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TECAN – BOARD OF DIRECTORS AND EXECUTIVE LEADERSHIP COMMITTEE

Third rowAnton Schrofner, General Manager Tecan Schweiz and Head of InstrumentsCarl Severinghaus, General Manager Tecan USMartin von Lueder, General Manager Central EuropeJan Timmers, Head of Business Development and BiopharmaBob Young, General Manager Tecan Boston

Second rowJoe Kaelin, Head of Clinical DiagnosticsDr. Emile C. Sutcliffe, Chief Executive Officer (CEO) Steve Levers, Head of OEM and General Manager CavroJoerg Borer, Head of Customer Support

First rowFranz Rutzer, Chief Financial Officer (CFO)

Board of Directors TecanMike Baronian, Chairman of the BoardProf. Dr. Armin Seiler, Vice ChairmanDr. Emile C. Sutcliffe, Chief Executive OfficerTimothy B. AndersonHans-Jörg Kummer

This annual report is published in English (legally binding) and German.

TECAN AT A GLANCE

Tecan is a leading player in the fast growing Life Sciences supply industry that specializes in the development, production, and distribution of enabling solutions for the discovery of pharma-ceutical substances, as well as for genomics,proteomics, and diagnostics. Tecan clients areleading pharmaceutical and biotechnology companies, university research departments and diagnostics laboratories. Founded in Switzer-land in 1980, the company has manufac-turing, research and development sites in bothNorth America and Europe and maintains a sales and service network in 52 countries.In 2001, Tecan achieved sales of CHF 361.9 million(USD 214.1 million; EUR 239.6 million).

www.tecan.com

Tecan Group Ltd., Seestrasse 103, CH-8708 Männedorf, Switzerland, T +41 1 922 88 88, F +41 1 922 88 89, [email protected], www.tecan.com

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TECAN AT A GLANCE


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GLOSSARYTECAN – CORE COMPETENCIES FOR THE LIFE SCIENCES

Meeting customer needs. In a competitive environment, customers must increasingly con-centrate on their own areas of expertise. Atthe same time, they would like to benefit fromthe revolution in laboratory automation thatis transforming the practice of the Life Sciences.Scientists in the Life Sciences therefore valuecompanies that can provide complete, user-friendly solutions for laboratory automationsupported by outstanding expertise and a will-ingness to work together to find the bestsolution for a particular task.

Tecan core competencies. Tecan’s success isbuilt on its ability to use its proven core com-petencies as the starting point to automate lab-oratory processes. The Tecan Group has corecompetencies in five areas serving the LifeSciences:

Robotics – The automated movement of ma-terials, for example tubes, vials or microplates,from one device to another, in many cases in an integrated system.

Liquid handling – The transfer of typically smallvolumes of liquid, for example in the nanoliterto microliter range, from a source location to adestination point.

Detection – The process by which chemical and biological processes are monitored, a signalor output generated, and data produced.

Software – The operating system essential tocontrol instruments and solutions. Software isalso key for the integration of different com-ponents in a system.

Miniaturization – The reduction of systems to a small scale to provide superior benefits forthe monitoring of biological processes.

These core competencies serve all of Tecan’s markets in Genomics, Proteomics,Drug Discovery and Diagnostics.

From core competencies to solutions for the Life Sciences. Tecan uses its instruments, incombination with software and protocols, asthe starting point to provide applications and solutions for the Life Sciences. Differentelements in the five core competencies may be combined with robotic platforms, consum-ables or reagents, to provide automatedsolutions or integrated systems for specific processes. Tecan’s core competencies enable thecompany to produce automated solutions for a wide range of applications through validatedor tested systems. In many cases, Tecan providessolutions or enabling packages that targetkey bottlenecks facing practitioners in the Life Sciences.

Strength through customer partnerships. Whatdistinguishes Tecan from other companies inthe Life Science supply industry is its commit-ment to partnership with its customers. In addition to providing standardized solutionsworldwide, Tecan has a dedicated team of con-sultants that provide customized solutions tailored to the individual needs of its clients.

The future. Through its commitment to long-lasting relationships with its customers and thestrength of its core competencies, Tecan is uniquely positioned to provide the breakthroughsolutions that will increase further the produc-tivity of the modern Life Science laboratory.

CreditsText: Rochat & Partners, Geneva, SwitzerlandDesign: CI Programm, Zurich, SwitzerlandPrepress/Printing: Neidhart + Schön AG, Zurich, SwitzerlandOriginal Photography: Willy Spiller, Zurich, SwitzerlandProject management: Tecan Corporate Communications and Corporate Finance, Männedorf, Switzerland© Copyright Tecan Group Ltd.

Absorption, distribution, metabolism, excretion,

toxicity (ADMET) assays Screening tests

designed to determine the toxicity of new drug

candidates

Bioinformatics The application of computer

science to the interpretation and management

of biological data

Combinatorial chemistry A technique for rap-

idly and systematically assembling a variety of

molecular building blocks in many different

combinations for use in drug discovery

Consumables Reagents and handling devices

that have a limited lifetime and which must

be replaced regularly

Detection devices Instruments used to monitor

chemical and biological processes

Fractionation The physical separation of mole-

cules of different properties

Free-flow electrophoresis Automated tool

for the fractionation of proteins. Allows for

elimination of abundant molecules that may

interfere with detection of key target mole-

cules

Functional genomics The process of assigning

functions to genes and other parts of the

genome of organisms

Genomics The study of the structure and

function of large numbers of genes simul-

taneously

Genotyping The determination of nucleotide

base sequences in genetic material (chromo-

somes)

High-throughput screening Automated pro-

cesses for the rapid assessment of the activity

of large numbers of samples

In situ hybridization A method of localizing

either messenger RNA within the cytoplasm or

DNA within the chromosomes of the nucleus

by hybridizing the sequence of interest to a

complimentary strand of a nucleotide probe

Matrix-Assisted Laser Desorption/Ionization

mass spectrometry (MALDI-MS) A spectrometric

technique that is used to determine the mass

of biomolecules

Microarray Glass or silicon surface used to

support rows of biological material, for example

known sequences of DNA. Microarrays are an

integral part of high-throughput processes

Microfluidics The miniaturization of fluid-based

biological processes to very small volumes that

enables high throughput analysis

Microplate A standardized plastic tray typically

with 96 wells or depressions for holding

small quantities of material. The 96 wells are

uniformly located in 8 rows of 12 wells each

Proteome The continually changing protein

complement expressed by a genome or tissue

Proteomics The study of the full expression of

proteins by cells in their lifetime

Reagents Superior chemistry that allows novel

processes to be performed (e.g. high-through-

put DNA extraction or purification)

Robotic system Automated device where

materials are transferred by the physical move-

ment of a delivery device to a receptacle

Screening The use of assays or tests to detect

compounds that change the activity of a target

Secondary screening Refined testing procedures

with which already identified substances can

be more precisely characterised, optimised, and

investigated for their behavior

Single nucleotide polymorphisms (SNPs) Small

differences in genetic makeup that may be

used to predict drug response and potentially

improve disease treatment results. Offers the

possibility of personalized medicine

Supply industries Companies providing essen-

tial services and products to support the

infrastructure of the life science industries

Target A molecule (usually a protein but some-

times a DNA sequence) that may interact with

a drug or drug candidate

Target validation The process of determining

if a target is critically involved in a disease

process

Two-dimensional electrophoresis Analytical

method in which a sample consisting of a pro-

tein mixture is subjected to two consecutive

separation processes in different directions

Validation A process for checking if an instru-

ment or system performs adequately the task

for which it was designed

TECAN AT A GLANCE

Diagnostics. Tecan’s progress in Diagnostics isbeing driven by its ability to build on its strongpresence in the market segments of immunolo-gy and blood grouping and by its capacity toleverage solutions from Genomics and Prote-omics. The success of this approach is beingused to penetrate further into the high growthmarkets of laboratory logistics and moleculardiagnostics.

Drug Discovery. Through the development ofnew core competencies such as microfluidics,Tecan is taking major steps in setting the industry standard for Drug Discovery assays.Building on its considerable expertise and experience, Tecan is removing the constraintsthat currently limit the modern drug discoveryprocess.

Proteomics. In Proteomics, Tecan is positioningitself in the post-genomic era by developingsolutions that will revolutionize the way labo-ratories perform high throughput protein analysis. ProTeam Digest and ProTeam FFE arethe first breakthrough products from Tecandesigned to enable proteomic research.

Tecan core business > Tecan collateral business >

> > Biopharma Companies

> Diagnostics Companies

Instruments

>Solutions

>Consumables

>Reagents

>Services

>Informatics

>

Supply Companiese.g. Affymetrix, ABI, APB,Beckman, Molecular Devices,Perkin Elmer, QiagenTecan

Genomics. In Genomics, Tecan is expanding intothe high growth markets of genotyping andgene expression. The company is applying itsexpertise in automating genomic processes toprovide complete suites for nucleic acid samplepreparation and gene expression studies.

As Tecan entered the new millennium, it reached a major milestone in its strategic positioning by establishing four business segments as the foundation for its future growth – Genomics, Proteomics, Drug Discovery and Diagnostics.

The value chain. Tecan is a leading player in the Life Science supply industry. For Tecan, theGenomics, Proteomics and Drug Discoverybusiness areas directly serve Biopharma com-panies. The fourth business area serves com-panies active in the Diagnostic segment of theLife Sciences. In addition, Tecan is able to exploit synergies between the Biopharma andDiagnostic markets to provide further break-through solutions for the rapidly changing Life Science industry.

In 2001, the evolution of the Life Science indus-try continued unabated. Increasingly, manyinformation companies, which provide know-ledge-based tools to empower research and development, drug discovery and diagnosticmethods, moved further along the path towardsbecoming Biopharma companies in their ownright. Through its value chain and four businessareas, Tecan is ideally positioned to cater for all sectors of the Life Science industry.

















candidates



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TECAN AT A GLANCE







Instruments

>Solutions

>Consumables

>Reagents

>Services

>Informatics

>






TECAN’S MISSION

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Tecan’s vision is to improve and

enhance the quality of human health by enabling the Life Sciences.

Our goals are to become the preferred

partner of our customers and the key player in the fast growing

Life Sciences supply industry.

We serve all segments of the

Life Sciences industry worldwide by offering the most comprehensive product

portfolio.

Message to Shareholders

Chief Financial Officer’s Statement

Tecan’s Business Strategy

Markets

Genomics

Proteomics

Drug Discovery

Diagnostics

Five-year Consolidated Data

Financial Review

Financial Statements

Information for Investors

Tecan Locations

Core Competencies for the Life Sciences

Glossary

Board of Directors and Executive Leadership Committee

Success in an uncertain market environment.2001 was another very successful year for Tecanin which the company was able to build on its strong performance in 2000. For many busi-nesses, the contrast between 2001 and theprevious year could not have been more extreme.The influx of funding from public markets,the enthusiasm for initial public offerings, andan overall healthy financial environment werereplaced by lowered financial expectations, areluctance to pursue new growth opportunities,and severe changes in market valuations forsome companies.

Tecan clearly benefited from a strong financialperformance, its unique positioning in the Life Science industry and the significant assetsof its implemented business model.

Further momentum to financial growth. Com-pared to the record financial performance of last year, Tecan further accelerated its salesgrowth in local currencies from 32.9% to 34.8%.For the first time, 2001 fourth quarter sales were in excess of CHF 100 million. Tecan’s EBIT margin of 17.2% of sales and a net profitmargin of 12.5% of sales, were both, however,slightly lower than the previous year (21.2% and14.4% of sales, respectively). These differenceswere due to significant expansion of our salesand marketing presence worldwide, higherinvestments in R&D to support entry intoProteomics and microfluidics, and the goodwillamortization from acquisitions. Net profitincreased 14.3% to a record CHF 45.1 million.

Validation of the business model – the road tosuccess. Our business strategy is to focus on high growth market segments in Genomics,Proteomics, Drug Discovery and Diagnostics,and provide superior solutions for our customersto maintain the momentum in our sales andprofit growth. Tecan’s strength is built uponthree key assets – a strong product portfolio,a balanced presence in all four market segmentsof the Life Sciences, and effective distributionchannels through an extensive network ofdirect contacts with our customers.

“In 2001, Tecan continued to deliver very strong financial results despite a highly turbulent market for that year. The merits of our business model wereclearly evident.” Dr. Emile C. Sutcliffe, Chief Executive Officer

By focusing on key bottlenecks in all businesssegments of the Life Sciences, Tecan is able to outperform overall market growth rates on a sustainable basis. The presence in four business segments makes Tecan resilient to unexpected fluctuations in each segmentof the market. This was amply demonstrated in 2001 when a widespread unanticipated slowdown in Drug Discovery was more thancompensated by strong growth rates for sales in Proteomics, Genomics and Diagnostics.

Creating value for the organization and ourcustomers. In 2001, we increased the number ofemployees at Tecan to 915, which represents a32.6% increase compared to 2000. The averagesales per employee reached an impressiveCHF 423,000 reflecting the performance valueof the organization (CHF 435,000 in 2000).Beyond the financial indicators, we have alsoplaced emphasis on creating value both within the organization and for our customers.Creating value starts with our employees.We have made investments to provide a goodworking environment and to enhance theinformation management systems available toTecan employees. Our move to new facilities at many locations of the organization is a sym-bol of Tecan’s commitment to its business and corporate culture.

Milestones in corporate development. Tecan’smanagement of its assets was reflected in the achievement of significant corporate mile-stones throughout 2001. In Proteomics, weunveiled our first proteomics workstation forfree flow electrophoresis. Proteomics is a major business opportunity for Tecan and it isvery satisfying to see the speed at which wehave moved from the foundation of TecanProteomics GmbH in Munich last year, to thedevelopment of much needed solutions in this important market area. The Tecan ProteamFFE workstation is the first technology fromTecan in a suite of products that will offer a complete solution for high-throughput auto-mated proteomic research.

MESSAGE TO SHAREHOLDERS

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Recently, we confirmed our entry into the newcore competence of microfluidics/miniaturi-zation by implementing Early Access Programsfor the LabCD™. These collaborations withleading international pharmaceutical companieswill provide invaluable feedback for our newhigh throughput solutions in drug discovery.The first applications for the LabCD™ will be available commercially towards the end of the second quarter of 2002.

In November 2001, we continued to strengthenour geographic presence with the foundation of a new fully owned subsidiary in the Nordicregion. Tecan Nordic AB completes our pre-sence in Northern Europe and brings significantbenefits to all our existing and future cus-tomers in the area. In addition, our efforts tostrengthen distribution channels worldwidewere particularly successful in expanding ourmajor corporate accounts in diagnostics.

All of these initiatives were financed by on-going operations and are reflected in the reduc-tion of EBIT margin compared to last year.

Strength through commitment to R&D. In 2001,we significantly increased our R&D expendi-ture in our four market segments. The financialcommitment to R&D increased by more than 50% compared to the same period lastyear. Gross R&D expenses amounted to CHF 44.3 million and represented 12.2% of totalsales in 2001. This increased expenditure wasmainly due to the developmental costs necessa-ry to prepare for major launches that targetbottlenecks in all business areas. Forthcomingproducts include the first elements of the Gene Expression suite (Genomics), the ProTeam FFE to simplify the proteome fractionation (Proteomics), new molecular diagnostic plat-forms, and much needed solutions for highcontent screening in drug discovery. At the endof 2001, Tecan employed 166 people in R&D,which represents an 37.2% increase compared to the previous year.

Outlook. Finally, as we enter 2002, we aretaking further major steps in our business de-velopment. In line with our strategy, we will continue to strengthen our core competen-cies and expand into high-growth marketsegments. Tecan will also continue to expandselectively into the business areas of con-sumables and reagents as the company strivesto provide complete solutions for the Life Sciences.

For Tecan, 2001 was a year in which we did notonly continue to develop our business strategybut in which we clearly saw the benefits of our efforts in recent years. It was particularlyrewarding to see the merits of our businessmodel confirmed through the expansion of ourhigh growth markets.

With a clear business strategy in place, a highlypromising research and development pipeline,and strong cash flow, we are in an excellentposition to benefit from the sweeping changesthat are shaping the Life Science industry.

We would like to take this opportunity to thankeveryone who contributed to the outstandingsuccess of Tecan in 2001.

Dr. Emile C. SutcliffeChief Executive Officer

Mike BaronianChairman of the Board

Strong overall performance in market areas.Tecan’s strong product portfolio, balanced pres-ence in all four market segments of the LifeSciences, and effective distribution channelsallowed the company to post outstandingfinancial results for the year 2001. Sales in-creased by 32.3%, or 34.8% in local currencies,to CHF 361.9 million (2000: 273.5 million). Netincome reached 45.1 million, an increase of 14.3% over last year’s record performance.

In Genomics/Proteomics, Tecan continued toshow outstanding progress with a 65.6% salesincrease to CHF 74.3 million or 20.5% of totalsales (2000: CHF 44.8 million or 16.4% of sales).Within three years, Tecan has been able to de-velop a CHF 75 million business in these new high growth markets that will offer significantopportunities for further development in the years to come. This considerable achieve-ment is being driven in part by the need for pre-analytical sequencing and breakthroughsolutions for functional genomics.

Drug Discovery sales grew by 0.6% to CHF 130.1million or 36.0% of total sales (2000:CHF 129.4 million or 47.3% of sales) mainly dueto pharmaceutical companies adopting a more cautious approach to their R&D invest-ments. Diagnostic sales increased by 58.6% to arecord CHF 157.5 million or 43.5% of sales (2000: CHF 99.3 million or 36.3% of sales).This strong performance was in part due to in-creased market penetration of the GenesisFE500 workcell and by the considerable impactof new distribution channels, as well as theleveraging of applications from genomics intodiagnostics.

Balanced geographical sales: strong growth inUS and European markets. All markets by loca-tion of customers contributed to Tecan’s sig-nificant sales growth. The United States andEurope, which represent Tecan’s main markets,grew by 33.0% and 33.9%, respectively, in localcurrencies. Increased market penetration andmarket share helped sales growth in Asia toincrease from 11.0% to 23.7% in local currencies.The positive effect of improved distributionchannels also enabled Tecan to almost doubleits sales in its remaining markets (rest of world).

“Over the last three years, Tecan has doubled its EBIT, sales and shareholdervalue. We have every reason to be confident that we will reach our target ofCHF 500 million sales in 2003.” Franz Rutzer, Chief Financial Officer

Investment in R&D to support new high growthmarkets. In 2001, Tecan significantly strength-ened its R&D programs increasing its investment in this area by more than 50% to CHF 44.3 million (2000: CHF 29.0 million) repre-senting 12.2% of total sales (2000: 10.6%).This reflects Tecan’s commitment to deliveringnew products to its customers in all businessesthat meet their needs in the rapidly changingLife Science market. Included in these invest-ments are the developmental costs for entrancein to the new high growth market of Proteomicsas well as the development costs for the newcore competence of microfluidics (LabCD™).The company’s objective is to spend 10–12% ofsales annually on R&D.

Net profit reaches CHF 45.1 million on sales ofCHF 361.9 million. Taking into considerationinvestments in R&D, in sales and marketingexpenditure, and in business systems andprocesses, the EBIT reached a strong 17.2% of sales which is in line with the expectationsand guidance provided by the company.Operating profit (EBIT) increased by 7.7% to CHF 62.4 million (2000: CHF 57.9 million).The positive financial result of CHF 1.5 million(2000: CHF –3.5 million) was mainly achievedbased on the successful hedging of foreigncurrencies.

The income tax rate for 2001 remained below30% at 29.4%. Tecan’s operating perfor-mance resulted in a net profit increase of 14.3%to CHF 45.1 million or 12.5% of sales (2000:CHF 39.5 million or 14.4% of sales). The grossprofit margin remained stable at a high level of56.8% (2000: 57.2%), which reflects the compa-ny’s ability to maintain a high level of efficiency.

Strong financial position to drive furthergrowth. As of December 31, 2001, shareholders’equity grew by 29.7% and represented 68.7% of total assets or CHF 180.2 million (2000:CHF 139.0 million). Cash and cash equivalentsincreased substantially by CHF 15.3 million toCHF 64.4 million (2000: CHF 49.1 million). Thesetwo positions reflect Tecan’s healthy balancesheet and put the company in a strong positionto implement its future strategic objectives.

CHIEF FINANCIAL OFFICER’S STATEMENT

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Through its strong product portfolio, balancedpresence in all four market segments of the LifeSciences, and effective distribution channels,Tecan is in a financial position to build on itsoutstanding success over the past years. In linewith its commitment to delivering value to its shareholders, the Board of Directors willpropose an increased dividend of CHF 0.45 per registered share (2000: CHF 0.35) at theAnnual Shareholders’ meeting to be held on April 25, 2002.

Tecan should continue to see a strong demandfor its products and solutions from the bio-technology and pharmaceutical industries inEurope and North America. For 2002, Tecanshould continue to outperform the expectedgrowth rate of the Life Science industry with anticipated sales growth of between 15% and 25%. R&D investment will be around CHF 50 million for 2002. Looking further ahead, we are confident to reach sales of CHF 500 million in 2003 which is two yearsbefore our initial expectations.

In 2001, Tecan was able to validate its businessmodel and continue to deliver strong financialresults despite a challenging market environ-ment. In view of this success, we have every rea-son to be confident of our ability to buildfurther on our sound financial performance ofthe past years.

Franz Rutzer Chief Financial Officer

Sales by business areas

in CHF million

130.1

%

36.0%

74.3 20.5%

157.5 43.5%

Genomics/Proteomics

Drug Discovery

Clinical Diagnostics

300

200

100

0 400

Sales broken down by regiony g

North AmericaEuropeAsia

in CHF million

361.9

193.1

273.5

1999

2000

2001

6040200 80

Operating and net profit

41.0

57.9

28.1

39.5

Operating profitNet profit

62.445.1

1999

2000

2001

in CHF million

Market position and business strategy. As Tecanentered the new millennium, it reached a major milestone in its strategic positioning byestablishing four business segments as thefoundation for its future growth – Genomics,Proteomics, Drug Discovery and Diagnostics.By supporting basic research in genomics andproteomics and by enabling the applied R&Dessential for drug discovery and diagnostics,Tecan is becoming one of the leading players inthe fast growing Life Science supply industry.

The Life Sciences may be subdivided into threecategories – supply, information and pipelinecompanies – that represent most of the enter-prises active in this domain. Supply companiesprovide the necessary infrastructure that allowsLife Science companies to operate within theirchosen area; information companies provideknowledge-based tools, for example electronicdatabases of nucleotide sequence information,that empower research and development, drugdiscovery and diagnostic methods; pipelinecompanies discover and develop new drugs anddiagnostic methods. The goal of Tecan is to provide complete solutions for the informationand pipeline companies that constitute the Life Science market.

How does Tecan serve the needs of the LifeScience market? First, Tecan provides servicesand products based on its core competencies inliquid handling, robotics, detection, softwareand miniaturization. These core competenciesare implemented through hardware andsoftware solutions that are integrated intosystems often validated for specific applica-tions. Strategically, Tecan is expanding on thesecore competencies to move further up the value chain. Recognizing the needs of informa-tion and pipeline companies, Tecan identifieskey bottlenecks in the Life Sciences. Workingwith its customers as it strengthens andexpands its own core competencies, Tecanprovides new solutions for these bottlenecks.

Five factors for success: from high-growth mar-kets to geographic reach. Behind each strategicmove Tecan makes in the Life Science valuechain are five key assets – high growth markets,a strong product portfolio, an extensive net-work of direct contacts with its customers,effective distribution channels and a broad geo-graphic reach. These five assets are the key toTecan’s success in implementing its businessstrategy in the Life Sciences.

High-growth markets. The benefits of beingpresent in four high growth market seg-ments are twofold. First, it makes the company more resilient to unexpected fluctuations indemand in a specific market. Second, it allowsfor synergies between different business areasthat are beneficial to product development.For example, an early stage application inGenomics may be useful in implementing laterstage projects in either Drug Discovery orDiagnostics. By focusing on key bottlenecks inall of its business areas, Tecan is able toconsistently outperform market growth rates.

In Genomics, Tecan is active in three marketsegments – sequencing, genotyping and geneexpression. Within these segments, Tecan pro-vides many applications that serve the needs of customers for activities that range fromlarge-scale nucleotide sequencing up to studiesof the localization and function of specificgenes.

In Proteomics, Tecan serves the major marketsegments of fractionation, protein identifi-cation and protein characterization through itsexisting expertise in automation and highthroughput technologies and the develop-ment of new core competencies. Proteomicsaims to study directly the role and function of all proteins in tissues and cells and promises to bridge the divide between nucleotidesequence information and cellular behavior.

In Drug Discovery, Tecan provides applications toimprove the efficiency of the modern drugdiscovery process. This includes applications foractivities that range from the early stages of drug discovery (e.g. target identification andvalidation) up to toxicity studies and clinicaltrials.

TECAN’S BUSINESS STRATEGY

“Through our business strategy, Tecan is able to implement new solutions rapidlyfor the Life Sciences that will ultimately lead to far-reaching improvements inthe standards of modern healthcare.” Dr. Emile C. Sutcliffe, Chief Executive Officer

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In Diagnostics, Tecan’s strategy has been tobuild on its already strong presence in the mar-kets of immunology and blood grouping. Itssuccess in these areas is being used to penetratefurther the high growth markets of labo-ratory logistics and molecular diagnostics. Thisapproach is already providing significantbenefits as Tecan prepares to meet the majorchanges that are shaping the develop-ments in diagnostics in new areas such as personalized and predictive medicine.

The value chain of Tecan’s products. Tecan pro-vides a broad range of products that are thefoundation for its success in all business areas.This comprehensive product portfolio constitu-tes the value chain that serves the Life Sciences.Tecan is continually strengthening its core busi-ness in instruments and solutions. In addition,Tecan selectively combines elements in its port-folio with new components in the value chain,for example consumables and reagents, toprovide total solutions that meet the needs ofits customers. At present, the Life Science sup-ply industry consists of many highly specializedcompanies that tend to address specific corecompetencies and narrow market areas. Thismeans that companies in the Life Sciences have to invest time and resources to integratecore competencies from different sources. Incontrast to this fragmented situation, Tecan’sunique strength is its ability to exploit a widerange of core competencies that offer its custo-mers integrated solutions for their needs inlaboratory automation.

Our customers. Tecan’s clients include leadingpharmaceutical and biotechnology companies,university research departments and diagnosticlaboratories. Tecan works directly with its cus-tomers to provide customized solutions andongoing support throughout the lifetime of a project.

Distribution channels. One of Tecan’s keystrengths is its global distribution and supportnetworks. Customers worldwide benefitfrom networks that put them in direct contactwith representatives from the company. Thesedistribution channels are mediated throughTecan’s own subsidiaries and network of em-ployees and, if necessary, are complemented by partnerships with other leading inter-national companies.

Geographic reach. Tecan leverages its world-wide presence to deliver products and solutionsrapidly to its customers. The company has astrong presence in all key markets through asales and service network that encompassesAmerica, Europe and Asia. Tecan maintains asales and network service in 52 countries world-wide.

By combining high growth markets, the valuechain of Tecan products, direct customercontact, superior distribution channels and geo-graphic reach, Tecan has achieved a uniqueposition in the Life Science supply industry. Thisposition ensures that Tecan customers receivecomplete solutions that meet their highestexpectations for laboratory automation. Withour validated business strategy in place, Tecanis well positioned to benefit from the superiorsolutions that it is able to offer its partners in the rapidly growing Life Science industry.

Bottlenecks

Tecan’s Business Model

Identification of Bottlenecks

Solutions

“Life is the natural expression of an underlying order.”

Industry trends: realizing the potential of thepost-genomic era. In the post-genomic era,researchers are shifting their focus from theacquisition of sequence data to the inte-gration of new high throughput techniqueswith powerful new computing capabilities.Developments in automation, miniaturizationand information technology are driving thesignificant advances in genomics. According toa recent report from the Boston ConsultingGroup1, existing technologies in genomics could reduce the cost of producing a new drugby up to USD 300 million and shorten the timefor development by about two years. To staycompetitive and increase R&D productivity,pharmaceutical and biotechnology companiesare therefore making major investments ingenomic technologies. In particular, they arelooking at improved ways to perform large-scale gene sequencing, genotyping studies,(for example single nucleotide polymorphism or SNP scoring a key approach for individ-ualized and preventive medicine), and geneexpression analyses (functional genomics).

The total market available to Tecan for genomicresearch and applications was estimated atUSD 350 million in 2000 and is expected to growannually by 25% to USD 1.4 billion in 20062.

Market position and strategy: strength throughsynergies in business areas. Tecan’s businessstrategy is to focus on high growth marketsthat include nucleotide sequencing, genotypingand gene expression. The markets for DNAextraction and sample preparation for large-scale nucleotide sequencing continue to growas the need for automation and improvedflexibility increases. The total nucleic acid pu-rification market alone was estimated ataround USD 400 million in 2000 and is ex-pected to reach USD 925 million by 2006. Ingenotyping, for which considerable expansion is predicted, companies are implementing their sequence-based technologies that willrevolutionize preventive medicine. The geneexpression or functional genomics marketis also showing remarkable growth which is being driven by the high demand for bothready-to-use and customizable microarrays.

Achievements 2001: significant sales growth,new products for key bottlenecks. Tecan isexpanding on its already strong presence in thegenomic market. The company is building onthe success of its existing product range byintroducing key new solutions that are meetingthe emerging needs of Tecan customers ingenomics.

For nucleotide sequencing and genotyping, theMolBio workstation continued to be a popularsolution for the genomic laboratory offeringsolutions for DNA extraction and most of thesubsequent labor-intensive steps in sample pre-paration that precede DNA sequencing analy-sis. For genotyping, Tecan also offers the Ultramicrotiter plate detection device, a highlyattractive solution for the quantitation of indi-vidual differences in nucleotide sequence (SNPs).

For the gene expression market, Tecan intro-duced the LS Series of Scanners (see inset), thefirst part of its Gene Expression Suite, andGenePaint, a powerful new solution for auto-mated high throughput in situ hybridizationanalysis based on a Genesis Robotic SampleProcessor. The Gene Expression Suite will auto-mate activities that range from microarrayprocessing up to the validation of gene expres-sion in tissues by in situ hybridization. In situhybridization, a key technique in elucidatingwhich tissues and cells express a particulargene, is an essential part of modern functionalgenomic studies and is a major bottleneck forresearchers due to a lack of automated solutions.

GENOMICS

“The advantages of our business strategy were fully vindicated in 2001 by the outstanding sales in our high-growth market of Genomics.”Jan Timmers, Head of Business Development and Biopharma

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Total available market (CAGR)

CAGR 25%

in USD billion

2000

2006

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1.4

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Outlook: new products to drive sales growth.Tecan will continue to introduce new productsin genomics that build on the success of its core competencies. The company will apply itsexpertise in automating genomic processes to provide a complete suite of Nucleic Acidsample preparation solutions.

In 2002, Tecan will introduce the MicroarrayHybridization Station to complete its Gene Ex-pression Suite for the fast-growing micro-array market. The promise of miniaturization,automation and massive parallel nucleotideanalysis makes DNA array technology a power-ful tool with many applications in academicand industrial settings. The hybridizationstation, in conjunction with process manage-ment software, will work seamlessly with the LS Series of Scanners (see inset) and will offerusers a complete Gene Expression Suite foroligonucleotide-, cDNA-, protein- and antibody-based microarrays.

These new products will drive sales growth andestablish genomics as one of the leading pillarsof Tecan’s business in the Life Sciences.

1 A revolution in R&D. How genomics and genetics are

transforming the biopharmaceutical industry, The Boston

Consulting Group, November 2001.2 Source: Front Line, Frost and Sullivan

To meet the needs of laboratories worldwide,Tecan is developing the Gene Expression Suite.The Gene Expression Suite will automate arange of activities from microarray processingup to subsequent validation of gene expressionin tissues by in situ hybridization. DNA micro-arrays, which consist of hundreds or thousandsof known sequences of DNA microspotted onglass or silicon, are central to genomic research.The Gene Expression Suite is an integratedsystem that can deal with the bewilderingnumber of microarray formats and sizes, enablemany applications, and deliver reproducibleresults.

In 2001, Tecan introduced the LS Series ofScanners, the first component of the GeneExpression Suite. The LS200 is the first fluores-cence laser scanning system that provides bothconfocal and non-confocal detection of arrayformats that range from glass, membrane, orgel-based arrays up to microplates. The LS200provides researchers with an invaluable tool toexplore the use of new microarray formats suchas the latest protein- and tissue-based arrays.In 2002, Tecan will introduce the MicroarrayHybridization Station and process managementsoftware to complete its Gene Expression Suite.

“Moving closer to defining the driving forces of the Life Sciences.”

Industry trends: the convergence of new tech-nologies, high-throughput capabilities andinformatics. The notion that proteins are centralto understanding the mechanisms of biology is not new. The introduction of the word proteinitself, which comes from the Greek word for“first things”, dates back to the first half of the19th century. What is new to modern biology is the scale at which it is now possible to studythese essential macromolecules.

Proteomics aims to study directly the role and function of all proteins in tissues and cellsand promises to bridge the divide betweennucleotide sequence information and cellularbehavior. This remarkable objective will be realized through developments in the wholeprocess of protein profiling including frac-tionation, high resolution separation, identifi-cation, and characterization techniquesimplemented through expertise in automation,high throughput technologies and progress in informatics. The convergence of these tech-nologies is leading to significant opportuni-ties for understanding how our bodies work,identifying new drug targets and defining thereasons why we fall victim to disease.

The available market for Tecan in proteomicswas estimated as USD 450 million in 2000 andis expected to grow by a CAGR of 40% over the next few years.

Market position and strategy: integrating newsolutions to alleviate key bottlenecks. Despitethe phenomenal pace of proteomics research,key barriers remain that are restricting pro-gress. New technologies are needed to inte-grate better the many steps required for proteinanalysis. It is necessary to alleviate bottlenecksin sensitivity, reproducibility and throughputthat occur in all steps up to the analysis of pro-teins and their fragments by modern spectro-scopic methods such as mass spectrometry.However, once the technological limitations toproteomics are overcome, our understanding of how proteins control the human body willgrow exponentially.

Through its core competencies in automation,robotics and the production of integratedsystems, Tecan is ideally positioned to provideworkstations and solutions that will systema-tically remove the major barriers facing theproteomics industry. Tecan’s strategy is to ex-pand into proteomics by focusing on three highgrowth market segments – fractionation,protein identification and protein characteri-zation. In these market segments, Tecan isdeveloping flexible solutions that target keyapplications for the proteomics industry.

Achievements 2001: innovative products fromTecan Proteomics GmbH. Tecan ProteomicsGmbH was established in January 2001 and inthe short time since, has laid the foundation for Tecan’s success in proteomics. The speed atwhich Tecan is moving in this field is in partdue to its existing expertise and core compe-tencies in liquid handling, miniaturization,and automation.

The acquisition of free flow electrophoresistechnology from Dr. Weber GmbH gave TecanProteomics GmbH a significant competitiveedge in the preparation of its first productfor fractionation. To reduce the complexity of a proteome, Tecan has introduced theProTeam FFE, the first part of its ProTeam suite.For protein identification, Tecan is developingautomated solutions and applications for thesample preparation steps that immediatelyprecede spectroscopic data analysis. Theserange from two dimensional gel electrophoresis(2D-PAGE), in-gel protein digestion, up to platespotting for Matrix-Assisted Laser Desorption/Ionization mass spectrometry (MALDI-MS).

2D-PAGE is a key technology in proteomics inwhich a complex protein mixture of a cell isseparated first in one dimension according toisoelectric point and subsequently in a seconddirection according to electrophoretic mobilitydepending on molecular weight. For 2D-PAGE,Tecan is developing ProTeam 2D. ProTeam 2Dwill greatly facilitate the reproducibility andthroughput of this key step in protein analysis.

PROTEOMICS

“Within 12 months, Tecan Proteomics GmbH has made outstanding progress.The company has launched its first products that will revolutionize the waylaboratories perform automated protein analyses.”Dr. Christoph Eckerskorn, Chief Scientific Officer, Tecan Proteomics GmbH

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1.0

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in USD billion

2000

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For in-gel protein digestion, ProTeam Digestwas introduced in 2001. This unique automat-ed product enables the digestion of electro-phoretically separated proteins directly in gelplugs and delivers protein fragments effort-lessly to sample plates prior to mass spec-trometric analysis and subsequent identifica-tion using databases.

In the market segment protein characterization,Tecan is targeting applications for proteinarrays, protein crystallization and protein puri-fication. As in genomics, Tecan will imple-ment an Array Suite to offer a powerful modu-lar system for protein processing and analysis. This system will operate seamlesslywith a wide range of instruments and devicesenabling superior flexibility for the needs ofTecan’s customers.

Outlook: delivering revolutionary applicationsfor protein analysis. Tecan’s goal is to deliversolutions that will span the whole range ofmethods and technologies for the analysis ofproteomes – these range from high through-put protein analysis, studies of quantitative pro-tein expression, and characterization of signal-ing and metabolic pathways all the way up toemerging areas such as structural proteomics.Experts estimate that humans may have morethan 200,000 protein species. Identifying all of the body’s proteins, including those thatrepresent the most important targets for thedevelopment of new drugs, will be a majorundertaking. As Life Science companies imple-ment their large-scale proteomic projects,Tecan is in excellent position to exploit both theexisting and future growth of the prote-omic market.

ProTeam FFE – the first front-end (pre-analytical)fractionation solution for proteomic research.First unveiled in September at Tecan’s InnovationDay, the revolutionary ProTeam FFE is a liquidfractionation device that reduces the complexityof the “proteome”. The ProTeam FFE processessample that range from particles, for exampleintact cells, cellular organelles and membranes,up to complex solutions such as protein mix-tures. This implies fast, matrix-free fractionationwith high reproducibility, high throughput,quantitative recovery, high resolution, and thenecessary processing for further analysis (such as conventional two dimensional gel electro-phoresis or 2D-PAGE).

The groundbreaking Tecan ProTeam FFE work-station is the first technology from Tecan in the ProTeam suite of products that will offer acomplete solution for high throughput auto-mated proteomic research.

“Pertinent solutions are the result of inspiration, dedication and a willingness to explore.”

Industry trends: accelerating drug developmentthrough drug discovery. Increased competition,changing health care and regulatory environ-ments are forcing pharmaceutical and bio-technology companies to streamline and accel-erate their drug development processes in new ways. Advances in the areas of Genomics,Proteomics and Bioinformatics are generatingan unprecedented number of potential drugtargets. These advances, coupled with the emer-gence of combinatorial chemistry and inno-vative automated technologies for conductinghigh throughput screening, now allow re-searchers to identify rapidly lead compounds that interact with many of these new potentialtherapeutic targets in very large numbers.

However, despite the increase in the number oflead compounds, the success rate of potentialdrugs in pre-clinical and clinical stages of devel-opment and the number of new drugs broughtto the market have not improved significantly.The success rate for a drug candidate in clinicaltrials remains at the historical level of about1 in 10. In response, many companies are devel-oping strategies that may be used earlier in the drug discovery process to better selectcompounds that display the most promisingpharmacological characteristics. Traditionally,companies have focused on potency withoutfocusing on pharmacology until very late in the drug discovery process. This strategy ischanging. In particular, the industry is strivingto eliminate drug candidates that show poorchemical stability, low solubility, poor cell permeability characteristics, and high rates ofmetabolism and/or clearance.

The challenge is to integrate the developmentsin high throughput screening technologies(Genomics, Proteomics, Screening) with theappropriate pharmacological selection criteriathat will improve the chances of success for a potential drug candidate. In this new envi-ronment, companies require superior auto-mated solutions that eliminate the key bottlen-ecks in their drug discovery and developmentprograms especially in the areas of pharma-cological screening.

Market position and strategy: targetingbottlenecks in key market segments. The totalcore drug discovery laboratory automation mar-ket that is available to Tecan is expected to grow annually by 9% to USD 0.9 billion in2006. Tecan’s strategy is to focus on highgrowth, high margin segments that representsignificant business opportunities for thecompany. As the pharmaceutical business isvery dependent on the output of its R&Defforts, companies are continuing to investheavily in new technologies for drug discovery.

Currently, Tecan is unique amongst its peers in that it targets applications for bottlenecks inall key market segments that constitute themodern drug discovery process. These rangefrom target identification and validation, com-pound synthesis, assay development, andscreening up to lead optimization and clinicaltrials. Many of the developments shapingTecan’s new products in Genomics and Prote-omics are highly relevant and widely used inDrug Discovery.

Achievements 2001: innovative products fordrug discovery. One of the most significantevents in 2001 was the introduction of thegroundbreaking Genesis Freedom automationplatform. The Genesis Freedom is a significantevolution of Tecan’s automated platforms and its revolutionary capabilities allow for the development of many new types of auto-mated solutions for the drug discovery market,for example for procedures in compound logis-tics, lead optimization and formulation.Further applications of the Genesis Freedom are being developed for many of the other mar-ket segments of Drug Discovery including assay development, drug screening, lead opti-mization, and cell-based assays.

In 2001, Tecan also introduced the innovativeSafire scanning monochromator reader. TheSafire is the first detection device that com-bines both absorbance and fluorescence mea-surements and has applications in the wholespectrum of drug discovery activities. For evenmore sophisticated and sensitive detection,

DRUG DISCOVERY

“The LabCD™ will set the industry standard for miniaturized, high-value drug discovery assays in the years to come.” Bob Young, General Manager Tecan Boston

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Tecan also offers the Ultra multifunctionalreader. The LS 200 scanner, which is currentlymainly used for Gene Expression, is also appli-cable for use with special miniaturized platesemployed in the drug discovery screening process. These readers, coupled with Tecan’sexisting detection products, provide a port-folio of devices that serve the diverse needs of researchers throughout the Drug Discoverymarket.

In drug discovery, high throughput drug screen-ing requires pipetting devices that can accu-rately deliver the liquids needed for screeningassays with the desired throughput. To meetthis goal, Tecan introduced the TeMo 96/384multi-pipetting devices in 2001 which may beeasily integrated with the well establishedGenesis platform. New detection devices, minia-turization technologies, and improved deliverydevices are also under development. For exam-ple, Impulse, a technology for use with theTeMo 384-tip pipetting device, will allow highthroughput miniaturization due to its pipett-ing range (from 50 nanoliters to the microliterrange) and is scheduled for introduction in 2002.

The year 2001 marked a significant milestonefor Tecan’s groundbreaking LabCD™ microfluidictechnology (see inset). Further applications indrug metabolism and automated cell mainte-nance are planned based on the Genesis Free-dom platform for the upcoming year.

Outlook: expansion of core competencies, newproducts to facilitate drug discovery. Looking tothe future, Tecan is investigating new oppor-tunities in drug discovery that complement itsexpertise and core competencies. For example,as Tecan moves up the value chain in drugdiscovery, the company is looking at the clinicaltrial market segment to implement a range of detection technologies for automated assays.The goal is to become the preferred partner of our customers in drug discovery and to offersolutions for all of their assay and applica-tion needs.

The LabCD™ – Removing the constraints ondrug discovery. In 2001, Tecan implementedearly access programs for its revolutionaryLabCD™ microfluidics technology in collabora-tion with leading international pharmaceuticalcompanies. The implementation of theseprograms marks a significant milestone in theadvanced development of this breakthroughtechnology.In drug discovery, the LabCD™ initially targetsapplications for ADMET (Absorption, Distri-bution, Metabolism, Excretion and Toxicity)assays, which are currently a major bottleneckfor biotechnology and pharmaceutical compa-nies. Due to the high costs associated with drug development and the low success rateduring clinical trials, life science companies aremaking major efforts to integrate highthroughput ADMET studies in their drug discov-ery programs.Current Drug Metabolism assays are limited intheir throughput and application due to slowanalytical/detection equipment. The LabCD™will greatly simplify the analysis of these DrugMetabolism assays, enabling them to be per-formed in much higher numbers and givingpharmaceutical researchers invaluable informa-tion sooner in the drug discovery process. Thefirst applications for the LabCD™ will be avail-able towards the end of the second quarter of 2002. Tecan will develop further applicationsfor the LabCD™ in its Genomics, Proteomics and Diagnostics business areas.

“Predicting change is an essential part of progress.”

Industry trends: improving public healththrough technological advances. Tecan is a lead-ing provider of solutions for clinical diagnos-tics, a segment of the Life Sciences thatfocuses on the use of test methods to predictthe occurrence of illness, identify diseases and monitor therapeutic effects. The industrytrend in diagnostics is to move away fromtraditional diagnostic methods that involve thedefinition of the symptoms of disease to-wards technologies that enable predispositionto illness and responsiveness to drug treat-ments to be determined.

Molecular diagnostics will impact many areasof medicine ranging from the detection ofdifferent forms of cancer and the diagnosis ofvarious genetic diseases up to organ and tissue transplantation. Significantly, this will beaccompanied by a large increase in point of care testing, in which diagnostic procedures will be performed in the presence of both patient and healthcare professional with accessto powerful computing resources. Overall,there will be a large shift towards personal-ized medicine based on the genetic profile ofthe patient.

Market position and strategy: core competen-cies for high growth market segments. Tecan’sstrategy in diagnostics has been to build on its already strong presence in the market seg-ments of immunology and blood grouping.Its success in these areas is being used to pene-trate further the high growth market segmentsof laboratory logistics and molecular diagnos-tics. This approach is already providing signi-ficant benefits as Tecan prepares to meet themajor changes that are shaping the develop-ments in new areas such as personalized and predictive medicine. Tecan has been able tomake outstanding progress in diagnostic auto-mation by implementing new solutions basedon its strong core competencies. The totalclinical diagnostics market available to Tecanwas estimated at USD 0.79 billion in 2000 and is expected to grow annually by 11% to USD 1.5 billion in 2006 (Genesis Report 2000;Front Line 7/2001).

Achievements 2001: strong sales growth, highlyeffective distribution channels. In 2001, sales indiagnostics amounted to CHF 157.5 million,which represents 58.6% growth compared tolast year. This outstanding performance wasdue not only to the introduction of key productsin high growth market segments but also toTecan’s ability to efficiently exploit its distribu-tion channels and to deliver much neededsolutions to its customers. Established andemerging diagnostic companies significantlybenefited from our ability to offer globaldistribution and support networks which haveled to highly effective partnerships directly with our customers.

Diagnostic tests have many applications rang-ing from the identification and prediction of human or other animal diseases to qualitycontrol testing of blood samples. In 2001,the Genesis FE500 made significant progress in penetrating the major market segment oflaboratory logistics. Pre-analytic processing is one of the most labor-intensive aspects ofclinical laboratory testing and some estimatesindicate that sample processing accounts for up to 65% of the average total time spent bypersonnel on clinical laboratory procedures.The Genesis FE500 offers customers a flexiblesystem for many front-end procedures inclinical laboratories. As such, it is an excellentsolution for a wide range of clinical laboratoriesthat may have different needs for throughputin sample preparation and processing.

In immunology, Tecan continued to make goodprogress in sales for its leading products forabsorbance- and fluorescence-based immuno-assay automation and confirmatory diagnosticapplications. In Diagnostics, one of the goals set in 2000 was to further strengthen Tecan’sposition in the blood grouping market segment.To meet this goal, Tecan introduced several new products in the second half of 2001 for thisgrowing market (see inset). For food andveterinary diagnostics, our Genesis platform to test for BSE (bovine spongiform encephalop-athy) continued to be a popular solution for our clients.

DIAGNOSTICS

“Our strength in global distribution and further penetration into the pre-analytical automation market helped us achieve record sales growth in 2001.Tecan is ideally placed to benefit from the profound changes that are shapingmodern practices in clinical diagnostics.” Joe Kaelin, Head of Clinical Diagnostics

2.0

1.0

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CAGR 11%

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2000

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Finally, in molecular diagnostics, we have beenable to leverage solutions from the Genomicsand Proteomics business areas that in thecoming years will offer considerable opportuni-ties in molecular diagnostic applications forareas as diverse as histology, cytology andoncology. Working together with its customers,Tecan is developing a wide range of automatedsolutions for many diagnostic applicationsincluding cell cultivation techniques, fluores-cence in situ hybridisation (gene expressionstudies), polymerase chain reaction (nucleic acidamplification techniques), and flow cytometry.

Outlook: driving the revolution in healthcare. In2002, Tecan will introduce new solutions forviral RNA extraction on the Freedom platform.For the first time, it will be possible to extractand analyse RNA from more than one type of RNA virus (for example human immu-nodeficiency virus or hepatitis C virus) in thesame sample offering significant savings inboth time and cost. In laboratory logistics, newsorting and archiving solutions will be intro-duced to meet the needs of Tecan customers in this market segment. Tecan will build on itsalready strong presence in immunology andblood grouping as it extends its presencefurther into laboratory logistics and molecu-lar diagnostics.

Future applications in diagnostics will leveragethe major developments taking place in a wide range of disciplines that include genomics,proteomics, bioinformatics, personalized medi-cine, and drug development. Our ability tointroduce products quickly, address critical mar-ket needs, and support the activities of itscustomers will give Tecan a major competitiveedge as it serves the Life Science community.For the revolution in diagnostic healthcare,Tecan is ideally placed to use its core competen-cies to address emerging bottlenecks in theclinical diagnostics industry and to provide the solutions that meet the growing needs ofits customers.

Innovative products to meet the needs of bloodbanks. By the end of 2001, Tecan introducedgroundbreaking products that strengthen fur-ther its position in the blood grouping marketsegment. Blood banks are relying increasinglyon “donor pooling” for increased efficiency and to accelerate nucleic-acid-based testing ofblood samples. Te-Sonic, a powerful detectiondevice for blood pooling and sample verifica-tion, provides significant benefits to bloodbanks, reference and diagnostic laboratorieswho wish to improve the speed and reliabilityof blood pooling procedures for nucleic acidtesting (NAT).

In October, Tecan introduced a new applicationfor viral RNA extraction and nucleic acid test-ing on the Genesis Robotic Sample Processor(RSP). The Genesis RSP provides a fast, reliableand highly accurate system to automate theextraction of viral RNA from plasma, serum and other biological samples.

Income statement

CHF 1,000 1997 1998 1999 2000 2001

Income statementSales 141,867 163,605 193,056 273,532 361,866

Operating profit 28,141 31,545 41,015 57,915 62,738

Financial result –1,811 168 989 –3,488 1,500

Income taxes 3,627 6,766 13,896 14,882 18,789

Net profit 20,328 22,876 28,050 39,450 45,093

Research & development, gross 12,756 18,987 25,931 29,020 44,279

Personnel expenses 39,927 46,806 56,342 73,437 101,396

Depreciation of fixed assets 5,625 6,025 4,592 5,631 7,512

Amortization of intangible assets 51 22 – 2,928 4,575

Balance sheetCurrent assets 86,857 103,016 131,346 151,594 206,071

Non-current assets 18,202 16,991 23,226 42,825 56,363

Total assets 105,059 120,007 154,572 194,419 262,434

Current liabilities 30,346 26,229 32,460 48,136 74,565

Non-current liabilities 5,427 4,976 4,172 7,261 7,645

Minority interests 169 219 80 25 –

Shareholders’ equity 69,117 88,583 117,860 138,997 180,224

Cash flow statementCash flows from operating activities 23,726 26,097 27,656 30,334 32,345

Capital expenditures in fixed assets 5,481 4,832 6,023 9,057 22,878

Dividends paid 1,036 1,944 2,683 3,358 4,534

Other dataNumber of employees (end of period) 454 507 556 690 915

Number of employees (average) 424 489 542 629 855

Research & development in % of sales 9.0% 11.6% 13.4% 10.6% 12.2%

Sales per employee 335 335 356 435 423

Data per share (CHF)*Net profit 1,58 1,78 2,18 3,07 3,50

Shareholders’ equity 5,37 6,88 9,16 10,80 14,01

Dividends paid (CHF/share)** 0,15 0,20 0,25 0,35 0,45

Data per share are based on 12,869,766 registered shares of par value CHF 1 eachoutstanding for all periods presentedProposal to the Annual General Meeting

FIVE-YEARS CONSOLIDATED DATA

*

**

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FINANCIAL REVIEW

Sales. Tecan Group consolidated sales grew in2001 by 32.3% to CHF 361.9 million (2000:CHF 273.5 million). In local currencies, this rep-resented a record sales growth of 34.8%.Within the particular market segments,Genomics/Proteomics sales showed strongprogress increasing by 65.6% to CHF 74.3million. This amounted to 20.5% of sales. DrugDiscovery sales totaled CHF 130.1 million, whichamounted to 36.0% of total sales, and this rep-resented growth of 0.6%. Diagnostics salesincreased significantly to CHF 157.5 million or 43.5% of total sales, which corresponds to agrowth of 58.6% in 2001.

All Group companies achieved highly favourablegrowth rates during the year, with Italy andAustria showing particularly strong perform-ances. In 2001 the European geographical seg-ment showed the largest growth in sales,40% in local currency, followed by the US andAsia. The US continued to provide around 50% of total Tecan Group sales.

From the viewpoint of the geographicallocation of customers, both of the main salesregions America and Europe showed approx-imately the same rate of growth, at 33.0% and33.9% respectively in local currencies.

Changes in Group companies. In January 2001,Tecan announced the formation of a newcompany Tecan Proteomics GmbH, which isbased in Munich (in December 2001, the nameof the company was changed to Tecan MunichGmbH). In January 2001, Tecan ProteomicsGmbH acquired a majority shareholding in Dr. Weber GmbH, a Munich-based companywith expertise in free-flow electrophoresistechnology.

In November 2001, Tecan opened a fully ownedsubsidiary in Sweden, following its takeover of a proportion of the assets of its former dis-tributor Lambda Instruments. The new com-pany will be called Tecan Nordic AB.

Goodwill from the above transactions amountedto CHF 2.0 million and will be amortised overthe next five years.

Profitability. Gross profit. A gross profit of 56.8%was achieved in 2001, which was only slightlylower than the figure reported in 2000 (57.2%).The gross profit margin therefore remainsstable at a high level.

Personnel. The number of Tecan Group em-ployees increased during 2001 from 690 to 915.This increase not only reflects the strong sales growth rate for the year but also ensuresthat this growth rate will continue in thefuture. The major increases in the number ofstaff were in the areas of Selling and Market-ing, Customer Services and Research &Development. It is Tecan’s continuing policy tohire highly skilled staff and to provide apleasant working environment. With this inmind, the company issued in 2001 an Em-ployee Satisfaction Survey, which produced ex-tremely good feedback. As in 1999 and 2000,Tecan employees had the possibility to par-ticipate in a stock option plan. In the year 2001,some 184,752 stock options were granted toemployees. Sales per employee slightly de-creased to CHF 423,000 (2000: CHF 435,000).

Research & Development. In 2001, Tecan in-vested CHF 44.3 million in R&D compared to CHF 29.0 million in 2000. This represents 12.2%of sales, an increase compared to previous years (10.6% in 2000). This is slightly above theGroups target of 10–12% of sales. However,the rate is somewhat biased towards higherexpenditure in the first part of 2001. The morerecent trend matches the mid-term target.Efforts in R&D focused in particular on areassuch as Proteomics, the LabCD™ for ADMETapplications in drug discovery, gene expressionand parallel pipetting devices. This significantinvestment in R&D will be used to supportthe launch of new products, to develop corecompetencies and to strengthen further theentry into new high-growth market areas.

Other operating expenses. The continuedgrowth in group sales was matched by an in-crease in the number of personnel and a rise in associated headcount costs. As the com-pany increased in size, the company’s invest-ment in infrastructure also grew. Several groupcompanies moved into new premises, includingthe new Group headquarters in Männedorf,Switzerland. System infrastructure expensesalso increased during 2001, consistent withTecan’s ongoing policy to strengthen processesand systems.

Operating profit rose by 7.7% to CHF 62.4 million,or 17.2% of sales (2000: 21.2%). The operatingmargin reflects a substantial increase in R&D of 1.4% of sales and investments in businessprocesses and systems. The figure also includesamortizations of CHF 4.6 million (2000:CHF 2.9 million), mainly from technologyacquisitions.

Financial result. Tecan was able to profit from a favorable situation in the foreign exchangemarkets. Despite substantial hedge costs, a gain of CHF 0.4 million was achieved. The inter-est income on the other hand was reduced by CHF 0.4 million to 1.1 million reflecting theworldwide reduction of interest levels.

Taxes. Tecan benefited in 2001 from a higherallocation of its profits to countries with lowertax rates. The underlying income tax rate of29.4% (2000: 27.3%) was in line with the com-pany’s strategy of maintaining a tax level of below 30%.

Tecan’s operating performance in 2001 resultedin a net profit of CHF 45.1 million, or 12.5% ofsales. This represents an increase in net incomeof 14.3% compared with 2000. The earnings per share increased from CHF 3.06 in 2000 to CHF 3.50 for the year 2001.

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Balance sheet. As in previous years, Tecan hasmaintained a very strong balance sheetstructure. Shareholders’ equity showed a netincrease of CHF 41.2 million and represents68.7% of total assets as of December 31, 2001.Net purchases of treasury shares totalling CHF 3.1 million and the premium of the putoption on the treasury shares, which amountedto CHF 4.0 million, were charged directly against shareholders’ equity. Due to the success-ful business year 2001, net working capitalincreased as of year-end. Higher capital expend-itures, which were necessary as a result of the expanding infrastructure to accommodatethe growing number of employees and the acquisitions of new subsidiaries already mentioned, caused total assets to rise by CHF 68.0 million or 35.0% compared with theprevious year, reaching CHF 262.4 million by the end of 2001.

Cash flow statement. The cash flow fromoperations increased by CHF 2.0 million compared with the previous year, reaching CHF 32.3 million in 2001. Capital expenditures ofCHF 22.9 million and acquisitions totaling CHF 2.7 million caused funds of CHF 20.4 millionto be used for investment activities. The cash inflows from financing activities of CHF 4.6 million are largely attributable to thepremium of the put option on treasury sharesand the increase in current bank liabilities.As a result, cash and cash equivalents increasedby 15.3 million as of the end of 2001.

Treasury shares. During the year 2001, some548,478 shares with an average price of CHF 156.4 were purchased and some 526,449shares were sold at an average price of CHF 157.0. Tecan held 173,149 treasury shares as of year-end. Tecan plans to continue thispolicy of investing a portion of those liquidassets not required in its operations in treasuryshares again throughout 2002.

Manpower by activity (eop)

Manufacturing & Logistics

Customer Service

Research & Development

General & Administration

Selling & Marketing259

126

166

28.3%

13.8%

18.1%

108 11.8%

256 28.0%

0 302010 40

Research and Development

25.9

29.0

44.0

13.4%

10.6%

12.2%

Research and Development grossResearch and Development (gross) in % of sales

1999

2000

2001

in CHF million

3020100 40

Cash flow

27.7

32.3

30.3

in CHF million

1999

2000

2001

Dividends. At the annual shareholders’ meetingon April 25, 2002, the Board of Directors willrecommend the payment of dividends of CHF 0.45 per share (2000: CHF 0.35). Tecan thussets forth its policy of distributing dividendsaccording to levels of net profit. This increase in dividends reflects the continuing belief by theBoard of Directors in the growth of the company.

Stock market performance. The registeredshares of Tecan Group Ltd., the Group’s ultimateholding company, are traded on the Swiss stock exchange. In former years, the share priceclearly outperformed the Swiss PerformanceIndex (SPI).

On December 31, 2001, the stock market closingprice was CHF 110.0 – compared with CHF 168.0 a year earlier – representing a 34.5% decreaseduring the year. This reduction has to be seen inthe context of generally lower share prices at the SWX and the very high performance ofthe Tecan share in former years. This develop-ment of the share price caused the company’smarket capitalization to drop from CHF 2.2 billionto CHF 1.45 billion.

1 to 10 share split. At the annual shareholder’smeeting on April 25, 2001, the shareholdersagreed to the proposed split of the registeredshares in a 1:10 ratio.

High and low share price (CHF)1997 1998 1999 2000 2001

High 38 50 68 198 190

Low 19 30 44 64 75

Year-end 33 49 68 168 110

Sales by location of customers

in CHF million

North America 172.6

139.9

29.6

19.8

%

47.7%

38.7%

8.2%

5.4%

Europe

Others

Asia

Net liquidity

in CHF 1,000 1999 2000 2001

+ cash and cash equivalents 49,421 49,071 64,386

+ marketable securities 10,774 – –

./. current bank liabilities –2,419 –2,126 –7,982

./. bank loans – –640 –1,166

= net liquidity 57,776 46,305 55,238

33

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CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet at December 31

in CHF 1,000 Notes 2001 2000

Assets

Cash 55,142 28,067

Time and money market deposits 9,244 21,004

Trade accounts receivable 3 98,595 68,189

Other receivables 7,131 5,454

Inventories 4 31,072 25,461

Prepaid expenses 4,887 3,419

Current assets 206,071 151,594

Financial assets 1,392 933

Property, plant and equipment 5 28,461 17,868

Intangible assets 6 14,246 16,854

Deferred tax assets 19 12,264 7,170

Non-current assets 56,363 42,825

Assets 262,434 194,419

Liabilities and shareholders’ equity

Current bank liabilities 7 7,982 2,126

Trade accounts payable 21,204 19,888

Other liabilities 8,060 2,855

Provisions 8 5,033 4,421

Current tax liabilities 11,995 5,806

Accrued liabilities 20,291 13,040

Current tax liabilities 74,565 48,136

Bank loans 7 1,166 640

Other non-current liabilities 461 88

Provisions 8 1,811 1,215

Deferred tax liabilities 19 4,207 5,318

Non-current liabilities 7,645 7,261

Minority interests 0 25

Share capital 13,041 13,020

Treasury shares (27,213) (23,073)

Capital reserve 21,223 15,017

Translation differences (668) 1,326

Retained earnings 173,841 132,707

Shareholders’ equity 9, 10 180,224 138,997

Liabilities and shareholders’ equity 262,434 194,419

Consolidated income statement

in CHF 1,000 Notes 2001 2000

Sales 14 361,866 273,532

Cost of sales (156,316) (116,972)

Gross profit 205,550 156,560

Selling and marketing (62,738) (43,563)

Research and development 17 (44,279) (29,020)

General and administration (34,023) (23,713)

Amortization of intangible assets 6 (4,575) (2,928)

Other operating income 18 2,443 579

Operating profit 62,378 57,915

Interest expense (184) (237)

Interest income 1,318 1,759

Foreign exchange gains (losses) 366 (5,010)

Financial result 1,500 (3,488)

Profit before taxes 63,878 54,427

Income taxes 19 (18,789) (14,882)

Profit before minority interests 45,089 39,545

Minority interests in profit 4 (95)

Net profit 45,093 39,450

Earnings per share (CHF/share)* 22 3,50 3,06

Diluted earnings per share (CHF/share)* 22 3,44 3,00

Per registered share with a nominal value of CHF 1*

35

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CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of changes in shareholders’ equity

in CHF 1,000 Total share-Share Capital Retained Tanslation Treasury holders’

capital reserve earnings differences shares equity

Shareholders’ equity at 1/1/2000 13,000 6,086 96,470 2,493 (189) 117,860

Net profit 39,450 39,450

Dividends paid (3,213) (3,213)

Movement in treasury shares 7,644 (22,884) (15,240)

Exercise of employee stock options 20 1,287 1,307

Translation differences (1,167) (1,167)

Shareholders’ equity at 12/31/2000 13,020 15,017 132,707 1,326 (23,073) 138,997

Restatement (IAS 39) 546 546

Shareholders’ equity at 1/1/2001 13,020 15,017 133,253 1,326 (23,073) 139,543

Net profit 45,093 45,093


Movement in treasury shares 1,070 (4,140) (3,070)

Exercise of employee stock options 21 1,103 1,124

Put option on treasury shares 4,033 4,033

Translation differences (1,994) (1,994)

Shareholders’ equity at 12/31/2001 13,041 21,223 173,841 (668) (27,213) 180,224

See also note 10.

Consolidated cash flow statement

in CHF 1,000 Notes 2001 2000

Profit before minority interests 45,089 39,545

Adjustments to reconcile profit to cash flow from operating activities:Depreciation of property, plant and equipment 5 7,512 5,631

Amortization of intangible assets 6 4,575 2,928

Change in net deferred taxes 19 (6,161) (771)

Increase in provisions 8 1,138 3,774

(Gain) loss on sales of property, plant and equipment (967) 89

(Increase) decrease in current assets:Trade accounts receivable 3 (31,136) (21,287)

Inventories 4 (4,915) (9,739)

Other receivables and prepaid expenses (3,513) (3,348)

Increase (decrease) in current liabilities:Trade accounts payable 1,152 9,540

Other liabilities and accrued expenses 19,571 3,972

Cash inflows from operating activities 32,345 30,334

Capital expenditures in property, plant and equipment 5 (22,878) (9,057)

Proceeds from sales of property, plant and equipment 5,653 213

Purchases of subsidiaries, net of cash acquired 1 (2,692) (17,740)

Sales of marketable securities 0 10,774

Increase in financial assets (503) (476)

Cash outflows from investing activities (20,420) (16,286)


Exercise of employee stock options 1,124 1,307

Purchase of treasury shares (net) (3,148) (15,240)

Put option on treasury shares 4,020 –

Increase in (repayment of) current bank liabilities 6,498 (72)

Increase in bank loans 7 660 657

Cash in(out)flows from financing activities 4,620 (16,706)

Translation differences (1,230) 2,308

Increase (decrease) in cash and cash equivalents 15,315 (350)

Cash and cash equivalents at beginning of year 49,071 49,421

Cash and cash equivalents at year-end 64,386 49,071

Interest received 1,215 1,716

Interest paid 140 174

Income taxes paid 13,154 12,338

37

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SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Basis for the consolidated financial statements.The consolidated financial statements arebased on the individual subsidiaries’ annualaccounts as of December 31, which wereprepared according to uniform Group account-ing principles. These consolidated financialstatements are designed to give a true and fairview of the results of operations, financialposition and cash flows of the Tecan Group, andare prepared in accordance with InternationalAccounting Standards (IAS) adopted by the International Accounting Standards Board (IASB).These consolidated financial statements wereapproved by the Board of Directors on February 14, 2002. Final approval is subjectto acceptance by the General Meeting ofShareholders on April 25, 2002.

Changes in accounting principles. In the currentfinancial year the Group adopted IAS 39 (revised 2000) Financial Instruments: Recogni-tion and Measurement. The adoption of IAS 39has resulted in the Group recognising allderivative financial instruments as assets orliabilities at fair value. This change has been accounted for by adjusting the openingbalance of equity (retained earnings) at1 January 2001; comparatives have not beenrestated.Additionally, the Group changed the presenta-tion of the income statement: The analysis of expenses has been changed from using aclassification based on the nature of expensesto a classification by function (cost of salesmethod). Prior-year figures have been restatedaccordingly.The secondary reporting format for segmentinformation has been changed from a segrega-tion by product groups to a segregation bybusiness areas. Prior-year figures have beenrestated accordingly.Finally, the Group changed the presentation oftreasury shares within equity from a nominalvalue approach to cost basis. Prior-year figureshave been adjusted.

Scope of consolidation. The consolidated finan-cial statements include Tecan Group Ltd. and all subsidiaries which are directly or indirectlyunder its control (generally those for which over50% of the voting rights are owned). Minorityinterests in shareholders’ equity and in the netprofit of consolidated subsidiaries are shownseparately. Group companies acquired duringthe year are included in the consolidatedfinancial statements as of the date of purchase.The essential companies which are included in the consolidated financial statements arelisted in the notes to the financial statementsof Tecan Group Ltd.Currently Tecan Group Ltd. owns no investmentswhich are not consolidated.

Capital consolidation. The capital consolidationis performed according to the purchasemethod. Companies included for the first timein the consolidation are valued according to uniform accounting principles. Any resultinggoodwill is capitalized and amortized over its estimated useful life.

Translation of foreign currencies. The financialstatements of foreign subsidiaries denominatedin foreign currencies are translated into Swissfrancs as follows:

Assets and liabilities current rates at year-end

Income and expenses average rates for the year

Cash flows average rates for the year

The resulting translation differences are directlycharged against or credited to shareholders’equity.Foreign currency transactions are translatedusing rates applicable as of the transactiondate. Resulting exchange gains and losses areincluded in net profit. Monetary assets andliabilities denominated in foreign currencieswhich were held at December 31 are translatedat year-end rates. The resulting translationgains and losses are a component of net profit.

Intercompany sales and profits. Intercompanysales and profits, as well as accounts receivableand payable between Group companies, areeliminated.

Marketable securities. Securities consist of easilyrealizable investments in debt and equity securities for which an active market exists. TheGroup does not hold investments for tradingpurposes. All securities held by the Group are classified as being available-for-sale. Theyare stated at fair value, with any resultantgain or loss being recognised in the incomestatement. There were no marketable securitiesas per balance sheet date.

Receivables. Trade accounts receivable andother receivables are shown at their nominalvalues, less economically necessary allowancefor doubtful accounts.

Inventories. Inventories are valued at the lowerof purchase/production costs or market values,using the first-in-first-out or average method.Production costs include costs of material andlabor, as well as a reasonable allocation ofoverhead. Slow-moving and obsolete inventoryitems have been written down.

Property, plant and equipment. Property, plantand equipment are stated at cost less accumu-lated depreciation and impairment losses ascommercially required. Depreciation is calcu-lated under the straight-line method based on the estimated useful lives of the assets:

Furniture and fixtures 4–8 years

Machines and motor vehicles 3–7 years

EDP equipment 3–5 years

Buildings 25–50 years

Leasehold improvements term of the lease,

not exceeding 10 years

Assets held under financing leases tantamountto the purchase of the assets are capitalized at the net present value of lease payments anddepreciated over their estimated useful lives.

Intangible assets. Goodwill resulting fromacquisitions represents the difference betweenthe purchase price and the fair value of netassets acquired. Goodwill is stated at cost lessamortization and impairment losses. Amort-ization is recorded on a straight-line basis overthe estimated economically useful life, limitedto a maximum of 20 years.

Taxes. The Group provides for all taxes estim-ated to be payable on Group companies’ nettaxable income for the year.

Deferred taxes arising due to temporary differ-ences in the recognition of certain income and expenses for financial and tax reportingpurposes are provided. The deferred tax cal-culation is made based on the balance sheetliability method using local tax rates currentlyapplicable or expected. Deferred tax assetsresulting from timing differences and tax losscarry-forwards are recorded to the extentthat their future realization is probable.Differences relating to investments in subsidi-aries are not provided for to the extent thatthey will probably not reverse in the foreseeablefuture.

Provisions. Provisions are recognized when anobligation has resulted from past events whichwill probably require an outflow of resources,the amount of which can reliably be estimated.

Financial instruments. The Group uses deriv-ative financial instruments to economicallyhedge certain exposure to foreign exchangerate risks. Hedge accounting is not applied.Derivative financial instruments are recognisedinitially at cost. Subsequent to initial recogni-tion derivative financial instruments are stated at fair value. Recognition of any resultantgain or loss is recognised in the income state-ment.

39

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Equity instruments. When own shares arepurchased, the amount of the considerationpaid, including directly attributable costs and taxes, is recognised as a change in equity.Repurchased shares are classified as treasuryshares and presented as a deduction from total equity. The consideration received whentreasury shares are sold is recognised as achange in equity.The Group enters into certain options on ownshares which are classified as equity instru-ments with option premiums recogniseddirectly in equity (capital reserve).

Retirement benefits. Within the Group, variouspension plan schemes exist. As a rule, theobligations are covered by independent pensionfunds, which are maintained as defined con-tribution plans.

Employee profit sharing. The company createdconditional share capital in 1997 for the purposeof an employee profit sharing program. Basedon this conditional capital, an employee shareoption plan was introduced in 1999. As suchoptions are exercised, new shares will be issuedfrom the conditional share capital, which willresult in share capital and capital reserve equalto the strike prices received.

Development costs. In compliance with IAS 38,development costs are capitalized if technicaland economical feasibility is assured, ifevidence of future use exists, and if develop-ment costs can be separately determined and measured.Development costs capitalized, which includematerial costs and external project costs, areamortized over the useful life associated withthe project, but not to exceed 5 years.

Government research subsidies. The group receives unconditional Government grants forresearch activities. They are recognised asincome when received.

Related parties. Transactions with relatedparties are conducted under arms’ length mar-ket conditions.

Changes in Group companies

The following amounts were included in the consolidation for assets and liabilities acquired:in CHF 1,000 2001 2000

Property, plant and equipment 51 718

Current assets 1,044 397

Cash and cash equivalents 63 171

Liabilities (379) (168)

Minority interests (19) 0

Net identifiable assets and liabilities 760 1,118

Goodwill 1,995 16,793

Purchase price 2,755 17,911

Cash acquired (63) (171)

Net cash outflow 2,692 17,740

Acquisitions 2001: As of January 1, 2001, Tecan acquired an interest of 51% (majority) in Dr. Weber GmbH.After having founded Tecan Nordic AB as of November 1, 2001, Tecan took over assets from its former distributor in Sweden (Lambda Instruments) and Denmark (Laboratory, Automation & Technology).

Acquisitions 2000: Sercolab Systems, a former distributor in Belgium, was acquired as of March 1, 2000and is included in the consolidated financial statements as of that date. As of July 1, 2000, Tecantook over the assets and liabilities of Gamera Bioscience and brought these into the newly foundedTecan Boston.

Foreign exchange rates

The Tecan Group has used the following foreign exchange rates in the preparation of the financialstatements:in CHF Balance sheet Income statement

2001 2000 2001 2000

USD 1 1.67 1.62 1.69 1.69

EUR 1 1.48 1.52 1.51 1.56

GBP 1 2.42 2.42 2.43 2.56

SEK 100 15.98 – 15.71 –

JPY 100 1.27 1.42 1.39 1.56

SGD 100 90.60 92.80 94.50 97.90

Trade accounts receivablein CHF 1,000 2001 2000

Receivables 100,568 69,449

Allowance for doubtful accounts (1,973) (1,260)

Total 98,595 68,189

Change compared with previous year 30,406 19,538

Thereof translation differences (344) (1,107)

1.

2.

3.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

41

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Inventoriesin CHF 1,000 2001 2000

Raw material and work in process 13,606 10,331

Semi-finished and finished goods 19,642 17,725

Allowance for slow-moving and obsolete inventories (2,176) (2,595)

Total 31,072 25,461

Change compared with previous year 5,611 8,572

Thereof translation differences 14 (649)

Property, plant and equipmentin CHF 1,000 Furniture Machines and EDP Land and Leasehold Total Total

and fixtures motor vehicles equipment buildings improvements 2001 2000

At cost

Balance at January 1 6,115 13,517 17,106 10,840 3,484 51,062 43,135

Changes in Group companies 52 11 25 – – 88 832

Additions 4,151 4,007 7,537 461 6,722 22,878 9,057

Disposals (1,358) (3,093) (4,700) (11,108) (2,276) (22,535) (901)

Transfer – – – (159) 159 – –

Translation differences (57) (125) (43) (34) (22) (281) (1,061)

Balance at December 31 8,903 14,317 19,925 0 8,067 51,212 51,062

Accumulated depreciation

Balance at January 1 4,084 7,863 11,864 6,912 2,471 33,194 28,581

Changes in Group companies 33 2 2 – – 37 114

Annual depreciation 1,050 2,501 3,403 71 487 7,512 5,631

Disposals (1,325) (2,920) (4,486) (6,848) (2,270) (17,849) (600)

Transfer – – – (125) 125 – –

Translation differences (38) (62) (40) (10) 7 (143) (532)

Balance at December 31 3,804 7,384 10,743 0 820 22,751 33,194

Net book value 5,099 6,933 9,182 0 7,247 28,461 17,868

Property, plant and equipment are insured in the event of fire for the total value of CHF 51.0 million(2000: CHF 39.2 million), of which CHF 0 million (2000: CHF 10.5 million) relates to buildings.As of year-end, purchase commitments for capital expenditures for property, plant and equipmentamounted to CHF 3.9 million (2000: 2.2 million).

4.

5.

Intangible assetsin CHF 1,000 Goodwill Other Total 2001 Total 2000

At cost

Balance at January 1 16,113 3,600 19,713 3,600

Changes in Group companies 1,995 – 1,995 16,793

Additions – – – –

Disposals – – – –

Translation differences (37) – (37) (680)

Balance at December 31 18,071 3,600 21,671 19,713

Accumulated amortization

Balance at January 1 1,659 1,200 2,859 –

Changes in Group companies – – – –

Annual amortization 3,375 1,200 4,575 2,928

Disposals – – – –

Translation differences (9) – (9) (69)


Net book value 13,046 1,200 14,246 16,854

Other intangible assets include development costs which have been capitalized.

Interest-bearing loans and borrowingsin CHF 1,000 2001 Due within 2000

1 year 2–3 years over 3 years

Analysis by currency

Denominated in EUR 1,270 104 417 749 640

Denominated in JPY 7,638 7,638 – – 2,126

Denominated in USD 240 240 – – –

Total 9,148 2,766

Change compared with previous year 6,382 347

Thereof translation differences (233) (223)

Analysis by interest rates

0%–2% 7,638 2,126

2%–4% 645 –

4%–6% 625 640

6%–8% 240 –

Total 9,148 2,766

Unused lines of credit amounting to CHF 44.4 million are available to the Group at December 31, 2001.

6.

7.

43

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Provisionsin CHF 1,000 Warranty provision Other Total 2001 Total 2000

Balance at January 1 2,958 2,678 5,636 2,000

Changes in Group companies 110 110 37

Provisions made 3,699 1,631 5,330 4,632

Provisions used (2,754) (1,438) (4,192) (855)

Provisions reversed – – – (3)

Translation differences 22 (62) (40) (175)


Thereof current 3,854 1,179 5,033 4,421

Thereof non-current 71 1,740 1,811 1,215

Other provisions consist primarily of pension provisions (CHF 1.1 million) and provisions for legalobligations (CHF 0.3 million).

Employee benefits

Personnel expenses. Personnel expenses include the following:in CHF 1,000 2001 2000

Salaries and wages 82,403 59,182

Social security taxes 10,114 7,200

Retirement benefits 2,455 2,142

Other personnel expenses 6,424 4,913

Total 101,396 73,437

Employee stock option plan. An employee stock option plan for Tecan shares went into effect inDecember 1999. In addition to salaries, all employees of the Tecan Group outside of the USAreceived options. Employees in the USA received stock appreciation rights with the same treatmentand the same conditions as the employee stock options. The options issued grant employees the right to purchase one Tecan share per option.The employee stock option plans includes progressive restricted periods, which allow the exercise of a maximum of 25% of options issued after one year (plan 1999: maximum of 50% after two years).All outstanding options granted are covered by the conditional share capital.

8.

9.

Change in the number of employee stock options outstanding:2001 2000

Number Number

Balance at January 1 606,390 337,920

Issued 184,752 344,540

Exercised (20,860) (20,070)

Cancelled and expired (21,330) (56,000)

Balance at December 31 748,952 606,390

Subsequent to the exercise of 20,860 options during the business year 2001, the company receivedCHF 1.1 million in cash and cash equivalents (2000: CHF 1.3 million). This resulted in an increase inshare capital of CHF 20,860 and in capital reserve of CHF 1.1 million.

Summary of employee stock options outstanding as of year-end:2001 2000

Expiration date Exercise price Number Number

December 15, 2004 CHF 50 266,020 292,900

April 10, 2005 CHF 100 176,690 175,620

November 30, 2005 CHF 162,5 132,350 137,870

November 30, 2012 CHF 99 173,892 –

Balance at December 31 748,952 606,390

Retirement benefits. The Tecan Group maintains various retirement benefit plans for its employees.Benefits are distributed for the most part by separate pension funds. These represent financiallyindependent retirement benefit funds administered by insurance companies and banks, and are conceived solely as defined contribution plans. As a rule, financing is achieved through bothemployee and employer contributions.As of year-end, pension provisions amounted to:in CHF 1,000 2001 2000

Funded plans 948 408

Unfunded plans 170 136

Total 1,118 544

45

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Shareholders’ equity

The changes in shareholders’ equity are presented on page 35.Treasury shares consist of 173,149 registered shares with a nominal value of CHF 1 each (2000: 15,112 registered shares with a nominal value of CHF 10).Stamp duty paid on the capital increase out of conditional capital subsequent to the exercise ofemployee stock options were charged against capital reserve.Through various purchase and sales transactions dealing in treasury shares during the currentbusiness year, shareholders’ equity was charged with a net amount of CHF 3.1 million (2000: 15.2 million).Tecan has issued a put option on own shares to a third party, which gives the other party the rightto deliver 100,000 Tecan shares on November 30, 2005, at a strike price of 162.5 payable by Tecan in cash. Option premiums received amounting to CHF 4.0 million were directly recognised in equity(capital reserve). As this put option is classified as an equity instrument, changes in its fair value are not recognised.The composition of and the changes in share capital are disclosed in note 3 to Tecan Group Ltd.’sfinancial statements.

Financial instruments

Credit risks. The individual companies and the Group as a whole have no significant concentrationof credit risks, as financial instrument contracts are concluded exclusively with first-rate financial institutions. The credit risk associated with trade accounts receivable is limited, as theGroup has numerous clients located in various geographical regions. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, includingderivative financial instruments, in the balance sheet.

Interest rate risks. The Group places its cash and cash equivalents as well as bank loans primarilyshort-term with first-rate bank institutions.

Foreign currency risks. The Group incurs foreign currency risks on sales, purchases, borrowings and investments denominated in a currency other than the measurement currency of therespective subsidiaries. On a consolidated basis, the Group is also exposed to currency fluctuationsbetween the Swiss Franc and the local measurement currencies of its subsidiaries. The two major currencies giving rise to currency risks are Euro and US Dollars.Tecan centralizes its foreign currency exposure of a few locations only. The hedging policy of theGroup is to cover the foreign currency exposure to a certain percentage of the operating activities. The Group uses forward exchange contracts, currency options and swaps to hedge itsforeign currency risk on specific future foreign currency cash flows. These contracts have maturities of up to 12 months. The Group does not hedge for its net investment in foreign entitiesand the related foreign currency translation of local earnings. The derivative financial instruments used as economic hedges of foreign currencies are summarised in the below table.They are recognised at fair value as other current assets and liabilities respectively.

10.

11.

Fair value Contracted value

Positive Negative Total Due within

in CHF 1,000 3 months 3–12 months

Foreign currency forwards

Denominated in USD 244 (542) 43,420 – 43,420

Denominated in GBP – (77) 3,630 2,420 1,210

Foreign currency options

Denominated in USD 34 (196) 10,020 – 10,020

Total 2001 278 (815) 57,070 2,420 54,650

Total 2000 546 – 12,644 6,849 5,795

Rental and lease commitmentsThe commitments arising from operating leases are largely rental payments for buildings.During 2001 a number of companies within the Group sold their buildings and entered intolongterm operating lease contracts on the same or on completely new buildings.

Commitments under non-cancelable operating leasesin CHF 1,000 2001 2000

Due date

2001 – 6,107

2002 5,729 5,467

2003 5,217 5,257

2004 4,448 2,089

2005 4,467 10,158

2006 and beyond 22,601 –

Total 42,462 29,078

No commitments exist under finance leases.

Contingent liabilities and encumbrance of assets

As of December 31, 2001 and 2000, the Group had no contingent liabilities to third parties,and none of the Group’s assets were pledged, assigned or subject to retention of title.

Segment information

The primary segregation is indicated by geographical region. Intersegment transactions areconducted based on prevailing market prices.

12.

13.

14.

47

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01

Segment information (by location of assets)in CHF 1,000 America Europe Asia Corporate/consolidation Group

2001 2000 2001 2000 2001 2000 2001 2000 2001 2000

Sales to third parties 178,059 134,313 164,096 120,213 19,711 19,006 – – 361,866 273,532

Intersegment sales 13,505 10,464 73,218 59,661 – – (86,723) (70,125) – –

Total sales 191,564 144,777 237,314 179,874 19,711 19,006 (86,723) (70,125) 361,866 273,532

Operating profit 23,237 19,237 39,162 43,580 556 1,522 (577) (6,424) 62,378 57,915

Total assets 91,465 65,199 246,874 185,113 15,152 11,736 (91,057) (67,629) 262,434 194,419

Capital expenditures

in fixed and intangible assets 5,225 1,707 17,490 7,222 163 128 – – 22,878 9,057

Depreciation and amortization (1,933) (3,011) (10,035) (5,440) (119) (108) – – (12,087) (8,559)

Total liabilities 61,294 39,080 57,078 37,830 13,538 9,148 (49,700) (30,661) 82,210 55,397

Other than the depreciation of property, plant and equipment and the amortization of intangibleassets, no significant non-cash expenses were incurred.

Sales by region (by location of customers)in CHF 1,000 America Europe Asia Others Total

2001 2000 2001 2000 2001 2000 2001 2000 2001 2000

Sales to third parties 172,612 129,843 139,878 107,263 29,566 26,117 19,810 10,309 361,866 273,532

Change in %* 33 33 34 34 24 11 95 96 35 33

* in local currency versus the prior year

Sales by business areasin CHF 1,000 Genomics/ Drug Discovery Clinical Diagnostics Total

Proteomics

2001 2000 2001 2000 2001 2000 2001 2000

Sales to third parties 74,266 44,859 130,096 129,381 157,504 99,292 361,866 273,532

Change in %* 76 95 3 35 57 15 35 33

* in local currency versus the prior year

Assets and capital expenditures in property, plant and equipment cannot be allocated meaningfullyto the individual business areas, as these are used for all product groups. A mathematical allocationwould not result in reliable or meaningful information.

Operating expenses by naturein CHF 1,000 2001 2000

Material costs 112,831 84,479

Personnel expenses 101,396 73,437

Depreciation of property, plant and equipment 7,512 5,631

Amortization of intangible assets 4,575 2,928

Other operating incomes and expenses (net) 73,174 49,142

Total operating expenses 299,488 215,617

Personnel

During the year, an average of 855 employees (2000: 629 employees) were employed by the TecanGroup. At year-end, the Group employed 915 persons (2000: 690 persons).

Research and developmentin CHF 1,000 2001 2000

Total research and development costs (gross) 44,279 29,020

Revenues received under development contracts 810 169

Government research subsidies 439 579

Amortization of development costs capitalized 1,200 1200

Total research and development costs (net) 44,230 29,472

Thereof external project costs 18,977 9,294

Costs for research and the development of new products amounted to 12.2% of sales (2001: 10.6%). Based on the sales agreement with Abbott, costs relating to the completion of theGenesis FE amounting to CHF 3.6 million were capitalized for the first time at December 31, 1999.The development costs capitalized are amortized over 3 years. After offsetting revenues received under development contracts of CHF 0.8 million (2000: CHF 0.2 million) and governmentresearch subsidies, a net research and development expense of CHF 44.2 million resulted in 2001 (2000: CHF 29.5 million).

Other operating incomein CHF 1,000 2001 2000

Government research subsidies 439 579

Gain on sales of property, plant and equipment 1,561 –

Miscellaneous 443 –

Total other operating income 2,443 579

15.

16.

17.

18.

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Income taxesin CHF 1,000 2001 2000

Current income taxes 24,994 15,533

Deferred taxes (6,205) (651)

Total 18,789 14,882

Deferred income taxes arising due to temporary differences in the valuation of assets and liabilitiesfor financial reporting and for tax purposes are determined according to the balance sheetliability method. The Group recognizes both deferred tax assets and liabilities on temporarydifferences using local tax rates currently applicable or expected. In addition, deferred taxes are provided on expected dividend distributions from subsidiary companies (withholding taxes).

Tax loss carry-forwards are available to Group companies:in CHF 1,000 2001 2000

Expiring in

2001 – 173

2002 – 173

2003 – 218

2004 and beyond 3,058 –

Unlimited 595 238

Total potential tax benefits 3,653 802

Thereof not capitalized 2 802

The income tax expense can be analyzed as follows:in CHF 1,000 2001 2000

Profit before taxes 63,878 54,427

Tax expense based on the Group’s average rate of 29% (2000: 32%) 18,657 17,177

Non-deductible expenses 1,103 779

Tax-free income and tax reductions (2,674) (1,324)

Unrecognised tax loss carry-forwards used (205) (219)

Under (over) provided in prior years 1,908 (1,531)

Tax expense reported 18,789 14,882

Deferred taxes apply to the following balance sheet line items:Impact on profit

in CHF 1,000 2001 2001 2000

Inventories 20 4,992 4,972

Property, plant and equipment (1,111) (1,113) (2)

Liabilities and accrued expenses 2,974 875 (2,099)

Provisions 215 67 (148)

Others 531 684 153

Total net deferred tax assets arising from Temporary differences 2,629 5,505 2,876

Deferred taxes provided on

expected dividend distributions (75) (1,099) (1,024)

potential tax benefits from tax loss carry-forward 3,651 3,651 –

Total net deferred tax assets 6,205 8,057 1,852

Temporary differences on inventory primarily relate to the intra-group profit elimination foraccounting purposes.

19.

Deferred taxes are included in the balance sheet as follows:in CHF 1,000 2001 2000

Deferred tax assets 12,264 7,170

Deferred tax liabilities (4,207) (5,318)

Total, net 8,057 1,852

Subsequent events

No events have occurred subsequent to the balance sheet date which would impact the disclosuresmade in these financial statements.As per January 1, 2002, Tecan acquired the remaining 49% of Dr. Weber GmbH and also purchased a 100% of CST Logic GmbH. The transaction will be completed at the end of February.

Remuneration of directors

The total remuneration expense for the Board of Directors of Tecan Group Ltd. was CHF 275,000 in2001 (2000: CHF 270,097). Annual individual director’s fees are CHF 35,000. In addition, a total of 4,380 stock options (2000: 1,160) were issued to directors in connection with the employee stockoption plan.

Earnings per share

The earnings per share were determined based on the profit attributable to shareholders and theaverage number of shares outstanding, excluding treasury shares.in CHF 2001 2000

Share capital issued 13,040,930 13,020,070

Treasury shares (173,149) (151,120)

Share capital entitled to dividends 12,867,781 12,868,950

Average number of shares outstanding 12,869,766 12,904,200

Undiluted earnings per share (CHF/share) 3.50 3.06

Number of shares under option 748,952

Average exercise price 93

Number of shares which could be issued from the above proceeds if the company

had issued shares at the average trading price for the year of CHF 137 (479,075)

Number of shares after dilution 13,110,325

Diluted earnings per share (CHF/share) 3.44 3.00

In 1997, Tecan Group Ltd. created a conditional share capital of CHF 1.3 million designated foremployee profit sharing. At the end of 2001, 748,952 options were outstanding under the employeestock option plan.

20.

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22.

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Report of the Group auditors to the general meeting of shareholders ofTecan Group Ltd., Männedorf

As auditors of the Group, we have audited the consolidated financial statements of Tecan Group Ltd.,Männedorf, and subsidiaries, presented on pages 33 to 50 for the year ended December 31, 2001.

These consolidated financial statements are the responsibility of the Board of Directors. Ourresponsibility is to express an opinion on these consolidated financial statements based on ouraudit. We confirm that we meet the legal requirements concerning professional qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession and with the International Standards on Auditing issued by the International Federationof Accountants (IFAC), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from materialmisstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principlesused, significant estimates made and the overall consolidated financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the InternationalAccounting Standards (IAS) and comply with Swiss law.

We recommend that the consolidated financial statements submitted to you be approved.

KPMG Fides Peat

Fredy Luthiger Lukas MartySwiss Certified Accountant Swiss Certified Accountant

Auditors in Charge

Zurich, February 15, 2002

TECAN GROUP LTD.

Balance sheet at December 31

in CHF 2001 2000

Assets

Cash 18,045,890 12,144,250

Time and money market deposits 3,050,000 3,500,000

Receivables from third parties 708,655 1,487,952

Receivables from Group companies 14,758,221 10,252,727

Prepaid expenses 713,314 66,929

Loans to Group companies 2,770,700 2,845,375

Current assets 40,046,780 30,297,233

Financial assets 91,362,772 61,482,695

Treasury shares 18,440,561 23,072,820

Property, plant and equipment 3,673,237 1,402,870

Non-current assets 113,476,570 85,958,385

Total assets 153,523,350 116,255,618

Liabilities and shareholders’ equity

Trade accounts payable to third parties 3,043,256 1,087,353

Other liabilities to third parties 62,305 758,808

Other liabilities to Group companies 1,218,404 121,129

Provisions 6,665,800 2,606,950

Provision for taxes 1,400,000 1,982,000

Accrued liabilities 1,818,307 762,140

Current liabilities 14,208,072 7,318,380

Non-current liabilities – –

Share capital 13,040,930 13,020,070

Legal reserves 55,933,389 36,826,286

Retained earnings 70,340,959 59,090,882

Shareholders’ equity 139,315,278 108,937,238

Total liabilities and shareholders’ equity 153,523,350 116,255,618

53

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Income statement

in CHF 2001 2000

Dividend income from Group companies 38,756,746 15,334,943

Interest and investment income from third parties 535,518 9,966,802

Interest income from Group companies 3,611,484 2,412,455

Management fees from Group companies 16,766,140 10,207,013

Gain on sales of property, plant and equipment 560,886 –

Income 60,230,774 37,921,213

Personnel expenses (5,938,909) (3,743,913)

Depreciation of property, plant and equipment (305,967) (136,685)

Financial expense (9,652,345) (2,348,410)

Other expenses (12,998,773) (6,109,868)

Expense (28,895,994) (12,338,876)

Profit before taxes 31,334,780 25,582,337

Income taxes (559,834) (2,348,840)

Net profit 30,774,946 23,233,497

Financial assetsin CHF 2001 2000

Investments in subsidiaries 20,565,755 18,605,028

Loans to Group companies 70,797,017 42,877,667

Total 91,362,772 61,482,695

Overview of investments in subsidiaries:Company Domicile Share capital

Tecan Schweiz Ltd. Männedorf (CH) CHF 5,000,000

Tecan Trading Ltd. Männedorf (CH) CHF 100,000

Tecan Austria GmbH Grödig (A) ATS 20,000,000

Tecan US Group Inc. Research Triangle Park, NC (USA) USD 1,500,000

– Tecan US, Inc. Research Triangle Park, NC (USA) USD 400,000

– Cavro Scientific Instruments Inc. San Jose, CA (USA) USD 26,000

– Tecan Boston, Inc. Medford, MA (USA)

Tecan Landesholding GmbH Frankfurt (D) EUR 25,000

– Tecan Deutschland GmbH Crailsheim (D) DEM 100,000

– Tecan München GmbH Kirchheim (D) EUR 25,000

– Dr. Weber GmbH Kirchheim (D) EUR 25,000

Tecan UK Ltd. Reading (UK) GBP 500,000

Tecan France SA Trappes (F) FRF 3,000,000

Tecan Italia S.r.l. Milan (I) ITL 150,000,000

Tecan Japan Co., Ltd. Tokyo (J) JPY 50,000,000

Tecan Asia (Pte.) Ltd. Singapore SGD 800,000

Tecan Software GmbH Hannover (D) DEM 150,000

Tecan Belgium N.V. Mechelen (B) EUR 62,000

Tecan Nordic AB Mölndal (S) SEK 100,000

All subsidiaries are held completely (100%), except for Tecan Software GmbH (70%) and Dr. Weber GmbH (51%).

Treasury shares

The balance in treasury shares is comprised of 173,149 registered shares with a nominal value of CHF 1 each. The average price of shares purchased (sold) in 2001 amounted to CHF 156.39 (CHF 156.95).

Number of shares

Balance at January 1 151,120

Additions 548,478

Disposals (526,449)

Balance at December 31 173,149

1.

2.

NOTES TO THE FINANCIAL STATEMENTS

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Changes in shareholders’ equityin CHF Legal reserves

Reserve for Total

Share General treasury shares Retained shareholders’

capital reserve (Note 2) earnings equity

Shareholders’ equity at 1/1/2001 13,020,070 13,753,466 23,072,820 59,090,882 108,937,238

Dividends paid (4,505,302) (4,505,302)

Capital increase 20,860 2,737,362 1,350,174 4,108,396

Net profit 30,774,946 30,774,946

Changes in reserves for treasury shares 16,369,741 (16,369,741) –

Shareholders’ equity at 12/31/2001 13,040,930 16,490,828 39,442,561 70,340,959 139,315,278

During the annual shareholders’ meeting on April 26, 2001, it was decided to split the registeredshares in a 1:10 ratio. The company’s share capital is CHF 13,040,930, consisting of 13,040,930registered shares with a nominal value of CHF 1 each (2000: 1,302,070 registered shares with anominal value of CHF 10 each). Each share has one voting right during the annual meeting.Shareholders are entered in the share register only up to 5% of share capital, and nominees only up to 2%.

During their 1997 annual meeting, the shareholders approved a conditional share capital of CHF 1,300,000, reserved for employees’ profit sharing. The conditional share capital as now revisedconsists of 1,300,000 registered shares with a nominal value of CHF 1 each. Based on this con-ditional capital, an employee stock option plan was introduced in 1999. At December 31, 2001,748,952 options not yet exercised were outstanding in connection with the stock option plan.

Tecan has issued a put option on own shares to a third party, which gives the other party the rightto deliver 100,000 Tecan shares on November 30, 2005, at a strike price of 162.5 payable by Tecan in cash. The fair value of the put option has been provided for. The maximum exposure under theput option less the premium received is included in the reserve of treasury shares.

The Company has knowledge of the following significant shareholders as of December 31, 2001:Schweizerische Unfallversicherungsanstalt (SUVA), Lucerne, CH 1,342,000 shares (10.3%)

3.

Contingent liabilities

The total amount of guarantees, indemnity liabilities and pledges in favor of subsidiaries wasapproximately CHF 37.2 million at December 31, 2001 (2000 CHF 5.9 million).

Encumbrance of assets

As of December 31, 2001 and 2000, none of the Company’s assets were pledged, assigned, or subjectto retention of title.

Unrecorded leasing liabilities

At December 31, 2001, as in the prior year, no unrecorded liabilities under lease commitments existed.

Fire insurance value of property, plant and equipment

The insured value of property, plant and equipment in the event of fire was CHF 0.9 million (prior year CHF 4.5 million).

Liabilities to pension funds

At December 31, 2001 no liabilities to pension funds existed (prior year CHF 0.3 million).

No other items existed which would require disclosure under the provisions of Art. 663b of theSwiss Code of Obligations.

4.

5.

6.

7.

8.

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Proposal of the Board of Directors for the appropriation of retained earningsThe Board of Directors of Tecan Group Ltd. proposes that the retained earnings of CHF 70,340,959be appropriated as follows:in CHF

45% dividends on the company’s share capital of CHF 13,040,930 at December 31, 2001*

(CHF 0.45 per share; prior year CHF 0.35 per share) 5,868,419

45% dividends on employee stock options which may be exercised before the

date of dividend payment of CHF 123,390* 55,525

Balance to be carried forward 64,417,015

Total 70,340,959

Dividends on treasury shares and employee stock options which have not been exercised

on the date of the dividend payment will be added to retained earnings.*

Report of the statutory auditors to the general meeting of shareholders ofTecan Group Ltd., Männedorf

As statutory auditors, we have audited the accounting records and the financial statements ofTecan Group Ltd., Männedorf, presented on pages 52 to 57 for the year ended December 31, 2001.

These financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meetthe legal requirements concerning professional qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by the Swiss pro-fession, which require that an audit be planned and performed to obtain reasonable assuranceabout whether the financial statements are free from material misstatement. We have examinedon a test basis evidence supporting the amounts and disclosures in the financial statements.We have also assessed the accounting principles used, significant estimates made and the overallfinancial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

In our opinion, the accounting records, the financial statements and the proposed appropriation of available earnings comply with Swiss law and the company’s articles of incorporation.

We recommend that the financial statements submitted to you be approved.

KPMG Fides Peat

Fredy Luthiger Lukas MartySwiss Certified Accountant Swiss Certified Accountant

Auditors in Charge

Zurich, February 15, 2002

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INFORMATION FOR INVESTORS

Capital structureShare capital at December 31

In 1999 shareholders approved the creation ofunitary registered shares. The bearer shares of CHF 100 par value were each converted into10 new registered shares of CHF 10 par valueeach. The previous registered shares of CHF 15par value each were exchanged in a twoleveltransaction into new registered shares of CHF 10 par value.During the annual shareholders’ meeting in2001, it was decided to split the registeredshares in a 1:10 ratio. The company’s share cap-ital is CHF 13,040,930, consisting of 13,040,930registered shares with a nominal value of CHF 1 each.

Conditional share capital. Since 1997, condi-tional share capital of 1,300,000 registeredshares of CHF 1 par value has been reserved foran employee share program. Based on this con-ditional share capital, employee share optionplans were introduced since 1999. Subsequentto the exercise of 20,860 options during thebusiness year 2001 (2000: 20,070 options), theshare capital increased by 20,860 shares andthe company received CHF 1.1 million in cash(2000: 1.3 million).

Voting rights. Each share carries one vote at theAnnual General Meeting.

Registration and voting limits. The statutes ofTecan Group AG contain a limit of 5% forregistration and voting rights. The Board ofDirectors can register nominees with amaximum of 2% of the share capital with votingrights in the company’s share register.

No opting-out or opting-up clauses. The statutes of the company do not contain anyopting-out or opting-up clauses which limit or remove the duty to offer based on theStock Exchange Law. According to Article 32 of the Stock Exchange Law, any shareholder whodirectly, indirectly or after agreement with third parties acquires shares of Tecan Group AG and exceeds the limit of 331⁄3% of voting rights (whether exercisable or not), is obliged tomake a purchase or exchange offer to all shareholders of Tecan Group AG. In addition,there are minimum regulations for such an exchange offer according to the law.

Shareholders. Per December 31, 2001 thefollowing shareholders held more than 5% ofTecan’s shares:SUVA Schweizerische

Unfallversicherungsanstalt 1,342,000 shares

Listing. Tecan registered shares are traded onthe main board of the Swiss Exchange (SWX).

Security number, exchange symbols

Security Number 1 210 019

ISIN CH0012100191

Telekurs, Dow Jones TECN

Reuters TECZn.S

Tecan registered shares are also freely

traded in EUR in Frankfurt, Munich and Berlin.

Security number 922 557

2001 2000 1999 1998 1997

Registered shares of

CHF 1 par value

Number 13,040,930

Nominal value CHF 13,040,930


CHF 10 par value

Number 1,302,007 1,299,400

Nominal value CHF 13,020,070 12,994,000


CHF 15 par value

Number 400 130,000 130,000

Nominal value CHF 6,000 1,950,000 1,950,000

Bearer shares of

CHF 100 par value

Number 110,500 110,500

Nominal value CHF 11,050,000 11,050,000

Share capital 13,040,930 13,020,070 13,000,000 13,000,000 13,000,000

Conditional share capital 1,259,070 1,279,930 1,300,000 1,300,000 1,300,000

TECAN LOCATIONS

Tecan Asia (Pte) Ltd.

80, Marine Parade

#13-04, Singapore 449269, Singapore

T +65 644 41 886

F +65 644 41 836

Tecan Austria GmbH

Untersbergstrasse 1a

A-5082 Grödig/Salzburg, Austria

T +43 62 46 89 33

F +43 62 46 72 770

Tecan Sales Austria GmbH



T +43 62 46 89 33

F +43 62 46 72 770

Tecan Sales International GmbH



T +43 62 46 89 33

F +43 62 46 72 770

Tecan Benelux B.V.B.A.

Vaartdijk 55

B-2800 Mechelen, Belgium

T +32 15 42 13 19

F +32 15 42 16 12

Tecan Benelux B.V.B.A.

Industrieweg 30

NL-4283 GZ Giessen, Netherlands

T +31 18 34 48 17 4

F +31 18 34 48 06 7

Tecan Boston

200 Boston Avenue, Suite 3000

Medford, MA 02155, USA

T +1 781 306 08 27

F +1 781 306 08 37

Tecan Deutschland GmbH

Theodor-Storm-Straße 17

D-74564 Crailsheim, Germany

T +49 79 51 94 170

F +49 79 51 50 38

Tecan France S.A.

Parc d’Activités de Pissaloup

Bâtiment Hermes II

Rue Edouard Branly

F-78190 Trappes, France

T +33 1 30 68 81 50

F +33 1 30 68 98 13

Tecan Italia S.r.l.

Via F.lli Cerci, Palazzo Bernini

Centro Direzionale Milano 2

I-20090 Segrate (Mi), Italy

T +39 02 215 21 28

F +39 02 215 97 441

Tecan Japan Co. Ltd.

Meiji Seimei Fuchu Building 10F

1-40 Miyamachi

Fuchu City, Tokyo, Japan

T +81 42 334 88 55

F +81 42 334 04 01

Tecan Nordic AB

Box 208

SE-43123 Mölndal, Sweden

T +46 31 75 44 000

F +46 31 75 44 010

Tecan Munich GmbH

Feldkirchner-Straße 12a

D-85551 Kirchheim

T +49 89 98 106 111

F +49 89 98 106 180

Tecan Schweiz AG

Seestrasse 103

CH-8708 Männedorf, Switzerland

T +41 1 922 81 11

F +41 1 922 81 12

Tecan Sales Switzerland AG

Seestrasse 103


T +41 1 922 89 22

F +41 1 922 89 23

Tecan Spain

Sabino de Arana, 32

E-08028 Barcelona, Spain

T +34 93 490 01 74

F +34 94 411 24 07

Tecan UK

Theale Court, 11-13 High Street, Theale

UK-Reading RG7 5AH, United Kingdom

T +44 11 89 300 300

F +44 11 89 305 671

Tecan US, P.O. Box 13953

Research Triangle Park

NC 27709, USA

T +1 919 361 5200

F +1 919 361 5201

Cavro Scientific Instruments Inc.

2450 Zanker Road

San Jose

CA 95131, USA

T +1 408 953 3100

F +1 408 953 3107

Tecan Trading AG

Seestrasse 103


T +41 1 922 88 60

F +41 1 922 88 61

















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