgart

Glinde

Ingelfingen-Criesbach

Waldenburg

Ilsfeld

Künzelsau

Fulda

Eschborn

Künzelsau

161


NO

TE

S

The consolidated cash flow statement shows how the group’s cash has changed in thecourse of the reporting year as a result of cash received and paid. The effects of acquisiti-ons and other changes in the consolidated group have been eliminated. When purchasedsubsidiaries are included for the first time, only the actual cash flows are shown in thecash flow statement. In accordance with IAS 7 (Cash Flow Statements), a distinction ismade between cash flows from operating, investing and financing activities. Cash andcash equivalents in the cash flow statement consist of cash on hand and bank balances aswell as highly liquid short-term investments.

The effects of acquisitions and other changes in the consolidated group on the cash flowstatement have been considered separately. We refer to Section C, “Consolidated group”.

--J. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT--

The list of shareholdings of the Würth Group is published in the electronic federalgazette (“Bundesanzeiger”) as an attachment to these consolidated financialstatements.

--K. SHAREHOLDINGS--

162

Central Managing Board

The Central Managing Board – comparable to the management board of a group holding– is the most senior decision-making board of the Würth Group and comprises fivemembers. Its most important duties include corporate strategy planning, the selectionof executives as well as the management of strategic business units and functions.

Robert Friedmann Chairman of the Central Managing Board of the Würth Group

Rolf Bauer Deputy Chairman of the Central Managing Board of the Würth Group

Prof. Dr. Harald Unkelbach Member of the Central Managing Board of the Würth Group

Dr. Roland Hartmann Member of the Central Managing Board of the Würth Group (until April 15, 2008)

Dr. Reiner Specht Member of the Central Managing Board of the Würth Group

Joachim Kaltmaier Member of the Central Managing Board of the Würth Group (since April 16, 2008)

Advisory Board

The Advisory Board is the supreme supervisory and controlling body of the Würth Group.It advises on strategy, approves corporate planning as well as the use of funds. It appointsthe members of the Central Managing Board, of the Executive Board as well as themanaging directors of the companies generating high sales.

Bettina Würth Chairwoman of the Advisory Board,Künzelsau-Gaisbach

Dr. Bernd Thiemann Deputy Chairman of the Advisory Board,Partner Leonardo & Co. GmbH & Co. KG, Frankfurt/Main

Peter Edelmann Member of the Management Board of Voith AG,Heidenheim

Hans G. Güldenberg Member of the Supervisory Board of Brauns-Heitmann, Warburg

--L. THE BOARDS OF THE COMPANY --

163


NO

TE

S

Dr. Frank Heinricht Vice Chairman of the Board of Management of Heraeus Holding GmbH, Hanau

Axel C. A. Krauss Member of the Supervisory Board of Unilever Deutschland, Hamburg

Dr. Bernd-Albrecht von Maltzan Divisional Board Member Private Wealth Management Deutsche Bank AG, Frankfurt/Main

Dr. Martin H. Sorg Certified Public Accountant, Partner of the law firm Binz & Partner, Stuttgart

Dr. h. c. Uwe Zimpelmann Former spokesman of the Management Board ofLandwirtschaftliche Rentenbank, Frankfurt/Main

Honorary Chairman of the Advisory Board

Prof. Dr. h. c. mult. Reinhold Würth Chairman of the Supervisory Board of the Würth Group’s Family Trusts, Künzelsau-Gaisbach

Honorary Member of the Advisory Board

Dr. Michael Rogowski Chairman of the Supervisory Board of Voith AG, Heidenheim

Executive Board

The 20 members of the Executive Board as of December 31, 2007 constitute the operationalmanagement of the Group and are each in charge of one strategic business unit.

Michael Coffey Würth Line UK, Ireland, Scandinavia (without Finland), Würth South Africa(until March 31, 2008)

Jürgen Graf Logistics

Helmut Gschnell Würth Line Italy, Würth Albania,Specialists in Italy

Bernd Herrmann Information Technology

164

Michel Kern Würth International AGCentral Purchasing

Jürgen Klohe/Jörg Murawski Würth Elektronik Group

Jürg Michel Finance

Svein Oftedal Würth Line UK, Ireland, Scandinavia (without Finland), Würth South Africa(since April 1, 2008)

Juan Ramírez Würth Line Spain, France, Central and South America

Wolfgang Rampmaier Industry Division (Würth Line), Tools Trade (since January 1, 2008 Deputy Member of the Central Managing Board)

Pentti Rantanen Würth Group Finland and Baltic Countries

Werner Rau Purchasing, Standard/DIN Parts and Stainless Steel

Peter Schneider reca Group

Hans Sigrist Würth Line Switzerland,Oceania and Sub-region Asia

Robert Stolz Würth Line Auto USA,Würth Line Wood USA and Canada

Zekeriya Uluca Würth Line Turkey and Sub-region Asia

C. Sylvia Weber Director of the Museum/Kunsthalle Würth,Curator of the Würth Collection

Alois Wimmer Production of Screws, Dowels and Plugs

Markus Würth Wood Division (Würth Line), Construction Division (Würth Line),Belgium, Netherlands, Portugal (Würth Line)

Peter Zürn Chairman of Adolf Würth GmbH & Co. KG,Auto Division (Würth Line), Sales

Künzelsau, April 3, 2008

The Central Managing Board of the Würth Group

165


NO

TE

S

--AUDIT OPINION OF THE GROUP AUDITOR--

The following audit opinion was issued by the group auditor on the full consolidated finan-cial statements including the list of shareholdings and the group management report:

“We have audited the consolidated financial statements prepared by the Würth Group, Kün-zelsau, comprising the consolidated income statement, the consolidated balance sheet, theconsolidated cash flow statement, the consolidated statement of changes in equity and thenotes to the consolidated financial statements, together with the group management reportfor the fiscal year from January 1, 2007 to December 31, 2007. The preparation of the consoli-dated financial statements and the group management report in accordance with IFRSs asadopted by the EU, and the additional requirements of German commercial law pursuant toSec. 315a (1) HGB [“Handelsgesetzbuch”: German Commercial Code] is the responsibility ofthe group management of the Würth Group. Our responsibility is to express an opinion onthe consolidated financial statements and on the group management report based on ouraudit. In addition we have been instructed to express an opinion as to whether the consolida-ted financial statements comply with full IFRS.

We conducted our audit of the consolidated financial statements in accordance with Sec. 317HGB and German generally accepted standards for the audit of financial statements promul-gated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).Those standards require that we plan and perform the audit such that misstatements materi-ally affecting the presentation of the net assets, financial position and results of operations inthe consolidated financial statements in accordance with the applicable financial reportingframework and in the group management report are detected with reasonable assurance.Knowledge of the business activities and the economic and legal environment of the groupand expectations as to possible misstatements are taken into account in the determination ofaudit procedures. The effectiveness of the accounting-related internal control system and theevidence supporting the disclosures in the consolidated financial statements and the groupmanagement report are examined primarily on a test basis within the framework of the audit.The audit includes assessing the annual financial statements of those entities included inconsolidation, the determination of entities to be included in consolidation, the accountingand consolidation principles used and significant estimates made by management, as well asevaluating the overall presentation of the consolidated financial statements and the groupmanagement report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statementscomply with IFRSs as adopted by the EU, the additional requirements of German commerciallaw pursuant to Sec. 315a (1) HGB and full IFRS and give a true and fair view of the net assets,financial position and results of operations of the group in accordance with these require-ments. The group management report is consistent with the consolidated financial state-ments and as a whole provides a suitable view of the group’s position and suitably presentsthe opportunities and risks of future development.”

Stuttgart, April 3, 2008

Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

signed by signed byElkart Dr. WellerWirtschaftsprüfer Wirtschaftsprüfer[German Public Auditor] [German Public Auditor]

166

Published by


for the Würth Group

D-74650 Künzelsau, Germany

Contact details

Press and Public Relations

Phone +49 7940 15-1186

Fax +49 7940 15-4400

[email protected]

Content responsibility

Robert Friedmann

Editorial responsibility and coordination

Joachim Bachner, Silke Hofmann, Sarah Meckel, Ralf Schaich, Sigrid Schneider, Martina Skibowski, Mara Wawer, Claudia Zürn

Design

Hilger & Boie GmbH

Büro für Gestaltung, Wiesbaden

Typesetting and lithography

Scanner GmbH Künzelsau

Edited by

Lorie Burns, Ina Christov

Printed by

Firmengruppe APPL, aprinta druck, Wemding

© Würth Group, Künzelsau

© Georg Baselitz

© Nolde Stiftung Seebüll for the work of Emil Nolde

© Succession Picasso/VG Bild-Kunst, Bonn 2008 for the work of Pablo Picasso

© The Munch Museum/The Munch Ellingsen Group/VG Bild-Kunst, Bonn 2008 for the work of Edvard Munch

Printed in Germany. All rights reserved. May not be reproduced, in part or in whole, without prior consent.

Photo credits

Wernhild Baars (p. 59)

Tiny Bogaerts (p. 62)

Reinhold Brütting (p. 64)

David Chipperfield Architects (p. 62)

Steven Cuypers (p. 19)

Marc Darchinger (p. 66)

Ralph Feiner (p. 63)

Andreas Körner (p. 51)

Volker Naumann (p. 65)

Werner Palmert (p. 58)

Sven Paustian (pp. 5–23)

Scanner GmbH (pp. 52, 54–56, 70–82)

Julia Schambeck (p. 62)

Andi Schmid (pp. 24, 31, 34, 60, 63, 67)

Würth Archive (pp. 58, 63, 64, 92, 93)

The editorial team would like to thank the many colleagues who helped prepare this annual report.

This annual report is published in German and English.

Both versions are available on the internet at www.wuerth.com, together with additional information about the Würth Group.

1GFP-MWK-BG-SC-APPL-5.5’-05/08

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