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Annual Report Carl Zeiss Group2003/04
Carl Zeiss is an international group of companies which is a globalleader in the optical and opto-electronic industry. The Carl ZeissGroup is systematically and consistently managed according to theprinciples of ongoing corporate value enhancement. The Group offersproducts and services for the three strategic growth fields of bio-medical sciences and healthcare, consumer goods, and system solu-tions for industrial markets. The various fields of corporate activityare organized into six business groups, each of which is responsiblefor its own operations within the Group. These business groups aregenerally one of the top two performers in their markets. Between1994 and 2004, Carl Zeiss grew by an average of five percent a yearsolely through its own efforts and successfully improved its balancesheet performance. ZEISS brand products stand for technologicalprogress and outstanding quality. Customer orientation and leading-edge technology are the keys to this success.
Systematic efforts to promote the ongoing value-oriented develop-ment of the Group are continuing. This process, which is clearly stipulated in the corporate Vision and is binding upon all units, is being implemented worldwide in six corporate projects.
Carl Zeiss is a stock corporation which is wholly owned by the CarlZeiss Stiftung (Carl Zeiss Foundation). The Carl Zeiss Stiftung iscommitted to promoting the interests of its member companies,fulfiling special social responsibilities, supporting the optical andprecision engineering industries and cultivating research and education.
Table of Contents
Foreword from the Board of Management 5
Report from the Supervisory Board 8
Management Report of the Carl Zeiss Group 10
Research and Technology 20
Human Resources 24
Environmental Protectionand Health & Safety 28
Business Groups
Semiconductor Technology 30
Medical Systems 36
Consumer Optics 42
Microscopy 48
Industrial Metrology 54
Opto-Electronic Systems 60
Highlights of the Fiscal Year 66
Carl Zeiss AG
Board of Management 74
Supervisory Board 75
Major Affiliated and Associated Companies 77
Consolidated Financial Statements of the Carl Zeiss Group
Consolidated Balance Sheet 82
Statement of Changes in Consolidated Equity 84
Fixed Asset Movement Schedule 86
Consolidated Statement of Income 88
Consolidated Cash Flow Statement 89
Notes to the Consolidated Financial Statements 90
Cover photo:
Clear optics for better visibility:
Eyeglass lenses coated with LotuTec® repel dirt
and liquids – just like a lotus leaf
Carl Zeiss Group
2001/02 2002/03 2003/04
million EUR % million EUR % million EUR %
Net sales 2,257 100 2,029 100 2,135 100
Domestic (Germany) 433 19 447 22 425 20
Foreign 1,824 81 1,582 78 1,710 80
Net income for the year 106 5 16 1 77 4
Income taxes 41 1 33 1 52 2
Net income before taxes 147 6 49 2 129 6
Depreciation, amortization and write-downson fixed assets and investments,net of post-capitalization/write-ups 91 4 126 6 97 4
Change in the provisions for pension plansand other long-term provisions 43 2 17 1 36 2
Change in special items with an equity portion –1 – –2 – – –
Adjustment for unusual income and expensesand those not affecting cash flow – – – – 2 –
Cash flow before income taxes1) 280 12 190 9 264 12
Personnel expenses 848 38 823 41 848 40
Total assets 1,930 100 1,823 100 2,094 100
Tangible assets 395 20 364 20 362 17
Capital expenditures 138 105 81
Depreciation and amortization 89 114 97
Inventories 418 22 400 22 396 19
Equity 309 16 338 19 420 20
Equity and long-term provisions2) 1,166 60 1,219 67 1,337 64
Net liquid assets3) 387 525 672
Number of employees on balance sheet date 14,702 14,151 13,667(September 30)
1) Determined following the recommendations of the German Financial Analysis Association/Schmalenbach-Gesellschaft2) Equity, provisions for pension plans, etc.3) Funds net of loans and liabilities to banks
Financial HighlightsGerman Commercial Code (HGB)
A time for new departures: with
the business success achieved in
fiscal year 2003/04, the Carl Zeiss
Group created a basis for further
growth. After the conversion to a
stock corporation, Carl Zeiss AG
now has access to new courses of
action in its international business
5
Ladies and Gentlemen,
Dear Business Partners,
The Carl Zeiss Group looks back on a success-
ful 2003/04 fiscal year. The pleasing year-end
figures include a healthy growth in revenues,
an operating result almost double that
reported last year and a substantial rise in
corporate value. A new era in the history of
Carl Zeiss – the first year as a stock corpora-
tion – has gotten off to a good start.
Our success reflects the trust placed in us by
our customers, and this trust is an incentive
for us to become even better in the future.
With innovative products and services, we
aspire to offer our customers even more
benefits. By implementing new business ideas
and opening up new fields of application, we
aim to provide additional customers with our
leading edge technologies. We plan to make
Carl Zeiss know-how accessible to new target
groups all over the world by means of license
agreements. Through strategic alliances and
targeted acquisitions, we are laying the foun-
dations for the Carl Zeiss Group to venture
into new dimensions in the years ahead.
We have an ideal starting position to achieve
these objectives. The business groups are
generating healthy earnings, and they are all
playing their part in enhancing corporate
value. This is the result of consistent, deter-
mined efforts focused on value enhancement.
We are convinced that the Carl Zeiss Group is
correctly poised for the future and that it will
rise successfully to the increasingly tough
challenges facing it in the competitive arena.
Our efforts will be focused on expanding our
position as a technology leader. We have once
again increased our spending on research
and development. We invest ten percent of
revenues in opportunities for future success.
This is an outstanding ratio as compared to
other high-tech corporations.
In the future, we will place more emphasis
on faster growth. This is necessary to coun-
teract mounting global competition. We aim
to grow to a size that will allow us to achieve
market positions with which we can expand
our technological capabilities in the long
term. During the reporting year we success-
fully strengthened some of our business
groups by means of acquisitions and new
partnerships. Further additions to our busi-
ness fields are in the pipeline.
Carl Zeiss Group in 2003/04 –
On Track to New Growth
Carl Zeiss GroupForeword from the
Board of Management
“We will find the balancebetween short-term and
long-term economicthinking, act fast and see
changes as opportunities.”
From the Carl Zeiss Vision
Carl Zeiss GroupForeword from the 6Board of Management
The aspirations we are pursuing in this
process are derived from our corporate Vision
which defines the mission of Carl Zeiss:
“Since pioneering science in optics, we con-
tinue to challenge the limits of man’s imagi-
nation. With our passion for excellence, we
create value for our customers and inspire
the world in new ways.”
This mission inspires and motivates us to set
sail for new shores.
We view fiscal year 2004/05 with confidence.
We know that forecasts are becoming more
and more difficult to make. This applies not
only to the economy, exchange rates and raw
material costs, but also to the global political
development. One thing is certain, however:
performance, speed and flexibility will win
the day every time. It will become increasing-
ly hard to be and stay one of the best. We
will rise to this challenge with eager anticipa-
tion and confidence.
Dr. Norbert GornyDr. Dieter Kurz Dr. Michael Kaschke
We would like to thank our customers and
business partners for the success accomplished
in the past years. Their trust and ideas repre-
sent an important acknowledgement of our
achievements and motivate us to do even
better in the future.
Our special thanks go to our employees for
their exceptional dedication, commitment
and their determination to support the
process of change in the company on the
road to further growth. The skills and abilities
of our employees are the key to our success.
Together with our employees, we look for-
ward to rendering special services to our
customers in 2004/05.
7
Dr. rer. nat. Norbert Gorny
Member of the Board responsible for
Microscopy, Opto-Electronic Systems,
the Service Centers, Information
Technology, Central Procurement,
Quality and Processes.
Born in Schweinfurt, Germany in 1963.
1984 – 1989 Studies in biology at the
Universities of Marburg, Tübingen and
Rome. 1990 – 1993 Doctorate in
Tübingen and Constance, where he
was also a member of the scientific
staff from 1990 to 1994. 1994 – 1998
Consultant at McKinsey & Company,
Inc., Stuttgart. 1998 Joined Carl Zeiss
as Vice President and General Manager
in the Light Microscopy Division.
1999 Executive Vice President and
General Manager in the Microscopy
Group and Manager of the Göttingen
plant. Member of the Board since
January 1, 2001.
Dr. sc. nat. Michael Kaschke
Member of the Board responsible for
Consumer Optics, Medical Systems,
Corporate Finance/Controlling, and
Research and Technology.
Born in Greiz, Germany in 1957.
1979 – 1983 Studies of physics at the
Friedrich Schiller University in Jena.
Subsequently scientific assistant,
doctorate, guest scientist at the Max
Planck Institute, Göttingen and mem-
ber of the scientific staff at IBM, USA.
1992 Joined Carl Zeiss in Oberkochen,
1998 Vice President and General
Manager, Surgical Products Division,
1999 Executive Vice President and
General Manager in the Medical
Systems Group. Member of the
Board since October 1, 2000.
Dr. rer. nat. Dieter Kurz
President and Chief Executive Officer,
Labor Director, Member of the Board
responsible for Semiconductor Technol-
ogy, Industrial Measuring Technology,
Strategic Corporate Development,
Corporate Communications, Corporate
Human Resource Management, Corpo-
rate Auditing, and Legal Affairs and
Patents.
Born in Tübingen, Germany in 1948.
1969 – 1974 Studies of physics at the
Eberhard Karls University in Tübingen.
1979 Doctorate in the field of semicon-
ductor and electron beam technology.
1979 Joined Carl Zeiss. Management
positions in research/development,
marketing/sales and general manage-
ment, including two years in North
America. Vice President and General
Manager, Semiconductor Technology
Division and Executive Vice President
and General Manager, Semiconductor
Technology Group. 1999 Member of the
Board. President and Chief Executive
Officer of Carl Zeiss since January 1,
2001, President and CEO of Carl Zeiss
AG since September 6, 2004.
Carl Zeiss AGReport from the Supervisory Board 8
Report from the Supervisory Board
Tilman Todenhöfer
Chairman of the Supervisory Board
of Carl Zeiss AG
In this context, the former function of Com-
missioner was transferred to the Foundation
Council of the Carl Zeiss Stiftung (Chairman
Tilman Todenhöfer, other members Dr. Arend
Oetker, President of the Donors’ Association
for the Promotion of German Science and
Ludwig Georg Braun, President of the Asso-
ciation of the German Chambers of Industry
and Commerce) and to the Supervisory
Boards of the foundation enterprises. The
Foundation Council exercises the rights of
the general meeting of shareholders in both
stock corporations.
In view of this special situation, four meet-
ings of the former Advisory Board were
held during the reporting period and the
constituent meeting of the Supervisory Board
in September. In the period to December 31,
2003, the then Commissioner of the
Carl Zeiss Stiftung Dr.-Ing. E.h. Heinz Dürr
supervised the work of the Advisory Board.
Ladies and Gentlemen,
This is the first report from a chairman of the
Supervisory Board in the history of Carl Zeiss.
Due to the retroactive conversion of the
company in July, Carl Zeiss has prepared its
balance sheet for the entire 2003/04 fiscal
year as a stock corporation. This conversion
marks the successful conclusion of a process
driven forward with commitment and deter-
mination by the former Commissioner of the
Carl Zeiss Stiftung Dr.-Ing. E.h. Heinz Dürr
together with the various organs of the Carl
Zeiss Stiftung.
With entry of the stock corporation in the
commercial register on July 1, 2004, the new
constitution of the Carl Zeiss Stiftung allow-
ing the conversion of its member enterprises
also came into effect. The operating enter-
prise SCHOTT Glas was simultaneously trans-
formed into the stock corporation SCHOTT
AG, Mainz. The Carl Zeiss Stiftung will remain
the sole owner of both stock corporations.
With retroactive economic effect to the
beginning of the fiscal year, i.e. October 1,
2003, the conversion of the operating
enterprise Carl Zeiss to a stock corporation
was undertaken on July 1, 2004. The Super-
visory Board was appointed in August 2004
on the basis of codetermination.
9
report will not follow until the planned
changeover of the consolidated financial
statements to International Financial Report-
ing Standards in the financial statements for
fiscal year 2005/06. The Supervisory Board
accepts the results of the audit. The financial
statements have hence been approved. The
Supervisory Board has endorsed the Board of
Management’s proposal for the appropria-
tion of the year’s profit.
The Chairman and members of the Super-
visory Board would like to thank the Board
of Management and all employees for their
committed and dedicated work. This was
the key factor contributing to the success
achieved by the Carl Zeiss Group during the
fiscal year.
Stuttgart, December 2004
On behalf of the Supervisory Board
Tilman Todenhöfer
Chairman
The Advisory and Supervisory Boards received
extensive information about corporate plan-
ning, the position of the company and the
course of business. The Commissioner of the
Stiftung and the Supervisory Board regularly
advised the Board of Management in the
performance of its duties and monitored the
conduct of business. All transactions of im-
portance for the company were discussed in
detail. In its new legal form, Carl Zeiss AG is
well poised to meet the challenges of inter-
national competition. Clear, internationally
recognized structures lay the foundation for
the transparency and flexibility required in
today’s world.
Carl Zeiss AG reported a pleasing trend in the
reporting year. The company has underlined
its efficiency and has substantially strength-
ened its financial position and corporate
value. Major business decisions during this
period concerned investments and acquisi-
tions aimed at strengthening the company’s
technological position in the fields of micro-
scopy, semiconductor technology and medical
systems.
The PricewaterhouseCoopers GmbH auditing
company in Stuttgart, Germany, audited the
annual financial statements of Carl Zeiss AG,
the consolidated annual financial statements
of the Carl Zeiss Group and the management
report. The audit received an unqualified
report with the exception of one segment
report for the Carl Zeiss Group. The segment
New Structure
The current annual report describes the busi-
ness development of the Carl Zeiss Group in
fiscal year 2003/04 (at balance sheet date on
September 30). The Group consists of Carl
Zeiss AG, Oberkochen, and a number of sub-
sidiaries in Germany and abroad.
A major change was made to the Group’s
legal structure during the reporting period.
With retroactive economic effect to October 1,
2003, Carl Zeiss was transformed into the
stock corporation Carl Zeiss AG by entry in
the commercial register on July 1, 2004. The
sole owner of Carl Zeiss AG, which has a
capital stock of EUR 120 million, is the Carl
Zeiss Stiftung (Foundation).
Upon entry of the new enterprise in the com-
mercial register on July 1, 2004, the new sta-
tutes of the Carl Zeiss Stiftung also came into
effect, completing the transition from a foun-
dation with primarily commercial activities to
one acting as a shareholder. This enabled the
conversion of the operating enterprises of the
Carl Zeiss Stiftung into stock corporations. At
the same time, SCHOTT Glas, the other enter-
prise within the Carl Zeiss Stiftung, was trans-
formed into the stock corporation SCHOTT AG,
Mainz.
Carl Zeiss GroupCorporate Management Report 10
Substantial Increase in Earnings and Corporate Value
1999/00 2000/01 2001/02 2002/03 2003/04
Revenue
Outside Germany 81%
in EUR millions
78%
2,257
81%
2,056 2,029 2,135
79%
1,998
80%
“We act fastand
see changes asopportunities.”
From the Carl Zeiss Vision
General Scenario
The Carl Zeiss Group looks back on a success-
ful 2003/04 year. Revenues and incoming
orders were clearly above the previous year’s
figures. Business received major momentum
from the upturn in the semiconductor indus-
try. The unfavorable currency development
relative to the dollar prevented a further
increase in revenues, particularly as the share
of business with the USA and Mexico re-
mained at a high level. All in all, the business
trend surpassed budget projections, with a
marked improvement in the profits generated
by the Carl Zeiss Group.
Portfolio Structure Stands the Test
The Carl Zeiss Group is well positioned in the
strategic growth fields of bio-medical sci-
ences and healthcare, consumer goods and
system solutions for industry. In addition to
the favorable development for suppliers of
the semiconductor industry, there were good
business opportunities for modern digital
projection technology and optronics systems.
Sales of medical systems increased, but no
growth was achieved because of the unfavor-
able trend in currency relations. The nega-
tive market development in the eyeglass lens
business due to healthcare reforms in Ger-
many was partly offset by prior purchases by
11
Operating result
1999/00 2000/01 2001/02 2002/03 2003/04
in EUR millions13064176172120
consumers in the first quarter of the fiscal
year before enactment of the changes. In
the field of capital goods for the automobile
industry and mechanical engineering, the
downturn appeared to have come to a halt
towards the end of the fiscal year. After
adjustment for currency influences, the
Microscopy Group successfully asserted its
position in the market.
Revenues Increased
The revenues generated by the Carl Zeiss Group
rose considerably to EUR 2,135 million, five
percent more than last year. After adjustment
for currency effects – primarily due to the US
dollar and the Japanese yen – this increase
totaled eight percent. The volume of sales
generated outside Germany increased by two
percentage points to 80 percent. The largest
growth in sales was posted by the Semicon-
ductor Technology Group with an increase of
25 percent. Considerable growth was also
recorded by the Opto-Electronic Systems
Group. The other business groups remained
below last year’s level. With a volume of EUR
2,234 million, an increase of 13 percent over
last year, incoming orders showed an even
stronger upward trend than revenues.
Strong Improvement in Profits
The favorable business trend led to a marked
improvement in profits. Virtually all business
groups increased their contribution to the
overall profits of the Carl Zeiss Group. The
measures initiated the previous year to en-
hance cost structures have aided this trend.
The Carl Zeiss Group recorded overall profits
of EUR 130 million, almost double the
value reported last year (EUR 64 million).
The result from ordinary business operations
increased from EUR 52 million the previous
year to EUR 133 million. Net annual income
amounted to EUR 77 million (last year
EUR 16 million). This value would have been
even higher without the special expenditure
of EUR 33 million required for a cross-licens-
ing agreement providing the Semiconductor
Group with licensed access to the patent
portfolio of its competitor Nikon in the field
of optics for wafer steppers.
Carl Zeiss GroupCorporate Management Report 12
1999/00 2000/01 2001/02 2002/03 2003/04
Net annual incomein EUR millions
771610611053
ments initiated last year in Germany in the
Consumer Optics, Semiconductor Technology
and Microscopy (Jena site) Groups, in the
Oberkochen Service Center and in the Wetzlar
plant. For the most part, the decrease was
achieved by natural attrition or by measures
aimed at causing minimum social hardship.
Decreased Investments
Investments in plant, property and equip-
ment totaled EUR 81 million (last year EUR
105 million). Depreciations amounted to
EUR 97 million compared to the high figure
of EUR 114 million recorded the previous
year due to special depreciations in the Semi-
conductor Technology Group. Capital spend-
ing was once again concentrated on semi-
conductor technology, ophthalmic products
and the Oberkochen and Jena Service Centers.
Net Liquid Assets at Record Level
The substantial rise in earning power is also
reflected in the pre-tax cash flow. At EUR
264 million, the value exceeded last year’s
level (EUR 190 million) by a good third. This
is equivalent to 12 percent (last year 9 per-
cent) of revenues. There has been a further
strong rise in the net liquid assets of the Carl
Zeiss Group. After EUR 525 million the previ-
ous year, the record figure of EUR 672 million
was reached on the balance sheet date.
Corporate Value is Growing
The growth in corporate value paralleled the
rise in profits. On the basis of the financial
performance measure EVA® (Economic Value
Added), all six business groups achieved an
enhancement of their value and improved
their position compared to last year. Overall,
EVA® at Carl Zeiss grew to the very positive
number of EUR 42 million.
Further Increase in Equity
The Carl Zeiss Group has once again expand-
ed its equity in fiscal year 2003/04. The equi-
ty ratio increased by one percentage point to
20 percent. At the same time, there was an
increase in the funds available in the long
term (equity and long-term provisions) which,
with a figure totaling EUR 1,337 million (last
year EUR 1,219 million), accounted for about
64 % of the balance sheet total.
Manpower Reduced
On the balance sheet date, the Carl Zeiss
Group had a global workforce of 13,667
people (last year 14,151), including 3,984
outside Germany (last year 4,044). The drop
was largely attributable to capacity adjust-
13
“Carl Zeiss willbe regarded as the
most innovativecompany in its
fields of business.”From the Carl Zeiss Vision
Outside Germany
Employees
9.30.00 9.30.01 9.30.02 9.30.03 9.30.04
4,157
14,702
4,081
14,220
3,984
13,66714,151
4,0443,873
13,845
eyeglass lens fitting systems. The Industrial
Metrology Group launched its first measuring
machine for microsystems technology – the
Model F25. Other new products included op-
tical systems for rear projection TVs and the
Zeiss Ikon® camera featuring lenses in a new
performance category. With innovative
product ideas, the Research and Technology
division is systematically opening up new
business possibilities. In a structured new
business generation process, opportunities
are identified, and the most successful pro-
jects are then accompanied and supported to
the point of product maturity. One example
of such a project is the optical system of an
ultra-compact digital projector that was
transferred during the fiscal year to the
Display Technologies Division for its market
launch.
Portfolio Strengthened
One focal point of the growth-focused
strategy of the Carl Zeiss Group is the value-
oriented development of the corporate
portfolio. Carl Zeiss is shaping the corporate
structure for the future through the organic
growth of the existing divisions, the develop-
ment of new fields of business, the expansion
Roughly EUR 210 million is invested in special
mid-term funds managed according to a total
return approach, while the remainder is avail-
able in the short term.
Innovative Potential Strengthened
To expand its leading technological position
in the competitive arena, the Carl Zeiss
Group once again increased its investments
in innovation. With a total of EUR 209 million
(last year EUR 190 million), spending on
research and development reached a record
high. This corresponds to 10 percent of rev-
enues and underlines the Group’s aspiration
to expand its technology leadership and turn
it into tangible market success. This is reflect-
ed by the percentage of new products in
overall sales. In fiscal year 2003/04 the Carl
Zeiss Group generated roughly 43 % of its
revenue with products launched on the
market in the past three years. Examples of
the most important new products introduced
during the reporting period include immer-
sion lenses and an electron beam mask repair
device for semiconductor technology, the
OPMI Pentero® Surgical Microscope for neu-
rosurgery with digital visualization possibilities,
eyeglass lenses with the dirt-repellent and
easy-to-clean LotuTec® coating, and new
Carl Zeiss GroupCorporate Management Report 14
Investmentsin property, plant
and equipmentin EUR millions
1999/00 2000/01 2001/02 2002/03 2003/04
81138122 10593
“Customerorientation
is the keyto all our
activities.”From the Carl Zeiss Vision
confocal microscopy division of the Californian
company Bio-Rad Laboratories, Inc. This
provides Carl Zeiss with exclusive access to
femtosecond, two-photon microscopy, one
of the most important technological innova-
tions in the field of microscopy. Carl Zeiss has
also acquired a significant participation in its
US partner company Cellomics which special-
izes in automated systems for microscopic
screening in pharmaceutical research.
Meditec Expands its Software
Competence
Carl Zeiss Meditec AG has acquired the soft-
ware specialist hiko medical communications
GmbH, its collaboration partner of many
years’ standing. The company, now called
Carl Zeiss Meditec Systems GmbH, is focusing
its activities on the administration and archiv-
ing of diagnostic and treatment data in
ophthalmic hospitals and doctors’ offices.
Access to Lithographic Technology
Carl Zeiss SMT AG gained access to a new
lithographic technology for semiconductor
production by investing in the young US
company Molecular Imprints, Inc., Austin,
Texas.
In September 2004, the Semiconductor
Technology Group (Carl Zeiss SMT AG) and its
partner ASML agreed on an extensive exchange
of the licensing business and by acquisitions
and alliances. Important portfolio manage-
ment measures included the following:
Display Technologies Now a Division
In view of the dynamic development in the
field of digital projection, the former Display
Technologies business unit is now being
operated as an independent division. Business
with projectors and projection TV systems
also promises further growth possibilities in
the future.
Production Facility Opened in China
The customers of digital projection optics are
the manufacturers of entertainment electron-
ics and information technology. The major
suppliers in this field are concentrating an
increasing proportion of their production
capacities in China. Against this background,
the Display Technologies division opened a
production facility called Carl Zeiss Display
Technologies (Suzhou) Co., Ltd. near Shanghai
in May 2004.
Microscopy Expands its Operations
The Microscopy Group expanded its technol-
ogy spectrum by the acquisition of the
15
Cash flow (gross)in EUR millions
1999/00 2000/01 2001/02 2002/03 2003/04
of revenue
264
12%
280
12%
226
11%
190
9%
219
11%
of industrial rights (cross licensing) with its
main competitor Nikon in the field of instru-
ments for optical lithography. This agreement
regulates payments by ASML and SMT to
Nikon. Carl Zeiss SMT AG has now trans-
ferred the first installment of its total share of
USD 58 million (about EUR 48 million). Further
payments will be made in the period to 2007.
LEO Becomes ZEISS
In addition, the Semiconductor Technology
Group assigned its business with electron
beam technology, formerly part of the activi-
ties of the company LEO Elektronenmikrosko-
pie GmbH, to the ZEISS umbrella brand. This
business will now be conducted as the
Nanotechnology Systems Division under the
name Carl Zeiss NTS GmbH. The systems
previously marketed under the LEO brand will
now all bear the name ZEISS.
Ophthalmic Products Sharpens Focus
on India
On the high growth Indian market, the
Ophthalmic Products Division strengthened
its position by participating in the firm GKB
Hi-Tech Lenses Ltd. in Mapusa (Goa). From
the end of 2004, the subcontinent’s leading
manufacturer of prescription eyeglass lenses
will offer ZEISS lenses featuring leading edge
coatings for the first time. Carl Zeiss has the
option of increasing its investment in the
company.
Shares Acquired in South Korea
After Carl Zeiss acquired 49 percent of the
shares in the firm held by long-time local
partners, the sales organization in South
Korea is now a fully owned subsidiary of
the Carl Zeiss Group.
Brand Creates Value
The ZEISS brand owes its global presence and
recognition not only to products that the
company itself has manufactured. For more
and more international instrument manufac-
turers, the excellence and reputation of Carl
Zeiss products are an incentive to acquire
licenses. In this way, camcorders and digital
cameras from such manufacturers as Sony
and Kyocera are entering the market with
ZEISS lenses. Up to one million consumers all
over the world are opting for these products
every month. Constant quality monitoring
ensures that the company meets its aspiration
to provide superior optics. Opportunities for
license agreements are also offered by the
Carl Zeiss GroupCorporate Management Report 16
Net liquid assets
9.30.00 9.30.01 9.30.02 9.30.03 9.30.04
in EUR millions525387 672230218
market for mobile camera phones. The divi-
sion also signed an agreement with mobile
communications specialist Dialog Semicon-
ductor, based in Kirchheim/Teck, Germany, to
develop compact camera modules for mobile
telephones. The licensing business enhances
brand visibility and plays a major role in the
healthy profits achieved by the business
groups concerned.
Group-wide Risk Management
The situation on the global political stage,
the overall economic trend and the develop-
ments in the various regions of the world
clearly demonstrate that influences outside
the corporate arena have different repercus-
sions on the prospects of success available to
market players. The Carl Zeiss Group system-
atically charts external and internal risks for
all business groups and subsidiaries before
evaluating their damage potential and likeli-
hood of occurrence. Direct responsibility
for the early recognition, control and com-
munication of risks lies with the respective
management of the business groups and
subsidiaries. Risk coordinators in the various
areas of the company ensure a uniform
reporting procedure. Risk management is
coordinated at corporate headquarters.
Overall responsibility lies with the Board of
Management.
Discernible Risks
The individual risks for which the Carl Zeiss
Group is prepared include the trend in the
global economy and currency parities. Cur-
rency developments, in particular with regard
to the US dollar and Japanese yen, entail
risks for business outside Germany. By cur-
rency risk management, the direct negative
impact on the profits of the business groups
was more than offset by the earnings gener-
ated from currency hedging transactions by
Carl Zeiss Financial Services GmbH. A high
technology group of companies such as Carl
Zeiss is particularly dependent on the avail-
ability of its IT facilities. State-of-the-art pro-
tective devices have been installed and are
constantly enhanced. There are currently no
pending litigations that could pose any sub-
stantial threat to any area of the company or
to the company itself. Attacks on intellectual
property and patent protection can jeopar-
dize the technological lead and hence the
competitiveness of the Carl Zeiss Group. Carl
Zeiss is taking precautions against such risks
by implementing an active IP strategy.
“Our brandis a
promise.”From the Carl Zeiss Vision
17
Spending onresearch anddevelopment
1999/00 2000/01 2001/02 2002/03 2003/04
in EUR millions
190186 209146139
The Semiconductor Technology Group is sub-
ject to the pronounced volatility of this
branch of industry. In the past, it succeeded
in creating and maintaining a development
lead. If the pace of development slows or a
rapid, unexpected technology change occurs,
this could have a detrimental effect on earn-
ings. A large proportion of the revenues
generated by Semiconductor Technology is
dependent on one large customer. Business
with multicoordinate measuring machines is
strongly influenced by cyclical trends in the
automotive industry, as are sales of scientific
instruments by budget cutbacks in research
and education. Reforms being implemented
in the German healthcare system may lead to
a reduction in sales of medical systems and
eyeglass lenses. The business groups are
counteracting the risk of supplier dependence
by implementing systematic measures to safe-
guard the supply chain.
Overall Risk Situation
On the basis of the information currently
available to us, it can be said that, taking
into account the measures adopted or
planned, no risks are currently perceivable
that, either individually or in interaction with
each other, could jeopardize the continued
existence of the Carl Zeiss Group in the fore-
seeable future.
Important Events after the End of the
Fiscal Year
Carl Zeiss continued its policy of active port-
folio management in the initial months of
fiscal year 2004/05 with the implementation
and preparation of further important changes
as follows:
IT Division Goes to HP
In October 2004, Carl Zeiss concluded an
agreement for the transfer of the Information
Technology Division to Hewlett-Packard. A
total of 151 employees at the Oberkochen,
Jena, Calmbach, Wetzlar and Göttingen loca-
tions switched to HP. The entire IT facilities
and existing supplier agreements are also
being transferred to HP. As a powerful global
player, HP is in a position to provide all loca-
tions of Carl Zeiss with optimum IT facilities
and service.
Special Provider Enriches Microscopy
At the beginning of December 2004, the
Microscopy Group acquired all shares in the
company P.A.L.M. Microlaser Technologies
AG, Bernried, Germany. P.A.L.M. Microlaser
Carl Zeiss GroupCorporate Management Report 18
Technologies AG is the leading manufacturer
in the field of microdissection and microma-
nipulation systems. The key technology used
here is Laser Microdissection and Pressure
Catapulting (”LMPC“).
New Diagnostics for Ophthalmology
At the beginning of December, Carl Zeiss
Meditec AG concluded the acquisition of
Laser Diagnostic Technologies, Inc. (LDT),
San Diego, California. This allows the Oph-
thalmology Division to offer its customers
an even broader spectrum of products for
the diagnosis and management of glaucoma.
Offer for International Eyeglass Lens
Provider
On December 6, 2004, Carl Zeiss AG an-
nounced its intention, together with the
private equity EQT III fund, to acquire the
majority shareholding in SOLA International
Inc., San Diego, California. The goal is to
merge the eyeglass lens business of Carl Zeiss
with SOLA, one of the world’s leading suppli-
ers in this field. The two companies are an
excellent match – both from the product and
technology viewpoints and with regard to
their presence in the world’s sales regions.
After approval by SOLA shareholders and the
antitrust authorities, the merger is scheduled
to take place in the first quarter of 2005.
Outlook
The global economy will probably continue
to grow in the coming months, although to a
lesser extent than last year. There seems
to be a slowdown in the level of business
activity in the US. The rising cost of energy
and raw materials is holding back the eco-
nomy. Together with the US, China is now
developing into a growth engine and is
accounting for an increasing share of overall
economic performance. However, the pace is
slowing here also. With the low exchange
rate of the dollar, the euro countries are less
affected by the global rise in raw material
prices, but a strong euro is making conditions
difficult for the heavily export-oriented Ger-
man industry. A situation of minimum growth
is likely to remain on the German market.
The overall economic scenario does not
promise any general improvement in the
conditions of business. By constant adapta-
tion to the opportunities and requirements of
the market, however, the business units of
the Carl Zeiss Group are well poised to sharp-
en their competitive edge in their respective
fields of operation. The high level of effort
invested in the expansion of the company’s
technological position in the past few years
has led to a state-of-the-art, powerful spec-
trum of products. Further important market
launches have already taken place or are
imminent in the new fiscal year.
“The nameCarl Zeiss
is a synonymfor quality and
precision all over the world.”
From the Carl Zeiss Vision
19
In the semiconductor sector, only minor in-
creases are expected after the unexpectedly
strong growth of the past months. The Medi-
cal Systems and Microscopy Groups are parti-
cularly subject to the effects of currency fluc-
tuations. However, the innovation lead and
market position in the segments in which
Carl Zeiss Meditec AG operates offer good
opportunities for further growth despite the
unfavorable economic climate. Little change
is to be expected in the budgets available to
government agencies for spending on scien-
ce and research. However, a reversal of this
trend ought to be possible here with new
products for microscopy. In the eyeglass lens
business, the repercussions of the cost-cur-
bing measures implemented in the German
healthcare system are still evident. A normali-
zation of this situation could occur in the
second half of the current fiscal year. In in-
dustrial business with metrology products,
growth possibilities are emerging thanks to
new applications. The digital display market
will continue to grow.
In addition to strengthening its performance
in the existing fields of activity, Carl Zeiss is
launching an increasing number of initiatives
aimed at utilizing any opportunities available
to enhance the market presence of the excel-
lently positioned ZEISS brand. Portfolio
measures being implemented by the business
units are part of a new offensive with which
the Carl Zeiss Group intends to initiate
greater growth.
Overall, the Carl Zeiss Group looks toward
fiscal year 2004/05 with cautious confidence.
The ongoing high level of spending on re-
search and development has provided the
business groups with a sound foundation for
new business potential. Against a background
of growing pricing pressure in many markets
and the lack of dynamism evident in the
global economy, the Carl Zeiss business units
have strengthened their market position and
further enhanced their cost position and in-
novative strength. The financial structures of
the Carl Zeiss Group, and not least the legal
form of a stock corporation (AG), have
opened up new possibilities for future action.
Creative Inventors
The corporate Vision defines the company’s
aspirations: “Carl Zeiss will be regarded as
the most innovative company in its fields of
business.” During the past fiscal year, the Carl
Zeiss Group submitted 371 applications for
patents or registered designs – an increase of
eight percent over the previous year. The
continuously rising number of applications
underscores the company’s focus on further
increasing its innovative strength.
Carl Zeiss GroupResearch and Technology 20
Research and Technology –
Innovative Approaches to New Business
With its innovative products, Carl Zeiss is at the forefront of technological development. It is rare to find anothercompany which can boast a tradition of innovation spanningmore than 150 years. Maintaining this tradition requiresoutstanding performance in research and technologicaldevelopment. An important requirement for success in thisarea is the availability of capital for research and develop-ment (R&D). During fiscal year 2003/04, the company invest-ed more than ever in the expansion of its technologicallyleading position, providing a basis for a prosperous future.Total investments rose to EUR 209 million, equivalent to anR&D ratio of ten percent, enabling the Carl Zeiss Group tomaintain its position among the leading high-tech corpora-tions. Manpower levels in this area are high. On the balancesheet date, there were approximately 1,553 employees inresearch and development – 11 percent of total manpower inthe Carl Zeiss Group.
Innovation as a Motor of Growth
Professional innovation management is a de-
cisive requirement in maintaining sustained
and profitable growth. It extends to all of a
company’s traditional approaches to growth:
– Maintain and expand the product line
– Develop new business opportunities
– Acquisitions and collaborations with partners
– Sales possibilities resulting from licenses.
Carl Zeiss’ core competencies create opportu-
nities for growth options. Identifying new
approaches for the application of existing
techniques is just as important as the creative
analysis of future customer needs based on
new technological possibilities. Hundreds of
new ideas and concepts are developed,
recorded and evaluated during this process.
The targeted, structured processing of these
various approaches is the key to economical
innovation management.
21
Excellent wearing comfort and
optimum field of view: the Head
Mounted Display developed by the
Research Center ensures mobile
availability of images and videos
New Business the Systematic Way
The Carl Zeiss Group devotes special atten-
tion to the creation of new fields of growth
and business. To better accomplish this goal,
Corporate Research and Technology has
established a “New Business Generation
Process” that systematically examines, devel-
ops and promotes business ideas based on
existing corporate competencies. All mem-
bers of the Board of Management and Exe-
cutive Vice Presidents are included in this
process. The plan for an internal corporate
“future forger” was created on the basis of
set timelines, selection criteria, review sched-
ules and a clear framework for costs and
personnel deployment. The methodology
corresponds to screening processes used in
the new venture business of venture capital
companies – the process, however, is imple-
mented at an earlier point in time.
From Project to Practice
Initial business initiatives from the new busi-
ness generation process indicate that this ap-
proach delivers successful business strategies.
The development of Head Mounted Displays
(HMD) is just one business resulting from this
process. Also known as data glasses, such
display instruments are suitable for a variety
of applications. They can directly project
digital pictures in front of the wearer’s eye,
making them ideal suppliers of supplementary
information on a current environment, as
well as for exclusive observation of projected
content.“Innovation and
technical excellenceis our passion.”
From the Carl Zeiss Vision
Number ofpatent applications
1999/00 2000/01 2001/02 2002/03 2003/04
344260 371240150
Projections Anywhere
The Display Technologies Division also as-
sumed responsibility for a project for a new
type of LED miniature display (Light Emitting
Diode). A prototype of an extremely compact,
digital projection display was built in the
research area. The outstanding features of
the device include not only its small dimen-
sions, but also its low energy consumption.
As a result, it is battery powered and line
independent, enabling the projection tech-
nology to be used anywhere. For example, it
can be used at any time to display pictures
taken with a camera phone, or graphics from
a PDA (Personal Digital Assistant/handheld
computer), on a large surface.
Culture of Innovation
Along with the strategic planning and control
of research and technology subjects, Corpo-
rate Research and Technology is devoted to
promoting the exchange of information be-
tween scientists, managers and specialists in
other disciplines. For this reason, it organizes
an internal event known as the Innovation
Days, during which specialists from different
areas and disciplines can discuss the current
Corporate Research and Technology accom-
panied the project from concept to proto-
type. Potential customers have already shown
great interest in the use of the devices for
complex tasks, in technical service for exam-
ple. The advantages of these systems can
also be experienced by people with severe
visual impairments. The next step involves
transfer to an internal new venture project or
to one of the company’s divisions for volume
production.
Better Driving with Optics
The numerous opportunities in the automo-
bile industry for the integration of optics and
electronics to improve safety and comfort
provide a new area of application for optical
technology from Carl Zeiss. Corporate Re-
search and Technology is exploring possible
business opportunities with a series of
promising product ideas. The focus lies on
sensors within the vehicle and for monitoring
its surroundings, as well as on display sys-
tems. Based on this development work, the
Display Technologies Division decided to set
up the Automotive Optics business unit.
Carl Zeiss GroupResearch and Technology 22
23
Digital projection of the future:
Corporate Research and Technology
has created an ultra-compact optical
module which makes mini-projectors
possible
status of important projects. The Innovation
Days, along with the company’s internal
Innovation Award, pave the way towards a
new culture of innovation within the Carl
Zeiss Group.
Under the motto “Managing the Innovation
Pipeline”, the Innovation Days were held for
the second time during the reporting period.
The subject of the meeting was strategic
planning of technological developments and
product innovations. Internal and external
speakers presented different approaches to
the theory and practice of innovation man-
agement, with current projects also being
presented.
Competition Stimulated
The number of entries for the Carl Zeiss
Innovation Award increased significantly over
the previous year. More than twice as many
teams entered the competition in its second
year. 78 projects were submitted for the
Leading Edge Technology, Innovative Business
Design, Short Time to Market, High Risk
Project and Successful Failure categories.
The Quality of Leadership
Highly qualified and motivated employees are essential tothe success of a high-tech corporation such as Carl Zeiss.Providing them with the best possible employment and development opportunities is one of the top objectives ofcorporate management. Carl Zeiss views management asleadership and promotes a performance mentality, customerorientation and internationality, giving the company an appealing image and enabling it to attract additional, highly-qualified employees. At the same time, personnel manage-ment focuses on the challenges posed by ambitious growthtargets and implements Carl Zeiss’ culture of leadershipwhich is oriented toward value enhancement worldwide.
High-tech Jobs
The Carl Zeiss Group has an exceptionally
large number of employees in research and
development. On the balance sheet date,
September 30, 2004, there were 1,553 em-
ployees in this area, equivalent to 11 percent
of the corporate workforce. The Carl Zeiss
Group has a global workforce of 13,667, of
which 9,683 are employed in Germany and
3,984 abroad. This represents a slight decrease
over the previous year (14,151). The number
of trainees in the Group rose to 597, or four
percent of all employees. 174 new trainee
positions were filled in 2003/04.
Increasing Internationality
Human Resources in the Carl Zeiss Group
promotes expertise and qualified employees
throughout the world. The personal commit-
ment of the employees is recognized by
providing them with attractive development
opportunities and clear, motivating perfor-
mance benchmarks. The challenges facing a
growing company with global aspirations
necessitate personnel reinforcement, particu-
larly in management. As the company con-
tinues to receive an increasing percentage of
its growth impetus from markets outside
Germany, the importance of employees at
locations abroad rises. This development
brings with it an increasing internationaliza-
tion among the leadership personnel.
Carl Zeiss GroupHuman Resources 24
Intercultural Skills
The Display Technologies Division’s new pro-
duction facility in Suzhou, China, provides a
clear example of the range of tasks faced by
personnel management. Personnel sent to
China were trained not only in specialty and
leadership issues concerning their future area
of responsibility, but also in intercultural rela-
tions. This requires interaction with employees
and business partners in another country, as
well as dealing with customers from other
regions of the world. The new objectives re-
sulting from the growing internationalization
are also expanding the profile of training
measures offered by the Carl Zeiss Group.
Measuring Leadership
The performance of leadership personnel
plays a decisive role in the success of the
company. A binding, corporate management
assessment framework was agreed upon as
an evaluation tool for this group of employ-
ees. It will be used for the comprehensive,
annual interviews between executives and
their superiors. Furthermore, it provides
orientation for the evaluation of performance-
25
Dr. Ulrich Simon,
Executive Vice President & General
Manager of the Microscopy Group
“The uniform performance review and the Performance & Development Dialogue help me to quickly develop the relevant aspects with the management team. Employees have also completely embraced these instruments.”
“The Performance & Development Dialogueis designed for international use.
It creates worldwide transparency and enhances the global team spirit.”
Jan Willem de Cler,
President of Carl Zeiss N.V.-S.A.,
Belgium and
Carl Zeiss B.V., Netherlands
Carl Zeiss GroupHuman Resources 26
“The Competence Model enables us to clearly determine what Carl Zeiss is all about, even at locations outside Germany.”
José Manuel Alonso,
President of Carl Zeiss de México
S.A. de C.V.
“Working for the “Competence Model”project was certainly time well spent:
comprehensive definition ofrequirements and abilities allows
us to precisely describe managementrequirements and functions.”
Dr. Rainer Ohnheiser,
President of
Carl Zeiss IMT GmbH
related compensations. The highest bench-
mark among the goals to be achieved is
increasing the value of the company in the
respective area. The performance assessment
is an essential component of an even more
comprehensive management instrument –
the “Performance & Development Dialogue”.
It incorporates performance, linked with an
assignment and development interview, as
well as the target agreements (“Management
by Objectives”) for the upcoming period.
The dialogue is an important element for the
continuous improvement of both personal
success and the success of the company.
Gerhard Fürter,
Vice President of Technology, Lithography Optics,
Carl Zeiss SMT AG
“The opportunities created by thespecialist career deliver interestingdevelopment perspectives to top per-formers in the technical and scientificareas. They help us optimally deploytop executives and generate interestin working for the company in thelong term.”
Skills Defined
The performance & development dialogue is
based in no small part on a clear determina-
tion of the skills required for the activity at
each level of the organization. For this pur-
pose, Human Resource Management worked
with the various business groups to develop
a “competence model” which describes the
demands on the individual skills of the em-
ployees beyond subject-specific knowledge.
Furthermore, 25 single competence features
were defined for entrepreneurial, leadership,
interaction, methodology and personal skills.
A profile can be determined based on these
criteria, from which the suitability of an em-
ployee for a certain job profile is derived.
27
Specialist Career
In addition to a leadership career in manage-
ment, Carl Zeiss also offers development
opportunities on a separate path to qualified
specialists. Within the framework of a know-
ledge-oriented career, scientists and engineers
can be appointed to specialist careers based
on their personal performance, opening a
five-step path leading from “Senior Engineer/
Scientist” to “Fellow”. Allocation to this
career path eliminates the possibility of a
parallel career on a management level. It is,
however, possible to switch paths. The spe-
cialist career raises the attractiveness of the
company for employees with outstanding
qualifications.
Carl Zeiss GroupEnvironmental Protection 28and Health & Safety
Well Positioned
The processing of glass and metal, as well as
the assembly of electronic modules, performed
by the Carl Zeiss Group does not involve any
manufacturing processes which critically im-
pact the environment. In addition, the num-
ber of sources of environmental and indus-
trial hazards is reduced by the increasing
amount of software development, applica-
tion support, maintenance and training.
Nonetheless, various aspects of environmen-
tal protection and industrial safety play a
key role in all phases of planning and delivery
of services in the company. Expanding the
expertise in these areas creates opportunities
for new businesses and often points the way
to considerable savings potential.
Certification
Environmental protection and health & safety
management have been continually expand-
ed in past years. Regular internal audits en-
sure the transparency of any measures taken.
The management systems for the two activi-
ties were merged, enabling a single audit of
the company’s largest production site – the
Oberkochen Service Center – and the Indus-
trial Metrology Group during the reporting
year. They received both environmental and
health & safety certification as per ISO 14001
and OHSAS 18001. Carl Zeiss Jena GmbH
was certified to ISO 14001 in addition to
health & safety certification.
Environmental Protection and Health &
Safety Online
The integration of environmental protection
and health & safety into daily procedures is
significantly simplified via online media. Both
subjects have their own pages on the exten-
sively-used corporate intranet and are always
available. Employees can quickly access
comprehensive documentation and current
reports. The large number of manuals which
provide the basis for certification are also
available online. All required information has
been divided into single documents and
linked to a clearly structured directory, en-
abling users to quickly find the necessary file.
Environmental Protection and Health & Safety –
Success Made Visible
The Carl Zeiss Group views safeguarding the environment andpreserving its natural surroundings as its corporate duty. Italso applies the same high standards to industrial safety andhealth protection. Finding economic solutions that minimizethe potential pollution caused by industrial production,prevent detriment to employees, and efficiently utilize mate-rials and energy is a top priority throughout the company.Successfully managing these tasks requires the motivationand ability of all employees and can lead to more efficientprocesses.
29
Transparent Materials List
Observance of environmental aspects in all
phases of a product lifecycle demands com-
prehensive knowledge of material properties,
design requirements, technical guidelines,
international environmental standards and
numerous other considerations. A new aid is
now available for the proper, environmentally-
friendly, economical use of materials: a data-
base for material management for developers
and design engineers provides detailed infor-
mation on materials, components, semi-
finished products and ingredients contained
therein. All relevant data, including informa-
tion on use in existing products throughout
the company, can be accessed, providing Carl
Zeiss with a powerful system for the effective
control of material usage, the benefits of
which extend far beyond simple environmen-
tal protection.
Ratio for Health & Safety
Statistically recording safety is the goal of a
new ratio that provides larger corporate units
with a reliable means of comparison. The
basis is the absence times resulting from in-
dustrial accidents. These are weighed against
total working hours recorded within a com-
parable period in the respective area. The
safety performance of organizational units is
documented quarterly based on the “absence
rate” ascertained, enabling early recognition
of problematic developments.
Projects Around the World
Protecting the environment and responsibly
utilizing resources are enshrined in the long-
term goals of the corporate Vision. Employees
throughout the world rise to this challenge
on a daily basis with initiatives that protect
the environment and resources. The corpo-
rate Vision Award attracts numerous teams
with projects on this subject. For example,
the US company of the Industrial Metrology
Group in Minneapolis, Minnesota, succeeded
in implementing numerous environmental
protection measures in quantifiable reduc-
tions of material consumption and waste.
Another project addressed the expensive
packaging required to transport large suspen-
sion systems for surgical microscopes. A
project team was successful in reducing the
packaging materials required, creating a
particularly sturdy, reusable container and
replacing wood with environmentally-friendly
cardboard. Their efforts also led to consider-
able cost savings.
Material properties and environ-
mental information on all impor-
tant materials and components
are displayed at a glance by the
materials management database
“Environmentalpreservation is a
core conside-ration in all
our activities.”From the Carl Zeiss Vision
Carl Zeiss GroupBusiness Groups 30
The Semiconductor Technology Group operates under the nameCarl Zeiss SMT AG (Semiconductor Manufacturing Technologies).It is organized as a legally independent unit of the Carl ZeissGroup. The enterprise is wholly owned by Carl Zeiss. It sees itselfas a pioneer of new technologies and aspires to “enable the nano-age world.” As one of the world market leaders in its sector, CarlZeiss SMT AG is committed to technical excellence in all its busi-ness areas. On a broad basis, the SMT Group supplies worldwideproviders of manufacturing and verification technology for nano-structures, enabling growth in these key technologies. SMT’s lead-ing position is based on its core competencies in optics and elec-tron beam technology. Its main products are lithography optics forwafer steppers and wafer scanners for its partner ASML, the lead-ing provider of semiconductor production machines. In addition,the company’s product line includes optical components and mod-ules for lithography lasers and synchrotron optics. For photomaskinspection and repair, SMT offers a system featuring unique tech-nology as a complete solution. Optical modules for automatedwafer inspection systems complete the product line.
The competence of Carl Zeiss SMT AG in electron and ion beamtechnology is also reflected in the extensive range of scanningelectron microscopes, transmission electron microscopes and ionbeam systems. Their fields of application include the semiconduc-tor industry, materials research and pharmaceuticals.
Carl Zeiss GroupBusiness Groups 32
Semiconductor Technology Group
In fiscal year 2003/04, the Semiconductor Technology Grouponce again posted strong revenue growth following a periodof weakness in the semiconductor market. Business grew byone quarter to EUR 560 million. The most important motorsof growth among the activities consolidated under the CarlZeiss SMT AG (SMT) umbrella were the group’s main revenuegenerators – lithography optics with its lenses for the fabri-cation of semiconductor chips, and laser optics. SMT earningsalso rose sharply in line with revenues.
“The significance of Carl Zeiss SMT’s AIMS systems for maskqualification will even increase for future technologies,where immersion and polarization will play a critical role insemiconductor lithography.”
Dr. Iwao Higashikawa, Chief Specialist, Process & Manufacturing Engineering Center Toshiba Corporation, Yokohama, Japan
Pages 31 and 32, center:
Laser optics for the chips of the
future: mirror systems direct the
extremely short-wave light of the
next technology generation
33
Market on the Move
The market for instruments and systems re-
quired for the fabrication of semiconductors
once again departed from industry forecasts
over the past fiscal year. The business clearly
surpassed generally cautious estimates, with
worldwide chip production exceeding the
record 2000 figure in both volume and value.
The Semiconductor Technology Group was
able to utilize opportunities that arose at
short notice and adjust production to the
changed conditions. The company strategi-
cally positioned itself for the unchanged con-
tinuation of strong fluctuations exhibited by
the semiconductor industry and increased its
flexibility in manufacturing and development.
The opening of a highly modern factory in
Oberkochen during fiscal year 2001/02 sig-
nificantly increased the company’s efficiency
and adaptability. Steps taken by personnel
management, such as highly flexible working
hour accounts, assisted in the new orienta-
tion.
Immersion Lithography Sharpens
Competitive Edge
The introduction of lenses for the new im-
mersion lithography process, which extends
the product life of 193 nanometer technolo-
gy by two to three optic generations, added
important momentum to the success of Carl
Zeiss SMT AG. SMT quickly reacted to market
trends and provided powerful, cost-efficient
alternatives within a short time following the
discontinuation of 157 nanometer technolo-
gy. It is well-known in microscopy that im-
mersion liquids between the lens and speci-
men significantly increase optical resolution.
This principle was converted to a usable
procedure for semiconductor fabrication.
SMT succeeded in delivering several systems
with this technology to its partner ASML
following trials with a pilot project last year.
SMT once again demonstrated its ability to
quickly implement innovations. In doing so, it
strengthened its technological position. In
the space of a single year, the company has
turned a setback into a new approach to
success.
Experience and sensitivity are required
to master the barely conceivable preci-
sion of a Starlith® 1400
Carl Zeiss GroupBusiness Groups 34
Electron Beam Repairs Masks
Technological progress and success in busi-
ness go hand-in-hand in semiconductor tech-
nology. This is highlighted in the instruments
used to evaluate and repair the photo masks
required for chip fabrication. The costs of
such masks, which serve as templates for the
circuits on a chip, are immense. If they can-
not be inspected and repaired, considerable
economic damage can result from production
errors. SMT introduced the first electron-
beam repair system in 2004 under the name
MeRiT®. It was developed in cooperation
with NaWoTec GmbH in Rossdorf, Germany,
which received the German Industry’s Inno-
vation Award in 2003 as a start-up company
for this procedure. In conjunction with SMT’s
market-leading AIMS® inspection technology,
the system uses electron beams and targeted
gas injection to correct the tiny defects on
the expensive masks by removing or adding
material with nanometer precision.
One-brand Strategy
The electron-beam technology business,
which previously operated under the aegis of
LEO Elektronmikroskpie GmbH, was restruc-
tured and supplemented with activities from
the field of nanotechnology. It now operates
as the Nanotechnology Systems Division. LEO
Electronmikroskopie GmbH became Carl Zeiss
NTS GmbH. Instruments which entered the
market under the LEO banner are now clearly
recognizable as Carl Zeiss products and also
benefit from the outstanding image the par-
ent company enjoys around the globe. The
move enabled Carl Zeiss SMT AG to realize
its goal of a uniform appearance and the dis-
tinct identity of the ZEISS brand.
There is currently fierce price competition un-
derway between providers of electron-beam
technology. The high-power ULTRA scanning
electron microscope, which achieves maxi-
mum resolution at a low acceleration volt-
age, is generating new impetus for this busi-
ness. The EsB™ detection procedure from
Carl Zeiss employs energy and angular analy-
ses of backscattered electrons to achieve an
35
extraordinarily high-contrast display of a
specimen’s topography and composition. To-
gether with the Gemini® detector for imag-
ing, the EsB detector transforms the ULTRA
model into one of the most versatile scan-
ning electron microscopes on the market.
Inspection of semiconductor wafers and
testing of ceramics, plastics, nano-particles
and immunogold markings are a few of the
many possible applications.
Masks for semiconductor chips are
extremely critical and expensive
tools: the MeRiT electron beam
repair instrument allows their cost-
effective repair
Comb structure etched from silicon
for the building of sensors; the
image captured with ULTRA 55
shows the high etching depth with
minimum line width
Extraordinarily high-contrast
visualization of a specimen and
clear information about the mate-
rial composition are provided by
the high-performance ULTRA
scanning electron microscope
Optimization
Carl Zeiss SMT AG, along with partner ASML,
has made good progress towards consolidat-
ing its market and technology leading posi-
tion as a supplier of the semiconductor in-
dustry. The group’s performance was en-
hanced as a result of the increased flexibility
and the additional acceleration of processes
from product development to delivery to the
customer. Internal procedures were further
improved and optimized using the Six Sigma
method.
Property Rights Clarified
The group took a significant step forward in
September 2004 with the signing of an
agreement that ended a long patent dispute
between main competitor Nikon, and Carl
Zeiss SMT AG and its partner ASML. All par-
ties involved agreed to a comprehensive
cross-licensing deal for lithography optics.
Carl Zeiss GroupBusiness Groups 36
With its constantly healthy level of earnings, the Medical SystemsGroup is a mainstay of business at Carl Zeiss. It is structured intothe Surgical Products and the Ophthalmology divisions. The mar-ket leadership enjoyed by the Surgical Products division spans aperiod of over fifty years. In 1953, a surgical microscope from CarlZeiss heralded the dawn of microsurgery. The product family withthe trade name OPMI® has since been extended and enhanced onan ongoing basis. Today, solutions for intraoperative diagnosis anddigital visualization, for example, are gaining special importance.Time and again, the development of new fields of application insurgery – in spine surgery and dentistry, for example – providenew momentum for innovation.
The ophthalmic systems and instruments business is combined inCarl Zeiss Meditec AG, a company listed on the Prime Segment ofthe Frankfurt stock exchange. As a stock corporation, it is optimal-ly positioned to meet the requirements of a market promising long-term growth. The capital market is showing keen interest in thepublicly listed company of the Carl Zeiss Group. Carl Zeiss Meditecoffers an innovative product range providing solutions for the fourmajor diseases of the eye. With two headquarters in the USA andGermany, more than 50 percent of its workforce in the USA and itsown subsidiary in Japan, it is directly represented in the largestand most important markets.
37
Carl Zeiss GroupBusiness Groups 38
Medical Systems Group
Despite the difficult economic climate, the Medical SystemsGroup has successfully asserted its position in the reportingyear. Incoming orders increased over the previous year’s levelin spite of unfavorable exchange rate developments. Whileproduct sales rose, revenues dropped slightly to EUR 466 mil-lion due to the currency influences. Nevertheless, the SurgicalProducts Division and the Ophthalmology Systems from Carl Zeiss Meditec AG each once again improved their results.
Market Recovery
A recovery was evident in the global market
for medical systems, which is developing in
line with the sustained growth anticipated
by long-term forecasts. Demographic devel-
opments, with a growing proportion of
elderly people in the population, and the in-
creasing economic power of fast-developing
countries are helping to boost demand. With
their restraining effect on investment, health-
care reforms are leaving their mark on the
market. The medical systems business con-
tinues to be heavily reliant on exports. The
effects of changes in currency parities are
clearly noticeable. Countries which are
dependent on dollar and yen exchange rates
account for a large proportion of exports.
European markets outside Germany which
reported growth in fiscal year 2002/03 were
able to maintain the previous year’s healthy
level. Business in Germany, on the other hand,
was more subdued. In the USA, a stable
market trend and the launch of new products
led to substantial growth in the national
currency. Japan, the most important Asian
market, recorded a slight upturn. With their
still relatively small volume of business, sales
in countries such as China and India showed
a very pleasing trend.
Optical brilliance and attractive
design in one: the OPMI Pentero®
surgical microscope
Internationally recognized design:
OPMI Pentero received the
“reddot” award
39
The OPMI Pentero surgical micro-
scope is configured in next to no
time via touch screen input
The MediLive® MindStream video
system integrates documentation
into the OR
Differentiation through Innovation
The Medical Systems Group is working
intensely on strengthening its position as a
leading innovator. Consistently high R&D
spending and a close dialog with leading
medical experts in the relevant disciplines
enable Carl Zeiss to respond to trends at an
early stage and to play a key role in setting
the pace of development.
Networking and Digitization
One example of these trends is digitization.
There is currently a noticeable increase in
hospital networking and the standardization
of information sources at a digital level.
Flexible access to diagnostic data and data
archiving offer a huge potential for organiz-
ing processes in hospitals and offices more
efficiently and cost-effectively. This potential
is opened up by a variety of products from
Carl Zeiss such as the latest generation of
surgical microscopes, accessory equipment
for digital visualization or software solutions
for the networking of diagnostic systems in
ophthalmology. The network solutions were
developed by software specialist hiko medical
communication GmbH in Pirmasens, Germany,
which was acquired by Carl Zeiss Meditec AG
in the reporting year and now operates as
Carl Zeiss Meditec Systems GmbH.
Neurosurgery and ENT Surgery
The latest example of innovativeness in the
field of microsurgery is the OPMI Pentero
surgical microscope system which has already
led to a noticeable boost in demand in
neurosurgery. This system is a unique combi-
nation of outstanding optical performance
and ease of use, and provides access to
digitized image material and diagnostic data.
Carl Zeiss GroupBusiness Groups 40
“The quality of ZEISS optical systems is unrivaled – and when I am working in my office with the slit lamp or in the OR with the microscope, a sharply defined, brilliant image is absolutely essential.”
Robert H. Osher, M.D., Cincinnati Eye Institute, University of Cincinnati, USA
The new PreView PHP examination system
enables the early diagnosis of age-related
macular degeneration (AMD) and makes
a substantial contribution to preserving
patients’ vision. More than 25 million people
worldwide are affected by this disease which
frequently causes blindness.
The approval of the VISULAS 690s laser for
the Japanese market means that patients
throughout the country can now also be
treated using photodynamic AMD therapy.
In the USA, initial treatments were conducted
using the MEL 80 excimer laser system within
the scope of a study for product approval.
The system, which has already been success-
fully introduced in Europe and Asia, is used
to correct such visual defects as shortsighted-
ness and farsightedness by laser surgery. This
means that patients no longer need such
visual devices as eyeglasses or contact lenses.
For the first time, it permits surgeons to ob-
tain additional diagnostic information during
surgery and thus to improve the surgical out-
come for the benefit of the patient. New mo-
mentum was also provided in the field of ENT
surgery thanks to the OPMI Movena® and
OPMI Sensera® model series launched in the
previous year.
Ophthalmology
The ophthalmology business is operated by
Carl Zeiss Meditec AG. The global leader for
instruments and systems in the field of oph-
thalmology successfully expanded its position
in a constantly growing market. New prod-
ucts primarily intended for the diagnosis of
retinal disorders and glaucoma as well as
software for system and data networking
significantly improve the early detection of
dangerous eye diseases and the efficiency of
diagnostic and therapeutic processes.
The Glaucoma Progression Analysis software
(GPA), for example, permits the various
stages of glaucoma to be diagnosed even
more accurately, allowing physicians to make
better decisions on required therapy on a
more objective basis.
41
With the new OPMI® VISU 140, 160 and 210
product series, the Surgical Products Division
strengthened the position of Carl Zeiss in the
field of ophthalmic surgery. Further impetus
for growth is expected from the addition of
further innovative products to the product
portfolio and the targeted expansion of sales
activities.
Dentistry
The latest-generation products in this field
include the OPMI PROergo® and OPMI Pico
microscopes and a range of head-worn
loupes for examination and treatment in the
office. They offer physicians optimum, mag-
nified viewing and an ergonomically correct
working position. Digital image capture and
visualization provide a new basis for commu-
nication between the physician and patient
and form an integral part of the patient file.
The MEL 80 refractive laser system
corrects visual defects with the
ultimate precision
International triumph: the success
story of the IOL Master® continues
New instrument system with lead-
ing technology: optical biometry of
the anterior segment of the eye with
the ACMaster offers extremely high
precision
Carl Zeiss GroupBusiness Groups 42
The Consumer Optics Group offers high-quality eyeglass lenses, anextensive line of examination systems for eye care professionalsand eyeglass lens production technology. Binoculars and huntingoptics from Carl Zeiss provide highly discerning and demandingusers with premium, prestigious products.
The Ophthalmic Products Division aspires to provide high-qualityvision to a large number of end users. The division’s main productsare eyeglass lenses made of a broad spectrum of materials. Theyoffer additional, technically advanced features such as high-per-formance coatings, polarization filters or individualized opticaldesigns for progressive lenses. Thanks to its extensive knowledge of all factors relevant to vision and high-performance systems for optimum eyeglass fitting, Carl Zeiss offers its customers unique expertise and competence: Relaxed Vision. The division’s clienteleinclude not only eyecare professionals such as opticians and optometrists, but also ophthalmic retail chains.
Binoculars and hunting optics are the domain of the Sports Opticsdivision. With a tradition of innovation, these products are impor-tant ambassadors of the brand name that stands for top opticalperformance and quality all over the world. Digital technology is now entering one of the company’s most traditional opticalproducts – binoculars: night scopes allow detailed observation ofnature, even in dark conditions.
Carl Zeiss GroupBusiness Groups 44
After an exceptional business trend marked by special effectsin fiscal year 2003/04, the Consumer Optics Group reportedrevenues totaling EUR 332 million. Sales were about 4 percentbelow the previous year. New regulations for cost reimburse-ment by health insurance companies in Germany left theirmark on business in the Ophthalmic Products Division, whichaccounts for more than 80 percent of the sales generated bythis business group. Earnings topped last year’s figure.
Consumer Optics Group
Comfort for the customer: eyeglass
lenses featuring the LotuTec®
coating repel dirt and liquid – just
like a lotus leaf
Healthcare Reforms Hit Eyeglass
Business
The reforms in the German healthcare system
that came into effect at the beginning of
2004 triggered a boom in demand in the
latter months of 2003. Numerous consumers
used the final opportunity to purchase eye-
glass lenses with the financial support of
their health insurer. Since the beginning of
2004, most eyeglass wearers have received
no funding from the healthcare system.
Short Boom at End of Year
The boom experienced at the end of the year
presented the Ophthalmic Products Division
with a unique challenge. Although it had
made the necessary preparations for this rise
in demand, the division was nevertheless
surprised by the sheer volume of incoming
orders which were 100 percent above the
45
The Gradal Brevis® progressive
lens is particularly suitable for
small eyeglass frames
LotuTec can be combined with
other coatings – with different
colors, for example
seasonal average in November and Decem-
ber. This considerably surpassed the volume
of business received before previous health-
care reforms. It took until February 2004 to
clear the backlog of additional orders posted
in the last months of 2003.
As a result, the downturn in orders in the
New Year was greater than anticipated. The
eyeglass industry estimates that the drop in
business totaled about 30 percent.
Stiff Competition
The ophthalmic sector is currently in the midst
of a consolidation process that has lasted for
some time now. This affects both the distribu-
tion channels and the providers of eyeglass
frames and lenses. It is becoming apparent
that there will be a further decrease in the
number of providers operating in all of these
areas. The product spectrum is becoming
increasingly polarized into the low-price
segment at one end of the market and high
quality, leading edge products at the other.
The mid-price, mid-performance range is
losing more and more ground.
In the face of this difficult situation, Carl Zeiss
was able to win additional customers. The
Ophthalmic Products Division strengthened
its position with new products and sales
initiatives. The targeted expansion of the
product portfolio underlines the division’s
position as a one-stop partner in the field
of eyewear.
Global Growth Potential
The ophthalmic business showed a stable
trend on all European markets outside Ger-
many. All in all, the regions outside Europe
also reported a slight rise in demand. On the
whole, the global ophthalmic market offers
healthy growth potential. The world popula-
tion is growing, and more than 50 percent of
people need a visual aid at some stage of
their lives. Eyeglasses will remain unchal-
lenged as the most widely used devices for
some time to come.
Carl Zeiss GroupBusiness Groups 46
new model in the series of Polatest® vision
testing instruments makes it easier for eye-
care professionals to determine and measure
visual defects. With the aid of a computer,
Polatest® II E displays test types in an alter-
nating, non-learnable sequence and hence
reduces the possible sources of error during
an examination. The digital centration and
measuring system known as the Relaxed
Vision Terminal (RV Terminal) was created for
optimum fitting to the face of the eyeglass
wearer. It allows ultra-precise lens fitting
thanks to accuracy to the nearest tenth of a
millimeter. Lenses fitted with this leading
edge system provide totally natural vision.
Sports Optics Holds its Ground
The Sports Optics Division, whose business is
primarily focused on binoculars and hunting
optics, achieved a slight increase in revenue
and earnings. The market for these premium
quality branded products is marked by the
current lack of consumer confidence. Business
momentum is being provided here by prod-
uct innovations with which Carl Zeiss repeat-
edly documents its expertise as a provider of
systems offering unique image quality.
Light Weight, High Quality
The Sports Optics Division has introduced a
new, advanced series of binoculars that offer
“My customers are impressed by Relaxed Vision and by the new type of eyeglass fitting.Trust in my skills has risen.”
Dirk Martens, Owner of Optiek Dirk Martens, Tervuren, Belgium
LotuTec Enhances Wearing Comfort
Carl Zeiss eyeglass lenses featuring the new
LotuTec surface coating offer more comfort
and better vision. In addition to the properties
offered by modern coatings such as reflec-
tion reduction, a filter effect and resistance
to damage, LotuTec displays an additional
benefit: it facilitates lens care for the eyeglass
wearer. Like a lotus leaf, the lens surface
repels water and dirt. As a result, the lenses
practically never get dirty. Any residue is
removed in next to no time. After its market
launch for high-index lenses, the high-tech
LotuTec coating will be gradually introduced
as an option for all other lens types.
State-of-the-art Systems
The refraction and lens prescribing processes
play a decisive role in determining the quality
of vision enjoyed by an eyeglass wearer. A
47
many outstanding benefits to users. In the
FL series, special lenses featuring fluoride
glass deliver image quality that sets standards
in the sector. The Victory 8x32 T* FL and
Victory 10x32 T* FL models are extremely
convenient and light and offer exceptionally
large fields of view.
Further Improvement in Performance
The Consumer Optics Group is rising to the
challenges facing it in the competitive arena
Polatest E II increases the precision
of refraction
Thanks to lenses with fluoride glass,
the Victory 8x32 T* FL binoculars
offer image quality that sets standards
The VisuLight® S illuminated
magnifier reveals even the tiniest
details, also in poor light or in
the dark
by implementing targeted measures in the
cost, speed and quality areas and by intro-
ducing special marketing initiatives. Here,
achieving a further increase in productivity is
of major importance. Thanks to process en-
hancements, attractive employee incentives
and quality optimization, a further rise in
earnings was achieved. Delivery times were
once again reduced. In its dealings with
eyecare professionals, dealers and consumers,
the business group is placing great emphasis
on communicating the brand promise.
The Brand Promise
Carl Zeiss is the only provider in the oph-
thalmic sector that covers the entire product
spectrum from refraction and lens prescrip-
tion to the eyeglass products themselves and
their fitting. With its expertise and compe-
tence, also in the field of ophthalmology, the
company offers the basis for giving optimum
consideration to the interaction between the
human eye and the eyeglass lens. Its under-
standing of the physiology of vision allows
Carl Zeiss to develop products that provide its
customers with the ultimate in comfort. Re-
laxed Vision is the term used by the company
to encapsulate this achievement. It allows
the company’s customers to actively experi-
ence the promise of the ZEISS brand.
Carl Zeiss GroupBusiness Groups 48
The Microscopy Group supplies its instruments to a market characterized by the current trends in the fieldsof healthcare, medical research and the pharmaceuticalindustry. It is expanding its leadership in the fields ofmicroscopes and systems for use in research and de-manding routine applications. In the field of biologicalapplications, Carl Zeiss aspires to cover all areas ofmicroscopic observation and documentation. The groupis opening up new growth fields by offering system solu-tions for cell or tissue applications sharply focused on thework processes of its customers. The Microscopy Group isrising to the challenges posed by global efforts to reducehealthcare costs and by the stagnation in the investmentactivities of scientific institutes.
Carl Zeiss GroupBusiness Groups 50
Weak Market
The difficult market scenario left its mark on
the field of microscopy. Life sciences and
industrial applications, market segments that
normally display different cyclical trends,
both experienced a downturn at the same
time in the reporting year. Furthermore,
unfavorable currency parities had a detrimen-
tal effect on the strongly export-oriented
business.
Tight Research Budgets
Most of the instruments supplied by the
Microscopy Group are used for research pur-
poses. Customers in research and training are
directly dependent on the budgets of public
authorities. Cutbacks in public spending
Microscopy Group
After several years of continuous growth, business in the Microscopy Group declined for two years in a row for the firsttime. In fiscal year 2003/2004, revenues totaled EUR 273 million,8 percent below the previous year’s level. After adjustment for foreign currency influences, the group successfully assertedits position. Thanks to consistent restructuring measures in the past few years, it also generated healthy earnings underunfavorable circumstances. Acquisitions supplemented thegroup’s competencies in important fields of application.
Filtered and bundled: light for
fluorescence microscopy
51
therefore have a direct impact on the market
and the group’s business. With only a few
exceptions, this development has taken place
in most markets.
Microscopy in Transition
In the past few years, fundamental changes
have taken place in microscopy. The technol-
ogy used for optical examination methods
has been further enhanced in many different
ways. Highly specialized techniques have al-
lowed the dramatic developments achieved
in genetic research. Innovative possibilities
for visualization in fluorescence microscopy
are providing physicians and biologists with
new knowledge.
Increasing Automation
Automation is an important, general trend in
microscopy. Microscopic examinations – par-
ticularly in biomedical applications – are
becoming more and more “industrialized”. In
order to answer such questions as, for exam-
ple, what genes or proteins cause diseases,
the examination of an enormous number of
specimens is required. The only solution here
is the use of mass screening techniques, an
approach that has become known as “large-
scale biology”. In many cases, examinations
must be performed up to 30,000 times in
order to test all gene types.
3D Increasingly a Matter of Routine
Major technological developments include
three-dimensional imaging in the microscope.
Here, special Advanced Imaging Microscopy
Systems are now being supplemented with
systems for routine examinations in the life
sciences. Visualization techniques such as the
ApoTome® system from Carl Zeiss permit
differentiated and high-contrast imaging of
biological specimens.
Rising to the Challenges
The Carl Zeiss Microscopy Group is facing a
double challenge. Revenues must be secured
and the price war won in spite of decreasing
market volumes on the one hand, while new
applications must be accessed with innovative
solutions, and customer requirements met
more satisfactorily on the other. To enhance
its economic performance, the group has
consistently increased the flexibility of its costs
and capacities in the past few years. One
major milestone was the opening of a new
microscope production facility in Göttingen
last year. Thanks to consistent cost manage-
ment, the group has succeeded in achieving
Now also increasingly important
in materials microscopy:
ergonomic convenience and
digital documentation
Complete solution for live cell
imaging: Axiovert® 200 inverted
microscope with an incubation
device, ApoTome® system,
AxioCam® digital camera and
AxioVision® image analysis
software
Carl Zeiss GroupBusiness Groups 52
above-average profitability compared to
other companies in the industry. Sales pro-
grams entitled “Leadership for Performance”
will further improve revenues.
No Reduction in Investments
In spite of the modest market trend, spending
on product development has been continued
at an unchanged high level in the reporting
year. In close cooperation with leading scien-
tists, the group has prepared the launch of a
new instrument generation that will replace
the entire line of mid-range “upright micro-
scopes” and the large research microscopes
in the current fiscal year.
Access to Technology
In addition to investments in product devel-
opment, the group has also strengthened its
position through acquisitions, e.g. of the
confocal microscopy division of the Califor-
nian company BioRad Laboratories, Inc. This
provides Carl Zeiss with exclusive access to
femtosecond, two-photon microscopy, one
of the most important future-oriented
technological innovations in the field of mi-
croscopy. This technique enables 3D imaging
of thick living tissue specimens using ultra-
short laser light pulses in a manner that is
particularly gentle on the object examined.
The US partner company Cellomics has
launched the Array Scan VTI system devel-
oped by the Microscopy Group. Carl Zeiss
has acquired a significant participation in
Cellomics which manufactures automated
systems for high content screening, a tech-
nique that is important in pharmaceutical
research, for example.
“I am impressed by the ease withwhich scientists in our imaging labo-ratories become quickly autonomous,allowing them to achieve excellentresults by using Carl Zeiss micro-scope imaging systems.”
Spencer L. Shorte, PhD, Plateforme d'Imagerie Dynamique (PFID),
Institut Pasteur, Paris, France
LSM 510 META confocal laser
scanning microscope with spectral
detection
LSM 510 NLO multiphoton
laser scanning microscope with
femtosecond excitation
Fluorescence photo of neurons in
a rat’s brain
Fluorescence photo of a zebra fish,
multiple marking of the nerve
system
Success with Innovations
Innovations from the Microscopy Group were
also applauded by the professional world in
the reporting year. In the USA, the group
received the renowned “R&D 100” award for
“PlasDIC®”, a new technique for high-con-
trast imaging of biological specimens on
low-cost, plastic slides. The creators of the
LSM 510 META laser scanning microscope
have also been honored. Together with three
other teams, they were nominated for the
German President’s Future Prize.
Integrated Solutions in Demand
In the medium and long terms, an expanded
market offers highly attractive business
opportunities. One focus is being placed on
sciences dealing with the examination of
living cells. In highly specialized applications,
it is currently often up to the customer to
efficiently integrate the various examination
tasks into one complete process. Carl Zeiss
considers this as an opportunity to offer
customers not just single instruments, but
optimized total solutions for complex appli-
cations.
Carl Zeiss GroupBusiness Groups 54
The Industrial Metrology Group (IMT) is one of the leadingproviders in the field of industrial coordinate measuring technolo-gy. With the launch of the world’s first CNC measuring machineback in 1973, Carl Zeiss paved the way for modern 3D CNCmetrology. IMT offers a wide product spectrum covering measur-ing tasks in diverse measuring conditions, from the metrology labto shop floor measurement in a rough production environmentwithout air-conditioning. The main customers for these productsare the automotive, mechanical engineering and aeronautical industries. In recent years, the business group has undergone atransition from a machine manufacturer to a solution provider,and now offers an impressive range of services from contract programming to worldwide on-site support. More than 25 % of theIMT revenue is already generated by services alone. The Carl ZeissIndustrial Metrology Group sets itself apart from its competitorsby offering the most comprehensive technological know-how. Allcomponents which are crucial to performance are developed andmanufactured in-house by IMT. This is a vital prerequisite forguaranteeing the recognized high quality of the products. On thebasis of its leading market position in the industrial countries,this business group is now expanding its activities in the growthregions of Asia.
Carl Zeiss GroupBusiness Groups 56
Industrial Metrology Group
Tiny parts can be measured with the
stylus of the F 25 measuring machine
Close-up of the illumination unit of
the F 25 measuring machine
Industry Stabilized
The market for coordinate measuring
machines is influenced by developments in
the manufacturing industries, primarily
mechanical engineering, and in the car and
aerospace industries. These sectors have
roughly maintained their levels in fiscal year
2003/04 following considerable reductions
the year before. The negative trend appears
to have stopped. The Industrial Metrology
Group used the opportunities thereby creat-
ed and once again recorded stable business.
The Industrial Metrology Group (IMT) maintained its positionduring fiscal year 2003/04 despite the subdued market trend.Revenue of EUR 244 million was five percent less than theprevious year. Streamlining of the organization, systematiccost management and location optimization enabled IMT tofurther increase its earning power. The group has operated asCarl Zeiss Industrielle Messtechnik GmbH since October 1, 2003.
Streamlined Structures
On October 1, 2003, the group combined
the organizationally separate functions of
development, assembly and logistics on the
one hand, and sales and service on the other,
into a single company. The entire group now
operates as Carl Zeiss Industrielle Messtech-
nik GmbH. Simultaneously, locations in
Germany were restructured and consolidated
further.
57
Microsystems technology
makes major demands on
metrology
Global Availability
A regional expansion of market developments
reveals that there is very weak demand in
Western Europe. Eastern Europe, however,
is showing an upturn in metrology business.
The American markets are beginning to pick
up again following a slowdown. The Japanese
market is well on its way to a noticeable
recovery. Overall, the Asian theater exhibits
the largest growth potential.
The mainstay of Carl Zeiss Industrielle
Messtechnik GmbH on the Asian market is a
service and application center in Shanghai,
which once again expanded during the re-
porting year. An assembly facility was estab-
lished for mid-class coordinate measuring
machines. With the completion of this
production site, IMT is represented in the
markets of the triad by powerful centers in
Oberkochen, Germany, Minneapolis and
Shanghai. Presence in three time zones
enables IMT to provide support to its world-
wide customers around the clock.
Fast Help from Far Away
Teleservice for measuring machines from Carl
Zeiss enables short reaction times and direct
help without interrupting operations. The
responsible control center can diagnose the
problem remotely via an online connection
and implement measures to solve the problem.
All coordinate measuring machines delivered
since the beginning of 2004 have been con-
figured for teleservice.
New Focus on Micosystem Technology
This year, IMT presented the F 25 measuring
system for measuring tasks in microsystem
technology. Micro-motors, micro-switches
and tiny components, e.g. for medical tech-
nology, are the ultimate challenge for tactile
or optical measuring. Other forces are at
work in these extremely small dimensions,
other principles apply than in traditional
metrology. A resolution of 7.5 nanometers
and special micro-sensors enable the F 25
measuring machine to conduct tactile meas-
urements on bores smaller than one milli-
meter in diameter.
3D measurements with a resolution
of 7.5 nanometers are the domain
of the F 25 measuring system
Carl Zeiss GroupBusiness Groups 58
Computer Tomography Measures and
Tests
The computer tomography measuring proce-
dure has also already undergone practical
testing. This method, which is known from
medical technology, enables inspection of the
inner structures of the workpiece parallel to
measurements on the surface and geometry.
An initial RayScan measuring machine
produced in cooperation with HWM Hans
Wälischmiller, in Markdorf, Germany, is
currently in use at the IMT 3D Academy.
Measurements are carried out on a customer-
order basis. The system is already a success,
and its capacity is completely utilized.
Successful Product Lines
Measuring systems from IMT set the pace in
their areas of application. GageMax® and
CenterMax® measuring systems have contin-
ued their success in their respective markets.
They are ideal for direct shop-floor integra-
tion with in-line applications for components
manufactured in a machining process, an
area where its performance features are par-
ticularly useful. CALYPSO® software developed
by Carl Zeiss has played a key role in the suc-
cess of the system. The in-line systems and
CALYPSO are market leaders in this segment.
Horizontal-arm measuring machines are the
key players in car body and tool design and
construction, in metal forming and in mold
making. The PRO® model achieves high speeds
as a result of the extremely lightweight and
sturdy bionic design. Optical “EagleEye”
sensors also help these machines to achieve
measuring times which could previously only
be reached with single-job measuring robots.
“For more than 30 years, we have establishedour image as a quality leader with the help ofZEISS measuring technology. With the newmeasuring systems, we continue to increaseproductivity for the benefit of our customers.”
Rune Karlsson, Vice President, Production & Logistics, AB Sandvik Coromant,
Sandviken, Sweden
59
A successful duo: the Prismo®
measuring system and the
CALYPSO software are bestsellers
in the Industrial Metrology Group
The VAST® Gold probe head allows
tactile measurement with active
scanning technology
New Customers for IMT
IMT is entering new market segments with
F 25 and RayScan, enabling it to access
customer groups with which it had previously
no contact. As the traditional segment offers
only minimal impetus for growth, gaining
new users is of paramount importance for
future success.
Service Business Increasing
The Industrial Metrology Group is well posi-
tioned to meet the challenges of the coming
months. It is at the forefront of development
of innovative solutions in both hardware and
software, and is poised to open new areas
of applications for measuring technology.
Its future achievements will be centered on
services that have contributed to its leading
position until now: proximity to customers,
outstanding service and rapid availability
throughout the world. The proportion of
service in overall business has continually
grown to 28 percent in recent years. This
business will continue to expand. Applica-
tions will focus on microsystem technology,
x-ray technology and the extension of the
service offering resulting from the establish-
ment of additional local measuring centers
for customer support and contract measure-
ments.
Carl Zeiss GroupBusiness Groups 60
The Opto-Electronic Systems Group offers a diverse product lineboth in the Carl Zeiss Group’s classic areas of operation and in itsnew lines of business. Its products represent a leading technologi-cal position that gives the customer the certainty of receiving thebest possible performance. The high-quality brand clearly under-lines the quality of the product and creates trust with the end-user.
The Camera Lens Division is building on its proven collaborationwith leading manufacturers of camera systems for conventionalstill and movie photography, as well as its dynamic cooperationwith licensee Sony in the field of digital cameras and camcorders.This successful joint effort is now being expanded to includedigital projection; a field where, as the market leader for “lightengines”, Carl Zeiss already equips well-known providers withoptical systems. These systems are manufactured in close prox-imity to the production sites of the globally operating customers.
Carl Zeiss Optronik GmbH is reporting extraordinarily dynamicdevelopment in the saturated market for opto-electronic modulesand sub-systems. This success can be attributed to the mid-termstrategy of moving away from the manufacture of sensors to thedelivery of subsystems.
Carl Zeiss is continuing to expand its market dominance and technological leadership in planetariums. Newly developed laserprojection systems, for example, allow unique display possibilitieson the planetarium dome.
Carl Zeiss GroupBusiness Groups 62
Business developments in the Opto-Electronic Systems Group(OES) were marked by strong growth, with revenue increasing17 percent to EUR 229 million and a significant rise in earn-ings. The young Display Technologies Division performed particularly well with its systems for digital projection andoptronics. The Planetarium and Camera Lens Divisions assert-ed their positions in the market. A new factory in China issupporting the dynamic development of display technologiesat Carl Zeiss.
Opto Electronic Systems Group
Light makes information visible
Growing with Digital Displays
Business with digital projection optics was
the most important driver of growth for OES.
Revenues from these products increased by
almost fifty percent during the reporting
year. In response to rapidly growing volumes,
the Display Technologies Division was created
at the beginning of the fiscal year from a
business unit with the same name. Earnings
also rose despite the high investments in the
expansion. The market for digital projection
systems is developing with extraordinary
speed. The division considerably increased
its capacities with the opening of its own
production facility in Suzhou, China (near
Shanghai) in May 2004. Carl Zeiss now man-
ufactures its display systems where its most
important customers and suppliers have their
production centers. Here, increased volume
is possible this year in addition to expanded
capacities.
63
DLP rear projection TV systems
with optical modules from Carl
Zeiss offer outstanding brightness
and rich contrast
Compact performance: optical
modules for digital projectors in the
“Field Lens Design™” patented for
Carl Zeiss
Breakthrough in Projectors
Digital projectors and rear-projection TV
systems have now made the breakthrough to
the mass private consumer market. In sys-
tems with large screen diagonals, digital light
processing technology won the upper hand
from the two competing processes. The
trigger of this success was a substantial cost
reduction for these systems resulting from
the introduction of the latest generation of
projection components. Important electronics
suppliers, such as Samsung, HP, Thomson,
Philips and Sharp, number among the cus-
tomers for projection systems from Carl Zeiss.
Fierce competition between manufacturers in
the USA and South Korea is emerging on the
projector market.
Planetariums Hold Their Ground
A stable business trend enabled planetariums
to once again post good results. The market
for star projections is stagnating as a result
of cutbacks in public budgets triggered by
the current subdued trend in the economy. In
addition to fiscal constraints for educational
projects, the most important market, the USA,
is also influenced by unfavorable currency
developments. A large planetarium utilizing
the latest technology opened in Hamburg,
Germany during the reporting year. Another
three large projects are currently being in-
stalled in Europe and Asia.
Small Domes – Large Images
The most recent new development in plane-
tariums is a digital, all-dome projection system
for dome diameters of 6 – 8 meters. Systems
of this size are ideal for presentations to small
groups, e.g. school classes. The projection
transforms the dome into a movie screen.
The projectors are specially-adjusted ZEISS
display systems from the Display Technologies
Division. A prototype of this system with a
mobile, inflatable dome has been presented
in several countries.
Carl Zeiss GroupBusiness Groups 64
Changeover Complete
The Camera Lens Division introduced several
important projects during the reporting year.
It was able to expand its global leadership in
lenses for professional movie cameras. As ex-
pected, overall business leveled off. Earnings
were once again better than the previous
year. The transition from analog to the digital
market has also been completed. Business
with partner Sony in the field of digital cam-
eras and camcorders once again increased.
Up to one million camera and video fans
around the world purchase a Sony camera
with a ZEISS lens every month.
Sony digital cameras transport
the name Carl Zeiss to millions of
photo fans all over the world
Hollywood Bound
Carl Zeiss reinforced its position as the lead-
ing provider of lenses for professional movie
cameras. DigiZoom was the first ZEISS zoom
lens for digital systems in this segment of
the market. All major productions are still
recorded on 35 mm film. The creative possi-
bilities and long-term economic efficiency of
this format remains unparalleled. The new
MasterPrime line, the most powerful lenses in
their class, was introduced for these systems.
Brand Revival
A new camera generated significant interest
towards the end of the fiscal year – and also
revived the Zeiss Ikon® brand. It is the basis
of a lens system in which advanced and
sophisticated features of movie lenses were
transferred to 35 mm cameras. Designed
around a universal lens connector, the high-
quality camera system is multifaceted and
maintains its value.
The division also signed an agreement with
mobile communications specialist Dialog
Semiconductor, based in Kirchheim/Teck,
Germany, to develop compact camera
modules for mobile telephones.
“Optics from Carl Zeiss play a key role in our product strategy for digital cameras and camcorders. Their performance is outstanding,and they enjoy a reputation of being the best possible choice for the exacting consumer.”
Shoji Nemoto, Vice President, Sony Corporation, Tokyo, Japan
President of Digital Imaging Company and IT & Mobile Solutions Network Company
65
The Zeiss Ikon® camera system
with high-performance lenses
from Carl Zeiss mark the revival
of a brand steeped in tradition
The hand-held Nestor® instrument
is used for observation and
determining target coordinates
Optronics Moving Forward
The Optronics Division once again increased
its business volume. Revenue improved clearly,
with more incoming orders than the year
before. The major momentum originated out-
side Germany. Unlike other industries, this
defense-oriented business is only marginally
affected by its direct economic environment.
Furthermore, it is based on relatively long
product life cycles. The rising number of
foreign deployments by the German military
and allied NATO states improved the overall
conditions for the division. Equipment needs
have also changed as a result of the new
deployment scenarios. New market potential
evolved from border control and internal
security. The division was particularly success-
ful with optronic systems for reconnaissance
vehicles, submarines and border surveillance
systems. It was able to secure important
large projects despite tough international
competition.
Carl Zeiss GroupHighlights 66
History Lessons
from the Ocean Floor
Delving into the ocean floor
The Japanese subsidiary of Carl Zeiss AG com-
pleted equipping the Usa Marine Biological
Institute at Kochi University with 51 research
microscopes – including the LSM 510 NLO
confocal laser scanning microscope. The mi-
croscopes are used to examine soil samples
obtained from the ocean floor. Researchers
gather information on the formation of the
earth from the composition of the samples.
The composition of the layers is not the only
thing that will be closely studied. Fossils and
plankton captured in the sediment will also
be examined under the microscope.
Highlights of Fiscal Year 2003/2004
Partnership with the University of
Moscow
Carl Zeiss signed a contract with the University
of Moscow to promote science and education
in Russia. The objective is to develop new,
optical technologies for biology, bio-tech-
nology, physics and medicine, disciplines in
which scientists in Moscow are considered
pioneers. Furthermore, the partnership
will create special education programs for
students. The five-year project was agreed
upon in September 2003.
The University of Moscow and
Carl Zeiss conduct research to-
gether. Dr. Victor A. Sadovnichy,
President of the University of
Moscow (left), and Dr. Norbert
Gorny, Member of the Board at
Carl Zeiss, signed the cooperation
contract
Namibia: Help for Self-help
Dr. Jürgen Lautermann (left) treats hearing-impaired
youths in Namibia using an OPMI® 1 FC surgical
microscope and is gradually training and incorporat-
ing local hospital personnel
Rural regions in Namibia will be able to help
themselves treat ear, nose and throat illnes-
ses. It is an ambitious goal in which German
specialists train local doctors and nurses to
treat young hearing impaired patients. Con-
veying knowledge of diagnostics and therapy
is the only way to help those who want to
help themselves. It is particularly important in
Namibia where there are only two ENT doc-
tors and few specialists. Carl Zeiss supported
the pilot project by providing an OPMI® surgi-
cal microscope in October 2003.
67
Mars Magnifier
The “Mars Express” probe is equipped with
a high-resolution mirror tele lens built by
Carl Zeiss in Jena. It will be used in a special
stereo camera to systematically map the
surface of a planet for the first time using
high-resolution, 3D color photos. The lens
works like a telescope and can precisely iden-
tify boulders the size of a garage or layers
of rock. The resolution of the lens is approxi-
mately ten meters at an altitude of 250 kilo-
meters. The probe is now on location and
returning pictures with outstanding quality.
The camera on Mars Express
delivers razor-sharp images of
Phobos, one of Mars’ moons
(Photo: Copyright ESA/DLR/FU
Berlin (G. Neukum))
Carl Zeiss Lecture 2004
Prof. Dr. Roger Tsien is the winner of the
award known as the Carl Zeiss Lecture, the
highest scientific commendation granted by
the German Association for Cell Biology (DGZ).
The DGZ presented the award donated by
Carl Zeiss to the scientist from the University
of California, San Diego in La Jolla, at its
annual meeting in Berlin in March 2004.
Tsien played a key role in the development
of fluorescence methods. One of his most
significant contributions, the determination
of cell structures and their functions with
“green fluorescent protein”, is one of the
most important aids used in making single
molecules in a cell visible. Every year, the
DGZ uses the Carl Zeiss Lecture to honor
outstanding performances in cell biology in
light and electron microscopy.
Winner of the 2004 Carl Zeiss
Lecture: Prof. Dr. Roger Tsien
Environmental Protection and Health &
Safety Certified
Using synergies and simplifying processes
were the objectives for the introduction of
a uniform management system for environ-
mental protection and health & safety at
Carl Zeiss AG’s largest facility in Oberkochen,
Germany. The efforts bore fruit in April 2004.
Following a joint audit, the Oberkochen
Service Center received both environmental
and health & safety certification as per
ISO 14001 and OHSAS 18001.
Many people are involved in
environmental protection and
health & safety – their success
is certified
Carl Zeiss GroupHighlights 68
Production in China
Carl Zeiss’ first production site in China
opened in May 2004. Carl Zeiss produces
large volumes of optic modules for digital
projectors, and later also for rear-projection
TVs at the 3000 square meter facility located
in Suzhou, about 80 km west of Shanghai.
A wholly-owned subsidiary of Carl Zeiss
Jena GmbH, Carl Zeiss Display Technologies
(Suzhou) Co. Ltd. was founded in 2003.
By the end of 2004, production increased
to 25,000 optic modules per month at the
100-employee factory.
Professorship Financed
A professor for Aalen (from left): Assistant Secretary
Christoph Keller, new endowed professor Dr. Rainer
Börret, Prof. Dr. Dr. Ekbert Hering, Director of the
Aalen University of Applied Sciences, and President
and CEO of Carl Zeiss Dr. Dieter Kurz
Carl Zeiss places great emphasis on training
qualified junior personnel in optical technolo-
gies. This close cooperation with universities
and institutes of higher learning boasts a
long tradition at the company. In June 2004,
Carl Zeiss reached an agreement with the
University of Applied Sciences in Aalen to
finance an endowed professorship for optical
production technologies with a focus on
aspheric optics for a period of four years. It
will be headed by Prof. Dr. Rainer Börret, a
former long-time employee at Carl Zeiss.
The new chair is the highlight of more than
40 years of cooperation between the univer-
sity and Carl Zeiss.
Carl Zeiss Award for L.V. Prasad
The L.V. Prasad Institute in Hyderabad, India,
has been honored with the Carl Zeiss Award
for Excellence. The institute was singled out
in recognition of its initiatives and contribu-
tions to eye care in India and in developing
countries in Southeast Asia. L.V. Prasad also
supports training of eye care specialists in the
use of the most modern instruments. Further-
more, the best graduate each year receives a
scholarship. Carl Zeiss supports the institute
in a number of projects.Professor Ravi Thomas, Director of
L.V. Prasad Institute, receives the
Carl Zeiss Award for Excellence
from Ulrich Krauss, Carl Zeiss
Meditec AG
Business openings and other im-
portant festivals in China are
greeted with the traditional lion’s
dance. The lion stands for happi-
ness and strength. Member
of the Board, Dr. Norbert Gorny
and Zhang Yihong, responsible for
public relations at the Suzhou In-
dustrial Park (from left), symboli-
cally paint the eye of the lion to
awaken its spirit
69
Gold for GageMax
GageMax, the measuring machine for pro-
duction integration, is scoring increasing
success after another in Eastern Europe. The
Industrial Metrology Group received a gold
medal at the International trade fair in Poz-
nan, Poland in June 2004 for the machine
which is used for in-line measurements. The
most important trade fair in Poland identified
GageMax as one of the outstanding techni-
cal innovations of the year.
Carl Zeiss Research Award Presented
Professor Mark Kasevich received the 2004
Carl Zeiss Research Award for his outstanding
achievements in basic research and applica-
tions in optics. The physicist from Stanford
University in California is particularly interest-
ed in experimental atomic and laser physics
and specific procedures in diluted, ultra-cold
liquid quantities. He has been involved with
atom interferometry for more than ten years.
Kasevich received the 2004 Carl Zeiss Research
Award in June for his research on precision
atomic interferometers. The award is present-
ed every two years. There have been a total
of seven winners.
Prof. Mark Kasevich is the current
winner of the Carl Zeiss Research
Award
The GageMax production system
received recognition on the Polish
market
Award-winning Innovations
The Carl Zeiss Innovation Days took place at
the beginning of July in Paderborn, Germany,
under the motto “Managing the Innovation
Pipeline”. Approximately 150 researchers,
managers and sales and marketing experts
from all areas of Carl Zeiss met to build net-
works, exchange knowledge and learn from
each other. The winners of the Innovation
Award 2004 were honored during the event.
79 Teams submitted projects in the Innovative
Business Design, Leading Edge Technology,
High Risk Project, Successful Failure and
Short Time to Market categories.
The winners of the Innovation
Award with President and CEO
Dr. Dieter Kurz (left), Member of
the Board Dr. Michael Kaschke
(third from right) and Dr. Augustin
Siegel (right), Senior Vice Presi-
dent of Corporate Research and
Technology.
Carl Zeiss GroupHighlights 70
Center for Microscopic Image
Processing
Gaining knowledge of new technologies in
microscopy for digital imaging systems and
image analysis and sharing it with scientists
in India is the main goal of the Center for
Cellular and Molecular Biology (CCMB) in
Hyderabad, India. The new facility will enable
the CCMB to become a knowledge center in
microscopy and imaging systems and to offer
a forum with which the CCMB will be able
to distinguish itself as a test center for new
microscopes and imaging systems in India.
Samsung Prefers Carl Zeiss
Carl Zeiss is a member of the club (from left): Albrecht
Richter and Dr. Franz von Falkenhausen, Carl Zeiss,
J.K. Kim and Yonghoy Kim, Samsung Electronics,
Visual Display Division
The Display Technologies Division has been
part of Samsung’s Digital Members Club
since September 2004. This makes Carl Zeiss
one of the preferred suppliers for the micro-
display projection business at South Korean-
based Samsung. Membership enables partici-
pation in promising key projects such as the
mini LED projector, or rear-projection TVs,
for example. Furthermore, members receive
early information on new project invitations
to tender and the most up-to-date market
developments.
Oscar for Inventions
The Microscopy Group won its third consecu-
tive R&D Award in July 2004. The prize pre-
sented by the leading US research and tech-
nology magazine honors the innovative
PlasDIC microscopic contrasting procedure.
For the first time, it is possible to use cost-
effective, plastic slides – without losing infor-
mation – for observation of living cells or
for cell micromanipulation on a microscope.
PlasDIC generates a larger depth of field than
conventional contrasting procedures, enabling
users to quickly assess both thin and thick
objects at a single glance.
Photomicrograph of human cells
from the lining of the mouth
1. without PlasDIC (left),
2. with PlasDIC (right)
Dr. Norbert Gorny, Member of the
Board at Carl Zeiss, and Kapil
Sibla, the Indian Minister for
Science and Technology, opened
the Center for Microscopic Image
Processing at the CCMB in
Hyderabad, India in August 2004
71
A Star Is Born
Preparations for the launch of the Zeiss Ikon camera:
Dr. Winfried Scherle (standing) and Larry Hansen
(right) from Carl Zeiss, Cosina President, Hirofumi
Kobayashi (middle) and Keiji Kato from Cosina
For the first time since 1972, there is now a
camera with the name Zeiss Ikon®. Working
closely with camera manufacturer Cosina,
Carl Zeiss created a rangefinder camera with
both peak performance and image quality.
The heart of the new camera is a line of
lenses with unique features. Significant
know-how in creating the optimal picture
was incorporated in the camera design. The
team produced an instrument for enthusiastic
photographers. The Zeiss Ikon premiered at
Photokina in Cologne in September 2004.
The name says it all: Zeiss Ikon
The Clearest Skies
The Universarium IX projector for the new Hamburg
dome
Nowhere is Hamburg’s night sky more beau-
tiful than in the North German city’s new
planetarium. One of the most popular plane-
tariums in Germany was closed for more than
a year while it underwent comprehensive
renovations. A new 21 meter dome provides
an ideal projection surface. The images of
the celestial bodies which cannot be distin-
guished from their natural counterparts are
created in a Universarium IX projector specifi-
cally configured for Hamburg. The new
facility was officially inaugurated in October
2004. The number of visitors in the first
months has doubled compared to previous
years.
73
Carl Zeiss AGBoard of ManagementSupervisory Board
Carl Zeiss AGBoard of Management 74
Board of Management
Dieter Kurz, Dr. rer. nat.
Aalen
President and CEO, and Labor Director
Member of the Board responsible for Semi-
conductor Technology, Industrial Measuring
Technology, Strategic Corporate Develop-
ment, Corporate Communications, Corporate
Human Resources Management, Corporate
Auditing, and Legal Affairs and Patents
Norbert Gorny, Dr. rer. nat.
Westhausen
Member of the Board responsible for Micro-
scopy, Opto-Electronic Systems, the Service
Centers, Information Technology and Central
Procurement, Quality and Processes
Michael Kaschke, Dr. sc. nat.
Oberkochen
Member of the Board responsible for Con-
sumer Optics, Medical Systems, Corporate
Finance/Controlling, and Research and
Technology
Board of Management and Supervisory Board
of Carl Zeiss AG
75Carl Zeiss AG
Supervisory Board
Supervisory Board of Carl Zeiss AG
Tilman Todenhöfer
Stuttgart
Chairman
Chairman of the Foundation Council of the
Carl Zeiss Stiftung, Heidenheim an der Brenz
and Jena
Personally Liable Shareholder of Robert Bosch
Industrietreuhand KG, Stuttgart
Jürgen Dömel 2) 3)
Jena
Deputy Chairman
Chairman of the Group Employee Represen-
tative Council of Carl Zeiss AG, Oberkochen;
Chairman of the Employee Representative
Council of Carl Zeiss Jena GmbH, Jena
Dr. Martin Allespach 2) 3)
Stuttgart
District Secretary of IG Metall union, District
Management, Baden-Württemberg, Stuttgart
Dr. Michael Claus 2) 3)
Aalen
Research Manager, Imaging Technology
Carl Zeiss AG, Oberkochen
Prof. Dr. Adolf G. Coenenberg 2)
Stadtbergen
Chair of Business Administration, Auditing
and Controlling at the University of Augsburg
Wolfgang Grothe 2) 3)
Aalen
Senior Vice President, Corporate Taxes
Carl Zeiss AG, Oberkochen
Roland Hamm 2) 3)
Aalen
First Authorized Representative of IG Metall
union, Administration Office Aalen, Aalen
Hans-Jürgen Heinicke 2) 3)
Aalen
Technical Services Manager, Carl Zeiss
Optronics GmbH, Oberkochen
Prof. Dr. Michael Hoffmann-Becking 1)
Düsseldorf
Attorney
Hermann-Josef Lamberti 2)
Königstein/Taunus
Member of the Board of Managing Directors,
Deutsche Bank AG, Frankfurt am Main
Dr. Hansjörg Manger 2)
Uhldingen-Mühlhofen
Former Managing Director,
Robert Bosch GmbH, Stuttgart
Dr. Michael Rogowski 2)
Heidenheim an der Brenz
President of the Bundesverband der
Deutschen Industrie e.V., Berlin;
Chairman of the Shareholders’ Committee
and the Supervisory Board, J.M. Voith AG,
Heidenheim an der Brenz
Dr. Georg Seyfarth 1)
Düsseldorf
Attorney
Prof. Dr. Klaus-Dieter Vöhringer 2)
Baden-Baden
Former Member of the Board of Managing
Directors, DaimlerChrysler AG, Stuttgart
1) until August 10, 20042) as of August 11, 20043) Employee Representatives
77
Carl Zeiss GroupMajor Affiliated and Associated Companies
Carl Zeiss GroupMajor Affiliated and 78Associated Companies
Europe
Germany Carl Zeiss 3D MetrologyServices GmbH AalenAalenC: EUR 103 75.1%
Carl ZeissBeteiligungs-GmbHOberkochenC: EUR 27,400 100%
Carl Zeiss FinancialServices GmbHOberkochenC: EUR 500 100%
Carl Zeiss IndustrielleMesstechnik GmbHOberkochenC: EUR 20,000 100%
Carl Zeiss Jena GmbHJenaC: EUR 6,187 100%
Carl Zeiss Jena Grundstücks GmbH & Co. KGJenaC: EUR 1,000 100%
Carl Zeiss Laser Optics GmbHOberkochenC: EUR 1,000 100%
Carl Zeiss Meditec AGJenaC: EUR 28,417 71.9%
Carl Zeiss Meditec SystemsGmbHPirmasensC: EUR 315 100%
Carl Zeiss NTS GmbHOberkochenC: EUR 515 100%
Carl Zeiss Oberkochen Grundstücks GmbH & Co. KGOberkochenC: EUR 1,000 100%
Carl Zeiss Optronics GmbHOberkochenC: EUR 6,600 100%
Carl Zeiss Optronics Wetzlar GmbHWetzlarC: EUR 26 100%
Carl Zeiss Schönkirchen GmbHSchönkirchenC: EUR 3,579 100%
Carl Zeiss SMS GmbH JenaC: EUR 2,500 100%
Carl Zeiss SMT AG OberkochenC: EUR 49,985 100%
Carl Zeiss Vision GmbHHallbergmoosC: EUR 511 100%
Hensoldt AGWetzlarC: EUR 5,800 100%
Hensoldt Grundstücks GmbH & Co. KGWetzlarC: EUR 1,000 100%
Marwitz & Hauser GmbHAalenC: EUR 8,436 100%
Prontor-WerkAlfred Gauthier GmbHBad WildbadC: EUR 3,579 100%
Austria Carl Zeiss GmbHViennaC: EUR 1,235 100%
Belarus Zeiss-Belomo TOOMinskC: USD 4,937 60%
Belgium Carl Zeiss N.V. – S.A.ZaventemC: EUR 551 100%
Czech Carl Zeiss s.r.o.Republic Prague
C: CZK 26,450 100%
France Carl Zeiss S.A.S.Le PecqC: EUR 5,800 100%
Carl Zeiss SMT S.à.r.l.Rueil MalmaisonC: EUR 375 100%
Hungary Carl Zeiss Hungaria Optikai Kft.MátészalkaC: HUF 1,639,030 100%
Italy Carl Zeiss S.p.A.AreseC: EUR 4,000 100%
Netherlands Carl Zeiss B.V.SliedrechtC: EUR 2,723 100%
Norway Carl Zeiss ASLØrenskogC: NOK 12,000 100%
Poland Carl Zeiss Sp.zo.o.PoznanC: PLN 3,515 100%
Romania Carl Zeiss Instruments s.r.l.BucharestC: ROL 17,750 100%
Slovenia Carl Zeiss d.o.o.LjubljanaC: SIT 2,100 100%
Spain Carl Zeiss S.A.Tres CantosC: EUR 1,435 100%
Sweden Carl Zeiss ABStockholmC: SEK 6,100 100%
Switzerland Carl Zeiss AGFeldbachC: CHF 1,500 100%
Optiswiss AGBaselC: CHF 210 100%
United Kingdom Carl Zeiss Ltd.Welwyn Garden CityC: GBP 1,570 100%
Carl Zeiss SMT Ltd.CambridgeC: GBP 2,700 100%
Major Affiliated and Associated Companies by Region
79
America
USA Carl Zeiss IMT CorporationMinneapolisC: USD 0.01 100%
Carl Zeiss Inc.ThornwoodC: USD 4,800 100%
Carl Zeiss Meditec Inc.DublinC: USD 0.02 100%
Carl Zeiss Microlmaging Inc.ThornwoodC: USD 0.02 100%
Carl Zeiss Optical Inc.ChesterC: USD 0.01 100%
Carl Zeiss SMT Inc.ThornwoodC: USD 0.1 100%
Carl Zeiss Surgical Inc.ThornwoodC: USD 0.002 100%
Cellomics Inc.PittsburghC: USD 882 47.9%
Canada Carl Zeiss Canada Ltd.TorontoC: CAD 6,170 100%
Argentina Carl Zeiss Argentina S.A.Buenos AiresC: ARS 0.008 99.9%
Brazil Carl Zeiss do Brasil Ltda.São PauloC: BRL 5,319 100%
Mexico Carl Zeiss de México S.A. de C.V.México D.F.C: MXN 14,030 100%
Africa
South Africa Carl Zeiss (Pty.) Ltd.RandburgC: ZAR 7,825 100%
Asia
China Carl Zeiss Display Technologies (Suzhou) Co. Ltd.SuzhouC: EUR 3,780 100%
Carl Zeiss IMT (Shanghai)Co. Ltd.ShanghaiC: USD 400 100%
Carl Zeiss Shanghai Co. Ltd.ShanghaiC: USD 200 100%
Special Carl Zeiss Far East Co. Ltd.administration Kowloon
region Hong Kong C: HKD 14,000 100%
India GKB Hi-Tech Lenses Ltd.MapusaC: INR 13,443 22.9%
Japan Carl Zeiss Co. Ltd.TokyoC: JPY 594,000 100%
Carl Zeiss Meditec Co. Ltd.TokyoC: JPY 50,000 100%
Malaysia Carl Zeiss Sdn. Bhd.Kuala LumpurC: MYR 500 100%
Singapore Carl Zeiss India Pte. Ltd.SingaporeC: SGD 750 100%
Carl Zeiss Pte. Ltd.SingaporeC: SGD 2,000 100%
South Korea Carl Zeiss Co. Ltd.SeoulC: KRW 2,720,000 100%
Thailand Carl Zeiss Co. Ltd.BangkokC: THB 3,000 49%
Australia
Australia Carl Zeiss Pty. Ltd.North RydeC: AUD 1,051 100%
New Zealand Carl Zeiss (N.Z.) Ltd.AucklandC: NZD 4 100%
Major affiliated and associ-ated companies: Status as of Sept. 30, 2004The percentage shares ofcapital given represent thoseshares held by the enterprisesas defined by the German Commercial Code,§ 285 No. 11
Not included in the Group’sfinancial statements
C = capital in thousands ofEUR or other currency
81
Carl Zeiss GroupConsolidated Financial Statements
Carl Zeiss GroupConsolidated Balance Sheet 82
Consolidated Balance Sheet as of September 30, 2004
Assets Notes Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Fixed assets 8
Intangible assets 31,580 15,294
Tangible assets 362,023 363,959
Financial assets 72,671 39,315
466,274 418,568
Current assets
Inventories 9 570,870 535,529
Advance payments from customers –175,059 –135,545
395,811 399,984
Receivables and other assets 10
Accounts receivable 402,479 356,477
Other receivables and other assets 73,263 95,507
475,742 451,984
Funds 11 734,724 533,204
1,606,277 1,385,172
Prepaid expenses 12 21,826 19,461
2,094,377 1,823,201
83
Liabilities Notes Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Equity 13
Subscribed capital (last year: proportionate share of Carl Zeiss Stiftung) 120,000 175,000
Capital reserves 52,770 –
Revenue reserves 76,872 61,148
Consolidated net income 137,373 68,783
Minority interests 32,709 32,682
419,724 337,613
Special items with an equity portion 14 – 11
Provisions 15
Provisions for pension plans and similar commitments 865,388 844,209
Other provisions 515,458 449,865
1,380,846 1,294,074
Liabilities 16
Loans 57,168 –
Liabilities to banks 5,487 7,997
Accounts payable 128,317 82,774
Other liabilities 77,224 75,340
268,196 166,111
Deferred income 25,611 25,392
2,094,377 1,823,201
Carl Zeiss GroupConsolidated Equity Statement 84
Statement of Changes in Consolidated Equity
during the 2003/2004 Fiscal Year
Subscribed Capital Generated Cumulative Consolidatedcapital reserves consolidated miscellaneous equity
equity consolidated of parentresult company
(in thousands (in thousands (in thousands (in thousands (in thousandsof EUR) of EUR) of EUR) of EUR) of EUR)
As of Oct. 1, 20031) 120,000 52,770 146,603 1,923 321,296
Dividends – – – – –
Other changes – – –5,663 – –5,663
Consolid. income for the year – – 72,546 – 72,546
Miscellaneous consolidated result2) – – – –1,164 –1,164
Consolidated total result – – 72,546 –1,164 71,382
As of Sept. 30, 2004 120,000 52,770 213,486 759 387,015
1) after conversion of the operating enterprise
Carl Zeiss to a stock corporation, including
valuation changes due to tax-basis elimina-
tions (deletion of § 308 Para. 3, German
Commercial Code (HGB)) and goodwill deduc-
tion
2) in particular adjustments for foreign curren-
cy translation
85
Minority Cumulative Minority Consolidatedcapital miscellaneous interests equity
consolidatedresult
(in thousands (in thousands (in thousands (in thousandsof EUR) of EUR) of EUR) of EUR)
32,682 – 32,682 353,978
–359 – –359 –359
–4,123 – –4,123 –9,786
4,528 – 4,528 77,074
– –19 –19 –1,183
4,528 –19 4,509 75,891
32,728 –19 32,709 419,724
Carl Zeiss GroupFixed Asset Movement Schedule 86
Acquisition / Manufacturing CostAs of Currency Additions
Oct. 1, 2003 differences
(in thousands (in thousands (in thousandsof EUR) of EUR) of EUR)
Intangible assets
Industrial property rights and similar rights and assets,and licenses in such rights and assets 19,644 –33 29,593
Goodwill 29,087 – –
Payments on account 789 – 75
49,520 –33 29,668
Tangible assets
Land, land rights and buildings,including buildings on third-party land 309,156 –1,370 4,122
Plant and machinery 511,953 –807 19,151
Other fixtures and fittings, tools and equipment 371,656 –1,214 48,455
Payments on account and construction in progress 15,661 –81 16,275
1,208,426 –3,472 88,003
Financial assets
Interests in affiliated companies 23,458 –151 17,277
Loans to affiliated companies 69 – 2,032
Investments in associated companies – 21 9,955
Other investments 15,359 –381 12,235
Long-term investments 880 –1 37
Other loans 19,253 –22 9,409
59,019 –534 50,945
1,316,965 –4,039 168,616
Fixed Asset Movement Schedule for the 2003/04 Fiscal Year
87
Accumulated Book value Book value Depreciation /Disposals Transfers As of depreciation Sept. 30, 2004 Sept. 30, 2003 Write-ups = Z
Sept. 30, 2004 during fiscal year
(in thousands (in thousands (in thousands (in thousands (in thousands (in thousands (in thousandsof EUR) of EUR) of EUR) of EUR) of EUR) of EUR) of EUR)
4,433 810 45,581 14,401 31,180 3,167 2,321
17,682 – 11,405 11,080 325 11,338 61
– –789 75 – 75 789 –
22,115 21 57,061 25,481 31,580 15,294 2,382
4,358 201 307,751 163,771 143,980 124,339 8,426
27,295 3,226 506,228 419,820 86,408 106,478 38,322
41,624 9,994 387,267 270,308 116,959 117,481 50,365
91 Z
3,737 –13,442 14,676 – 14,676 15,661 –
77,014 –21 1,215,922 853,899 362,023 363,959 97,113
91 Z
11,589 –26 28,969 349 28,620 23,108 –
580 – 1,521 – 1,521 69 –
1,508 1,421 9,889 1,349 8,540 – –
100 –1,395 25,718 10,951 14,767 2,884 92
– – 916 118 798 762 –
3,497 – 25,143 6,718 18,425 12,492 69
17,274 – 92,156 19,485 72,671 39,315 161
116,403 – 1,365,139 898,865 466,274 418,568 99,656
91 Z
Carl Zeiss GroupConsolidated Statement of Income 88
Consolidated Statement of Income
from October 1, 2003 to September 30, 2004
Notes 2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Sales 19 2,134,596 2,028,938
Increase or decrease in finished goods and work in progress 28,257 –17,068
Own work capitalized 42,183 50,678
Total operating performance 2,205,036 2,062,548
Other operating income 20 177,740 164,286
Cost of materials 21 790,068 731,908
Personnel expenses 22 847,799 822,538
Depreciation of intangible assets and tangible assets 23 99,495 120,070
Other operating expenses 24 523,512 505,477
Result from investments in other companies 25 279 2,315
Income from other investments and long-term loans 281 409
Depreciation of financial assets and investments held as current assets 26 2,352 9,318
Net interest income 27 12,699 11,832
Results from ordinary activities 132,809 52,079
Taxes on income 28 52,412 32,691
Other taxes 3,323 3,525
Income for the year 77,074 15,863
Profit carried forward from previous year 68,584 61,106
Withdrawals from revenue reserves 1,314 7,102
Transfers to revenue reserves 5,071 12,866
Minority interests in income 4,528 2,422
Consolidated net income 137,373 68,783
89
2003/04
(in thousandsof EUR)
Income for the year 77,074
Depreciation of fixed assets net of post-capitalization/write-ups 96,553
Increase in provisions 90,849
Other non-cash expenses 1,508
Loss from the disposal of fixed assets (balance) 2,976
Decrease in inventories 1,308
Increase in receivables –52,661
Decrease in other assets 18,319
Increase in payables 46,326
Increase in other liabilities 3,714
Cash flows from operating activities 285,966
Proceeds from the disposal of tangible and intangible assets 13,161
Purchase of tangible and intangible assets –110,229
Proceeds from the disposal of financial assets 6,497
Acquisition of financial assets –50,945
Increase in investments held as current assets (terms longer than 90 days) –124,270
Cash flows from investing activities –265,786
Cash payments to minority interests –359
Cash proceeds from issuing bonds/loans and short or long-term borrowings 58,616
Cash repayments of short or long-term borrowings –3,127
Cash flows from financing activities 55,130
Change in cash funds from cash relevant transactions 75,310
Change in cash funds from exchange rate movements 1,960
Cash funds as of October 1, 2003 370,161
Cash funds as of September 30, 2004 447,431
Consolidated Cash Flow Statement
from October 1, 2003 to September 30, 2004
Carl Zeiss GroupConsolidated Cash Flow Statement
Carl Zeiss GroupNotes to the Consolidated 90Financial Statements
3 Changes in the Principles of
Accounting and Valuation
As a result of the deletion of § 308, Para. 3
German Commercial Code, the option to
transfer tax values and/or special items with
an equity portion included in the individual
statements to the consolidated financial
statements is no longer applicable. For this
reason, the inclusion of these values and
special items in the consolidated financial
statements has been discontinued for the
first time. This has resulted in an increase in
fixed assets of EUR 27,764,000. The adjust-
ments are shown in revenue reserves and do
not affect the operating result.
4 Scope of Consolidation
The consolidated financial statements of Carl
Zeiss AG include 22 domestic and 35 foreign
companies, the business activities of which
are conducted by Carl Zeiss AG or in which it
directly or indirectly holds a majority interest.
In addition, one foreign investment has been
valued using the equity method.
Subsidiaries which are of minor importance
for the net assets, financial position and re-
sults of operations of the Carl Zeiss Group
have not been included in the financial state-
ments.
One company is no longer included in the
scope of consolidation. This change does
not markedly impair the comparability with
the Group’s financial statements from the
previous year.
A list of the Group’s investment holdings is
filed with the Commercial Register of the
District Court in Aalen.
Principles and Methods
1 Conversion of the Operating Enter-
prise Carl Zeiss to a Stock Corporation
With retroactive economic effect as per
October 1, 2003, the conversion of the oper-
ating enterprise Carl Zeiss to the stock corpo-
ration Carl Zeiss AG became legally effective
with its entry in the Commercial Register on
July 1, 2004. The sole shareholder of Carl
Zeiss AG is the Carl Zeiss Stiftung domiciled
in Heidenheim an der Brenz and Jena, Germany.
2 General Accounting Principles
The consolidated financial statements of Carl
Zeiss AG, Oberkochen, comprising the Con-
solidated Balance Sheet, the Consolidated
Statement of Income, the Consolidated Equity
Statement, the Consolidated Cash Flow
Statement and the Notes to the Consolidated
Financial Statements have been prepared in
accordance with the German Commercial
Code (HGB). In view of the planned application
of the International Financial Reporting
Standards (IFRS) to the consolidated financial
statements for the first time in the 2005/06
fiscal year and the harmonization of internal
and external accounting associated with it,
we have dispensed with business segment
reporting.
The consolidated financial statements have
been compiled in euros. Unless stated other-
wise, all amounts are given in thousands of
euros.
For the sake of clarity, individual items are
combined in the consolidated balance sheet
and the consolidated statement of income
and are shown separately in the Notes. The
method of total costs has been used for the
compilation of the consolidated statement of
income.
Notes to the Consolidated Financial Statements
for the 2003/04 Fiscal Year
91
In the consolidated statement of income, in-
tercompany sales and other internal earnings
have been offset against corresponding ex-
penses or have been reclassified as changes
in inventories or own work capitalized.
6 Currency Conversion
In the individual statements, receivables and
payables in foreign currencies are initially
valued at the rate applicable on the date of
transaction. Book losses resulting from
changes in foreign exchange rates are taken
into account by revaluation on the balance
sheet date.
All balance sheet items of the individual
financial statements compiled in foreign cur-
rencies and included in the consolidated
financial statements have been converted at
the mean exchange rates valid on the balance
sheet date. Currency exchange differences
resulting from the conversion of equity using
different exchange rates from those of the
previous year are taken into account in re-
venue reserves or minority interests without
affecting net income. The income and ex-
penses shown in the statements of income
have been converted at the average annual
exchange rate. The results for the year have
been converted at the mean exchange rate
valid on the balance sheet date. Any differ-
ences resulting from the conversion using the
average annual exchange rate and the mean
exchange rate valid on the balance sheet
date have been shown under other operating
expenses or other operating income.
7 Principles of Accounting and Valuation
The financial statements of the companies
included in consolidation have all been pre-
pared pursuant to German legal provisions
and in accordance with the accounting and
5 Principles of Consolidation
As part of the process of converting the op-
erating enterprise Carl Zeiss to a stock corpo-
ration, Carl Zeiss AG completely acquired its
assets and liabilities in exchange for the
granting of shares in the company. This creat-
ed, at Group level, the conditions for chang-
ing to the capital consolidation method pur-
suant to § 302 German Commercial Code, of
which use was also made. To the extent that
the net assets transferred to Carl Zeiss AG
also included investments in subsidiaries, the
application of the choice of method pursuant
to § 302 German Commercial Code means
that the previous capital consolidation using
the book value method pursuant to § 301,
Para. 1, No.1 (German Commercial Code)
and/or Art. 27 of the Introductory Law to
the German Commercial Code (EGHGB) can
continue to be used for these companies in
the consolidated financial statements of
Carl Zeiss AG. Accordingly, the remaining
goodwill of EUR 9,169,000 has been deduct-
ed from consolidated revenue reserves.
Interests of third parties in shareholders’
equity are included in minority interests in
the Group’s financial statements.
Receivables and payables between consoli-
dated companies have been offset against
each other. Any currency exchange differ-
ences arising are included in revenue reserves.
Intercompany trade profits resulting from
deliveries and services have been eliminated,
inasmuch as they are not of secondary im-
portance.
The deferred taxation principle has been ap-
plied to consolidation adjustments affecting
net income.
Carl Zeiss GroupNotes to the Consolidated 92Financial Statements
Inventories of raw materials, supplies and
merchandise for resale are valued at the low-
er of acquisition cost or current market price.
Unfinished and finished products are valued
at manufacturing cost. This includes not only
the cost of materials and wages, but also
adequate factory overhead costs for materials
and production.
An allowance is made for possible declines in
value caused by prolonged storage or re-
duced marketability; no adjustment is made
for unrealized losses.
Receivables and other assets are carried at
their face value. All perceivable default risks
are taken into account by means of individual
adjustments. To cover the general credit risk,
receivables have been reduced by a flat-rate
allowance for each country.
Investments held as current assets are capi-
talized at acquisition cost or the lower quoted
price valid on the balance sheet date.
The pension plan provisions and similar oblig-
ations of the domestic companies are based
on actuarial computations and the 1998 mor-
tality tables compiled by Dr. Klaus Heubeck.
They are set up at 6 % interest, with the
statutory method being used for pension
commitments covered by the “P82 neu” pen-
sion charter, and the present value method
of an expectancy being used for pension
commitments covered by the “Pension Strate-
gy 2000”. At foreign subsidiaries, provisions
for pension plans and similar obligations are
made on the basis of principles specific to
the country concerned.
Deferred taxes are stated for the timing
differences between the commercial balance
sheet and the tax balance sheet only if the
overall result is a provision.
valuation principles applicable to the Carl Zeiss
Group. Inasmuch as the financial statements
of the individual companies markedly depart
from these principles, the necessary adjust-
ments have been made. Pursuant to § 312,
Para. 5, German Commercial Code, these
adjustments have not been made for the
company valued at equity in the balance
sheet. For companies whose balance sheet
date differs from that of the Group’s balance
sheet, interim financial statements are used
as a basis.
Acquired intangible assets are capitalized at
acquisition cost and systematically depreciat-
ed. Acquired goodwill is depreciated over a
period of 10 years.
Tangible fixed assets are valued at acquisition
cost or manufacturing cost, less depreciation.
The manufacturing cost of the company-pro-
duced assets includes not only direct costs,
but also proportionate factory overhead costs
for materials and production. The declining
balance method is mainly used for deprecia-
tion by domestic companies, otherwise the
straight-line method. Foreign subsidiaries
mainly use the straight-line method for de-
preciation. Minor fixed assets are written off
completely in the year of acquisition. Extra-
ordinary depreciation is undertaken for fore-
seeable permanent reduction in value.
Investments in associated companies are val-
ued at equity using the book value method,
unless they are of minor significance for the
net assets, financial position and results of
operations of the Group. Other financial
assets are valued at acquisition cost or the
lower current value.
93
All payments received from customers are
shown as deductions from inventories.
The other provisions are sufficient to cover all
perceivable risks.
Liabilities are stated in the amount due for
repayment.
Notes to the Consolidated Balance Sheet
8 Fixed Assets
Changes in the individual items of the fixed
assets are shown in the fixed asset move-
ment schedule, with any currency differences
being given separately.
Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Raw materials and supplies 132,279 133,701
Unfinished goods,work in progress 289,841 244,638
Finished goods and goods for resale 136,981 153,176
Payments on account 11,769 4,014
Inventories 570,870 535,529
Advance payments from customers –175,059 –135,545
395,811 399,984
9 Inventories
Carl Zeiss GroupNotes to the Consolidated 94Financial Statements
The receivables from affiliated companies
result from Cash Management and from trade
deliveries and services provided by companies
not included in the consolidated financial
statements of Carl Zeiss AG.
Other assets also include accruals whose
amounts are, however, of minor importance.
10 Receivables and Other Assets
Sept. 30, including Sept. 30, including2004 those due 2003 those due
after more after morethan than
one year one year
(in thousands (in thousands (in thousands (in thousandsof EUR) of EUR) of EUR) of EUR)
Accounts receivable 402,479 10,710 356,477 7,549
Other accounts receivable and other assets
Receivables from affiliated companies 20,683 4,651 29,863 5,394
Receivables from companiesin which an investment is held 3,359 – 16,840 –
Other assets 49,221 10,775 48,804 8,200
73,263 15,426 95,507 13,594
475,742 26,136 451,984 21,143
95
Deferred taxation is due to time-limited
differences in results attributable to consoli-
dation measures. Other prepaid expenses
include pre-payments.
The securities held as current assets mainly
include fixed-interest-bearing loans and
shares in funds companies.
Liquid funds include checks, cash-in-hand
and bank balances.
11 Funds
Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Securities held as current assets 371,794 230,502
Liquid funds 362,930 302,702
734,724 533,204
12 Prepaid Expenses
Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Deferred taxation 10,252 7,690
Discount 1 1
Other prepaid expenses 11,573 11,770
21,826 19,461
Carl Zeiss GroupNotes to the Consolidated 96Financial Statements
13 Equity
After conversion of the operating enterprise
Carl Zeiss to a stock corporation, the sub-
scribed capital of Carl Zeiss AG amounts
to EUR 120,000,000. It is divided into
120,000,000 par-value stocks held by the
Carl Zeiss Stiftung. The capital reserves result
from the conversion of the operating enter-
prise Carl Zeiss to a stock corporation. In ad-
dition to the legal reserves of EUR 2,318,000,
revenue reserves also include retained earn-
ings from consolidated subsidiaries, credit
differences arising from capital consolidation,
consolidation adjustments pursuant to Art 27,
Introductory Law to the German Commercial
Code (EGHGB), valuation changes due to tax-
basis eliminations, and currency differences
resulting from capital consolidation and the
consolidation of intercompany balances. In
addition, goodwill resulting from capital con-
solidation has partly been deducted from
consolidated revenue reserves.
Minority interests cover third-party shares in
the equity of domestic and foreign sub-
sidiaries. Last year’s figure included EUR
5,886,000 of the capital and the reserves
of Carl Zeiss S.A.S., Le Pecq (France), as this
company was previously assigned to the
Group only on the basis of economic criteria.
All shares previously held by SCHOTT-Zeiss
France Holding S.à.r.l., Clichy (France), a
company consolidated in the SCHOTT Group,
were acquired in the reporting year.
The development of the consolidated equity
is shown in the equity statement, which is
based on the German Accounting Standard
No. 7 (DRS 7) of the Deutsche Rechnungs-
legungsstandards Committee e.V.
14 Special Items with an Equity Portion
As § 308 Para. 3, German Commercial Code,
has been deleted, special items with an
equity portion set up in individual statements
are no longer included in the consolidated
financial statements.
The amount shown for the previous year
includes solely special items required by
foreign regulations.
97
The provisions for pension plans include com-
mitments undertaken by Carl Zeiss AG and
various subsidiaries for current pensions and
for vested rights to future pension payments.
This item also includes the provisions made
by our US companies for the post-retirement
health-care liabilities.
Provisions for taxes include amounts for taxes
not yet finally assessed.
Other provisions mainly include amounts for
obligations in the personnel area, restructur-
ing, warranties, anticipated losses from pend-
ing business, price discounts and for various
other obligations and risks.
15 Provisions
Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Provisions for pension plans andsimilar commitments 865,388 844,209
Other provisions
Provisions for taxes 58,137 39,468
Other provisions 457,321 410,397
515,458 449,865
1,380,846 1,294,074
Carl Zeiss GroupNotes to the Consolidated 98Financial Statements
The loans cover a “private placement” by a
US subsidiary.
The liabilities to affiliated companies result
from Cash Management and from trade
deliveries and services provided by non-con-
solidated companies of the Carl Zeiss AG.
EUR 4,903,000 of the total liabilities is
secured by mortgages.
Liabilities for taxes, which are included in
other liabilities, amount to EUR 15,370,000
(previous year EUR 19,536,000). Liabilities
relating to social security come to EUR
8,902,000 (previous year EUR 8,981,000).
16 Liabilities
Sept. 30, including including Sept. 30, including including2004 those due those due 2003 those due those due
within after more within after moreone year than 5 years one year than 5 years
(in thousands (in thousands (in thousands (in thousands (in thousands (in thousandsof EUR) of EUR) of EUR) of EUR) of EUR) of EUR)
Loans 57,168 – 37,283 – – –
Liabilities to banks 5,487 844 3,714 7,997 3,042 3,714
Accounts payable 128,317 127,659 219 82,774 82,006 329
Other liabilities
Liabilibies to affiliated companies 16,980 16,980 – 11,799 11,799 –
Liabilities to companies in whichan investment is held 327 327 – 391 391 –
Other liabilities 59,917 48,342 49 63,150 60,020 1,546
77,224 65,649 49 75,340 72,210 1,546
268,196 194,152 41,265 166,111 157,258 5,589
99
18 Other Financial Obligations
During the fiscal year, expenses from leasing,
rental and similar agreements amounted to
EUR 41,481,000. They will probably remain
at a similar level for the next few years.
On September 30, 2004, obligations resulting
from capital spending plans, etc. existed in
the amount of EUR 32,414,000.
17 Contingent Liabilities
Sept. 30, 2004 Sept. 30, 2003
(in thousands (in thousandsof EUR) of EUR)
Notes payable 445 188
Liabilities on guarantees 13,235 21,237
attributable to affiliated companies 1,540 1,487
Liabilities from warranty contracts 734 327
Liabilities arising from the provisionof collateral for third-party liabilities 97 91
Carl Zeiss GroupNotes to the Consolidated 100Financial Statements
19 Sales
Sales have been achieved with precision-
mechanical, optical and electronic products
and can be divided by geographic areas as
follows:
20 Other Operating Income
This item includes foreign exchange gains,
income from license agreements, grants for
research and development, and the release of
general provision of bad debt to receivables.
Other operating income also includes:
The income due to the release of other provi-
sions mainly includes the release of provisions
for risks resulting from supply and services,
and for restructuring measures.
The income from the disposal of fixed assets
shown for the reporting year mainly results
from the sale of technical equipment and
machinery. The amount disclosed last year
was mainly attributable to income from the
sale of real estate and buildings.
2003/04 2002/03
(in thousands % (in thousands %of EUR) of EUR)
Germany 424,549 20 447,129 22
Rest of Europe 917,987 43 767,012 38
America 482,285 23 519,020 26
Other areas 309,775 14 295,777 14
2,134,596 100 2,028,938 100
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Release of other provisions 61,536 39,796
Income from the disposal of fixed assets 1,904 1,789
Post-capitalization and write-upsof fixed assets 3,103 2,807
Release of special items with an equity portion – 1,821
Notes to the Consolidated Statement of Income
101
21 Cost of Materials
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Cost of raw materials, consumables andsupplies, and of purchased materials 709,532 666,683
Cost of purchased services 80,536 65,225
790,068 731,908
22 Personnel Expenses
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Wages and salaries 649,777 631,285
Social security costs 115,152 114,727
Pension costs 82,479 75,894
Other benefits 391 632
847,799 822,538
23 Depreciation of Intangible Fixed Assets and Tangible Assets
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Depreciation of intangible fixed assetsand tangible assets 99,495 120,070
of which non-scheduled depreciation 85 19,321
of which special depreciation allowancefor tax purposes – 1,817
Carl Zeiss GroupNotes to the Consolidated 102Financial Statements
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Investment income 1,583 1,600
Income from profit transfer agreements 170 499
Expenses from loss absorption 75 –
Income from investments in associated companies –1,508 –
Taxes charged to subsidiaries deemedintegrated for tax purposes 109 216
279 2,315
Also included are: 2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Losses from the disposal of fixed assets 4,880 2,184
Investment income includes income of
EUR 668,000 (previous year EUR 1,460,000)
attributable to affiliated companies.
24 Other Operating Expenses
Other operating expenses consist primarily of
administration costs, sales costs, maintenance
expenses, consultants’ fees, exchange losses,
and allocations to other provisions. This also
includes special expenses in the amount of
EUR 33 million incurred for an agreement on
industrial property rights which gives access
to patents covering lithography optical prod-
ucts made by the company’s competitor
Nikon.
25 Results from Investments
103
26 Depreciation of Financial Assets and Investments Held as Current Assets
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Depreciation of financial assets 161 8,303
Depreciation of investmentsheld as current assets 2,191 1,015
2,352 9,318
27 Net Interest Income
2003/04 2002/03
(in thousands (in thousandsof EUR) of EUR)
Other interest and similar income 17,190 15,814
attributable to affiliated companies 327 265
Interest and similar expenses 4,491 3,982
attributable to affiliated companies 283 248
12,699 11,832
28 Taxes on Income
The taxes on income include domestic and
foreign taxes on income, the release of
provisions for taxes, tax refunds and deferred
taxes for the timing differences of results
arising from consolidation measures.
Carl Zeiss GroupNotes to the Consolidated 104Financial Statements
Number of employees 2003/04 2002/03(average for the year)
Heads Heads
Wage-earning employees 5,023 5,498
Salaried employees 7,963 8,162
Trainees/Interns 557 504
13,543 14,164
Other Information
Comments on the Cash Flow Statement
We have observed the German Accounting
Standard No. 2 (DRS 2) of the Deutsche
Rechnungslegungsstandards Committee e.V.
when compiling the cash flow statement.
The flow of funds has been divided into the
cash flows for operating activities, investing
activities and financing activities. The cash
funds totaling EUR 447,431,000 include
liquid assets of EUR 362,930,000 disclosed
in the Notes to the Consolidated Financial
Statements, and securities held as current
assets with maturities shorter than 90 days
totaling EUR 84,501,000. EUR 1,631,000 of
these funds was subject to disposal and
transfer restrictions.
Employees include the employees working
for the companies incorporated in the finan-
cial statements. The above numbers also in-
clude the relevant proportions of employees
working on a part-time basis and employees
with temporary employment contracts.
105
Information on Related Party Trans-
actions
The term “related party” comprises the oper-
ating enterprise SCHOTT AG, Mainz, as well
as non-consolidated subsidiaries.
Business relations with these companies are
handled on generally accepted market terms
and conditions.
Corporate Governance Code
The Board of Management and the Super-
visory Board of Carl Zeiss Meditec AG, Jena,
quoted on the stock exchange and included
in the Group’s financial statements, have
issued a declaration on the recommendations
of the “Government Commission on the
German Corporate Governance Code” in ac-
cordance with Art. 161 of the German Stock
Corporation Act (AktG). This declaration has
been made public and is available to share-
holders on the company’s website
(www.meditec.zeiss.de).
Remuneration of the Board of
Management and the Supervisory Board
The total remuneration of the Members
of the Board amounted to EUR 2,031,000 in
the reporting year.
The amount paid to former members of the
Board of Management and their surviving
dependents was EUR 1,219,000 in the
reporting year.
EUR 13,120,000 has been set aside for
pension commitments to former members
of the Board of Management and their sur-
viving dependents.
No fee was paid to the members of the
Supervisory Board for their Supervisory Board
activities in the reporting year.
Oberkochen, December 7, 2004
Board of Management of Carl Zeiss AG
Dr. Dieter Kurz
Dr. Norbert Gorny
Dr. Michael Kaschke
Carl Zeiss GroupAuditors’ Report 106
Auditors’ Report
We have audited the consolidated financial
statements and the Corporate Management
Report prepared by Carl Zeiss AG, Ober-
kochen, for the fiscal year from October 1,
2003 to September 30, 2004. The prepara-
tion of the consolidated financial statements
and the Corporate Management Report of
the Carl Zeiss Group in accordance with Ger-
man commercial law is the responsibility of
the Board of Management of Carl Zeiss AG.
It is our responsibility to express an opinion
on the consolidated financial statements and
the Corporate Management Report of the
Carl Zeiss Group based on our audit.
We conducted our audit of the annual con-
solidated financial statements in accordance
with § 317, German Commercial Code, and
the generally accepted standards for the
audit of financial statements promulgated by
the Institut der Wirtschaftsprüfer (IDW) in
Germany. Those standards require that we
plan and perform the audit in such a way
that misstatements materially affecting the
presentation of the net assets, financial posi-
tion and results of operations in the financial
statements in accordance with the German
principles of proper accounting and in the
management report of the Carl Zeiss Group
are detected with reasonable certainty.
Knowledge of the business activities and
the economic and legal environment of the
Carl Zeiss Group and evaluations of possible
misstatements are taken into account when
determining audit procedures. As part of the
audit, the effectiveness of the accounting-
related internal control system and the
evidence supporting the disclosures in the
consolidated financial statements and the
Corporate Management Report of the Carl
Zeiss Group are examined primarily on a test
basis. The audit includes the assessment of
the annual financial statements of the compa-
nies included in the scope of consolidation,
the determination of the companies to be in-
cluded in consolidation, the accounting and
consolidation principles used and the signifi-
cant estimates made by management, as well
as the evaluation of the overall presentation
of the consolidated financial statements and
the Corporate Management Report of the
Carl Zeiss Group. We believe that our audits
provide a reasonable basis for our opinion.
With the exception of the following restriction,
our audit has not yielded any reservations.
Contrary to § 297, Para.1, sentence 2, Ger-
man Commercial Code, no business segment
report has been compiled.
Apart from this exception and with due re-
gard to generally accepted accounting princi-
ples, the consolidated financial statements
provide a true and fair view of the assets,
financial position and earnings of the Carl
Zeiss Group. The Corporate Management
Report of the Carl Zeiss Group correctly
presents the position of the Group and the
risks of future developments.
Stuttgart, December 8, 2004
Price WaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Wagner
Wirtschaftsprüfer
(independent auditor)
Lange
Wirtschaftsprüfer
(independent auditor)
The Annual Report is also available
in German.
Carl Zeiss AG73446 OberkochenGermany Phone +49 (0)7364 20-0Fax +49 (0)7364 6808www.zeiss.com