Wacker Neuson SE — Annual Report 2010

Apr 20, 2011

Figures at a glance 2010

Wacker Neuson Group at December 31

in € million	2010	2009	2008
Key figures
Revenue	757.9	597.0	870.3
EBITDA	77.8	27.2 (36.7)1	100.9
Depreciation and amortization	41.1	140.3 (40.0)5	43.0
EBIT	36.7	- 113.1 (- 3.2)2	58.0
EBT	32.7	- 115.5 (- 5.6)2	55.7
Profit for the period	23.9	- 110.1 (- 2.9)2, 6	37.4
Number of employees	3,142	3,059	3,665
Share
Earnings per share in €	0.34	- 1.57	0.53
Dividends per share in €	0.173	0	0.19
Key profit figures
Gross profit as a %	33.1	30.8	33.7
EBITDA margin as a %	10.3	4.6 (6.2)1	11.6
EBIT margin as a %	4.8	- 18.9 (- 0.5)2	6.7
Key figures from the balance sheet
Non-current assets	673.9	632.7	750.0
Current assets	356.3	339.0	428.6
Equity before minority interests	830.6	789.0	909.1
Net financial debt	13.7	- 24.9	59.0
Total liabilities	197.3	180.2	266.8
Equity ratio before minority interests as a %	80.6	81.2	77.1
Working capital	269.3	217.9	303.9
ROCE I as a %	6.9	- 2.45	10.8
ROCE II as a %	5.2	-1.95	7.4
Capital employed (average)	531.3	538.9	537.4
ROE as a %	3.0	-1.45, 6	4.2
Cash flow
Cash flow from operating activities	44.9	138.3	38.14
Cash flow from investing activities	- 85.2	- 38.1	- 16.44
Investments (property, plant and equipment and intangible assets)	85.0	43.4	101.8
Cash flow from financing activities	- 10.3	- 53.0	- 21.9
Free cash flow	- 38.8	100.6	23.4

1 Figure in parentheses adjusted to discount restructuring costs in the amount of EUR 9.6 million (p. 54 and 60).

2 Figure in parentheses adjusted to discount restructuring costs in the amount of EUR 9.6 million and discount write-downs on intangible assets in the amount of EUR 100.3 million (p. 54 and 60).

3 Dividend payment to be proposed at the AGM on May 26, 2011.

4 The position "Interest received" has been shifted from cash flow from investing activities to cash flow from operating.

5 Adjusted to discount write-downs on intangible assets (p. 54 and 60).

6 Incl. deferred taxes in the amount of EUR -2.7 million (resulting from write-downs on brand value, intangible assets).

All consolidated figures prepared according to IFRS. A complete list of figures from the past seven years is provided at the end of this report.

One Group – Three Brands

Wacker Neuson SE is a global manufacturer of light and compact equipment. The company also offers an exceptionally broad portfolio of services. Products under the Wacker Neuson and Kramer Allrad brands are tailored to the needs of professional users in construction, gardening and landscaping as well as to the needs of municipal bodies and companies in the industrial sector. The company's Weidemann-brand machines are designed to optimize agricultural processes.

Our business segments

More Information p. 2/3

Development of business segments

in € million

More Information p. 68

Revenue according to segment reporting

Sales by region as a % (previous year)

Consolidated sales before discounts

Facts and figures at a glance

Rise in Group revenue and gross profit

In the years from 2005 to 2008, Wacker Neuson increased revenue by 20 percent on average3 . The sharp drop in revenue in 2009 resulted in the company reporting an operating loss for the first time in its history. By mid-2010, the company had returned to the profit zone and posted a double-digit EBITDA margin for the entire year. Wacker Neuson is aiming for an EBITDA margin in excess of 15.0 percent in the medium to long-term. For more informationen p. 52

Pro-forma figures as if Neuson Kramer subgroup had been consolidated in full in fiscal 2007 (consolidation as of October 1, 2007). Pro-forma figures as if Neuson Kramer subgroup had been consolidated in full in fiscal 2007 (consolidation as of October 1, 2007).

2009 profit margins discounting goodwill impairment and restructuring costs (p. 54 and 60). 2009 profit margins discounting goodwill impairment and restructuring costs (p. 54 and 60).

Compound annual growth rate (CAGR) over a period of three years. Compound annual growth rate (CAGR) over a period of three years.

Increased return on capital employed (ROCE)

Capital employed and ROCE 2005 – 2010

200 300 400 25 30 20 236.5 269.4 Average capital employed increased as a result of the merger in 2007. Negative EBIT in 2009 led to a negative return on capital employed. In 2010, the improvement in the Group's earnings situation pushed ROCE up to almost 7 percent. For more informationen p. 55

537.4 538.9 531.3

35

75

Average capital employed ROCE I

100

750

Healthy asset and financial position

Key figures from the balance sheet 2005 – 2010

50 250 150 450 350 - 50 550 650 15 55 35 289.9 45.1 59 13.7 As planned, we turned the net cash position from 2009 into a slight net financial debt of EUR 13.7 million as financial markets grew more confident. Wacker Neuson has a high equity ratio in excess of 80 percent and is almost debt-free with a low gearing of only 1.7 percent. The Group has drawn on less than half of its credit lines and thus has plenty of financial backing. For more informationen p. 60

Net financial debt in € million Equity before minority interests in € million Gearing in % Equity ratio before minority interests in %

Publishing Details / Financial Calendar Content

To our Shareholders

Product Overview		2
Interview with the Executive Board		4

• A firm grip! | 9
• Report by the Supervisory Board | 23
• Declaration on Corporate Governance | 29
• The Share /Investor Relations | 36
  • Group Structure | 42
• Combined Management Report | 43
• Consolidated Financial Statements | 99

Further Information

• Glossaries | 150
• 7-Year Comparison | 155
• Publishing Details/Financial Calendar | 156

Our product philosophy is based on understanding our customers' processes

guaranteed to optimize our customers' construction processes. The Group has a

Internal vibrators Convertors Trowels Rebar tiers

Soil and asphalt compaction

Universal compaction equipment

Demolition

Utility

The technical glossary on p. 150 contains more detailed information on exact areas of deployment.

Services

Compact equipment

Excavators

Mini excavators Mobile excavators Compact excavators

Parts exchange

Dumpers

Track dumpers Four-wheel dumpers Four-wheel dumpers with cabs

Skid-steer loaders

Skid-steer loaders Skid-steer loaders Track skid-steer loaders

Rental service

Financing

All-wheel drive wheel loaders

wheel loaders

Telescopic handlers

Wheel loaders

Compact telescopic handlers Telescopic handlers Telescopic handlers for

Articulated wheel loaders

Wheel loaders for the agricultural sector

the agricultural sector

"Healthy finances, innovative drive and strong global sales will secure our future growth."

From left to right

Richard Mayer, Spokesperson for the Executive Board.

Member of management / Executive Board since 1998.

Responsible for the light equipment business segment, HR, legal matters and quality management.

Martin Lehner, Deputy Chairman (since October 2007).

Responsible for the compact equipment business segment.

Previously member of management / Executive Board at Neuson Kramer.

Werner Schwind,

Member of the Executive Board.

Member of management / Executive Board since 1993.

Responsible for sales, rental, logistics, service and marketing.

Günther C. Binder, Member of Executive Board

(since October 2007).

Responsible for finance, IT, investor relations and auditing.

Previously member of management / Executive Board at Neuson Kramer. Wacker Neuson has emerged from the crisis in a stronger position. In the following interview, the Executive Board outlines the measures the company has already implemented and the challenges it intends to master as it moves forward.

Mr. Mayer, was fiscal 2010 a good year for Wacker Neuson?

Richard Mayer: Good is relative in this case. On the one hand, we put in a very strong performance and regained a lot of the ground lost in 2009 when our revenue fell by almost a third to just under EUR 600 million due to the financial crisis. On the other hand, however, we are still a long way from the EUR 1 billion pro-forma revenue that we reported in 2007. But we are growing fast, as our earnings clearly show. In 2010 for example, our EBITDA almost trebled.

Mr. Binder, what are the key factors behind this success?

Günther C. Binder: Well, we busied ourselves during the downturn – getting our house in order and streamlining our cost structures. At EBIT level, break-even for 2011 is EUR 690 million, although we have already increased core staff numbers in the US and Austria to capitalize on upcoming opportunities. Fixed costs now only account for just over one third of current total costs and our operating leverage ratio is currently between 3.5 and 4. Which means that a 10 percent increase in revenue translates to a 35 to 40 percent rise in profit.

What does this mean for shareholders?

Günther C. Binder: Our shareholders have probably already noticed the difference. Allowing for the usual fluctuations, share prices nonetheless rose steadily during the course of 2010, gaining around 50 percent in

"We want our shareholders to share our success and will be paying a dividend of EUR 0.17 per share this year."

Günther C. Binder

value overall. Plus we are already in a position to again offer our shareholders a dividend of EUR 0.17 per share for 2010, which is at least a small token of our gratitude for their loyalty.

Mr. Schwind, what are the main drivers of this new, dynamic growth? Are there any special hot spots?

Werner Schwind: Most sales regions and all of our business segments contributed to our growth. The light equipment segment led the field with a revenue

"We are no newcomer to the South American market. We have a long and successful track record with light equipment in this region and are now following suit with our compact equipment."

Werner Schwind

increase of 39 percent. But the compact equipment segment was not far behind with a plus of almost 34 percent. As anticipated, our plan to distribute compact equipment via our existing international light equipment sales network yielded substantial synergies, which were of great benefit to the company.

This strategy has opened up new market opportunities for compact equipment – for instance in South America, where we have been successfully distributing light equipment for over 30 years through our affiliates. We also saw great results in Canada as well as in South and North Africa. We are also delighted with the almost five percent growth in our services segment, which comprises our rental, spare parts and repair business.

Mr. Lehner, what does the future hold for the compact equipment business?

Martin Lehner: The future is certainly bright. In 2010 alone, we experienced steady quarter-on-quarter growth in this segment. After a marginal rise in the first quarter, revenue for Q2 was up 32 percent on Q2 2009, going on to grow a further 53 and 55 percent in the third and fourth quarters respectively. Of course, this upward curve cannot continue forever. But it does underline a clear overall dynamic trend. Our compact equipment is making headway across the globe and there is still plenty of room to increase market shares.

What about the US market?

Werner Schwind: Our progress here is somewhat slower at present than in other compact equipment markets due to local market structures. In the US, we have always sold our light equipment to a small number of large rental companies and dealers. So unlike other countries such as Germany, we do not have a direct sales network here. However, we are currently establishing our own network of exclusive Wacker Neuson dealers for our compact equipment offering in the US. Our strategic alliance with the heavy equipment manufacturer Caterpillar Inc. will also contribute to medium-term revenue gains in the US. We are currently developing several mini excavator models as part of this agreement and expect this alliance to start bolstering revenue during the second half of this year. Caterpillar already unveiled the first models for the European market in March at the SAMOTER trade fair in Italy.

Looking first of all to the near future, Mr. Mayer, what are your expectations for fiscal 2011?

Richard Mayer: It's looking good. The global construction industry is picking up, fueled in part by numerous government recovery packages but also by marketdriven increases in demand from key sectors such as residential construction. And although the upturn in public construction is set to level off somewhat as recovery packages come to an end, we still anticipate further strong double-digit growth for Wacker Neuson.

"In 2011, we expect revenue to rise by over 15 percent. So we plan to match 2008 revenue but exceed 2008 earnings."

Richard Mayer

We are aiming to exceed the EUR 870 million mark in revenue, a rise of 15 percent that should result in an EBITDA of at least EUR 105 million and an EBITDA margin in excess of 12 percent. In other words, we aim to generate roughly the same revenue as in 2008 but exceed that year's EBITDA margin of 11.6 percent. Of course, this assumes that the economy does not suffer any further setbacks. In fact, we also expect doubledigit growth in 2012.

Which markets or product segments are looking particularly promising?

Richard Mayer: We expect healthy growth across all product segments. Building on our substantial shares worldwide in the light equipment market, we expect further growth as professional rental companies in the US and Europe start restocking fleets. Investment from this sector is set to increase throughout 2011 and intensify in 2012. During the downturn we continued to focus on product development. The new products we developed will open up new revenue streams, as will new regional markets. Our expectations for the compact equipment segment are even higher. But I'll hand over to Mr. Lehner for that one.

7

Martin Lehner: Indeed, our predictions are based on three pillars of growth. The first of these is the massive order backlog at the start of 2011, which was 350 percent up on the previous year. This was due in part to delays from some suppliers who still had difficulty meeting orders once business picked up. This situation, however, has now eased. These longer delivery times also prompted our customers to place orders earlier, all of which gives us a clear overview of the current fiscal year. Our strategy of utilizing the global light equipment sales network to launch our compact offering in new markets is our second core growth driver. And it is proving to be an increasingly successful model. Our collaboration with Caterpillar is the third pillar, although we will not realize the revenue benefits until 2012. The agricultural industry is also a promising opportunity for compact equipment. We have established footholds in new markets such as Russia and Italy.

Such rapid expansion calls for a degree of financial flexibility that many companies simply do not have after an economic crisis. How is Wacker Neuson positioned?

Günther C. Binder: Our growth strategies may appear ambitious, but the crisis did not shake our healthy financial foundation. In fact, the opposite is the case. Our low net financial debt and high equity ratio in excess of 80 percent ensure good bank ratings. This means we have enough undrawn credit lines with reasonable terms to finance future growth. Also bear in mind that we did not compromise on R&D expenses or necessary investments even during the crisis. So we are more than ready for the upswing.

On the subject of investments – what are the company's capital expenditure plans for 2011?

Günther C. Binder: We will be investing around EUR 100 million this year. Much of this will be channeled into our new production facility for compact equipment in the Austrian district of Hörsching, near Linz. This site will become our new center of competence for excavators, dumpers and skid-steer loaders. It will give us the

capacity to significantly increase output, including deliveries to Caterpillar. All of our production facilities will then be in company ownership. Following this investment, will have sufficient overall production capacity to generate revenue well in excess of EUR 1 billion. Our expansion strategy also entails investments in our own rental pool and new sales and service stations. The opening of our new European research and development center in Munich mid-2011 will mark another key milestone for Wacker Neuson.

You just mentioned the one billion euro revenue mark. When does Wacker Neuson expect to reach this milestone?

Günther C. Binder: As things currently stand, by 2013 at the latest. As we move towards this target, however, our revenue structure is set to change. We expect the compact segment to increase its share in revenue from today's 36 percent, including agricultural machines, drawing level with today's 40 percent light equipment.

"We intend to again hit the EUR 1 billion revenue mark in 2013."

Günther C. Binder

The timeframe here will depend on how quickly our compact offering captures international markets beyond Europe. The services segment, which comprises the rental, maintenance and spare parts business, should then level off at around 20 percent. In 2010, this sector accounted for 25 percent of total revenue as, unlike the construction equipment business, it was not affected by the downturn.

What about longer-term prospects?

Richard Mayer: We are also very optimistic about our long-term prospects. Many of our light equipment products already lead the market, in some cases with over 30 percent market share. Nevertheless, we still see major opportunities to expand our lead over competitors here. There are plenty of factors in our favor.

Our reputation as innovation leader; our fast, efficient service network; our broad product portfolio; and the reliability and quality of our products mean we are ideally positioned to provide one-stop solutions to the widest range of customer challenges. In addition, we have only just begun to tap a whole range of opportunities in promising growth markets. Emerging economies, which

"Our reputation as innovation leader will help us expand market share for light equipment across the globe."

Richard Mayer

currently account for 15 percent of Group revenue, are a particularly interesting prospect. And the future for the compact equipment segment is even brighter. Looking at international markets beyond Europe, we have only scratched the surface thus far. It's full steam ahead for our global marketing strategy.

Martin Lehner: Compact equipment is growing in importance as construction players increasingly recognize the clear benefits of equipment in this class. These

"China and India are still establishing an extensive basic infrastructure. Once this phase is complete, our integrated, compact machines will come into play."

Martin Lehner

include increased flexibility, comparatively low investment and operating costs, outstanding maneuverability and the possibility of working in restricted spaces. In emerging economies such as China and India, where industry and logistics are developing rapidly, initial construction work calls for heavy equipment – required

to access remote regions, lay roads and build other transport routes. Light and compact equipment is required at a later stage and Wacker Neuson is ideally placed to capitalize on these opportunities as they arise. Although China and India are still future markets, we have already established our first affiliates there. As in all other economies, demand for high-quality equipment will rise here in the medium term once the cost of labor increases. This will mark the start of our strong growth phase in these regions. Eastern Europe is also a promising growth market. We are carefully analyzing all of these dynamics to ensure that we closely align our go-to-market strategies with global economic trends.

Tapping these new markets single-handedly can be quite challenging. What role do alliances and acquisitions play here?

Werner Schwind: Werner Schwind: Both strategies have played a central role at Wacker Neuson throughout the company's history. Our acquisition of agricultural machine manufacturer Weidemann is a case in point. It enabled us to enter the agricultural market, which now accounts for one eighth of Group revenue. The merger of Wacker and Neuson, which evolved from a successful alliance spanning several years, is a further example. As are our strategic alliances with Caterpillar and CLAAS, both of which are creating new sales opportunities for our products. In addition to these milestones, we have also made numerous smaller acquisitions. One such move, for example, enabled us to incorporate heating and lighting equipment into our portfolio and create real value for our customers. Collaborations and alliances will continue to be part of our strategic gameplay and we are always on the lookout for winning opportunities. After all, Wacker Neuson is nowhere near the end of its growth path.

Thank you for taking time for this interview.

A firm grip!

The right growth strategy, product excellence and innovative drive are crucial to staying ahead in tomorrow's markets and meeting our customers' ever-changing needs. At Wacker Neuson, we intend to focus more than ever on consolidating and expanding these success factors in 2011.

Above all, we will be raising the bar for flexibility, customer service and teamwork. Demand for the kind of machines

our Group manufactures is rising worldwide – primarily fuelled by infrastructure expansion and repair projects, increasing demand for industrial and residential buildings and ongoing industrialization of agricultural holdings. For Wacker Neuson , this means bundling our know-how with decades of experience in state-of-the-art technologies and product quality to bring our products to the markets that need them. In short, we have a firm grip on today's and tomorrow's opportunities!

Growth strategy page 10

Product excellence page 12

Innovative drive page 14

Flexibility page 16

Customer service page 18

Teamwork page 20

Growth strategy

Pastures new

Building on our success in our core markets, we are now looking to broaden our horizons and reach new heights. We will use synergies to grow faster at an international level, particularly in our compact equipment segment where many of our products are still relative newcomers to many regions. Countries in North and South America as well as South Africa, Scandinavia and Russia are of particular interest to us. We are working hard to establish and expand our sales networks in these areas, increasingly utilizing our existing light equipment infrastructure.

Our aim is to give our customers a onestop-shop for both light and compact equipment. Certainly the US market offers promising growth opportunities. Market potential for compact equipment is set to double in the medium term given the sizeable investment backlog – particularly for compact and cost-effective equipment. Here also, we will be aiming to provide a one-stop service. In South America, we intend to benefit from dynamic growth in individual regions by expanding the portfolio distributed through our network of affiliates, which we have built up there over the last 30 years.

Product excellence

Precision engineering – down to the last nut and bolt

Our company name is more than a brand. It is a promise to customers. A guarantee of product and quality excellence. Wacker Neuson is a by-word for a long service life, outstanding reliability, low operating costs and ease of use. Above all, our customers can be sure of highly competitive machines packed full of innovative technologies and designed to the most exacting safety and environmental standards. Our attention to detail is evident down to the last nut and bolt.

Our commitment to quality, excellence and continuous improvement is hardwired into our entire product value chain and defines each and every business relationship. Our sales, procurement, production and service departments work hand in hand, ensuring that the Group remains in future what it is today – a quality leader.

Stop-check during the production of ties for the DF16 rebar tier – quality control is an integral part of all production processes.

Innovative drive

New ideas for a bright future

When we develop products, we always have our customers and their needs in mind. After all, the machines don't do the job on their own. Operators have to work in the same tough environment – day in, day out. Which is why our research and development activities are geared toward meeting everyday challenges on construction sites and raising performance, efficiency and safety across our portfolio. We stay in close contact with users to keep a grip on emerging trends. In our modern training center, we not only teach our sales teams and dealers how to handle new equipment, but also our customers, so when they get back on site they know our equipment inside-out.

We are always on the lookout for innovative ideas and already own around 600 patents and utility models. The ability to quickly turn these ideas into market successes is what keeps us ahead. In 2010, the bauma trade fair was the perfect showcase for our innovative drive, enabling us to demonstrate a broad range of new products – and show how the future starts with new ideas and creative solutions.

Before launching the DPU 130, the world's most powerful vibratory plate, Wacker Neuson provided training for all sales teams.

Its compact footprint, sensational lifting height and tight turning radius make the Weidemann T4512 telescopic handler a versatile farm hand.

Flexibility

Greater efficiency for greater gains

The agricultural sector is changing across the globe. Farms and holdings are getting larger. Pressure on prices is increasing. Now more than ever, agricultural holders must raise efficiency levels to succeed at domestic and international level. Our modern, versatile Weidemann-branded machines are the perfect answer to rising efficiency needs. These agile all-rounders make light work of the toughest farm, barn and stable jobs – raising efficiency levels and cutting costs.

Yet flexibility also means change. And for Wacker Neuson, change means growth. 2010, for example, saw us branch out to new agricultural markets in Italy and Russia. In addition, our growth strategy has also seen us adapt compact construction equipment for the agricultural sector in order to streamline processes on agricultural holdings. We intend to increase our sales worldwide, backed by our wealth of experience and broad portfolio of compact equipment for the agricultural industry. In 2011, we will be strengthening both these strategies.

Assembling a spring element for the BS 30 gasoline rammer at the spare parts production facility in Reichertshofen, Germany.

Customer service

Always on the move

Across the globe, around 180 locations and 30 affiliates take Wacker Neuson's international expertise and product excellence right to our customers' doorsteps. Worldwide, our people are on hand to respond quickly to customer needs and deliver flexible solutions. This commitment is reflected in the trust our customers place in us and our equipment the world over. Our international network delivers outstanding services – above all maintenance, repair and rental in countries with direct sales stations. Our global service capabilities range from individual consultations to 24-hour delivery guarantees for spare parts, which are manufactured on demand and at short notice. Where necessary, we also produce in very small numbers – anything to keep our machines on the move.

Maintaining continuous dialog with our customers is not just a sign of trust and reliability. It is also the basis of our company's continued success. And every day, we go the extra mile to keep it that way.

Marcus Auerbach Head of Compact Equipment and Marketing for the Americas Region

Michaela Detzner Area Sales Manager for Weidemann Products

Ferdinand Kopp Industrial Engineer in Rebar Tier Production

Teamwork

Reaching new heights together

Our employees are the biggest secret to our success. Their dedication and drive fuel our growth, make our products better every day and create value for our customers. Over 3,100 dedicated and highly skilled people worldwide are constantly looking at ways of turning new opportunities into concrete ideas. Our people never stand still – they are hands-on and always ready for action. Wacker Neuson's employees the world over live and breathe our core values, making them a clear and integral part of their working lives. Our philosophy is defined above all by a sense of responsibility, reliability and integrity. These attributes form the solid base upon which our company is built and explains why everything we do stands out.

An unsere Aktionäre

Michael Schmitt Trainer for Soil and Concrete Compaction at the Wacker Neuson Academy

Stefan Stichlmayr Industrial Engineer in Spare Parts Production

Exceeding expectations

We achieved a lot in the past year. In some areas, we came considerably closer to reaching our targets; in others, we met and even exceeded our goals. Our performance was particularly strong on the financial front, where we clearly exceeded our original forecasts for 2010. Revenue was up an impressive 27 percent on the previous year, while EBITDA almost trebled. Our share also made significant value, rising 53 percent. So our efforts literally did pay off.

However, our ability to recover from the crisis so quickly and so successfully is not just down to economic dynamics. Our employees also put in an outstanding performance, driving the company forward with intelligent innovations that enhanced our market presence. Whatever challenges the future may hold for Wacker Neuson, on the future success of our company, we have

a firm grip!

To our Shareholders

Report by the Supervisory Board

Hans Neunteufel Chairman of the Supervisory Board

Dear Ladies and Gentlemen,

After reporting an operating loss for the first time in company history in 2009, 2010 saw us seize market opportunities to drive a significant increase in revenue and earnings. We would like to thank our employees in particular for this achievement. Their dedication and active willingness to assume responsibility was a great support to company management over the year.

Cooperation between Supervisory and Executive Boards

In the period under review, the Supervisory Board performed the tasks assigned to it by law and the Articles of Incorporation and verified that the Group was governed soundly by the Executive Board. Furthermore, the Supervisory Board regularly advised the Executive Board on the management of the Group and supervised management activities. It maintained continuous dialog with the Executive Board regarding business development and corporate strategy and was directly involved in all major decisions regarding the Group.

In the run-up to and during its meetings, the Supervisory Board was brought up to date on business developments, changes in the net assets, financial position and earnings, fundamental issues regarding business planning, business strategy and other key measures by means of written and verbal reports from the Executive Board. The reports to the Supervisory Board were discussed in depth during Supervisory Board meetings amongst Supervisory Board members and with the Executive Board.

As already reported in 2009, at the start of the period under review there were some differences of opinion within the Supervisory Board and within the Executive Board as well as between the Supervisory Board and Executive Board. These led to various legal proceedings. These differences have now been resolved by mutual agreement.

Members of the Executive Board regularly took part in Supervisory Board meetings. When necessary, the Supervisory Board and its committees also convened without the Executive Board. Once again, all Supervisory Board members attended more than half of the Supervisory Board Meetings in fiscal 2010.

Furthermore, the Executive Board provided the Supervisory Board with regular, comprehensive and timely information between meetings about current business trends as well as special or urgent projects. This information was made available in writing and also in person. Where necessary, the Executive Board requested approval from the Supervisory

Board for suggested courses of action. Together with the Executive Board, the Supervisory Board discussed and examined in detail proposals that required Supervisory Board ratification. The Supervisory Board voted on resolutions of this kind during scheduled meetings.

In addition, the Executive Board submitted monthly reports on key financial and economic figures. The Chairman of the Supervisory Board maintained regular contact with the Executive Board, ensuring a continuous flow of information on the current business and financial situation of the Group and its members and on major business events. In many instances, this information was actively presented to the Chairman of the Supervisory Board by the Executive Board, or the CEO or Spokesperson in particular.

Main topics of Supervisory Board and committee meetings in fiscal 2010

Twelve plenary meetings of the Supervisory Board were held in fiscal 2010. One of these sessions was held by telephone. The Presiding Committee met three times and the Audit Committee met on four occasions. In three cases, the Supervisory Board adopted circular resolutions.

The Supervisory Board was regularly involved in the day-to-day business of the Wacker Neuson Group and planning activities at executive level. Discussions focused in particular on the global economic downturn and its impact on the business performance and organizational structures of the company and of the Group. Particular emphasis was placed on the analysis and discussion of Wacker Neuson's financial situation as well as the development of sales, costs and earnings. During the relevant meetings, any questions from the Supervisory Board that arose in connection with the regular written and verbal reports were answered in full by the Executive Board. In addition to these regular reports, the Supervisory Board concentrated its advice and auditing activities on the following matters in particular during its meetings:

During its meeting on February 26, 2010, the Supervisory Board focused on the preliminary figures for the previous fiscal year as well as possible changes in the Group structure (holding structure) and the strategic alliance with Caterpillar, which the company has now entered into. The general remuneration structure for the Executive Board was also discussed as were the results of the efficiency audit of the Supervisory Board. Furthermore, the Supervisory Board approved the closure of the production plant in Gotha, which has now been converted to a used equipment center.

Following appropriate preparations by the Audit Committee, the Supervisory Board focused on the Annual Financial Statements, the Consolidated Financial Statements, the Combined Management Report of Wacker Neuson SE and the Group, as well as related party disclosures for fiscal 2009 in the Supervisory Board meeting to approve the financial statements on March 22, 2010. In its session immediately before the Supervisory Board meeting, the Audit Committee discussed these documents in detail with the Executive Board, raising numerous questions with the auditing company representative present at the meeting, and discussing these issues at length. This was done in addition to the Supervisory Board's regularly examinations as part of its own preparation for the meeting to approve the financial statements. The Supervisory Board also addressed strategic issues regarding the compact equipment business and the alliance with Caterpillar. In a follow-up session to the Supervisory Board meeting to approve the financial statements on March 25, 2010, supplemented by a circular resolution, the Annual and Consolidated Financial Statements along with the Combined Management Report and the appropriation of net profit suggested by the Executive Board were approved. The Supervisory Board also ratified the AGM agenda, the Supervisory Board report and the updated declaration of compliance with the German Corporate Governance Code at this meeting.

At the meeting on May 7, 2010, the agenda covered the interim report for Q1, restructuring measures at an affiliate and the strategic alliance with Caterpillar. The Supervisory Board also approved the acquisition of a company in Austria.

The current shareholder representatives were reelected during the AGM. This meeting on May 28, 2010 was followed by the constituent meeting of Wacker Neuson SE's Supervisory Board, during which the Chairman and Deputy Chairman of the Supervisory Board were appointed along with the committees and chair persons. The alliance with Caterpillar was also discussed at this meeting. The spotlight was again on the strategic alliance with Caterpillar at the June 21, 2010 meeting.

The meeting of June 28, 2010, focused primarily on Executive Board matters. On the basis of this meeting, the Supervisory Board extended the contracts of the members of the Executive Board by means of a circular resolution on July 30, 2010.

At its meeting on August 9, 2010, the Supervisory Board focused primarily on the pending publication of the half-year report. The possible sale of real estate not required for operating purposes, a holding structure, the alliance with Caterpillar and issues regarding Group strategy were also discussed. In addition, the liquidation of the affiliate in Japan was approved.

The September 16, 2010, meeting centered on HR matters resulting from Dr.-Ing. Georg Sick's decision to step down from his position.

The meeting of September 22, 2010 was conducted by phone and again discussed HR issues primarily in conjunction with the search for a successor for the position of Chief Executive Officer.

The meeting on November 8, 2010, covered in particular the pending publication of the quarterly report, the revision of the rules of procedure for the Supervisory Board, the alliance with Caterpillar plus related plans to build a new production facility in Hörsching (near Linz), a holding structure, possible sale of real estate not required for operational purposes as well as the operational situation at various international sales affiliates. The Supervisory Board also exercised certain balance sheet exemptions for an affiliate and thus invoked the company's obligation to carry the associated loss.

During its meeting on December 17, 2010, the Supervisory Board examined the Executive Board's business plan for fiscal 2011. Board members not only assessed the plan, but also discussed the associated opportunities and risks in detail with the Executive Board against the backdrop of the improving economic climate. The planned construction of the new production facility in Hörsching (near Linz) was also discussed in this meeting together with certain balance sheet exemptions for another affiliate, invoking the company's obligation to carry the associated loss.

The Supervisory Board examined each of the Executive Board's monthly reports. During numerous meetings, it also addressed in detail various possible acquisition and collaboration projects, aimed at expanding the product portfolio of the Group, for example, and further developing the Group's general sales strategy.

Changes in the composition of the executive bodies

On September 15, 2010, Dr.-Ing. Georg Sick, CEO and President of Wacker Neuson SE, stepped down from his position at his own request in order to prepare for a new position. The Supervisory Board complied with the wishes of Dr.-Ing. Georg Sick. The contracts of the remaining members of the Executive Board were extended during the period under review until March 2016. Mr. Richard Mayer (Executive Board member responsible for light equipment) was appointed temporary Spokesperson for the Executive Board and shall remain in this position until an external successor for the position of CEO has been found.

During the AGM on May 28, 2010, all four existing shareholder representatives were reappointed to the Supervisory Board for a further term. The two existing employee representatives were also reappointed to the Supervisory Board for a further term by the SE Works Council. In the constituent meeting of the Supervisory Board following the AGM, Mr. Hans Neunteufel was re-elected Chairman of the Supervisory Board and Dr. Ulrich Wacker Deputy Chairman. The composition of the Presiding Committee remains unchanged with Mr. Hans Neunteufel as Chairman. There were also no changes to the composition of the Audit Committee, although Mr. Kurt Helletzgruber has replaced Dr. Kollmar as Chairman.

On December 31, 2010, Mr. Herbert Santl stepped down from his position as employee representative on the Supervisory Board for reasons of health. He has been replaced by Mr. Hans Haßlach, Chairman of the Kramer-Werke Works Council and Deputy Chairman of the Group and SE Works Council. Mr. Haßlach was appointed to the Supervisory Board on January 1, 2011 by the Wacker Neuson SE Works Council. The Supervisory Board would like to thank Mr. Santl for his many years of service and dedication to the Group and the Supervisory Board and warmly welcomes Mr. Haßlach as the new employee representative on the Board.

Work performed by the Supervisory Board committees in fiscal 2010

The two Supervisory Board committees (the Presiding and Audit Committees) also continued their work during the period under review, thus helping the entire Supervisory Board to work more efficiently.

During the March 22, 2010 meeting, the Audit Committee prepared the Supervisory Board's resolution on the adoption of the Annual Financial Statements and the Consolidated Financial Statements for the year ending December 31, 2009. The Committee also contemplated a suitable auditor and submitted a recommendation in that regard at the Supervisory Board plenary meeting. The Supervisory Board, in turn, followed this recommendation and proposed the same auditor at the AGM. At the May 7, 2010, August 9, 2010, and November 8, 2011 meetings, the Audit Committee primarily dealt with publication of the pending interim financial reports. The Presiding Committee dealt with general matters regarding the Executive Board and human resources during its three meetings. The chairmen of the committees reported on the work performed by the committees during the Supervisory Board's plenary meetings.

Risk assessment and compliance

The Supervisory Board is satisfied that the Group's risk management policy meets the requirements set down in the German law on control and transparency in business (KonTraG), insurable risks are sufficiently insured and operational, financial and contractual risks are subject to suitable controls through approval procedures and organizational processes. A detailed risk reporting system is in place throughout the Group and it is continuously maintained and further developed. The risk management system was also examined by the duly appointed auditing company, which confirmed that the Executive Board had met the requirements outlined under Section 91 (2) of the German Stock Corporation Law (AktG) and established a suitable early warning system capable of monitoring and identifying developments that could pose a threat to the company's continued existence as a going concern. During Supervisory Board meetings and personal conversations, the Executive Board informed the Supervisory Board of the current risk situation. The Supervisory and Executive Boards discussed all areas deemed to be risks during these sessions. In addition, the Audit Committee addressed compliance issues.

Corporate governance

Both the Supervisory Board and the Executive Board are aware that sound corporate governance is essential to protect shareholder interests and secure the company's long-term success. The Supervisory Board continuously monitored the further development of the German Corporate Governance Code and kept up to date with the capital market and corporate legislative framework. The Executive and Supervisory Boards issued an updated declaration of compliance with the German Corporate Governance Code pursuant to Section 161 AktG during the period under review on March 25, 2010 and again after the close of the period on March 21, 2011. The entire declaration is permanently available on the company's website and is also included in the new declaration on corporate governance online and in the annual report pursuant to Section 289a of the German Commercial Code (HGB).

Annual and Consolidated Financial Statements for 2010

At the AGM on May 28, 2010, the auditing company Rölfs WP Partner AG, based in Munich, Germany, was appointed auditor for the company and Group for fiscal 2010. The Chairman of the Audit Committee commissioned the company in writing with the task of auditing the accounting procedures. Before the Supervisory Board made its proposal to the AGM, the auditing company confirmed its independence in writing to the Chairman of the Audit Committee.

The Annual Financial Statements for the year ending December 31, 2010 were prepared by the Executive Board in accordance with the German Commercial Code (HGB). The Consolidated Financial Statements for the year ending December 31, 2010 were prepared by the Executive Board in line with IFRS as adopted in the EU and in supplementary compliance with Section 315a HGB. The auditing company Rölfs WP Partner AG has audited both sets of statements along with the books and approved them without qualification.

Each member of the Supervisory Board received the audit documents for appraisal in a timely manner. Together with the Audit Committee, the entire Supervisory Board undertook a thorough examination of the Annual Financial Statements as well as the Consolidated Financial Statements, the Combined (Group) Management Report and the related party disclosures in conjunction with the audit reports. The documents were discussed in detail at the Audit Committee meeting on March 21, 2011 with the Executive Board and in the presence of the auditors, who reported the main findings of their audit and answered questions from Supervisory Board members. After its own close examination of the documents, the Supervisory Board raised no objections and endorses the results of the audit report.

The Supervisory Board also approves the Combined (Group) Management Report and, in particular, the forecast regarding the company's further development. The final examination by the Supervisory Board revealed no grounds for objections. The Super visory Board therefore endorsed the Annual Financial Statements, the Consolidated Financial Statements and the Combined (Group) Management Report prepared by the Executive Board for the year ending December 31, 2010, on March 21, 2011. The Annual Financial Statements have thus been duly approved.

The Supervisory Board also examined the Executive Board's suggested appropriation of profit for fiscal 2010. It did not raise any objections and thus gives its unqualified consent.

Examination of the Executive Board report regarding relations with related entities (related party disclosures)

The Executive Board prepared a report on related party disclosures for fiscal 2010. This report contains in particular a declaration by the Executive Board about the legal transactions undertaken by Wacker Neuson SE. The Executive Board states that – to the best of its knowledge and based on the information known to the Executive Board at the time the transactions were entered into – appropriate compensation was received in respect of all transactions outlined in the related party disclosures report. Auditing company Rölfs WP Partner AG examined the related party disclosures report and issued the following auditor's opinion:

"Based on our professional examination and evaluation, we confirm that

• 1. the factual statements contained in the report are correct, and
• 1. the performance provided by the company in respect of the transactions listed in the report was not unreasonably high."

The Audit Committee and the entire Supervisory Board received the Executive Board's report on related party disclosures in a timely manner. The contents of the report and the assessment thereof by the auditors were read and understood by these bodies, and both documents and their results were examined and discussed with the Executive Board and the auditors. The Supervisory Board endorses the auditor's assessment of the related party disclosures report. Based on the final results of the discussions and its own examination of the related party disclosures, the Supervisory Board regards the Executive Board's conclusions to be true and accurate and has no objection to the closing statement by the Executive Board.

The management and all employees of the Wacker Neuson Group showed great personal dedication in light of the turbulent global economic situation. Their commitment, dedication and performance – both on a day-to-day basis and under exceptional circumstances – were crucial factors behind the company's continued positive development during the period under review. The Supervisory Board would like to thank all employees and the Executive Board for their efforts here.

Munich, March 21, 2011

Supervisory Board

Hans Neunteufel Chairman of the Supervisory Board

Declaration on Corporate Governance

Corporate Governance takes high priority at Wacker Neuson. Our Executive and Supervisory Boards see it as their responsibility to comply with principles ensuring responsible, professional and transparent company management, as stipulated in the German Corporate Governance Code. Our activities are geared towards secu r ing our company's longterm success and increasing its value. The mission statement is embedded in the group and its business practices.

Declaration on Corporate Governance

In the following statement the Executive Board reports on the company's corporate governance policies and practices – also for the Supervisory Board. It therefore complies with Section 289a (1) of the German Commercial Code (HGB) and Section 3.10 of the German Corporate Governance Code.

1. Declaration of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG)

The Executive Board and the Supervisory Board of Wacker Neuson SE consider the German Corporate Governance Code as an important body of regulations. Both executive bodies feel compelled to comply with its principles aimed at responsible, professional and transparent company management. They have therefore thoroughly examined the recommendations of the German Corporate Governance Code and issued the following declaration of compliance on March 21, 2011.

Declaration of compliance with the German Corporate Governance Code in accordance with Section 161 of the German Stock Corporation Act (AktG)

The German Corporate Governance Code contains recommendations and proposals for managing and monitoring German listed companies in relation to shareholders and the Annual General Meeting (AGM), the Executive Board and the Supervisory Board, transparency, accounting and auditing. The German Stock Corporation Act requires the Executive Board and the Supervisory Board of listed companies to declare each year which recommendations of the German Corporate Governance Code have not been followed or are not being followed, and why this is the case.

The Executive Board and the Supervisory Board identify with the duty as outlined in the German Corporate Governance Code to uphold the principles of a social market economy and maintain the substance of the company as a going concern and its ability to generate value in a sustainable fashion (company interest) and to further promote responsible and transparent management and governance of the company.

In accordance with Section 161 AktG, the Executive Board and the Supervisory Board of Wacker Neuson SE declare that the company complied with and continues to comply with the recommendations issued by the German Corporate Governance Code Commission published by the German Federal Ministry of Justice (BMJ) in the official section of the electronic Federal Gazette as amended on June 18, 2009 and/or as amended on May 26, 2010 (as of the effective dates respectively), with the exceptions listed and explained in more detail below:

• 1. Section 3.8, para. 2: The company's directors' and officers' (D&O) liability insurance policy for its Supervisory Board has been concluded without a deductible. The company is of the opinion that a deductible would not improve the sense of motivation and responsibility with which the Supervisory Board members perform their duties. D&O insurance safeguards the company against substantial internal risks and – only as a secondary function – protects the assets of members of its executive bodies. Hence it is the company's intention to refrain from introducing a deductible on Supervisory Board members until further notice.
• 1. Section 4.1.5: The company does not follow this recommendation to the extent that it requires companies to aim or provide for adequate representation or involvement of women. The Wacker Neuson Executive Board has always and will continue to base its staff appointment decisions solely on the basis of the capabilities and qualifications of the available candidates and does not accord any importance to gender. It should be noted in this context that key top Group management positions are already occupied by women. The Executive Board actively welcomes all efforts to combat gender-based discrimination, and indeed any other type of discrimination, and to promote diversity.
• 1. Section 4.2.3 para. 2 and 3: In some of the Executive Board members' contracts, recommendations under the Code that extend beyond the German Law on the Appropriateness of Executive Board Remuneration (VorstAG) regarding the variable components of Executive Board remuneration were not considered in the past. The provisions of existing contracts of employment thus enjoyed a valid right of protection and continuity. In connection with the 2010 extensions to existing contracts, all contracts were adapted to consider the recommendations under the Code. The Supervisory Board will continue to generally follow this recommendation under the Code when concluding new contracts and extending existing contracts in the future.
• 1. Section 4.2.3, para. 6: The AGM is not informed separately about the main terms of and changes to the remuneration system for Executive Board members as this information is already disclosed in the Group Management Report, which is available to all shareholders.
• 1. Section 4.2.4, 4.2.5, 5.4.6, para. 3 and 7.1.3: The AGM decided not to publish the income of each individual Executive Board member in the Notes to the Annual and Consolidated Financial Statements. In line with this, the corporate governance report does not include an individualized remuneration report. Nor does it contain specific information about share-based incentive systems for the Executive Board (which the company does not have in any case).

Once again, the Executive and Supervisory Boards devoted themselves to the question of striking a balance between shareholders' need for information and Executive Board members' need for privacy. Once more, they have come to the conclusion that the shareholders' right to transparent information is duly served with the disclosure of total Executive Board remuneration and that publishing information on individual remuneration payments would impinge unnecessarily on the privacy of the members of the Executive Board. A resolution in line with Sections 286 (5) and 314 (2) sent. 2 HGB shall thus again be presented at the upcoming AGM, proposing that individual Executive Board remuneration payments shall not be published in the Annual and Consolidated Financial Statements for the next four fiscal years.

Similarly, the income of individual Supervisory Board members shall not be published. Remuneration is clearly regulated in the company's Articles of Incorporation. The Executive Board and Supervisory Board are of the view that these Articles coupled with other mandatory legal disclosures provide investors and the public with sufficient information in this area.

• 1. Section 5.1.2 para. 1 sent. 2 and section 5.4.1 para. 2 and 3: The company does not follow this recommendation to the extent that it requires companies to aim or provide for adequate representation or involvement of women on the Executive Board and on Supervisory Board. Hence the corporate governance report does not include representation targets from the Supervisory Board. The Supervisory Board bases its staff appointment recommendations and decisions solely on the basis of the capabilities and qualifications of the available candidates and does not accord any importance to gender. The Supervisory Board actively welcomes all efforts to combat gender-based discrimination, and indeed any other type of discrimination, and to promote diversity.
• 1. Section 5.1.2, para. 2, sent. 3: The Supervisory Board originally set no age limit for members of the Executive Board as the Supervisory Board was of the opinion that individual performance was the deciding factor when assessing management ability, not age. In 2010 however, an age limit was introduced in line with this recommendation under this code.
• 1. Section 5.3.3: The Supervisory Board has not formed a nomination committee. The size of the Supervisory Board (four shareholder representatives) does not warrant a dedicated committee for proposing Supervisory Board candidates.
• 1. Section 5.4.1, para. 2: The rules of procedure of the Supervisory Board stipulate that members of the Supervisory Board should not generally be older than 75. To ensure the greatest possible transparency in advance, the company draws attention to the fact that one of the Supervisory Board members, who is a shareholder representative, will turn 75 during his term of office.
• 1. Section 5.4.3., sent. 3: So that the Supervisory Board can continue to vote impartially for its chairperson, the proposed candidates will not be announced in advance.
• 1. Section 5.4.4: Should the AGM elect a (previous) member of the Executive Board to the Supervisory Board, taking the regulations of the German Stock Corporation Act into consideration, the Supervisory Board intends to comply with the recommendation that this new member should not chair the Supervisory Board.
• 1. Section 6.6: Share ownership by individual members of the executive bodies exceeding one percent of shares issued by the company has not been and will not be stated in the corporate governance report. The Executive Board is of the view that protecting personal and family privacy takes priority here.

Munich, March 21, 2011

Wacker Neuson SE Executive and Supervisory Boards

The above declaration has been made permanently available to shareholders on the Wacker Neuson SE company website (www.wackerneuson.com) under The Company, Investor Relations, Corporate Governance. It is updated as required, at least once a year. Previous declarations of conformity are stored for reference purposes on our website for a period of at least five years. Further details on corporate governance at Wacker Neuson SE are presented in the following corporate governance report.

2. Corporate governance report

The corporate governance report outlines the role of the Executive Board and the Supervisory Board as well as the composition and role of the committees.

Wacker Neuson SE is a European company (Societas Europaea) incorporated under German law. Upon foundation of the company, shareholders chose the dual management system common under the German Stock Corporation Act, comprising two executive bodies, the Executive Board and the Supervisory Board, each vested with different spheres of competence. The two bodies work closely together on a basis of mutual trust and are committed to increasing the company's long-term value.

Executive Board

The Executive Board represents the company towards third parties and manages its business in accordance with legal regulations, the Articles of Incorporation and the rules of procedure for the Executive Board. The Executive Board currently comprises four members. It is responsible for managing the company and represents it both legally and otherwise. The Executive Board functions on the basis of joint accountability. In other words, all members of the Board are jointly responsible for all areas of company management.

The Executive Board plans the company's strategic direction in collaboration with the Supervisory Board and ensures it is appropriately executed. It is also responsible for establishing the company and Group's business plans for the coming year and beyond as well as preparing legally required reports such as Annual Financial Statements, Consolidated Financial Statements and interim reports. In addition, the Executive Board ensures that a suitable risk management and control system is in place and that regular, prompt and extensive reports are made to the Supervisory Board regarding all issues relating to strategy, company planning, business developments, the risk situation and risk management activities that are relevant to the company and the Group.

Cooperation and areas of responsibility within the Board are governed by the rules of procedure for the Executive Board. These focus not only on the lines of responsibility vested in individual Executive Board members, but also the issues entrusted to the Executive Board as a whole, resolutions (quorum requirements in particular) and the rights and obligations of the Spokesperson of the Executive Board. Executive Board meetings are held regularly and are convened by the Spokesperson of the Executive Board or at the request of an Executive Board

member. The Executive Board generally reaches decisions based on a simple majority of votes cast unless other legal provisions apply.

The Spokesperson of the Executive Board steers and coordinates the entire Executive Board and represents the company and Group vis-à-vis the public, in particular when dealing with the authorities, trade associations and publishing houses. Mr. Richard Mayer is the Spokesperson of the Executive Board. Mr. Martin Lehner is the Deputy CEO. Further details on individual members of the Executive Board, in particular their areas of responsibility, are disclosed in the Notes to the Consolidated Financial Statements in section 31 "Executive bodies" (2010 Wacker Neuson Annual Report). p.145

Measures and transactions of fundamental importance must be approved by the Supervisory Board as set down in the rules of procedure for the Supervisory Board and/or the Articles of Incorporation. They are also communicated to shareholders and the capital market in a timely manner, thus ensuring that decision-making processes remain transparent – also throughout the year – and capital market players are kept sufficiently up to date.

Supervisory Board

The Supervisory Board advises the Executive Board in key decisions, monitors its activities, appoints members and relieves them of their duties. The Supervisory Board has six members. In accordance with the agreement on employee representation in the Wacker Neuson SE Supervisory Board and the German One-Third Participation Act (Drittelbeteiligungsgesetz), four of these are shareholder representatives and two are employee representatives. The terms of office of all Supervisory Board members run until the close of the AGM that tables a resolution to formally approve the actions taken by Wacker Neuson SE in fiscal 2014. Their terms may be no longer than six years. Further details on individual members of the Supervisory Board are disclosed in the Notes to the Consolidated Financial Statements in section 31, "Executive bodies" (2010 Wacker Neuson Annual Report). p.145

ports and monitors the Executive Board regarding accounting issues especially in relation to quarterly reports, risk management, the internal control system, internal auditing system and compliance. The Audit Committee members are Dr. Eberhard Kollmar, Mr. Hans Neunteufel, Mag. Kurt Helletzgruber, Mr. Herbert Santl (until December 31, 2010) and Mr. Elvis Schwarzmair (from January 1, 2011). Mr. Kurt Helletzgruber is the Chairman. The respective committee chairpersons provide the Supervisory Board with regular and timely informati-

on about the committees' activities. The committees also reach decisions with a simple majority of votes cast. The respective chairperson has the casting vote in the event of a tie.

Shareholders and the AGM

Shareholders exercise their rights, including voting rights, at the AGM. All shares in Wacker Neuson SE provide shareholders with full voting rights and are registered by name. Each share represents one vote. The AGM agenda plus the reports and documents required for the AGM are published in good time – also on the company's website.

Our AGM this year will take place in Munich on May 26, 2011. The Executive Board makes it easier for shareholders to exercise their voting rights at the AGM by offering the opportunity to delegate binding voting instructions to proxies named by the company. Shareholders can also do this during the AGM. Information on how to vote by proxy will also be included in the invitation to the AGM meeting. These named proxies are also available at the AGM to shareholders present at the AGM. It is also possible to delegate voting rights to financial institutions, shareholder associations and other third parties.

Accounting and auditing

The Consolidated Financial Statements of Wacker Neuson SE are prepared in line with the International Financial Reporting Standards (IFRS). The Annual Financial Statements and the Combined Management Report of Wacker Neuson SE and its Group are prepared in accordance with the German Commercial Code (HGB).

The principles of cooperation within the Supervisory Board are governed by the rules of procedure for the Supervisory Board. These rules reflect the recommendations of the German Corporate Governance Code and – as an integral part of the monitoring and control process – provide for clear and transparent procedures and structures as well as regular efficiency checks on Supervisory Board work. The Supervisory Board reaches decisions based on a simple majority of votes cast unless other legal provisions apply. The chairperson of the Supervisory Board convenes and oversees Supervisory Board meetings and generally coordinates the activities of the Supervisory Board and its committees.

The Supervisory Board defines the Executive Board's information and reporting duties in detail. The core areas of collaboration between the Executive and Supervisory Boards as well as specific details on the Supervisory Board's activities and committees are disclosed in the report by the Supervisory Board.

Composition and role of committees

In contrast to the Executive Board, the Supervisory Board forms two committees, the Presiding and the Audit Committee.

The responsibilities of the Presiding Committee include in particular submitting proposals for Executive Board member appointments, terminations and mandate extensions, for concluding, amending and terminating contracts with Executive Board members, as well as for preparing Supervisory Board meetings and handling ongoing business. The Presiding Committee members are Mr. Hans Neunteufel, Dr. Ulrich Wacker and Dr. Eberhard Kollmar. Mr. Hans Neunteufel is Chairman of the Presiding Committee.

The Audit Committee maintains close contact with the auditors. It appoints the auditors to review the Annual and Consolidated Financial Statements, identifies the focal points of the audit and receives the report. Furthermore, the Audit Committee negotiates the fee, assesses the auditor's independence and submits a voting proposal with regard to the auditor to the Supervisory Board for the AGM. It supThe Supervisory Board proposes the election of the auditor at the AGM, based on a recommendation from the Audit Committee. Prior to making its proposal, the Supervisory Board obtains a certificate of independence from the auditor in question.

The Chairman of the Audit Committee asked the auditor to immediately report all significant findings or incidents identified during the audit and relating in the broadest sense to Supervisory Board duties if these findings or incidents could not be directly resolved.

Risk management

Responsible handling of risks facing the Group and the company is, as always, a crucial part of sound corporate governance. The Executive Board and the Supervisory Board therefore continually monitor the Wacker Neuson Group's risk management and internal control systems along with the accompanying reporting mechanisms.

Specific details on risk management within the Wacker Neuson Group are disclosed in the risk report of the Combined Management Report. This also includes a report on the control and risk management system within accounting (2010 Wacker Neuson Annual Report). p.79

Transparency

Regular, active dialog with our shareholders and other stakeholders is one of the cornerstones of our corporate governance policy. We provide shareholders, financial analysts, shareholder associations and the media with information about business trends and significant changes within the company promptly, regularly and with the greatest possible transparency. We are fully committed to a policy of active and honest communication.

As stipulated by the German Securities Trading Act (WpHG) and the German Corporate Governance Code, we provide information on our company's business development and financial situation four times a year. This takes the form of one annual report and

three quarterly reports. The Supervisory Board or the Audit Committee discusses these reports with the Executive Board prior to their publication. The Executive Board also answers shareholders' questions at the AGM. We also use our Internet platform as a way of keeping our stakeholders up to date. All press and ad-hoc releases, financial reports and our financial calendar detailing important events are permanently available under The Company, Investor Relations at www.wackerneuson.com. Interested parties can join our distribution list to receive regular updates.

Director's dealings and significant voting interests

In order to ensure compliance with the German Securities Trading Act (WpHG), Wacker Neuson SE publishes reports on directors' dealings pursuant to Section 15a WpHG. We use these reports to provide immediate information about securities transactions with regard to Wacker Neuson shares made by members of the Executive and Supervisory Boards as well as by natural and legal persons closely related to members of these bodies. This information is also disclosed on the company's website (www. wackerneuson.com) under The Company, Investor Relations, Corporate Governance. Pursuant to Section 21 WpHG, we also immediately publish reports regarding the purchase or sale of significant voting rights, and the holding of corresponding financial instruments in line with Section 25 WpHG on our website under Investor Relations, IR News.

Annual Document in line with Section 10 of the German Securities Prospectus Act (WpPG)

The Annual Document pursuant to Section 10 (1) WpPG is available at www.wackerneuson.com under The Company, Investor Relations, Corporate Governance.

Remuneration report in the Corporate Governance Report

We report on the remuneration system of the Executive Board in our Combined Management Report under section XII "Remuneration framework". p.89 The AGM approved a resolution not to publish remuneration details for individual Executive Board members in the interest of their privacy.

The overall remuneration of the Executive and the Supervisory Board is disclosed in the above-mentioned section and in the Notes to the Consolidated Financial Statements in section 32 "Related party disclosures" (2010 Wacker Neuson Annual Report). p.145

3. Corporate governance best practices

Compliance – key business driver

Beyond the guidelines and recommendations of the German Corporate Governance Code, the Wacker Neuson SE Executive Board is committed to conducting its business worldwide in a lawful manner, along socially and ethically responsible lines. Which is why we have developed a Group-wide strategic mission statement that shapes the conduct of each and every individual in the Group – from the Executive Board through management to all Group employees. This mission frames the way we do business for shareholders, customers, the general public and employees alike.

Our approach is anchored in the values one would expect from a mid-sized family-owned company, geared towards a profitable, sustainable business model. Shared values and sustainable leadership principles underlie everything we do. Values such as integrity, openness, honesty, and respect for other people and our surroundings inspire us to succeed, serve our shareholders with dedication and embrace sustainable business practices. This mission sta tement captures our commitment to all our stakeholders and can be seen on our website at: www.wackerneuson.com/mission-statement.

To ensure our values remain firmly embedded in every aspect of our corporate structure, we regularly inform our employees of the rules and requirements

of responsible conduct. In the interests of our company and the entire workforce, we ensure we trace any infringements back to their causes, which we promptly eliminate. This also includes thorough investigation of any violations of applicable national regulations.

Moving forward, we are committed to sustaining this value-driven approach, which we see as a solid ground for our future success and credibility as a company.

Munich, March 21, 2011

Wacker Neuson SE

The Executive Board

Richard Mayer Martin Lehner

Günther C. Binder Werner Schwind

This declaration on corporate governance is permanently available to shareholders on the Wacker Neuson SE website at www.wackerneuson.com under The Company, Investor Relations, Corporate Governance. The declaration on compliance will be revised annually. Wacker Neuson SE will make outdated declarations on compliance available on its website for a period of at least five years.

An eventful year sees Wacker Neuson share price climb

In 2010 – the year of economic recovery – Wacker Neuson stepped up its efforts to give all stakeholders a transparent overview of Group events and developments. Roadshows and capital market days in Germany, Europe and the US provided a regular feed of information on the company's latest performance and gave all capital market players an opportunity to exchange views. And our efforts have certainly paid dividends. Climbing 53 percent, Wacker Neuson's share price clearly outperformed the SDAX.

Stock market trends in 2010

International stock market trends in 2010 were largely shaped by global recovery from the economic and financial crisis. The German economy, in particular, experienced rapid, strong growth. On the negative side, however, debt crises in Greece and Ireland put the euro under considerable pressure.

A clear upward trend was visible in the financial markets. Early 2009, it was already evident that smallto-medium cap shares were clearly outstripping their large-cap cousins. This was a global phenomenon, but the difference was especially pronounced in Germany, where the MDAX – the index for medium-sized companies – rose by 35 percent in 2010. As such, it clearly outperformed the DAX leading index, which registered a 16 percent rise. The best performance of all, however, was seen in the SDAX small cap index, which rose by 46 percent.

Wacker Neuson mirrors stock market trends

Overall, stock market trading was extremely lively and this was reflected in Wacker Neuson SE share price trends. With significantly more pronounced spikes than the SDAX, the share price continued on its upward path until it reached EUR 13.00 at the end of 2010. This represented an increase of 53 percent, outpacing the SDAX average. p. 37 fig.1 This was the market's reward for a quicker than expected return to profit mid-year and a sizeable increase in earnings throughout the year.

			Share facts at a glance
--	--	--	-------------------------	--

ISIN / WKN	DE000WACK012 / WACK01
Trading symbol	WAC
Sector	Industrial
Reuters / Bloomberg	WACGn.DE/WAC GR
Stock category	Individual no-par value nominal shares
Share capital	EUR 70,140,000
Number of authorized shares	70,140,000
Stock exchange segment	Regulated market (Prime Standard), Frankfurt Stock Exchange
Indices	SDAX, DAXplus Family, CDAX, GEX, Classic All Shares
IPO	May 15, 2007
Designated sponsor	Deutsche Bank

1. Share price trends Jan. 1, 2010 – Feb. 28, 2011 as a %

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb.

High/low price Monthly average

Neuson share Jan. 1, 2010 – Feb. 28, 2011 in €

as a %

Construction equipment shares performed well on the whole in the year under review. p. 37fig. 2 plots Wacker Neuson's share against four of its peers – French companies Haulotte, a lifting equipment manufacturer, and Manitou, one of our competitors in the compact equipment sector, Palfinger, Austrian crane manufacturer, and Deutz, engine manufacturer. Deutz also supplies special-purpose engines to compact equipment manufacturers. The share price trend for all companies was roughly similar. In the first few weeks of fiscal 2011, the sharp rise in oil prices in response to political upheaval in the Arab world had a negative effect on stock markets. In March 2011, the consequences of the earthquake in Japan caused further uncertainty.

Share and index information

Wacker Neuson SE shares are listed on the regulated Prime Standard segment of the Frankfurt Stock Exchange and the SDAX. Wacker Neuson has been included in the new DAXplus Family-Index since January 4, 2010. This index comprises around 120 German and international companies from the Frankfurt Stock Exchange's Prime Standard segment in which the founding families hold at least 25 percent of the voting rights or sit on the Executive or Supervisory Board and hold at least a five-percent share of the voting rights. Weighting is based on market capitalization of the free float.

Key indicators for the Wacker Neuson share

in €	2010	2009
High	13.20	9.51
Low	7.63	4.31
Average	10.28	6.96
Year-end	13.00	8.20
Average daily trading
volume in shares	38,790	37,837
Earnings per share1	0.34	-1.57
Book value per share1	11.86	11.28
Dividend payment
proposed1	0.172	0
Distribution ratio as a %	49.82	–
Market capitalization at
year-end in € million	911.8	575.1

70,140,000 shares.

Dividend payment to be proposed at the AGM on May 26, 2011.

Wacker Neuson is ranked in this index as one of the largest listed family-owned companies. Compared with all other companies listed on the DAX, MDAX, SDAX and TecDAX, Wacker Neuson is rated as one of the ten best companies in Germany, with a high equity ratio of over 80 percent. We regard inclusion in the DAXplus Family-Index as confirmation of our success in combining the culture of a family-run enterprise with a value-driven commitment to sustainable, stable management practices.

2010 AGM

The Annual General Meeting (AGM) is an important event for Wacker Neuson. In the year under review, it was held in Munich on May 28, 2010. Around 230 shareholders with 61,158,924 voting rights were represented. Based on a share capital of 70,140,000 shares, this corresponds to attendance of 87.2 percent. In view of the uncertain economic situation prevailing at the time, the shareholders approved the proposal by the Executive Board and the Supervisory Board to carry the net profit for the year forward in full and thereby waive a dividend payment for fiscal 2009 (previous year's resolution for fiscal 2008: EUR 0.19 per share).

Dividend proposal

In view of the company's stronger earnings situation potential and the long-term optimization of cost structures, the Executive Board and Supervisory Board of Wacker Neuson SE will propose a dividend of EUR 0.17 per eligible share at the AGM on May 26, 2011. This dividend represents a total payout of EUR 11.9 million. The distribution ratio pans out at around 50 percent based on Group profit for the year in the amount of EUR 23.9 million. This is in line with the long-term dividend policy defined by the Supervisory Board and Executive Board and is higher than the 30 percent minimum (of net earnings) communicated at the time of the IPO. This early return to a dividend payout after a gap of just one year demonstrates the Executive Board's and the Supervisory Boards' gratitude to shareholders for their loyalty during a difficult period.

Ownership structure

At December 31, 2010, around 70 percent of company shares were in either direct or indirect family ownership. The Executive Board holds a further 1.5 percent direct stake. The remaining shares are

Executive Board and Supervisory Board at the official AGM on May 28, 2010 in Munich.

in free float. As far as the company is aware, around 87 percent of the free float is held mainly by European investors.

Proactive communication

Investor relations (IR) is a key priority at Wacker Neuson. The aim of IR communications is to give financial market players an up-to-date and accurate account of company performance so that stakeholders can realistically assess and evaluate our share.

Capital market players continued to show a keen interest in our company in 2010. The Executive Board and the IR department did everything possible to satisfy high expectations surrounding the information flow in the year of the upturn. We held regular

briefings on the current status of the company at a number of events, including the AGM, investor conferences and roadshows in Germany and abroad. The objective here was, and remains, to keep analysts and investors up to speed on trends in our markets and business areas as well as on our responses to market challenges and our strategic reaction to changes.

A wealth of up-to-date information is available on our website www.wackerneuson.com under The Company, Investor Relations. This includes annual and quarterly reports, press releases and ad-hoc announcements, plus presentations. manager magazin provided further welcome confirmation of the quality of our financial communication by awarding

Including Wacker-Werke GmbH & Co. KG, Wacker Familiengesellschaft mbH & Co. KG and VGC Invest GmbH.

us eighth place among SDAX-listed companies in its Best Annual Reports 2010 competition. Meanwhile in the Vision Awards Annual Report Competition, organized by the League of American Communications Professionals, our 2009 Annual Report came first in the "Equipment, Machinery and Instruments" category and ranked 55th overall out of a 4,000-plus field of entrants. Finally, our 2009 Annual Report featured in the 13th edition of "Beispielhafte Geschäftsberichte" [Exemplary Annual Reports]. From a selection of over 1,000 annual reports, it was included in the top 100 for its success in the compelling visual presentation of financial information.

Wacker Neuson's "Capital Market Day" at world's largest construction equipment trade fair

In April 2010, over 415,000 visitors from more than 200 countries attended bauma 2010 – the world's largest construction equipment trade fair held in Munich. There was an upbeat mood at the event, suggesting that the worst of the economic downturn in Europe is over. As such, bauma 2010 marked a turnaround for the entire sector.

Wacker Neuson took the opportunity to unveil its broad portfolio of light and compact equipment, ranging from handheld rebar tiers to 14-ton excavators, providing end-to-end support for the widest range of construction process flows. The demo shows proved to be particularly popular. The spectator stands around the 1,000 m² demo site were full of visitors who had come to see the excavator, wheel loader and dumper drivers put the machines through their paces.

Meanwhile, in a bid to demonstrate the company's strong performance and innovative drive to the financial market, the Executive Board and Investor Relations team hosted a "Capital Market Day" event for a sizeable group of analysts and investors on April 19, 2010. The demo show and a tour around the stand gave participants useful insights into the innovations that underpin the company's strong competitive position. Important investment issues and questions from investors were addressed during follow-up talks. And, to round it all off, our bravest guests even had the chance to try out some of our machinery for themselves.

Analysts focusing on small and mid caps

Our stock has attracted the attention of yet more analysts, with 12 financial institutions now regularly studying the movements of Wacker Neuson's share price. The latest addition was Unicredit Bank in February 2011. At the beginning of March 2011, the mean target price was EUR 12.87 per share. The highest recommendation was EUR 15.00 and the lowest EUR 10.80. Only three analysts made a "sell" recommendation.

Awards for Wacker Neuson's 2009 Annual Report "Capital Market Day" at bauma 2010 in Munich (April 2010)

Current analyst recommendations on Wacker Neuson share

Name of bank	Target price in €	Buy	Hold	Sell	Date
Deutsche Bank	14.00				Feb. 14, 2011
UniCredit Bank AG	15.00				Feb. 1, 2011
Reuschel & Co. Privatbankiers	12.50	1			Aug. 13, 2010
DZ Bank	13.50				Mar. 3, 2011
BHF Bank	13.60	2			Oct. 29, 2010
UBS Investment Bank	13.00				Mar. 9, 2011
Commerzbank	11.50				Nov. 26, 2010
M.M.Warburg	12.50				Feb. 14, 2011
Berenberg Bank	14.70				Feb. 15, 2011
Cheuvreux	12.00			3	Feb. 14, 2011
Goldman Sachs	11.30				Dec. 10, 2010
Bank of America Merrill Lynch	10.80			3	Feb. 25, 2011

Recommendation: Accumulate

Recommendation: Overweight

Recommendation: Underperform

The analysts' positive evaluations are based on the following opportunities in particular:

• JJ Gains in market share in the US market with compact equipment
• JJ Stimulation of demand through rental chains
• JJ Strategic alliance with Caterpillar for mini excavators
• JJ Expansion of agricultural machinery portfolio

The possible risks are identified as general economic risks, currency risks, raw materials risks and price pressure, all of which could affect the entire sector.

Historic overview of analyst recommendations on Wacker Neuson share

% Buy % Hold % Sell

as of March 15, 2011

Group Structure

Wacker Neuson SE (Consolidation structure)

1 Operations ceased.

2 Affiliate is set to be closed.

Contents Combined Management Report

I. The Wacker Neuson Group	44
II. General background	46
Overall economic trends	46
Overview of construction and
agricultural industries	47
General legal framework	48
Competitive position	49
III. Business trends in 2010	50
IV. Earnings, financial position and net assets	52
Earnings	52
Finances	55
Assets	60
General overview of economic situation	62
V. Earnings, financial position and net assets
of Wacker Neuson SE (condensed version
according to HGB)	63
VI. Segment reporting by region	65
Europe	65
Americas	67
Asia	67
VII. Segment reporting by business segment	68
Light equipment	68
Compact equipment	68
Services	70

VIII. Other factors that impacted on results	70
Research and development	70
Production and logistics	72
Sustainability and quality	73
Purchasing	75
Human resources	75
Sales, customers and marketing	77
IX. Risk report	79
X. Information in accordance with Section
315 (4) and Section 289 (4) HGB as well as the
Executive Board report in accordance with
Section 176 (1) Sentence 1 AktG	84
XI. Declaration on corporate governance
according to section 289a HGB	89
XII. Remuneration framework	89
XIII. Supplementary report	90
XIV. Opportunities and outlook	91
Overall economic outlook	91
Outlook for construction and
agricultural industries	92
Opportunities and outlook for the
future development of the Wacker Neuson Group	94
Development outlook by region	95
Development outlook by business segment	96
Group forecast	96
Summary forecast	98

The graphics and tables below are not part of the Consolidated Management Report and are provided for information purposes only. The following print version of the Consolidated Management Report does not exactly correspond to the audited Consolidation Management Report. Further informations on key figures definition and calculation methods applied in the report are disclosed in the glossaries at the end of this annual report.

Combined Management Report of Wacker Neuson SE and its Group for fiscal year 2010

The Management Report of Wacker Neuson SE has been combined with the Group Management Report according to section 315 (3) of the German Commercial Code (HGB). The risks and opportunities facing Wacker Neuson SE, in its capacity as parent company, cannot be differentiated from those facing the Group. Unless otherwise stated, the information contained in this Management Report refers to the Group. The information relating specifically to the parent company is presented in a separate section.

We have prepared the Consolidated Wacker Neuson Financial Statements in accordance with the International Financial Reporting Standards (IFRS) as applicable in the EU in addition to the provisions of HGB set forth in section 315a (1). The Annual Financial Statements of Wacker Neuson SE have been prepared in accordance with the provisions of HGB and the German Stock Corporation Act (AktG).

I. The Wacker Neuson Group

• JJ A global leader in light and compact equipment
• JJ International sales, consulting and support/service network backed by outstanding logistics know-how
• JJ Management focus on long-term increase in company value

The Wacker Neuson Group develops, manufactures and distributes high-quality light and compact equipment. Complemented by an extensive service offering, Wacker Neuson's

broad product portfolio optimizes and supports its customers' construction processes around the globe. The Group is the partner of choice among professional users in mainstream construction, gardening, landscaping, agriculture, municipal works, recycling and various branches of industry, including the construction machine rental sector. The construction industry is the Group's largest target market, accounting for around 84 percent of machine sales. The Group offers over 300 product categories together with rental, spare parts and repair services.

Wacker Neuson has approximately 180 locations in over 30 countries, resulting in a dense consulting and service/support network. fig. p. 42 Our main aim is to complement our broad offering of high-quality products with an extensive and reliable range of services.

The Wacker Neuson Group is divided into three business segments:

• JJ Light equipment up to 3 tons with the following business fields:
• JJ Concrete technology
• JJ Soil and asphalt compaction
• JJ Demolition
• JJ Utility
• JJ Compact equipment up to 14 tons
• JJ Services with two business fields:
• JJ After-market (repair and maintenance)
• JJ Rental (Central and Eastern Europe)

The majority of products from our light and compact equipment segments are marketed under the "Wacker Neuson"

brand. In the Europe region, we also distribute all-wheel-drive wheel loaders and telescopic handlers from the compact equipment business segment under the "Kramer Allrad" brand, as well as articulated wheel loaders for the agricultural industry under the "Weidemann" brand. In the rest of the world, all Group products for the construction industry are branded "Wacker Neuson".

Organizational and legal structure

Wacker Neuson SE is a European company with its headquarters in Munich. It is registered in the German Register of Companies (Handelsregister) at the Munich Magistrate's Court under HRB 177839. The company's shares have been listed since May 2007.

The Consolidated Financial Statements of Wacker Neuson SE are prepared in accordance with the International Financial Reporting Standards (IFRS). Forty-one companies, including the parent company, are fully consolidated in these statements. Furthermore, we have direct or indirect majority holdings in five smaller companies which do not have a significant impact on Wacker Neuson's business either individually or collectively and are therefore not included in the consolidation structure.

Wacker Neuson SE is the largest operating company in the Wacker Neuson Group and thus assumes a central role in the Group. As the parent company, it holds the shares in the other members of the Wacker Neuson Group directly or indirectly and is represented in Germany through approximately 70 controlled sales and service stations. The parent company's Executive Board is responsible for managing the Group. As a rule, the executive bodies of the affiliates report directly to Group management.

Our segment reporting is based on regions (Europe, Americas and Asia). We also break revenue down according to business segments (light equipment, compact equipment and services).

With the exception of our affiliates Kramer-Werke GmbH and Weidemann GmbH, which have retained their original names, all significant operating affiliates now trade under the common name of "Wacker Neuson".

Please refer to the section entitled "General information on accounting standards" in the Notes for detailed information on the legal structure. p. 106

Corporate governance and value-based company management

The controlling department of the parent company Wacker Neuson SE is responsible for the Group's internal controlling instruments. It steers and monitors deviations between 'to be' and 'as is' figures, primarily based on the development of revenue and profit before interest and tax (EBIT) margins (EBIT to revenue ratio) reported by affiliates. It also tracks the progress of operative measures and prepares the consolidated monthly reports for the Executive Board. We continually adapt our controlling instruments to reflect developments both within and beyond company walls.

Project decisions made in response to changing market and customer requirements are taken by various committees rather than specific individuals. These may include members of the Executive Board, representatives from company management at our affiliates, plus senior employees from research and development, product management, quality management, sales and service and strategic procurement.

Our management strategy is geared toward generating a lasting increase in company value. We have invested heavily over the past few years to achieve and maintain long-term growth. Revenue, profit before interest, tax, depreciation and amortization (EBITDA) and the corresponding EBITDA margin (EBITDA as a percentage of revenue) are our key performance indicators.

Other key performance benchmarks and targets are gross profit margin, EBIT margin (ratio of profit before interest and tax to revenue), and the working capital to revenue ratio (return on working capital to generate revenue).

We also analyze and steer our dividend payment policy, financing structure and return on capital employed. Our key indicators here are capital employed (average invested capital) and return on capital employed (ROCE I and II, return on capital before and after tax). ROCE indicates the efficiency and profit-generating ability of our capital expenditure. We also

Performance indicators

As a %	2010	2009	2008	Pro-forma 2007
Gross profit margin	33.1	30.8	33.7	35.4
EBITDA margin	10.3	4.6 (6.2)1	11.6	16.1
EBIT margin	4.8	- 18.9 (- 0.5)1,2	6.7	11.5
Working capital / revenue	35.5	36.5	34.9	–
ROCE I	6.9	- 2.42	10.8	23.1
ROCE II	5.2	- 1.92	7.4	15.8
ROE	3.0	- 1.42,3	4.2	8.3
Equity ratio (before minority interests)	80.6	81.2	77.1	–
Gearing	1.7	- 3.1	6.5	–

Adjusted to discount restructuring costs in 2009.

Adjusted to discount write-downs on intangible assets and restructuring costs in 2009.

3 Incl. deferred taxes in the amount of EUR -2.7 million (resulting from write-downs on brand value, intangible assets).

use ROE (return on equity) to measure how well equity is used. The balance sheet performance indicators for the Group also generally include equity ratio. These indicators are described in more detail in the sections "Earnings" and "Net assets". To effectively manage financing, the Group monitors a number of indicators including gearing (net financial debt in relation to equity before minority interests) and net financial debt.

Please refer to section Earnings for an explanation of the adjusted figures in 2009 on page 54, and to the Opportunities and outlook chapter for an explanation of the targets defined for each indicator. p. 98

Alongside these financial performance indicators, we also monitor key early indicators on the operational side. Important indicators for the construction business include future investment plans in the construction equipment and construction materials industries, the number of building permits as well as the development of real estate prices, especially in the US. Operative early indicators for the European agricultural industry currently focus on subsidy programs for agricultural landholders as well as the development of milk, food and animal feed prices. We continually revise the controlling instruments in place at Wacker Neuson SE and align them with global developments and trends.

The indicators are described in more detail in the financial glossary from p. 152.

II. General background

Overall economic trends

• JJ Economic buoyancy fuels upturn
• JJ Export-heavy countries benefit most
• JJ Record growth for Germany

The global economy has largely recovered from the financial and economic crisis. Initially, the economic drivers for 2010 were underestimated. In effect, the global economy recovered faster overall than originally expected – thanks in part to momentum from fast-growing countries such as India and China. Global trade, for example, was expected to expand by just 5 percent in 2010. Experts have now reported growth of 12 percent.

The economy in the US was plagued by structural problems such as high levels of private debt, high unemployment, a severely contracted real estate sector and continued weak performance on financial markets. Nevertheless, the US economy also developed positively in 2010. Government spending and corporate investment showed a clear rise. National economies in Latin America and Canada also experienced

clear growth. Many emerging economies1 returned relatively quickly to their growth paths. China in particular proved to be a growth driver.

The European economy also expanded by 1.8 percent in 2010, although financing difficulties slowed development in numerous EU countries and subsequently the European Union as a whole. European rescue packages stabilized some countries, although current budgetary deficits still pose risks. Many countries, Germany included, have started to introduce cost-cutting measures, some of which are quite severe.

Overall, however, Germany enjoyed a unique position. With record economic growth of 3.7 percent, the country capitalized heavily on the upswing thank to its high share of exports and high degree of specialization. The euro devalued 5.3 percent (annual average) against the US dollar during the course of 2010. This, and the devaluation of the euro against other key trade partner currencies also helped fuel growth. Exports to other countries in the European Monetary Union – Germany's main sales market – rose at a below-average rate last year, but this was offset by a stronger than anticipated rise in exports to the US and growth markets in Asia. The low interest rate also stimulated investments while low unemployment bolstered consumer spending. Compared with the annual averages of other key currencies, the euro fell 3.7 percent against the British pound (GBP), 9.2 percent against the Swiss franc (CHF) and as much as 11.7 percent against the Japanese yen (JPY).

The swift pace of economic recovery pushed up prices of raw materials in general, and of steel in particular. Please refer to the "Purchasing" section for further information on this.

Real GDP

change from previous year as a %	2010	2009
World	4.7	- 0.6
EU 27	1.8	- 4.3
Germany	3.7	- 4.7
USA	2.8	- 2.6
Latin America	5.9	- 2.1
China and Hong Kong	9.7	8.2
Russia	4.4	- 7.9

Source: ifo Institute, Eurostat, OECD, German Federal Statistical Office, 2010: ifo Institute forecast

Overview of construction and agricultural industries

• JJ Construction and agricultural markets experience partial revival
• JJ Emerging markets drive growth
• JJ Major differences between individual countries

The global construction industry benefitted from the economic upswing although the pace of revival varied from one region to another. In 2010, global construction investment fell by just 0.7 percent, compared with a 7.0 percent slump in 2009. Recovery was particularly strong in Asia and South America, where the construction industry expanded by around 5 percent last year.

In contrast, construction in North America and Europe again experienced a downturn. The US property and mortgage market showed no signs of recovery in 2010. Demand for residential property remained at a low level, although state economic action plans countered this negative trend somewhat.

		Performance key currencies against the euro
(Annual average rates)

			Change
1 euro equals	2010	2009	as a %
US dollar (USD)	1.3213	1.3955	- 5.3
British pound (GBP)	0.8575	0.8907	- 3.7
Swiss franc (CHF)	1.3693	1.5089	- 9.2
Japanese yen (JPY)	115.2189	130.4779	- 11.7

Source: Notes to the Consolidated Financial Statements, from p. 110.

Dow Jones list as of May 2010, Dow Jones classified the following 35 countries as emerging markets: Argentina, Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India, Indonesia, Jordan, Kuwait, Latvia, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Slovakia, South Africa, Sri Lanka, Thailand, Turkey, United Arab Emirates

Construction industry trends differed greatly throughout Europe. Finland, Poland, Germany, the UK, Sweden and Switzerland, for example, experienced strong growth. Overall, however, European construction investments contracted 3.3 percent (previous year: minus 8.8 percent).

The German construction industry is the largest in Europe. According to Euroconstruct, construction investments here rose 3.4 percent. Underground and public overground construction, both of which are closely linked to commercial construction, showed strong performance. Low interest rates stimulated growth in residential construction. According to experts at VDMA (German Engineering Federation), revenue from earth-moving equipment and highway construction equipment was up 25 and 38 percent respectively. The positive mood in the construction sector was bolstered by the healthy overall economic climate and by the German Government's economic action plan – although this initially got off to a slow start and in some cases merely resulted in existing projects being put on hold in favor of new projects that qualified for financing aid.

Construction and economic growth 2010

Source: Euroconstruct (70th conference), November 2010

Agricultural incomes stabilizes

In the first half of 2010, the agricultural climate in Western Europe was still dominated by the effects of the economic and financial crisis. At the beginning of the period under review, producer prices were still below average. In the fourth quarter, however, prices for milk and grain were on the rise. This had a positive impact on landholders' incomes, which in turn raised prospects of investment in agricultural equipment and machines.

On the global market for agricultural raw materials, drought and forest fires in Russia, coupled with arid conditions in Australia, had the effect of pushing up producer prices. However, the markets for agricultural raw materials also mirrored financial speculations and the resulting price distortions on the global market. Discussions are currently being held regarding more stringent regulation of raw materials markets.

Even though the European livestock sector – a key target market for Wacker Neuson – developed positively overall in 2010, low landholder income and, at times, stringent bank lending policies slowed growth, especially in Eastern European markets.

General legal framework

• JJ Protection for users and the environment
• JJ Compliance with new emissions standards in compact equipment segment
• JJ Ongoing integration of new requirements in internal process flows

As a global manufacturer and provider of light and compact equipment, Wacker Neuson has to observe numerous national and international statutory guidelines governing environmental and user protection. These include provisions regulating exhaust gas emissions and ergonomics as well as noise and vibration-induced impact. Europe, in particular, has a large number of directives and regulations in this area.

At Wacker Neuson, we therefore continuously review and adapt our product portfolio to ensure compliance with new requirements and various harmonized standards and norms. We integrate new regulations as promptly as possible in our processes.

Exhaust emissions standards for light and compact equipment

Statutory exhaust emissions regulations have a major impact on the sale of compact equipment. In 2010, attention focused on preparations for compliance with the new TIER IV emissions regulations in the US (EPA) and Europe (COM). As of January 1, 2011, diesel engines in non-road mobile machinery – in other words, construction equipment, forklifts and agricultural machines – must comply with these new emissions levels. The specific compliance dates vary depending on the engine power and individual market requirements. The first wave of compact equipment products from the Wacker Neuson Group will be affected by the new regulations as of 2012. This refers to equipment in the power class between 56 and 130 kW – accounting for around 30 percent of our compact offering. Further models will be adapted by 2015 to comply with the new regulations. New components such as engines, cooling and exhaust aftertreatment systems – which Wacker Neuson sources from thirdparty companies – will have to be modified. Our expenses for research and development in 2010 were up as a result of preparations for the new emissions regulations. By and large, Wacker Neuson is less affected by the new rules than manufacturers of larger machines as the stringency of the regulations varies as a function of the size and power of the relevant engine.

Nevertheless, we still had to adapt a range of light equipment products to comply with emissions regulations in the US. Large vibratory plates and smaller diesel-powered vibratory plates, for example, had to be certified for compliance with forthcoming EPA4 regulations. We also adapted mobile generators in line with the new TIER IV exhaust emissions standard. Further compliance-related modifications will be carried out between now and 2012. The Group had to develop a new version of the DPU 130 for the Swiss market in order avoid additional regulations on soot particle emissions that are exclusive to Switzerland and apply to engines in the 18 kW power class and above. Our new gasoline cut-off saws were designed from the ground up to comply with all relevant regulations worldwide.

Beyond that, there were no legislative changes that had a significant impact on our business activities.

Competitive position

• JJ Largest portfolio of light and compact equipment worldwide
• JJ Leading global manufacturer
• JJ Alliance with Caterpillar

The Wacker Neuson Group is an innovative company with good growth prospects and a strong balance sheet. The Group aims to expand further at international level by winning new market shares and tapping new markets.

Our competitive edge – the world's largest light and compact equipment offering

We will also continue to focus exclusively on light and compact equipment in the future – a position that sets us apart from the DIY sector and manufacturers of heavier machines. A broad light and compact equipment portfolio, coupled with a premium service offering, clearly differentiates us from the competition. Our research shows that the majority of our competitors restrict their product portfolios to either light equipment or compact equipment or a combination of compact and heavy equipment in excess of 15 tons.

As a mid-sized company, we back up our high product and service standards with state-of-the-art production facilities, in-depth development and manufacturing know-how and an efficient sales network. Built on this solid foundation, many of our products have established an excellent market position across the globe.

The global construction equipment market is highly fragmented. There are also few official statistics. Hence it is not possible to give a detailed and meaningful overview of market shares. Similarly, our competitive landscape is very heterogeneous. In certain segments, we compete against global enterprises with a broad spectrum of compact and heavy equipment such as Atlas Copco and Volvo. We also compete with Takeuchi, Kubota and Yanmar, Japanese manufacturers specialized in compact equipment. In the light equipment sector in particular, we also face a variety of competitors operating only in specific local markets. Light equipment players in this category include Bomag, Weber, Ammann, Multiquip, Mikasa and Dynapac.

Since the acquisition of the Weidemann Group in fiscal 2005, the Wacker Neuson Group has also been active in the agricultural machinery market. Weidemann GmbH enjoys a leading position for articulated wheel loaders in the Central European agricultural market. Our Kramer-Werke GmbH affiliate also develops and manufactures telescopic handlers for the agricultural industry. These are distributed by CLAAS Global Sales GmbH, a leading German agricultural machinery supplier, under the CLAAS brand.

Growing market reach

Over the past fiscal year, the Wacker Neuson Group seized available opportunities and performed well at both national and international level. This success was partly fuelled by the fact that we have a much wider portfolio since the merger. Key activities included the launch of our compact equipment portfolio via the existing light equipment sales network in North and South America, South Africa, the Middle East and several countries in the European Union. Strengths that worked to

our benefit included our innovative drive, outstanding product quality, high rental and service standards, reliable spare parts business and streamlined business processes.

Alliances grow in importance

The economic crisis scarcely changed the heterogeneous competitive landscape in which the Wacker Neuson Group operates. The entire industry experienced a drop in revenue and earnings with some manufacturers recording a sharp decline. Manufacturers across the board reacted by cutting costs, closing production facilities, reducing headcount and looking for new financing solutions. However, a market shakeout as a result of insolvencies did not occur in 2010. Instead, companies increasingly focused on forging alliances, as did Manitou and Terex or JCB and Volvo. In January 2011, Finnish rental chain Cramo acquired German rental company Theisen. A common aim of such alliances and mergers is to utilize the sales channels of the other partner for international expansion. The above-mentioned alliances have not changed Wacker Neuson's position. Most of the Group's product groups continue to target fastgrowing markets.

In June 2010, Wacker Neuson also entered into a 20-year strategic alliance with heavy equipment manufacturer Caterpillar and now produces mini excavators weighing up to 3 tons for the company. Caterpillar will distribute these machines under its own brand via its global sales network, with the exception of Japan. The alliance will improve the competitive position of both companies.

III. Business trends in 2010

• JJ Strong revenue growth
• JJ Own forecast exceeded
• JJ Order situation remains strong

General statement on business performance

Overall, business developed positively in 2010 and the Group was well prepared for the upswing. Revenue and earnings quickly reflected the positive effects of comprehensive economic recovery packages, project backlogs and the overall improvement in the economic climate. The Group increased revenue by 27.0 percent to EUR 757.9 million (previous year: EUR 597.0 million).

All business segments helped fuel this strong growth. Demand was strongest in the US, although the Group also performed well in South America, Central Europe and South Africa.

New sales in the light equipment segment were particularly strong as construction companies upped investments in order to replace existing equipment. Continued high demand for light equipment in the US was a key revenue driver here.

As the economy picked up, we also capitalized on sales synergies by utilizing our existing light equipment sales network to distribute our compact offering. Demand for compact equipment in particular jumped during the second half of the year. The order backlog was up 350 percent on the previous year at the close of 2010. At the same time, customer order patterns changed. Rising demand led to bottlenecks among suppliers, which in turn extended delivery windows at Wacker Neuson. Customers therefore placed orders earlier. Supply bottlenecks have since eased.

The lean, cost-saving program that we implemented early on in the crisis and continued over the past two years yielded longterm positive results during the period under review, enabling us to more than double our EBITDA margin to 10.3 percent (previous year: 4.6 percent) and achieve EBIT turnaround by the middle of the year. The EBIT margin for the entire fiscal year was 4.8 percent. These results clearly show that adapting our cost structure during the crisis was the right move.

Quarterly comparison: Revenues for 2010 developed positively in € million

Comparison between actual trends and projected performance

In March 2010, the Executive Board issued a cautiously optimistic forecast projecting revenue growth in excess of 5 percent and a return to net profit. At that time, there were still major uncertainties surrounding the prospect of economic recovery, especially in relation to the sustainability of the recovery.

Forecast exceeded

The light equipment segment had already experienced significant growth during the first half of the year. Once this was mirrored by rising demand for compact equipment, the Group raised its forecast for the year in August, predicting a revenue rise in excess of 10 percent compared with the prior-year figure and an EBITDA margin of at least 9 percent.

Based on the healthy order situation in the compact equipment segment in the fourth quarter, company management again revised its forecast in October, this time raising its revenue projection to a 20 percent or more increase on the previous year and estimating an EBITDA margin of at least 10 percent. However, the Group even managed to exceed these figures. As we outperformed expectations overall, we were able to make additional targeted investments, with the result that capital expenditure was slightly above forecast at year-end.

Healthy finances and assets

As planned, we financed day-to-day operations with cash flow from operating activities. Despite the planned increase in investments during the period under review, the Group was almost debt-free at December 31, 2010, reporting net financial debt of just EUR 13.7 million and a gearing of only 1.7 percent (net financial debt as a percentage of equity before minority interests). As production activity increased, so too did working capital. To ensure optimum delivery timeframes, we increased inventory. At 80.6 percent (previous year: 81.2 percent), our equity ratio before minority interests remains well above the industry average.

Collaboration with Caterpillar

Wacker Neuson SE, Munich, and Caterpillar Inc., Peoria/USA, concluded a strategic alliance on June 24, 2010. The long-term collaboration is set to run for 20 years. From 2011 onwards, Wacker Neuson will be developing mini excavators weighing up to 3 tons exclusively for Caterpillar, initially at our Austrian facility in Linz. The alliance will enable Caterpillar to meet demand for smaller machines worldwide (with the exception of Japan) and allow the Wacker Neuson Group to significantly increase production volumes in this product class and cut unit costs accordingly. The customers of both partners are set to benefit from the alliance. Both partners aim to strengthen their individual competitive positions in the highly fragmented market more quickly.

Expansion of production capacity in Austria

In 2009, it was already clear that a rise in demand for compact equipment would push our plant in Linz – our Austria competence center for excavators, dumpers and skid steer loaders – to its capacity limits. Thus, in the same year, Wacker Neuson

purchased a 160,000 m2 plot of land in nearby Hörsching. The decision to build a new facility was made by the Executive Board in December 2010. Through this investment, the Group will be ideally positioned to meet further rises in demand for compact equipment. The previous plant was rented. Once the new facility is completed, the Group will own all of its production facilities.

Key resolutions at the 2010 AGM

At the AGM held in Munich on May 28, 2010, the Executive Board informed around 230 Wacker Neuson SE shareholders of the developments in fiscal 2009. Based on a share capital of 70,140,000 eligible shares, 87.2 percent of shareholders were present. In light of the 2009 drop in profit, the Executive Board and Supervisory Board proposed that no dividends be distributed for fiscal 2009 (2008: EUR 0.19 per share) and that the retained earnings be carried forward. The AGM agreed this proposal. Executive and Supervisory Board members' actions were approved for fiscal 2009.

All shareholder representatives were reappointed to the Supervisory Board. The employee representatives had been reappointed to the Supervisory Board earlier by the SE Works Council. There were therefore no changes to the composition of the Supervisory Board of Wacker Neuson SE in 2010. In the constituent meeting of the Supervisory Board following the AGM, Mr. Hans Neunteufel was reelected Chairman and Dr. Ulrich Wacker Deputy Chairman. Mr. Helletzgruber succeeded Dr. Kollmar as chairman of the audit committee, a position he had held for many years. On January 1, 2011, Mr. Hans Haßlach was appointed to the Supervisory Board of Wacker Neuson SE as an employee representative. He has thus joined Mr. Elvis Schwarzmair, the company's other employee representative on the Supervisory Board. Mr. Hans Haßlach took over from Mr. Herbert Santl, who stepped down from the position as he approached retirement age.

Active capital market communication and share trends

Wacker Neuson increased its communication efforts to keep capital market players continuously informed of Group developments. The Executive Board kept stakeholders up to date on current Group developments through a variety of channels including the AGM, investor conferences, national and international roadshows and a Capital Market Day. They also outlined the Group's strategy in numerous personal conversations.

The share price developed positively over the course of the year. After starting the year off at EUR 8.49, it initially dropped to EUR 7.63 on February 9, 2010. By the middle of the year, it had reached EUR 9.72 and continued to rise, peaking at

EUR 13.20 on November 5, 2010. At December 31, 2010, the share price closed at EUR 13.00. Overall, the share outperformed the positive DAX and SDAX trends.

Changes to company organization and structure

Differences of opinion within the Supervisory Board were resolved by mutual agreement during the first quarter of 2010. Hans Neunteufel remains Chairman of the Wacker Neuson Supervisory Board.

The changes to company management as outlined in the following occurred during the period under review. On September 15, Dr.-Ing. Georg Sick stepped down from his position as CEO and President of Wacker Neuson SE at his own request to prepare for a new position. The remaining members of the Executive Board remain committed to the company in the long term. With the approval of the Supervisory Board, the Executive Board appointed Mr. Richard Mayer (Executive Board member responsible for light equipment) temporary speaker of the Executive Board until an external successor to the position of CEO has been found.

The following legal changes were made to the Group during the period under review. The Group's sales affiliates in Finland and New Zealand were closed. Cooperations with established local sales partners, however, mean that Wacker Neuson products and services retain access to these markets and the Group can reduce its administrative costs. Please refer to the Notes for a description of further changes to the Group's participating interests that affected the consolidation structure. p. 109

To improve and synchronize process flows across the Wacker Neuson Group, we continued to bundle Group-wide functions such as finance and accounting, treasury, IT, HR and marketing. On January 1, 2011, we migrated our entire ERP system to an SAP platform at the parent company Wacker Neuson SE and at Wacker Neuson Corporation, our wholly owned US affiliate. On January 1, 2011, Wacker Neuson Corporation was converted from a parent to a holding company and now manages separate legal entities for production, logistics and sales activities. A similar structural change is planned for the parent company Wacker Neuson SE. For further information, please refer to section XIII. "Events/transactions of particular importance since the reporting date". p. 90

IV. Earnings, financial position and net assets

The report on earnings, financial position and net assets covers a total of 40 Group companies (previous year: 40) excluding the parent company, Wacker Neuson SE.

The following figures include the effects of purchase price allocation (PPA) resulting from the merger between the former Wacker Construction Equipment AG and Neuson Kramer Baumaschinen AG in fall 2007.

Earnings

• JJ Revenue and profit develop positively
• JJ SG&A and R&D expenses kept low
• JJ Optimized cost structure yields positive results

The Wacker Neuson Group benefited worldwide from the economic upswing as customers showed increasing readiness to invest in light and compact equipment. Combined with the reorganization measures implemented across the Group in the previous year, this rise in demand enabled us to outpace the global economic recovery.

Group sales rose 27.0 percent to EUR 757.9 million (previous year: EUR 597.0 million). Adjusted to discount currency fluctuations, this corresponds to an increase of 22.5 percent. The fourth quarter proved particularly dynamic. With revenue of EUR 206.3 million, it outstripped the same quarter in the previous year by 34 percent, underscoring the lasting nature of the recovery. The fourth quarter thus accounted for around 27.2 percent of overall revenue for 2010, significantly more than its "usual" share. In previous years, the fourth quarter contributed between 22 and 26 percent of annual revenue.

The cost of sales rose 22.8 percent to EUR 506.9 million (previous year: EUR 412.9 million) due to a rise in production volumes. Pressure on product prices did not increase relative to the prior-year period. However, the increase in material costs, above all for steel and steel components, had an impact on cost of sales for compact equipment especially in the fourth quarter. This increase could not be passed on to the market during Q4. However, the Group did increase prices in January 2011.

Gross profit amounted to EUR 251.0 million (previous year: EUR 184.1 million), with the gross profit margin rising to 33.1 percent (previous year: 30.8 percent). 1 As anticipated, the gross profit margin in the fourth quarter (31.5 percent) was down on the third quarter margin (35.7 percent). This was due to the above-mentioned impact of cost of sales plus a shift in the Group's product mix, with compact equipment accounting for a greater share than light equipment. This was further compounded by seasonal fluctuations that traditionally make the fourth quarter a quiet period for our profitable services segment.

Tight control over SG&A and R&D expenses during the upswing

As business picked up in 2010, we were initially able to make use of excess capacities without having to make significant changes to our cost structure which we had streamlined the previous year in response to the crisis. Although flexible structures within the Group helped here, this achievement was primarily due to the high levels of qualification among our employees. We continued to keep a tight rein on costs. Total sales, general and administrative (SG&A) and R&D expenses were up 7.5 percent to EUR 218.4 million (previous year: EUR 203.2 million). Considering the strong rise in revenue, however, we were able to keep these costs in check. Expressed as a percentage of revenue, total SG&A and R&D expenses were down to 28.8 percent (previous year: 34.0 percent).

Selling expenses alone were up 6.5 percent to EUR 143.9 million (previous year: EUR 135.1 million) due to the increase in revenue, global expansion of sales channels as well as further go-to-market measures in countries such as Sweden, Australia, North America and South America.

R&D costs rose 9.1 percent to EUR 22.3 million (previous year: EUR 20.5 million). A total of EUR 4.4 million in development costs was capitalized by all manufacturing companies in 2010 (previous year: EUR 4.5 million). As a result of the increase in revenue, the R&D margin dropped to 2.9 percent (previous year: 3.4 percent).

General administrative costs amounted to EUR 52.2 million (previous year: EUR 47.7 million). The administrative cost ratio totaled 6.9 percent (previous year: 8.0 percent).

Other operating income fell to EUR 7.5 million (previous year: EUR 12.2 million). Other operating expenses amounted to EUR 3.4 million (previous year: EUR 106.2 million). One-off writedowns, mainly on goodwill, in the amount of EUR 100.3 million were the main factors behind the previous year's figure.

Earnings reflect usual seasonal fluctuations

Earnings in 2009 were clearly affected by two one-off items. These were a one-off, non-cash write-down on intangible

1 Rise in Group revenue and gross profit

Revenue and margins from 2005 to 2010 In the years from 2005 to 2008, Wacker Neuson increased revenue by 20 percent on average3 . The sharp drop in revenue in 2009 resulted in the company reporting an operating loss for the first time in its history. By mid-2010, the company had returned to the profit zone and posted a double-digit EBITDA margin for the entire year. Wacker Neuson is aiming for an EBITDA margin in excess of 15.0 percent in the medium to long-term.

Pro-forma figures as if Neuson Kramer subgroup had been consolidated in full in fiscal 2007 (consolidation as of October 1, 2007).

2009 profit margins discounting goodwill impairment and restructuring costs (p. 54 and 60).

Compound annual growth rate (CAGR) over a period of three years.

		Q1 vs. Q4
	Q1	prev. year	Q2	Q2 vs. Q1	Q3	Q3 vs. Q2	Q4	Q4 vs. Q3	Total year
2009 revenue in € million	137.3	- 26.1%	156.5	14.0%	149.0	- 4.8%	154.2	3.4%	597.0
EBITDA margin in %	- 9.0		8.6		10.5		6.8		4.6
2010 revenue in € million	150.3	- 2.5%	205.3	36.6%	196.0	- 4.5%	206.3	5.2%	757.9
EBITDA margin in %	2.4		13.2		12.7		10.7		10.3
Revenue increase compared
with prior-year period	9		31		32		34		27

Quarter-on-quarter comparison of revenue and earnings for 2009 and 2010

assets (EUR 100.3 million) which was largely related to the goodwill attributable to the Neuson Kramer subgroup and restructuring costs amounting to EUR 9.6 million. For improved comparability, the previous year's figures have also been adjusted in the following comparison.

Earnings quickly improved, bolstered by the rise in revenue plus long-term cost savings from previous years. The Group had already returned to the profit zone by the middle of the year.

Profit before interest, tax, depreciation and amortization (EBITDA) rose from EUR 27.2 million (adjusted: EUR 36.7 million) to EUR 77.8 million. The EBITDA margin came to 10.3 percent (previous year: 4.6 percent; adjusted: 6.2 percent). Depreciation and amortization amounted to EUR 41.1 million (previous year: EUR 140.3 million; adjusted: EUR 40.0 million). In the fourth quarter, the EBITDA margin was 10.7 percent below the third-quarter margin (12.7 percent) due to seasonal fluctuations. As mentioned above, the cost of sales for the compact equipment segment also dampened Q4 figures.

Profit before interest and tax (EBIT) increased to EUR 36.7 million (previous year: EUR -113.1 million; adjusted: EUR -3.2 million). Purchase price allocation (PPA) had the effect of reducing EBIT by EUR 3.5 million. The effects of PPA will continue to have a significant impact until the end of 2013, albeit to a lesser and lesser extent. The EBIT margin revived to 4.8 percent (previous year: -18.9 percent; adjusted -0.5 percent).

Natural hedging protects the Group against exchange rate fluctuations. In 2010, the dollar increased slightly on average against the euro (EUR 1 = USD 1.3213; previous year: EUR 1 = USD 1.3955).

The financial result amounted to EUR -4.0 million (previous year: EUR -2.3 million).

Profit before tax (EBT) increased to EUR 32.7 million (previous year: -115.5 million; adjusted: EUR -5.6 million).

Tax expenditure totaled EUR 8.1 million (previous year: tax revenue of EUR 5.5 million). The tax revenue in 2009 primarily resulted from the reversal of deferred tax liabilities in combination with write-downs on the Neuson brand value plus the capitalization of tax loss carry-forwards. The tax rate was

		2009	2009 Adjusted
		Group income	Group income
in € million	2010	statement	statement1
EBITDA	77.8	27.2	36.71
EBIT	36.7	- 113.1	- 3.22
EBT	32.7	- 115.5	- 5.62
Profit for the period	23.9	- 110.1	- 2.93

Earnings: One-off expenses in 2009

1 Adjusted for EUR 9.6 million restructuring costs.

2 Adjusted for a EUR 100.3 million write-down on intangible assets and EUR 9.6 million in restructuring costs.

3 Also adjusted for EUR 2.7 million in deferred taxes. up from 18.7 percent in 2009 (adjusted for write-downs on intangible assets and deferred taxes payable on that amount) to 24.7 percent in the period under review.

At EUR 23.9 million, net profit for the period was clearly above the prior-year result (net loss for the year: EUR 110.1 million; adjusted: EUR 2.9 million). The return on revenue here was 3.2 percent (adjusted figure for previous year: -0,5 percent).

Based on 70.14 million ordinary shares in circulation on average during the period, earnings per share came to EUR 0.34 (previous year: EUR -1.57; adjusted: EUR -0.04).

Earning power up

Capital employed generally refers to all assets used in business. Non-interest-bearing borrowings, for example, trade payables, are deducted from this figure. Average capital employed was down 1.4 percent on the previous year despite the increased investment volume.

ROCE I increased to 6.9 percent, up from -2.4 percent the previous year. ROCE II rose to 5.2 percent (previous year: -1.9 percent). The significant improvement in the Group's earnings situation had an impact here. In 2010, the Group thus succeeded in realizing a healthy return on assets employed for operating activities. 2

The indicators presented here are also described in more detail in the "Performance indicators" section (part I, the Wacker Neuson Group). They are calculated as follows on the basis of the figures reported in the Consolidated Financial Statements and the Notes on page 56.

Finances

• JJ Positive liquidity situation
• JJ Investments secure long-term growth prospects
• JJ Working capital increases in line with revenue

Principles and targets of financial management at Wacker Neuson

Financial management at the Wacker Neuson Group is guided by the need to strike a healthy balance between financial security, return on equity and earnings. To achieve this, we draw on set balance sheet ratios and key indicators to manage our financing needs. The most important indicators here are the net financial debt – resulting from short-term net borrowings and long-term borrowings – and the equity ratio.

Our aim is to fund day-to-day operations with operating cash flow as far as possible. Surplus funds are invested in liquid, safe instruments where they earn the prevailing interest rates and are available to finance sustainable growth.

2 Increased return on capital employed (ROCE)

Average capital employed increased as a result of the merger in 2007. Negative EBIT in 2009 led to a negative return on capital employed. In 2010, the improvement in the Group's earnings situation pushed ROCE up to almost 7 percent. 200 300 15 25 30 20 236.5 269.4

Average capital employed ROCE I

Calculating ROCE I and II

In € K	2010	2009	2008	pro-forma 2007
EBIT1	36,700	- 12,796	57,989	112,632
Tax ratio acc. to income statement as a %1	24.74	18.68	31.57	31.62
NOPLAT1 = EBIT - (EBIT x tax rate)	27,619	- 10,406	39,684	77,015
Non-current assets	673,903	632,696	750,008	697,036
Goodwill	- 236,550	- 236,016	- 326,059	- 325,676
Brands	- 54,040	- 54,040	- 64,838	- 64,838
Other investments	- 5,478	- 4,144	- 3,420	- 1,649
Loans	- 99	- 99	- 139	- 83
Investment securities	- 3,540	- 3,094	- 2,870	- 1,656
Interest rate swap	- 56	0	0	- 832
Present value (finance lease obligations) of non-current assets	- 4,381	- 9,680	- 14,659	- 17,362
Non-current liabilities
Deferred taxes	- 23,957	- 25,530	- 31,989	- 33,724
Non-current assets used in business	345,802	300,093	306,034	251,216
Current assets	356,314	339,042	428,603	517,474
Marketable securities	0	0	- 1,894	- 88,656
Cash and cash equivalents	- 36,559	- 85,024	- 65,600	- 76,816
Trade payables	- 36,207	- 21,251	- 32,290	- 63,084
Short-term provisions	- 12,317	- 13,583	- 11,112	- 9,324
Current tax payable	- 470	- 413	- 466	- 1,366
Other current liabilities	- 43,776	- 29,102	- 35,184	- 42,698
Net working capital	226,985	189,669	282,057	235,530
Capital employed	572,787	489,762	588,091	486,746
Average capital employed	531,275	538,927	537,419	486,746
ROCE I (return on capital employed before tax)
(EBIT/average capital employed)	6.91	- 2.37	10.79	23.14
ROCE II (return on capital employed after tax)
(NOPLAT/average capital employed)	5.20	- 1.93	7.38	15.82

2009 EBIT was reported before one-off write-downs on intangible assets in the amount of EUR 100.3 million. The tax rate in 2009 was calculated without deferred taxes in the amount of EUR 2.7 million payable on these write-downs.

The Wacker Neuson Group uses standard derivative financial instruments such as foreign exchange forward contracts and interest rate swaps or caps exclusively for hedging purposes and to minimize risks. Financial instruments without a corresponding underlying transaction are not carried out.

Ensuring payment flow through liquidity management

The main objective of liquidity management is to ensure that the Wacker Neuson Group has sufficient funds to meet payment obligations as they arise. To this end, the Group maintains a cash pool in which almost all its companies are incorporated. The participants can draw on the positive cash pool balance up to an individually fixed limit. Participants who make deposits receive interest equivalent to market conditions for the respective currency.

Positive cash flow developments

Cash flow from operating activities came to EUR 44.9 million at the close of the fiscal year (previous year: EUR 138.3 million). As planned, we were again able to use this to fund dayto-day business.

Statement of free cash flow changes

in € K	2010	2009	20081	20071
Cash flow from operating activities	44,918	138,255	38,109	60,890
Purchase of property, plant and equipment	- 75,618	- 36,281	- 93,134	- 81,571
Purchase of intangible assets	- 9,344	- 7,120	- 8,654	- 2,469
Purchase of marketable securities	0	0	0	- 122,078
Proceeds from the sale of marketable securities	0	1,996	85,674	46,987
Proceeds from the sale of property, plant and equipment and intangible assets	1,205	3,753	1,440	895
Change in consolida tion structure	- 1,467	- 460	- 1,771	10,572
Cash flow from in vestment activities	- 85,224	- 38,112	- 16,445	- 147,664
Change in consolid ation structure	+ 1,467	+ 460	+ 1,771	- 10,572
Cost of procuring capital	0	0	- 69	- 5,582
Issue of new shares	0	0	0	165,000
Free cash flow	- 38,839	100,603	23,366	62,072

1 The item "Interest received" has been transferred from cash flow from investment activities to cash flow from operating activities.

Cash flow from investment activities, which only covers investments that have been paid, amounted to EUR -85.2 million (previous year: EUR -38.1 million). The 2009 figure was lower as we deferred some investments in property, plant and equipment during that year due to the financial crisis.

Cash flow from financing activities came to EUR -10.3 million (previous year: EUR -53.0 million). EUR 21.9 million was utilized for the repayment of long-term bank loans.

Investments in 2010 exceeded write-downs, which resulted in a negative free cash flow of EUR -38.8 million (previous year: EUR +100.6 million). Free cash flow corresponds to cash flow from operating activities plus investment activities without changes to the consolidation structure (and where available, amounts accruing from the issue of new shares including the costs of raising capital). We used available liquid funds to cover the current year's financing deficit.

In 2010, we primarily drew on external credit lines in the amount of EUR 10 million to finance the purchase of the plot of land in Hörsching.

Comfortable liquidity situation

We were able to meet liquidity needs in 2010 through our own liquid funds. Credit line commitments to the value of up to EUR 110.7 million in total provided additional backing. At the closing date, less than half of these had been drawn. For further details on the terms and interest conditions of the credit lines, please refer to item 20 in the Notes to the Consolidated Financial Statements.

The Group had liquid funds to the value of EUR 36.6 million (previous year: EUR 85.0 million) at year-end. Our high level of liquidity from the previous year afforded us the freedom to operate independently of bank or state funding during challenging economic times. ³

Comfortable liquidity situation despite increased investment 3

The diagram shows payments from production and marketing activities and includes payments from financing, investment and payout policies. As we outperformed expectations overall, we were able to make additional targeted investments. We were able to meet liquidity needs in 2010 through our own liquid funds. The liquidity situation remains healthy.

We do not expect any significant deterioration in the refinancing market in the near future. Although banks have increased their margins on loans, this is largely compensated for by the fact that interest rates remain low and our bank rating continues to improve.

Efficient working capital management

Another of our priorities in 2009 lay in reducing our working capital, particularly with a view to increasing liquidity. Strong revenue growth in 2010 pushed working capital 23.6 percent up on the prior-year figure to EUR 269.3 million (previous year: EUR 217.9 million). The working capital to revenue ratio developed as expected and – at 35.5 percent (previous year: 36.5 percent) – slightly exceeded our 33-percent target. 4 Inventory was up 24.1 percent at EUR 184.0 million (previous year: EUR 148.3 million) and trade payables increased to EUR 36.2 million (previous year: EUR 21.3 million). Trade receivables rose 33.7 percent to EUR 121.5 million (previous year: EUR 90.8 million).

Substantial investments for stronger growth

In 2010, we continued to make major investments to secure future growth at Wacker Neuson.

These included EUR 75.6 million in property plant and equipment during the period under review (previous year: EUR 36.3 million), which is in line with our planned expenditure of around EUR 70 million. We have thus more than doubled investments here after deferring a large number of projects in 2009.

The 2010 investment breakdown is outlined in the following. Renewal/maintenance investments of around EUR 13.0 million and construction work on our new state-of-the-art European R&D center for light equipment and on our company headquarters in Munich to the tune of EUR 14.2 million. The new complex will be completed by mid-2011 and will enable the Group to consolidate and expand its position as innovation leader by focusing heavily on research and development over the coming years. Its central location in Munich is an added attraction for our specialists and technicians. In addition, German sales, export and administration operations are also based in Munich.

We invested around EUR 9 million in the expansion of our global sales network in 2010. Projects here included the construction of a new head office for Poland in the city of Warsaw plus the expansion of our sales facilities in the Norwegian city of Oslo. In recent years, we have focused on expanding across Eastern Europe and now have ten sales and service stations in Poland.

Total investments for 2010: EUR 85 million (property, plant and equipment and intangible assets)

Investments in 20101

150 200 250 25 20 217.9 Working capital developed in line with our expectations in 2010. Although increased revenue led to a 23.6-percent rise in working capital compared with the previous year, the return on capital employed to generate revenue nonetheless improved to 35.5 percent (previous year: 36.4 percent).

Working capital/Revenue Working capital

2007 revenue on a pro-forma basis.

Working capital to revenue ratio falling 4

Construction work on our new facility in the Austrian district of Hörsching, near Linz airport, has just got underway. Thus far, we have invested around EUR 12 million in this project. Having made a small down-payment in 2009, we capitalized the property on January 20, 2010 following successful entry in the land registry and paid EUR 8.5 million, the remainder of the purchase price (total purchase price: EUR 9.3 million). The state-of-the-art production facility for excavators, dumpers and skid steer loaders will replace our rented plant in Linz. This ramp-up in capacity will enable us to meeting rising demand for compact equipment, including increased volumes resulting from our alliance with Caterpillar.

As planned, we invested EUR 25.4 million in our rental pool for Central and Eastern Europe. Our customers view renting as a useful supplement to purchasing that gives them a high degree of flexibility without having to tie up capital funds. Even though we, as the manufacturer, service and maintain the machines in our rental pool, regular investments still need to be made to ensure that products remain below a certain average age.

We invested around EUR 0.8 million in the conversion of our former production facility in Gotha (previously Weidemann) to create our first Europe-wide used equipment center. This strategy will enable us to bundle maintenance work and increase logistics flexibility in the delivery of used equipment.

EUR 9.4 million was channeled into intangible assets – primarily into licenses and the capitalization of research and development activities.

The investment (property, plant and equipment plus intangible assets) to write-downs ratio increased to 2.1 (previous year, excluding one-off write-downs: 1.1). 5

Cost of capital

In fiscal 2010, we included the key indicator weighted average cost of capital (WACC) in our financial reports. It indicates the weighted average cost of capital within the Group. A company is producing value for its investors if return on capital employed (ROCE) exceeds WACC. For shareholders and lenders, WACC indicates the return they might expect on the funds or capital they have provided. It also gives a company a good indication of the type of return it needs to generate on prospective investments.

WACC was reported at 7.93 percent in the period under review (previous year: 8.57 percent) and was thus higher than ROCE II (return on capital employed after tax), which stood at 5.2 percent.

5 Cash flow and investments

Investments and cash flow from operating activities 2005 – 2010

In 2010, the upswing in business enabled the company to make investments that had been partly put on hold during the crisis in 2009. We thus invested a substantial EUR 85.0 million in future growth projects in the course of 2010. Investments were twice as high as write-downs. The investment (property, plant and equipment plus intangible assets) to write-downs ratio increased to 2.1 (previous year, excluding one-off write-downs: 1.1). 120 140 80 100 84 101.8 85.0

Capiral expenditure Depreciation

and amortization Operating cash flow Basis for calculating WACC1

	2010	2009	2008	2007
Risk-free return (rf ) as a %	3.00	4.25	4.25	4.75
Market risk premium (MRP) as a %	5.00	5.00	5.00	4.50
Leverage beta (ßL)	1.050	1.028	1.032	1.542
Interest-bearing liabilities due beginning of period (DBOP), EUR K	83,997	150,649	146,057	91,271
Interest-bearing liabilities due end of period (DEOP), EUR K	75,143	83,997	150,649	146,057
Average interest-bearing liabilities, EUR K	79,570	117,323	148,353	118,664
Interest expense (D x rD), EUR K	4,212	5,480	8,215	8,151
Cost of debt (rD) as a %	5.29	4.67	5.54	6.87
Group tax rate (s) as a %	24.74	36.52	31.57	30.85
Share price at closing date (k) EUR	13.00	8.20	6.19	14.62
Number of shares (n) in thousands	70,140	70,140	70,140	70,140
Market capitalization (E), EUR K	911,820	575,148	434,167	1,025,447
Cost of equity (rE)	8.25	9.39	9.41	11.69
Percentage of financing that is equity (E/(E+D)) as a %	92.39	87.26	74.24	87.53
Percentage of financing that is debt (D/(E+D)) as a %	7.61	12.74	25.76	12.47
Weighted average cost of capital (WACC) as a %	7.93	8.57	7.96	10.82

1 WACC: (percentage of financing that is equity x cost of equity) + (percentage of financing on average that is debt x cost of debt) x (1 - tax rate) WACC = (rf +MRP x ßL )*E/(E+D)+rD x (1-r) x D/(E+D)

WACC is the weighted average cost of capital. It is calculated as the mean value of equity and debt costs, whereby tax benefits are to be deducted from debt costs. Here, equity is taken at its market value at the closing date.

Assets

• JJ Solid balance sheet structure underpins upswing
• JJ High equity ratio compared with industry peers
• JJ Low net financial debt despite increased investments

The balance sheet total rose during the last fiscal year to EUR 1,030.2 million (previous year: EUR 971.7 million).

The Group's return on assets (ROA) after tax and before minority interests amounted to 2.5 percent (previous year: -1.1 percent). Return on assets expresses the ratio between profit/ loss for the period before minority interests and the average balance sheet total. For fiscal 2009, profit/loss for the period before minority interests was adjusted to discount one-off items resulting from write-downs on brand value and goodwill plus deferred taxes payable on these write-downs.

Assets rose to EUR 642.4 million (previous year: EUR 597.8 million). An impairment test carried out on the basis of projected figures revealed that there was no need for write-downs when the net book value of the Group's goodwill and brands was compared with the fair market value. In the previous year, this comparison led to one-off write-downs on intangible assets,

mainly goodwill from the Neuson Kramer subgroup, in the amount of EUR 100.3 million. This impairment did not affect liquidity. The goodwill in question resulted from the merger between the former Wacker Construction Equipment AG and the former Neuson Kramer Baumaschinen AG in 2007. At December 31, 2010, goodwill amounted to EUR 236.6 million (previous year: EUR 236.0 million). Intangible assets were valued at EUR 90.6 million (previous year: EUR 87.6 million).

The Group focused once again on increasing inventory to improve delivery capabilities as business picked up. Due to an increase in production volumes, the value of finished products was up from EUR 107.1 million to EUR 123.5 million in 2010. Current assets were at EUR 356.3 million (previous year: EUR 339.0 million) due to the increase in inventory and rise in trade receivables.

High equity ratio compared with industry peers

Net profit for the period brought equity before minority interests up to EUR 830.6 million during the period under review (December 31, 2009: EUR 789.0 million). At 80.6 percent, the equity ratio before minority interests remained high for the industry (December 31, 2009: 81.2 percent). The Group's share capital remained unchanged at EUR 70.14 million.

In considering the equity figures, the balance sheet effects of currency fluctuations between the euro and US dollar should be taken into consideration. The EUR 41.4 million rise in equity is primarily attributable to net profit for the period and the fact that the euro was weaker than the figure reported on the prioryear closing date.

Bolstered by a profit before minority interests, ROE rose to 3.0 percent (previous year: -1.4 percent) in 2010.

Total non-current liabilities fell 3.2 percent to EUR 86.4 million (previous year: EUR 89.3 million). Long-term borrowings contracted 4.1 percent to EUR 32.2 million (previous year: EUR 33.6 million). At EUR 30.2 million, long-term provisions remained at the previous year's level (previous year: EUR 30.2 million). Deferred tax posted as liabilities amount to EUR 24.0 million (previous year: EUR 25.5 million).

At EUR 110.8 million, total current liabilities were up 21.9 percent (previous year: EUR 90.9 million). This is primarily due to the increase in trade payables resulting from the rise in revenue.

Net financial debt at December 31, 2010 amounted to EUR 13.7 million (previous year: EUR 24.9 million net cash position). As financial markets grew more confident, we reduced our positive balance as planned with the aim of turning it into a slight debt by the end of the year. For information on the calculation of net financial debt, please refer to the section on risk management / capital management, item 30 in the Notes to the Consolidated Financial Statements. At the closing date, gearing was posted at 1.7 percent (previous year: -3.1 percent).

Net financial debt

In EUR K	2010	2009	2008
Long-term borrowings	- 32,218	- 33,583	- 38,845
Short-term borrowings	- 5,958	- 14,889	- 81,742
Current portion of long-term
borrowings	- 12,109	- 11,698	- 5,876
Marketable securities	0	0	1,894
Cash and cash equivalents	36,559	85,024	65,600
Total	- 13,726	24,854	- 58,969

Calculating ROE

In EUR K	2010	2009	2008	pro-forma 2007
Profit/loss before minority interests	24,628	- 12,3071	38,105	75,526
Equity before minority interests	830,618	789,049	909,088	910,439
Average equity before minority interests	809,834	849,069	909,764	910,439
ROE as a % (profit/loss before minority interests / average equity)
before minority interests	3.04	- 1.45	4.19	8.30

1 2009 figures are reported before one-off write-downs on intangible assets in the amount of EUR 100.3 million, incl. deferred taxes in the amount of EUR 2.7 million payable on these write-downs.

Financing structure

Please refer to the section on financial liabilities, item 20 in the Notes to the Consolidated Financial Statements for information on the financing structure, financial covenants and the terms of covenants, p. 130 .

Off-balance-sheet assets and financial instruments

In addition to the assets shown in the consolidated balance sheet, the Group also makes customary use of assets that cannot be recognized in the balance sheet. These generally refer to leased, let or rented assets (operating leases). Please refer to the section on other financial liabilities, item 25 in the Notes to the Consolidated Financial Statements for detailed information, p. 135 .

The Group uses off-balance-sheet financial instruments such as the sale of receivables to a limited extent only. In connection with the sale of receivables, customers are offered interest-subsidized financing models, which can also be reported as factoring in the wider context. However, these schemes are only used to finance sales and are not a major source of funding for the Group.

Judgments and estimates

During the past fiscal year, no voting rights were exercised and no balance-sheet disclosures made which, if exercised or disclosed differently, would have had a material effect on the net assets, financial position and earnings of the Group.

6 Healthy asset and financial position

Information about estimates, assumptions and judgments made, especially in connection with the valuation of tangible and intangible assets and goodwill, doubtful debts, pension liabilities, provisions and contingent liabilities, is presented in the Notes to the Consolidated Financial Statements along with information on tax expense, p. 110 .

General overview of economic situation

Group management feels that Group finances and assets are in a strong position 6 . With an equity ratio before minority interests of 80.7 percent and low net financial debt of EUR 13.7 million at year-end, the Group is almost debt-free despite a significant increase in investments. The Group has not drawn on over half of its credit lines and had liquidity in the amount of EUR 36.6 million at December 31, 2010. It will thus be able to meet its financial obligations in the current year.

The healthy economic climate will help the Group implement its strategies and reach its goals of further growth – at an international level in particular – and a return to pre-crisis revenue levels by the year 2013.

450 550 650 750 789 830.6 As planned, we turned the net cash position from 2009 into a slight net financial debt of EUR 13.7 million as financial markets grew more confident.

9.4

50 250 150 350 35 289.9 45.1 282.4 Wacker Neuson has a high equity ratio in excess of 80 percent and is almost debt-free with a low gearing of only 1.7 percent. The Group has drawn on less than half of its credit lines and thus has plenty of financial backing.

V. Earnings, financial position and net assets of Wacker Neuson SE (condensed version according to HGB)

The Annual Financial Statements of the parent company Wacker Neuson SE have been prepared in accordance with the provisions of the German Commercial Code (HGB) and the German Stock Corporation Law (Aktiengesetz). In 2010, the Management Report of Wacker Neuson SE has been combined with the Group Management Report.

The Annual Financial Statements describe the results of business activities conducted by Wacker Neuson SE during fiscal 2010. This includes trading activities on the German market with products from our own manufacturing facilities along with imports from affiliates and suppliers, plus the rental, spare parts and service business in Germany and exports from our German production facilities.

Income statement for Wacker Neuson SE (condensed version)

In € K	2010	2009
Revenue	251,815	212,510
Cost of sales	- 168,688	- 140,701
Gross profit	83,127	71,809
Sales, general and administrative
(SG&A) expenses	- 93,251	- 81,128
Other income	13,829	12,134
Other expenses	- 8,618	- 8,567
EBIT	- 4,913	- 5,752
Income from shareholdings in
companies	10,113	9,265
Income from other securities and
long-term loans	14	30
Interest and similar income	515	1,786
Write-downs on financial assets	- 214	- 550
Interest and similar expenses	- 1,130	- 769
Profit before tax (EBT)	4,385	4,010
Extraordinary profit	- 2,180	0
Taxes on income and earnings	- 274	- 379
Net profit/loss	1,931	3,631
Profit/loss carried forward	3,631	30,174
Withdrawal from / allocation to
other revenue reserves	7,500	- 30,174
Retained earnings	13,062	3,631

The economic upturn both within Germany and beyond fuelled a rise in revenue and profit at Wacker Neuson SE. Similar to many German machinery manufacturers, the company benefited from a revival on the domestic market and a strong pull from export markets. Revenue was up 18.5 percent in 2010 to EUR 251.8 million (previous year: EUR 212.5 million).

Cost of sales rose to EUR 168.7 million (previous year: EUR 140.7 million). The gross profit margin fell to 33.0 percent due to the shift in the company's product mix (previous year: 33.8 percent).

Sales, general and administrative (SG&A) expenses were up from EUR 81.1 million in fiscal 2009 to EUR 93.3 million in 2010. This was primarily due to higher legal and consulting costs plus payments for non-compete clauses, profit shares and bonuses incurred in connection with changes to the composition of the Executive Board. After deducting other expenses, other income was up by EUR 1.6 million.

Profit before interest and tax (EBIT) came to EUR -4.9 million, a slight improvement on the 2009 figure of EUR -5.8 million.

Income from shareholdings in companies accruing to Wacker Neuson SE rose EUR 0.8 million to EUR 10.1 million in fiscal 2010 as a result of higher dividend payouts from affiliates.

At EUR 1.9 million (compared with EUR 3.6 million in 2009), net profit for the period was positive due to dividend payouts from affiliates.

Taking retained earnings in the amount of around EUR 3.6 million into account and the withdrawal of EUR 7.5 million from other revenue reserves, Wacker Neuson SE reported retained earnings of around EUR 13.1 million.

Assets and finances

Company assets rose to EUR 726.1 million (previous year: EUR 687.4 million). This was due, on the one hand, to an increase in intangible assets resulting from the SAP project, the groundwork for which was laid in 2010. At the start of the year under review, Wacker Neuson SE's ERP system was successfully migrated to the SAP platform. It was also due to a rise in outlay on property, plant and equipment required to build the new R&D center and company headquarters in Munich. Financial assets rose from EUR 563.7 million to EUR 581.2 million, related primarily to capital increases at affiliate level.

In € K	Dec, 31, 2010	Dec, 31, 2009
Intangible assets	6,034	4,696
Property, plant and equipment	138,874	119,049
Financial assets	581,216	563,698
Assets	726,124	687,443
Inventories	36,733	26,688
Trade receivables	11,669	10,570
Receivables from associated companies	5,871	26,048
Other assets	2,433	7,217
Liquid funds	18,514	57,012
Current assets	75,220	127,535
Deferred items	668	1,394
Balance sheet total (assets)	802,012	816,372
Equity	757,779	755,848
Special tax-free reserves	80	89
Other provisions	17,147	20,934
Borrowings from banks	7,800	25,099
Trade payables	1,780	6,446
Payables to associated
companies	15,066	6,543
Other liabilities	2,260	1,403
Liabilities	26,906	39,491
Deferred items	100	10
Balance sheet total (liabilities)	802,012	816,372

Balance sheet of Wacker Neuson SE (condensed version)

Cash flow statement of Wacker Neuson SE (condensed version)

In € K	2010	2009
Operations
Cash flow according to DVFA/SG	25,686	23,829
Cash flow from operating activities	26,086	43,367
Investments
Cash flow from investments	- 61,206	- 35,039
Financing
Cash flow from financing activities	- 3,378	16,321
Change in cash and cash equivalents	- 38,498	24,649
Cash and cash equivalents
on January 1	57,012	32,363
Cash and cash equivalents
on December 31	18,514	57,012

Provisions dropped to EUR 17.1 million (previous year: EUR 20.9 million) and liabilities were down at EUR 26.9 million (previous year: EUR 39.5 million).

Cash flow according to DVFA/SG (German Society of Financial Analysts and Investment Consultants) was up EUR 1.9 million to EUR 25.7 million in the year under review (previous year: EUR 23.8 million) despite the lower net profit reported for the period. Liquid funds were down EUR 38.5 million to EUR 18.5 million (previous year: EUR 57.0 million), reflecting the increase in working capital as well as planned investments.

In summary, company management feels that Wacker Neuson SE's financial position remains strong. The company's earnings improved in line with the rise in revenue despite the negative impact of items detailed above.

Dividend proposal

The Executive Board and Supervisory Board of Wacker Neuson SE will propose a dividend of EUR 0.17 per eligible share at the AGM on May 26, 2011 (based on a total of 70.14 million eligible shares). In total therefore, the company will be paying out EUR 11.9 million. The distribution ratio pans out at around 50 percent based on net Group profit for the year in the amount of EUR 23.9 million. This is higher than the minimum long-term target pursued by the Executive Board and Supervisory Board. As the company refrained from making a dividend payment last year and instead carried the retained earnings for the year forward, it regards the payout as justified.

Current assets dropped from EUR 127.5 million to EUR 75.2 million. Inventories were up EUR 10.0 million, fuelled by increased production to meet rising demand. However, receivables from associated companies were down EUR 20.2 million on the previous year due to the repayment of short-term loans extended to associated companies posted under receivables from associated companies.

Equity increased to EUR 757.8 million (previous year: EUR 755.8 million) as the company decided not to make a dividend payout in 2010 and carried retained earnings for the period forward. At EUR 584.0 million, capital reserves remained at the previous year's level. Wacker Neuson SE's share capital also remained stable relative to the previous year at EUR 70.14 million. It is divided into 70,140,000 individual no-par-value nominal shares. The equity ratio amounted to 94.5 percent (previous year: 92.5 percent).

Dividend trends (the figures shown relate to the fiscal year in which the dividend was realized)

	20102	2009	2008	2007
Total payout (€ m)	11.9	–	13.33	35.07
Payout ratio (as a %)	49.8	–	32.01	40.01
Eligible shares (in m)	70.14	70.14	70.14	70.14
Dividend per share (in €)	0.17	0.00	0.19	0.50

Based on net Group profit for the period before purchase price allocation in 2007 and 2008.

Dividend proposal for the AGM on May 26, 2011.

The auditing company Rölfs WP Partner AG, Munich, Germany, has audited the Annual Financial Statements of Wacker Neuson SE in full and approved them without qualification. The audited report will be published in the electronic Federal Gazette. It can also be downloaded from www.corporate.wackerneuson.com/ir/en-financial_reports.php.

Statement from the Executive Board pursuant to Section 312 AktG

The following declaration hereby concludes the Executive Board report regarding relations with related entities.

"Our company received appropriate compensation in respect of all transactions entered into with associated companies. These transactions did not put the company at a disadvantage. No measures were taken during the year under review that would have required reporting. This assessment is based on the circumstances known to us at the time of transactions subject to reporting."

VI. Segment reporting by region

• JJ Enhanced product portfolio appeals to European customers
• JJ Strongest growth in Americas region
• JJ Further expansion of sales network in Asia

With its broad product and service portfolio, the Wacker Neuson Group not only supplies construction companies, but also dealers, rental organizations and importers across the globe. Segment reporting provides an overview of business developments according to region (Europe, Americas and Asia). We also break revenue down according to business segment (light equipment, compact equipment and services). We are happy to report that the Group increased revenue across all business segments in 2010 – in most cases, with double-digit percentage growth.

Europe

As predicted, Europe was again the biggest revenue generator, accounting for 73.7 percent of total Group revenue (previous year: 78.0 percent). This region's revenue rose 20.0 percent to EUR 558.6 million (previous year: EUR 465.7 million). Segment profit before interest and tax (EBIT) increased to EUR 26.6 million (previous year: EUR -107.3 million; adjusted for writedowns on goodwill: EUR -7.0 million).

Demand for light and compact equipment bucks predicted trends

Demand for our products and services picked up noticeably across all of Europe, clearly defying Euroconstruct forecasts, which projected a downturn in the construction market for 2010. This is primarily due to the fact that the majority of Wacker Neuson's revenue stems from European countries where the domestic market has largely recovered from the global economic crisis, in particular Germany, Austria and Switzerland.

This positive trend clearly shows that our product portfolio is targeted at growth segments and that our European sales strategies have yielded positive results. The company experienced double-digit growth in particular in France, the UK, Sweden, Norway, Switzerland, Germany, Poland, Hungary, Turkey and Russia (which also belongs to the Europe segment). Denmark, Italy and Spain were the only countries where development remained below the previous year's level.

Government investment programs had a stabilizing effect. With the exception of German-speaking countries, growth in 2010 was further boosted by an increase in investments to replace light equipment on the back of a 2009 drop in capital expenditure in many countries. Company management believes this is primarily attributable to rising demand from end customers rather than dealers increasing inventory levels.

Adjusted to discount write-downs on intangible assets in the amount of EUR 100.3 million.

Revenue up in key markets for the Group

In the UK, our revenue rose by almost 50 percent. Following a two-year slump in sales, investment backlogs were the main growth drivers, although our go-to-market strategy for compact equipment also made an impact here.

Our decision to launch compact equipment via the existing sales network also proved successful in France, where revenue increased by over 30 percent. This same strategy also fuelled a 70-percent rise in product revenue in Scandinavia in 2010.

Poland was the only country where the construction industry continued to grow even during the crisis. Consequently, our revenue here also developed positively in 2010. A large number of ongoing residential developments, infrastructure improvement measures, and redevelopment and commercial construction projects pushed growth further throughout the year. Our revenue for the region grew by over 30 percent.

Russia proved a surprisingly positive market. Our revenue here leapt by over 150 percent, albeit from a low level. Our performance in this still new market, however, gives us every confidence for the future.

Germany again accounted for the lion's share of European revenue. In 2010, our domestic business benefited from ongoing construction projects and infrastructure investment programs as well as from increased activity in residential construction plus underground projects in the commercial construction sector. New product launches and our enhanced service offering also had a positive impact here.

Americas

Significant revenue growth in the Americas

The positive trend in the US that we first reported mid-2009 continued and gained momentum throughout 2010. Product sales to our dealers were up. Major rental companies did not start investing in individual products until the second half of the year. Depending on the age of their rental fleets, they primarily invested in new machines to replace existing stock.

Revenue in the Americas was up 63.0 percent on the previous year to EUR 168.1 million (previous year: EUR 103.1 million). Segment profit before interest and tax (EBIT) increased from EUR -8.1 million to EUR 14.4 million. The region expanded its share of revenue from 17.3 percent to 22.2 percent. Discounting exchange rate fluctuations, revenue in the Americas was up by 49.7 percent.

As in previous years, our US production and sales company Wacker Neuson Corporation generated the majority of revenue. In local currency (US dollar), revenue for this affiliate was around 54 percent up on the previous year's figure. However, increased exports to Europe and Asia also played a role here. Revenue growth in South America and Canada were even stronger.

We continued to launch our compact equipment offering in this region in 2010 and were also able to further expand our US dealer network during the year. Our compact equipment launch in South America also resonated strongly across the industry there.

Asia

Asia remains a growth market for Wacker Neuson, although we do not expect demand for our high-quality light and compact equipment to take off there for the next five to ten years. Hence we are aligning our go-to-market strategy with the rise in demand anticipated for that point in time. The company has also had an affiliate in India since 2008.

Positive trends in Asia

Overall, construction markets showed signs of recovery in the Asia-Pacific region, especially in Australia. Business in Asia profited from numerous infrastructure measures aimed at expanding road and rail networks.

Revenue was up 10.7 percent on the previous year from EUR 28.2 million to EUR 31.2 million. Segment profit before interest and tax (EBIT) amounted to EUR -0.3 million (previous year: EUR 0.8 million). This drop was primarily down to increased air transportation costs incurred to ship replacement deliveries from the production plant in Manila as a result of delivery bottlenecks among suppliers. In light of the strong growth in other regions, this region's share of total revenue dropped to 4.1 percent (previous year: 4.7 percent).

Revenue plus in Australia

Our results for 2010 in Australia strongly reflect the expansion of our product offering here, with revenue increasing by over 50 percent.

Emerging markets now account for around 15 percent of our revenue. Our revenue in these markets was up by around 38 percent on the previous year.

VII. Segment reporting by business segment

• JJ Demand for light equipment remains high
• JJ Strong growth in compact equipment segment
• JJ Rental business remains at prior-year high level

Sales by business segments

in € K	2010	2009
Light Equipment	296,606	213,494
Compact Equipment	274,824	205,321
Services	192,386	183,273
Minus cash discounts	- 5,890	- 5,075
= Total sales	757,926	597,013

Light equipment revenue before discounts rose 38.9 percent to EUR 296.6 million (previous year: EUR 213.5 million). This segment's share of total revenue (before discounts) amounted to 38.8 percent (previous year: 35.5 percent). Continued high demand in the US provided strong momentum here. In 2010, an increase in pressure on prices for light equipment relative to the previous year was not evident.

Light equipment

The light equipment business segment covers the Wacker Neuson Group's activities within the four strategic business fields of concrete technology, soil and asphalt compaction, demolition, and utility. Production is synchronized with demand and delivery times are short. The company therefore does not report order intake or the order backlog for this segment.

Light equipment sales was a good indicator of the long-term nature of economic recovery. Experience from previous economic cycles shows that this is an early-cycle mover. So the strong rise in demand for light equipment, which set in 1.5 years ago, was a clear indicator of overall recovery. This is because delivery timeframes for light equipment, once ordered, are usually very short and per-unit purchase costs are typically lower than for larger machines. So as the crisis took hold, investment in this area was the first to drop. The high quality of our products enabled customers to extend the typical service life during the downturn. When business picked up, however, the short delivery times and relatively low capital outlay meant that customers soon upped their investments to replace their existing machines. Our position as a market leader in many product segments also helped. Demand remained consistently high over the last four quarters.

Raft of new launches

Sales by business segment1

Product innovations and new models again played a key role in the light equipment segment's positive performance last year. We launched a raft of new products including new vibratory plates and electric breakers as well as powerful new pumps. In 2010, we added a total of 78 new products or product versions to our portfolio (previous year: 44).

Compact equipment

The compact equipment business segment covers the manufacture and sale of compact machinery under the Wacker Neuson, Kramer Allrad and Weidemann brands. In addition to all-wheel and articulated wheel loaders, the compact equipment segment includes compact excavators, skid-steer loaders, telescopic handlers and dumpers as well as attachments.

In 2009, this business segment was still suffering from the high inventory levels affecting all market players in the Europe region at that time (especially in the case of compact excavators). The situation turned around, however, during the first

quarter of 2010. Demand increased dramatically in all countries where we distribute compact equipment. This growth was fuelled by the economic recovery and our continued measures to expand market share and distribute our compact offering via the existing sales network. This resulted in very high utilization of production capacities.

Compact equipment revenue before discounts rose to EUR 274.8 million, up 33.9 percent on the previous year's figure of EUR 205.3 million. In view of the light equipment segment's strong revenue performance, compact equipment only managed to slightly expand its share of overall revenue (before discounts) to 36.0 percent (previous year: 34.1 percent).

Although the compact equipment segment benefited from investments to replace existing equipment, infrastructure construction projects were the main growth drivers, especially in Central and Eastern Europe and South America.

Monthly order intake is a reliable indicator of demand for our compact equipment. Our customers changed their order patterns as a result of supply difficulties, placing orders significantly earlier than in 2009. This resulted in a consistently high order backlog for both construction and agricultural compact equipment. At December 31, 2010, the order backlog was around 4.5 times higher than the prior-year figure.

• 350 % yoy

At December 31, 2010, accumulated order intake for the construction and agricultural equipment were around 87 percent up on the previous year's figure of -34 percent. The merger between Wacker and Neuson Kramer created a wide range of sales synergies that Wacker Neuson is increasingly using to win market share. The Group is also distributing its compact equipment portfolio to more and more markets outside of Europe. Demand for compact equipment is developing particularly well in France, Sweden, South America, Canada, South Africa and Australia.

There were no noticeable signs of increased pressure on prices in the compact equipment segment during fiscal 2010. The devaluation of the euro against the US dollar and other key trade partner currencies also helped fuel growth for European manufacturers. Japan's yen (JPY), for example, rose an average 11.7 percent against the euro in 2010, which forced some of our Japanese competitors to increase the price of products for the European market. Our special financing programs for customers continued to be well received.

We continue to innovate and improve the quality of our extensive compact portfolio, encompassing around 40 models. During the period under review, Wacker Neuson launched new compact machines, delivering significant added value for customers. These include Wacker Neuson's largest compact excavator model to date, the 14504, with an operating weight of 14.5 tons, as well as a new range of wheel loaders and compact telescopic handlers under the Kramer Allrad and Weidemann brands. The company also launched mini excavator models equipped with new features. In addition, Wacker Neuson overhauled its cab concept for compact equipment.

Demand for agricultural machines up

Demand for agricultural machines was particularly strong in the second half of the year. At the close of the year, the order situation for agricultural equipment was almost as healthy as the construction order book. The Weidemann brand offers well designed, innovative machines for agricultural holdings, primarily for farmyard work. In 2010, Weidemann agricultural machines were launched in Italy and Russia. The agricultural sector's share of group revenue came to 12.4 percent in the year under review (previous year: 13.6 percent).

Services

The services business segment encompasses our after-market (repair and maintenance) and rental (Central and Eastern Europe) business fields, each covering both light and compact equipment.

The services business segment remained stable during the crisis. From this solid level, revenue before discounts rose a further 5 percent to EUR 192.4 million in 2010 (previous year: EUR 183.3 million) and thus accounted for 25.2 percent of total revenue (previous year: 30.4 percent).

Service offering resounds well with customers

Revenue before discounts in the after-market business field (which covers the traditional repair and spare parts business) was up 7.9 percent to EUR 129.4 million (previous year: EUR 119.9 million). A price increase of around 3.0 percent for spare parts during the second quarter plus the favorable response from customers to our extensive service offering had a positive impact here. Our strategy for the traditional repair and spare parts business also yielded results in 2010. In countries with direct sales channels, we implemented measures to reduce the turnaround times on repairs, improved our equipment pickup and drop-off service from and to construction sites and intensified training for our service staff. We were able to hold our own against independent workshops and construction machinery dealers.

Rental business less prone to cyclical variations but dependent on the weather

We started expanding our rental activities in Central and Eastern Europe back in the crisis year of 2009. The business reached an all-time high back then as many customers saw rental as a better alternative to purchase at a time of major

uncertainty. At EUR 63.0 million, revenue from the rental business in 2010 remained level with the previous year's figure of EUR 63.3 million.

The early onset of winter meant that demand for rental equipment in the fourth quarter was down slightly by 3 percent on the previous year. Rental revenue in the fourth quarter, however, is traditionally higher than in the third quarter as contractors usually hire additional equipment to get jobs done before the onset of winter. In 2010, it was 4 percent higher. Hiring equipment is not only an attractive option in times of economic decline. It is also a valid alternative in times of growth as it gives customers additional flexibility. Rented machines also provide a reliable basis for calculating costs, making rental a useful supplement to purchasing. The number of daily rentals continued to outweigh numbers of monthly or longer-term rentals. Our sales and service stations responded with great flexibility to customer requirements, quickly making rental equipment available wherever it was needed.

VIII. Other factors that impacted on results

Research and development

• JJ Launch of new products and product variants
• JJ Numerous new patent applications
• JJ Construction of new R&D center in Munich progressing according to plan

Our research and development (R&D) activities are geared towards the needs of the market and our customers, also taking regional dynamics into account. New product developments are inspired by customer needs. We always implement existing and new legal regulations, particularly measures aimed at protecting users and the environment.

The Group's R&D departments are responsible for the development of new products and ongoing evolution of existing models. We develop products at the following locations: light equipment products are developed in Munich (Germany), Milwaukee (USA), Norton Shores (USA) and Manila (Philippines); compact equipment under the Weidemann brand is developed at the Weidemann GmbH headquarters in Diemelsee-Flechtdorf (Germany), while compact products under the Kramer Allrad and Wacker Neuson brands are developed at the production plants in Pfullendorf (Germany) and Linz (Austria). Development and research work is coordinated at Group level in order to synchronize activities at local level.

In 2010, our development was aimed in particular at extending our pioneering position in product safety, operator safety and environmental protection. Research, development and innovation are playing an increasingly central role, for example, in ensuring compliance with climate protection targets. Our activities here have a particularly high priority at Wacker Neuson as we intend to maintain our high standards in the delivery of environmentally sound, safe products as we move forward. Which is why, in addition to developing new products, we will continue to focus our R&D efforts on compliance with more stringent environmental regulations governing combustion engine emissions. For further information on new exhaust emissions regulations, please refer to the "General legal framework" section. p. 48

The R&D payroll mainly consists of mechanical and electronics engineers, technical engineers, technical drawers and other skilled workers. In 2010, we concentrated on skill building among these employees with a series of project management and engineering design seminars, flanked by external courses.

2010 was another year of new developments and numerous product launches. We developed various basic models for the global market, creating numerous modular variants of these models to meet country-specific requirements. We launched 78 new products and product variants in the light equipment segment worldwide (previous year: 44), thus further consolidating our technology lead in this R&D-intensive area. On the compact equipment side, the Group launched 28 new innovations (previous year: 25).

Our new and enhanced products combine greater cost efficiencies in deployment with the same high standards of quality. In April 2010, we presented our largest range of new products to date at bauma, the world's largest construction equipment trade fair, in Munich. The world's largest vibratory plate, Wacker Neuson's DPU 130, was nominated for the bauma design innovation award. The DF 16 rebar tier was awarded the Euro-Test prize for its outstanding contribution to user ergonomics.

VDS system receives several product innovation awards

In September of last year, the "State Innovation Award 2010" was presented to the most innovative companies in the Austrian state of Upper Austria. Wacker Neuson's vertical digging system (VDS) was awarded second place in the large enterprise category. Wacker Neuson was also was awarded the French EDGE innovation prize for VDS in the category "Construction and Maintenance of Green Spaces" in the mini excavator segment from zero to five tons. The prize was awarded at Saint-Chéron, near Paris. VDS is a hydraulic tilt mechanism that keeps the bucket in a vertical position even on uneven ground, saving customers both time and money, and at the same time increasing operator ergonomics. This technology gives us a clear competitive advantage.

Design has long been a key aspect of Wacker Neuson's compact equipment products. The iF Design Award is the world's most renowned product design prize. 2011 iF Design Awards went to the Wacker Neuson 14504 compact excavator, the new joystick concept for compact excavators, the 2506 telescopic handler from Kramer and Weidemann's T4512 compact telescopic handler. The award is an international seal of approval for outstanding design quality and customer value. The machines were rated on numerous features including compact dimensions, maneuverability and innovative design combining maximum payload with easy access to narrow, low-headspace areas. Other highlights included an engine hood design that gives the operator maximum visibility from the cab.

New peak performance from light equipment

Much of our light equipment is subject to particularly high stresses. R&D activities for these products focus on ensuring high-quality, robust design, shorter downtimes and longer maintenance intervals. Our aim here is to keep lifecycle costs as low as possible while ensuring highest productivity levels for our customers. The new BTS 630 and BTS 635 cut-off saws, for example, were developed in line with these principles in 2010 and launched in January 2011. The machines are fitted with a new air filter system that makes them extremely productive. We also improved the compaction performance of our successful range of medium-weight vibratory plates by around 25 percent and launched the EH 25, the world's first electric breaker delivering 70 joules of single-stroke energy.

Innovation is the key to expanding our market shares worldwide. Wacker Neuson regards research and development as crucial growth drivers and core elements of the Group's overall success. During the period under review, around 49 percent of revenue in the light equipment segment was generated by products that were launched within the last five years (previous year: 25 percent). "Newcomers" to the compact equipment offering accounted for around 60 percent of segment revenue (previous year: 60 percent).

R&D expenses amounted to EUR 22.3 million (previous year: EUR 20.5 million). The R&D margin (share of total revenue) thus fell to 2.9 percent (previous year: 3.4 percent). During the period under review, we also capitalized expenses in the amount of EUR 4.1 million (previous year: EUR 4.5 million).

Over the last fiscal year, we filed a total of 47 new patents and utility models (previous year: 31 trademark rights). 45 patents and utility models were granted (previous year: 74 trademark rights). In total, we own 595 patents and utility models worldwide.

To successfully utilize third-party development know-how, we rely on the strengths of individual OEM (original equipment manufacturer) partnerships or develop forward-looking solutions in specific areas with our system suppliers. We only procure third-party services in exceptional cases. This entailed expenses of less than EUR 0.26 million in the light equipment segment during the year under review (previous year: EUR 0.25 million). In addition, we cooperate with national and international universities and research institutes. This gives us access to the latest scientific insights.

We also continued expanding our test department in Munich, equipping it with cutting-edge measurement and test stations. This department is set to move into the new R&D center for light equipment in Munich during the first half of 2011. The state-of-the-art R&D center will play a pivotal role in maintaining our dynamic pace of innovation and the high quality of our light equipment into the future. In total, the Group plans to invest around EUR 43 million in the new R&D center and the neighboring Group headquarters. The majority of this construction work was carried out over the last two years.

Production and logistics

• JJ Rising demand improves capacity utilization
• JJ Flexible work arrangements as business picks up
• JJ Logistics processes streamlined

We manufacture light equipment at Reichertshofen (Germany), Milwaukee, Norton Shores (both US) and Manila (Philippines). Our focus factory concept guarantees optimum efficiency by ensuring that each product group is manufactured at just one site. Not only do focus factories ensure the largest possible batch sizes, correspondingly low costs and rapid availability of products, they also provide a certain degree of natural currency hedging through cross-deliveries between regional logistics centers.

Compact equipment factories are located in Linz (Austria), Pfullendorf and Korbach (both Germany). We have expanded and upgraded production capacity in Pfullendorf (Kramer Allrad) and Korbach (Weidemann) in recent years, equipping our facilities here with cutting-edge technologies.

Supply bottlenecks extend delivery windows

Our customers expect short order turnarounds and on-time deliveries and are accustomed to this with Wacker Neuson. In a growth phase, however, it is to be expected that some suppliers will have problems meeting deliveries if they significantly scaled back their own capacity prior to the upswing. As a precautionary measure, we started to increase inventory levels back in fall 2009. We proceeded with caution though. If demand had stayed low over a longer period, or worsened, high inventory levels would have tied up an unnecessarily large amount of capital.

When business picked up faster than expected in 2010, delays on the part of our suppliers were so severe that they prevented us from completing and delivering our compact equipment orders on time, and our plants were faced with additional production and handling costs. Manufacturers across our industry were facing similar issues. Parts such as steering columns and hydraulic components for wheel loaders were delivered late across the board.

The delivery timeframe for a number of product groups in our light equipment offering, which thanks to a high degree of vertical integration is less dependent on supplier markets, remained between 24 and 48 hours in 2010. Other product groups were delayed by up to four weeks. Delivery windows

for compact equipment products were exceptionally long, up to five months in spring. Similar to the automotive industry, we rely on premanufactured parts that involve their own complex supply chains before they get to us. At the close of the year, average delivery times were down to just four months. We continue to maintain regular contact with our business partners and suppliers to jointly develop forward-looking solutions.

Improved capacity utilization at all plants

The upswing in demand improved capacity utilization at all of our production facilities. The Group initially managed its increased production needs via flexitime accounts and by reducing short-time work programs. We then terminated shorttime work schemes at all facilities in Germany and Austria in May 2010. In the US, where there are no such comparable legal options, we started to increase headcount again from spring 2010 on. We also adjusted staff capacity slightly in Europe during the period under review in response to rising order intake but are otherwise focusing on using existing flexitime options during the upturn. At the start of 2011, utilization of production capacity at our facilities had returned overall to 2008 levels based on the current staff structure. In previous years, we had ramped up production capacity in preparation for rising demand. We are therefore currently manufacturing below full capacity and are ideally equipped for the coming years.

Ongoing improvements to production and logistics processes

We have also implemented a variety of measures to streamline production processes and make them more customer-centric. In addition to investing in a powerful machinery pool, we reorganized production structures, material flows and intralogistics across the Group.

With the exception of our plant in Linz, Austria, which is leased, all production facilities are in company ownership. In order to meet the ongoing rise in demand for compact equipment such as excavators, skid steer loaders and dumpers, we have started construction on a new production facility in Hörsching, near Linz, which will be owned by the company. We will be relocating production operations to this new site in the first half of 2012.

Smooth logistics

The Wacker Neuson Group logistics centers for new light equipment, spare parts and attachments are located in Karlsfeld (Germany), Germantown (Milwaukee, US) and Hong Kong (China). Spare parts logistics for the Korbach compact equipment plant is integrated in the Karlsfeld logistics center. The Group has an efficient logistics planning system in place within the logistics centers – complemented by the high flexibility of our production facilities. Attention focused on improving parts and product availability in 2010.

Sustainability and quality

• JJ Increased awareness surrounding sustainability
• JJ Focus on ergonomics and safety
• JJ Certified quality management system

As an international player, Wacker Neuson takes its responsibility to society and the environment very seriously. Our main focus is on sustainable growth rather than short-term gains. Environmental protection is a key issue with every new product we develop and facility we invest in. Our designers and production and facility planners face the challenge of creating the optimum balance between product quality, faster, more costeffective production, energy efficiency, environmental protection and health and safety. Over the past year, we implemented various measures to raise environmental protection levels and to protect the health of our employees.

Committed to the environment

In recent years, Wacker Neuson has progressively raised awareness in the company surrounding the importance of sustainability in our business dealings. Sustainability is a particularly important issue in product development. We choose environmentally friendly materials wherever possible and factor endof-life recycling into the design of our machines and equipment.

As a manufacturer of light and compact equipment, we are subject to a wide range of national and international regulations aimed at protecting users and the environment. We comply with emissions control, water and soil laws as well as guidelines governing exhaust emissions.

User safety, however, is always a top priority. Product ergonomics and the reduction of noise and vibration-induced impact for users are just some of the areas we focus on here. Our ultimate objective is to deliver products that go above and beyond legal regulations.

Our products are designed for durability and low maintenance – despite being typically deployed under harsh conditions. We strive to reduce environmental impact by using appropriate materials and ensuring low exhaust emissions. This reflects our commitment to both customers and the environment.

Energy balance – improved climate protection and greater conservation of resources

We regularly arrange audits to identify areas within our company offering scope for energy efficiency gains. Improving energy management features on our light and compact equipment (which means users are releasing less CO2 ), managing energy more efficiently in our buildings and our fleet and reducing heat, electricity and fuel consumption all help to permanently reduce CO2 emissions. The need to reduce CO2 emissions from our products is an integral part of our product philosophy. In the coming years, we will be raising our game here further by complying with new exhaust emissions regulations for compact equipment.

Implementing the latest sustainable production techniques

In the production of our equipment, we use lighter, highergrade steel wherever appropriate in order to reduce machine weight. This lightweight design can help reduce fuel consumption and, by extension, CO2 emissions.

The new plants we constructed in the past three years in Korbach, Pfullendorf (both Germany), Manila (Philippines) and Norton Shores (US) have all been designed with optimized building management systems. Pfullendorf takes the lead here, with highlights including solar panels to heat running water, waste water treatment, rainwater recycling, heat recovery, structural HVAC, and intelligent lighting that adapts indoor hall lighting to natural fluctuations in daylight.

A special coating on our machines protects them against the elements and rust. Special, high-quality powder coating is in use at our Korbach and Reichertshofen production facilities. Eco-friendly, water-based coatings ensure a high-quality finish on certain machine parts from Reichertshofen and Pfullendorf. In 2010, we also investigated our other production locations to see how we could improve our environmental performance at those plants.

Since January 2009, we have been sourcing environmentally friendly electricity for three of our sites.

Careful handling of environmentally hazardous waste

Our employees across the globe are highly sensitive to the dangers of hazardous waste. Corresponding regulations are embedded in company guidelines such as the quality management guideline.

Recycling and reuse have priority over disposal at all times. We use Europe-wide standardized waste codes to categorize hazardous waste. Paint, grinding and oil sludge are collected separately from production processes to be filtered and reused, where possible, or appropriately disposed of. In May 2010, we rolled out a uniform, electronic management system at our German sites to ensure standardized disposal of all hazardous waste at these facilities. The information on waste treatment can then be processed and evaluated efficiently. In this way, we are gradually raising sustainability levels across the entire company.

Injury and accident prevention

We regularly held safety briefs and occupational safety training courses for employees to minimize the risk of accidents and injury. These included seminars on correct loading and securing procedures, training sessions for safety officers and special courses for specific machines. Where necessary, we also carry out regular supplementary audits for specific processes to assess whether the workplace is safe, tidy and clean. During the period under review, we improved workplace ergonomics overall.

Responsibility beyond company walls

Our company and general approach to business epitomize the values typical of mid-sized, family-owned enterprises, focused on sustainable and profitable growth. Our corporate culture enables us to create a decentralized organization that reacts with greater speed and less bureaucracy to customer needs.

We engaged in a variety of voluntary initiatives to the benefit of our employees. Wacker Neuson is a family business in the truest sense of the word. We remained committed to looking after our employees in 2010. The Curt Wacker Memorial Foundation, for example, helps individual employees in hardship. Our Hermann Wacker Innovation Award is presented each year in acknowledgement of excellent creative and, above all, technical employee achievements that deliver lasting benefit to the company. Please refer to the "Human resources" section for further information.

Quality management system confirmed by audit

Long service life and high reliability, ease of operation and repair, low operating costs and compliance with the highest safety standards are key benchmarks of our product quality. To ensure we always meet our own high standards, our commitment to quality is hardwired throughout the entire organization and we are continuously on the lookout for areas of improvement. In 2010, we further optimized our Group-wide quality management system. A significant share of our 2010 investment funds, for example, was used to purchase stateof-the-art, dedicated measurement technology to enable us to meet the exacting demands we place on our existing portfolio and new products.

The processes and indicators covered by our quality management system are documented and certified to DIN EN ISO 9001. Our quality management system covers our compact and light equipment business segments, our Group headquarters in Munich, our production plants in Reichertshofen, Pfullendorf (both Germany), Linz (Austria), Norton Shores and Milwaukee (both USA), our logistics center in Karlsfeld (Germany) and all sales regions in Germany. In 2010, an external audit reconfirmed that our quality management system is comprehensive and effective. Under the umbrella of this system, for example, quality indicators are reported on a monthly basis for the products from all locations based on the German, US and Canadian markets. These are used to improve quality by identifying scope for improvement. Quality management officers continuously monitor the implementation of this system.

Purchasing

• JJ Increase in raw material and premanufactured part prices
• JJ Closer ties with suppliers
• JJ Lead buyer concept successfully established

Within the cost of sales, the cost of materials and third-party services constitute the largest cost factors for the Group.

Reacting to price fluctuations in procurement markets

To manufacture its products, Wacker Neuson requires various components and raw materials – particularly steel, aluminum and copper. We also require structural steel components and precast parts as well as hydraulic and chassis components. To meet projected future demands, Wacker Neuson concluded flexible agreements for raw materials with its main suppliers in recent years.

The healthy economic climate raised prices for raw materials, especially for steel and steel components. However, long-term contracts for materials subject to variations in annual demand ensured fair pricing for Wacker Neuson. Currency fluctuations between the euro and yen were felt in the compact equipment

segment as prices for diesel engines and hydraulic components rose. This led us to raise our prices for light and compact equipment by 3 to 4 percent at the start of 2011.

Lead buyer concept optimizes procurement prices

For some time now, we have been operating a lead buyer concept at our compact equipment production locations in Linz (Austria), Pfullendorf and Korbach (both Germany). Consolidating the procurement of identical or similar parts in this way has enabled us to negotiate more attractive purchasing terms.

Our affiliate in Serbia supplies some ready-made steel components to our compact production facilities, thus optimizing workflows in the production plants and reducing dependency on suppliers.

Globalization is still the predominant trend in procurement. Choosing the right procurement markets is becoming an increasingly important factor to secure the Group's competitive position. We have therefore established procurement offices across the globe, for example in Shanghai. Our aim here is to focus on promising key suppliers and incorporate them at an early stage into our development and production processes.

We will continue to align our procurement, production and logistics processes more closely in the future in order to optimize the entire supply chain and minimize dependency on individual suppliers. For further information on the impact of supplier bottlenecks in the year under review, please refer to the "Production" section.

Human resources

• JJ New hires due to rising demand
• JJ HR marketing intensified
• JJ Training for young people actively supported

Wacker Neuson Group employees play a key role in the company's successful growth and performance. Identifying and promoting our employees' skills and expertise is therefore a cornerstone of our HR strategy. Fairness, respect and trust are the core principles that define how we cooperate and interact with each other across the group.

Employees by sector

Manpower capacity up slightly due to order situation

In 2009, we implemented a range measures to reduce staff capacity by over 20 percent (flexible work accounts, flexitime, reduction of temporary staff, short-time work schemes and headcount reductions). In 2010, the upswing in business enabled us to cancel all of these measures in the first half of the year. At the close of 2009, around 15 percent of our employees were still involved in short-time work schemes. By the end of April 2010, we were able to discontinue short-time work entirely due to the higher utilization of production capacity. In some areas of the company, for example in Austria and the US, we even increased headcount to support our growth strategy.

At December 31, 2010, the Group employed a total of 3,142 people, a 2.7 percent increase on the previous year's figure of 3,059. These figures are calculated by converting the number of people working for the company into full-time jobs. They do not include temporary staff.

Within the Wacker Neuson Group, 2,379 – or 75.7 percent – of all employees were based in Europe at the balance sheet date (previous year: 2,361). 573 were employed in the Americas region (previous year: 513) and 190 in the Asia region (previous year: 185). In Germany, headcount came to 1,505 at the close of 2010 (previous year: 1,533), and the number employed in the US was 496 at the end of the year (previous year: 442). Personnel costs totaled EUR 183.1 million (previous year: EUR 170.5 million).

Headcount by region as a % (previous year)

Age structure

number of employees in %

HR marketing and talent development intensified

Qualified professional training gives young people a good and motivating start in the working world. In 2010, we provided intensive training for 118 young people at our production sites in industrial or business posts or within the framework of practical training programs flanked by studies at technical or vocational colleges (previous year: 146). Our training philo sophy centers on providing experience in a wide range of disciplines, assigning individual areas of responsibility and ensuring intensive, one-to-one trainee support. The student training quota for the Wacker Neuson Group over the last fiscal year was 4.8 percent worldwide (previous year: 6.1 percent). As in the previous year, 45 trainees completed their training, with 31 of these offered positions in the company (previous year: 28), a takeup rate of 68.9 percent (previous year: 62 percent). In Manila, we continued to provide training in collaboration with the Don Bosco institute. Here we trained 7 young people from low-income families along the same lines as the German dual training system (previous year: 19 young people).

We were able to hire and systematically support qualified graduates by attending renowned career fairs. In order to attract talent to our company, we intend to focus more on recruiting networks and establishing links with further technical colleges and universities.

Training and voluntary benefits

The Wacker Neuson Group has always placed great importance on ongoing employee development and continues to do so. In 2010, technology, IT systems, SAP applications and languages were core subjects of our internal training curriculum. The Wacker Neuson Academy ran a total of 273 courses during the year under review (previous year: 129). Around 3,341 employees from our company and increasingly from our customers completed these courses (previous year: 1,780). Total staff development expenditure from our most important Group companies (around 72 percent of all employees) came to around EUR 0.66 million in 2010 (previous year: EUR 0.43 million).

Number of employees (Group)1 as of December 31

2010	2009	2008	20072	2006	20053
3,142	3,059	3,665	3,659	2,837	2,630

By number of full-time jobs.

Through the merger with Neuson Kramer.

Through Weidemann acquisition.

Human resources figures1

	Dec. 31, 2010	Dec. 31, 2009
Part-time employees as a %	3.5	3.31
Number of trainees	118	146
Quota of trainees as a %	4.7	6.05
Expenses for personnel development in €	appr. 660,000	appr. 430,000
Average age in years	41.1	40.76
Number of men (proportion as a %)	2,084 (83.4)	2,005 (83.02)
Number of women (proportion as a %)	414 (16.6)	410 (16.98)
Number of years with the company	12.05	12.13
Fluctuation as a %	8.5	21.282
Sickness rate as a %	2.65	2.81

Figures only based on 72 percent of total workforce

(previous year: 75 percent).

Influenced by the market crisis as terminations for operational reasons are included.

We again offered our employees in Germany numerous voluntary benefits in 2010, including an employer-funded company pension plan. Depending on the location, we also supported employees across the Group with grants and healthcare initiatives.

General collective wage negotiations did not take place in Germany in 2010.

At Wacker Neuson, all employees – management included – see change as an opportunity. The ability to embrace change will allow us to continuously evolve and prosper in the future. Continuous process optimization and structural evaluation are an integral part of our organizational development process.

Sales, customers and marketing

• JJ Successful presence at trade fairs
• JJ Sales structures adapted to country-specific market structures
• JJ Successful marketing of compact equipment via existing sales network

Success at world's largest construction machine trade fair, bauma 2010, and other industry exhibitions The Wacker Neuson Group presented its portfolio at bauma 2010, the world's largest construction machine trade fair held in April 2010 in Munich. Our portfolio of high-quality, innovative Wacker Neuson and Kramer Allrad products was extremely well received. We put the spotlight firmly on innovations that are already in series production and not just prototypes due for launch in the distant future. This had a positive impact on sales during the event. The number of contracts concluded this year was up significantly on figures for the last bauma in 2007, which was a boom year. Our direct sales team won over 25 percent more deals. This figure does not include the results achieved by our dealers.

Wacker Neuson also showcased its broad product portfolio at the Galabau trade fair in Nuremberg, Germany, at the end of September. Galabau is the largest gardening and landscaping trade fair for German-speaking countries and proved a great success for the company. Order intake in 2010 was up an impressive 70 percent on the last Galabau in 2008.

The company also exhibited and demonstrated products at smaller yet equally successful trade fairs in the UK, France, Germany and the US. Events of this kind are crucial for the Group as they enable visitors to discover the quality of our products first-hand. All of our trade fairs were a resounding success, drawing a steady stream of visitors and sparking very promising discussions with our customers.

Weidemann GmbH exhibited its products at numerous agricultural trade fairs in Europe, including Eurotier 2010, one of Europe's largest agricultural trade fairs. The Weidemann brand showcased its new corporate design and logo, which reflects the company's ties to the Wacker Neuson Group.

Expansion of global sales network

We are aligning our sales structures with local market dynamics. We have three distribution models: a direct sales channel to end customers and rental companies; a global dealer network; and a combination of both. In Europe, we mainly distribute directly to end customers, major accounts and sales partners. Weidemann agricultural products are sold mainly in Europe via special dealer networks. We distribute Kramer Allrad products only in Europe. In the US, the Group distributes Wacker Neuson products exclusively to rental firms and dealers. In Asia, we distribute to smaller construction companies, dealers and rental firms.

During the period under review, we continued to expand national sales channels in countries such as France, Poland, Australia, South Africa, Russia and China. We are making particularly good headway with the distribution of our compact equipment offering in the US, which is a key market for the Group. Here we are extending our existing network of dedicated dealers who exclusively distribute a selected range of light and compact equipment from the Wacker Neuson brand. To provide the best possible support for dealers in the US, we launched a new online service in 2010 through our affiliate Wacker Neuson Corporation. By feeding information

on Wacker Neuson products to dealer websites in real time, the service improves communication with dealers and their customers, creating an effective sales interface.

Our customer base in 2010 again comprised construction companies (public and private enterprises), gardening and landscaping firms, municipal bodies, companies from the industrial and agricultural sectors, professional rental firms and specialist dealers. We generated around 15 percent of worldwide revenue during the past fiscal year with our ten largest accounts (previous year: 13 percent). The construction companies and specialist dealers we dealt with were mainly smaller businesses. According to our own estimates, almost three quarters of these firms have a headcount of less than ten.

Individualized solutions and customer-centric strategy

During the period under review, our sales and service teams focused on customer acquisition, promotional measures and attractive financing models via external service providers (offering zero-percent financing, for example). We also offered our customers individualized sales and service solutions tailored to their needs and held various seminars in our Reichertshofen training center. These were targeted at the company's sales and service teams as well as at customers looking for information on how to put our products and services to the best possible use and maximize process efficiencies. The company also held a number of training courses in Spain, France, Italy, Poland, Australia and the US for customers and employees as part of its sales support concept for compact equipment.

IX. Risk report

Presentation of the internal control and risk management system including information in accordance with Section 315 (2) No. 5 and Section 289 (5) HGB plus an explanatory report by the Executive Board

Risk reporting requires that the company also outline its risk management system within the Group Management Report. Furthermore, the key steps involved in the internal control system and the risk management system in relation to the (consolidated) accounting process must be described in detail pursuant to Section 315 (2) No. 5 and Section 289 (5) of HGB. Since the internal control system is an integral part of the overall risk management system, the Executive Board has decided to present both together. These disclosures are explained in more detail – also in relation to the accounting process – as a precautionary measure pursuant to Section 175 (2) AktG as amended by the German accounting law reform act (Bilanzrechtsmodernisierungsgesetz) although this regulation has since been overturned.

General

The Group-wide risk management system serves as an earlywarning safety net that identifies, assesses and appropriately communicates risks and enables the Group to implement corresponding counteractive measures in good time. This calls for the reliable identification, evaluation and monitoring of all risks that may prevent this goal from being achieved. In fiscal 2010, the Wacker Neuson Group continued to implement its risk management system as a key steering tool for business decisions and processes. This system includes planning for each of the core business segments, comprehensive Group reports on all affiliates (which are regularly analyzed, discussed, evaluated and submitted to all decision-makers), process definitions for all business segments and Group auditing.

The risk management handbook outlines the Group's goals, its risk policy in terms of defining, assessing and quantifying potential risks, and the nature and procedures of the risk management system. It also assigns roles and responsibility for identifying, analyzing, monitoring and communicating risks. This allows us to derive suitable measures to actively counteract known risks. Every risk management system has certain limitations, however. The Group makes every effort to rule out incorrectly applied control mechanisms or similar vulnerabilities. As such, the internal control systems deployed in our

company and described in detail in this report do not provide an absolute guarantee or warranty that all risks are always correctly identified and recorded in full and in good time.

Risk categorization

Risk class	Risk exposure1
To be monitored	EUR 50,000 to 125,000
Major	EUR 125,000 and more

1 Risk exposure = (probability/100) x impact

Our risk reporting system lists and describes each individual risk identified in our lines of business. We examine the risks every quarter and add newly identified risks if necessary. To this end, the controlling department consults the departments at Group headquarters and at the affiliates. Following completeness and plausibility checks, the data gathered is aggregated.

The Group's comprehensive risk management system also includes systematic financial risk management. We have defined Group guidelines and policies for certain activities such as dealing with foreign currency risks, interest rate risks and credit risks, the use of derivative and other financial instruments and the use of liquidity surpluses. We assess the risks using both quantitative and qualitative methods that are uniform throughout the Group, allowing comparison across the various business units. The risks are evaluated according to probability of occurrence and potential damages.

Risk probability

Category	Risk probability as a %
Low	0 to 5
Medium	5 to 20
High	20 to 50
Very high	50 to 99

Key features of our internal control and risk management systems in relation to accounting plus related disclosures

According to the law outlining modernization of German accounting rules, the internal control system covers the basic principles, processes and measures required to ensure effective, cost-efficient, due and proper performance of accounting processes in compliance with the relevant legal guidelines. In this context, this also includes the internal auditing system, to

the extent that it relates to accounting. As part of the internal control system, the risk management system – similar to the auditing system – draws on appropriate control and monitoring processes for accounting. This refers in particular to items on the balance sheet recognizing the company's risk hedging positions (evaluation units).

The Wacker Neuson Group's internal control and risk management system in relation to accounting can be described as follows:

• JJ The individuals/units responsible for accounting are clearly defined at company and Group level. Responsibility has been vested in the accounting, controlling, auditing and treasury departments. Ultimate responsibility lies with the Executive Board. Within accounting, we clearly differentiate between booking and auditing financial data.
• JJ Employees involved in accounting are qualified to the highest standards.
• JJ We have suitable systems and processes in place for planning, reporting and controlling as well as for risk management and deploy these across the Group. Reports due on a quarterly or monthly basis, including in accounting, enable the Group to respond quickly to unexpected negative developments.
• JJ Procedural guidelines, such as the Group-wide accounting manual, rating guide and list of processes subject to second sign-off, are documented in writing and accessible at all times to all Group employees. These guidelines guarantee uniform handling of specific scenarios throughout the entire Group. We update them as required and align them with new circumstances and requirements.
• JJ Proven standard software supports accounting functions, and all systems deployed are secured against unauthorized access from third parties.
• JJ Line managers double-check sample bookings. Similarly, electronic checks are regularly activated and plausibility checks carried out. Effective controls (including second sign-off and analytical checks) are in place for all accounting processes (payment runs, for example).
• JJ Accounting processes are also regularly checked by internal auditing.
• JJ Various internal bodies, such as the auditing department or the auditing committee of the Supervisory Board, review and rate the effectiveness of the internal control and risk management system in relation to accounting processes.

In relation to accounting, the aim of our internal control and risk management system is to ensure that all company dealings and circumstances are disclosed, calculated and evaluated correctly on the balance sheet, and correctly incorporated in the accounting system. This enables the Group to at least identify and – by and large –prevent accounting errors.

Efficient accounting procedures are built on a framework comprising suitably qualified employees, appropriate tools, dedicated software, a clearly defined management, control and monitoring structure plus internal regulations and guidelines. Clearly defined areas of responsibility plus a range of controls and checks as described in detail above (in particular second sign-off and plausibility checks) ensure that our accounting processes are executed correctly and with due care and attention.

This framework ensures that business transactions are captured, processed and documented in the accounting systems of the company and Group in compliance with other statutory regulations, international accounting standards, the Articles of Incorporation and internal company guidelines, and that these figures are rapidly and correctly recognized in the balance sheet. Our risk management strategy enables us to identify risks at an early stage, respond appropriately and communicate them in a timely manner. At the same time, it ensures that assets and liabilities are correctly evaluated and disclosed in the Annual and Consolidated Financial Statements. This provides our stakeholders with reliable, meaningful and timely information.

Risks

As of December 31, 2010, the company identified the following significant risks to the Wacker Neuson Group that could have a negative impact on business development:

Environment and industry risks (risks related to the overall economic situation, the industry, locations and countries as well as other sales risks)

At 49 percent, environment and industry risks account for the largest share of overall risks (previous year: 32.2 percent).

The Wacker Neuson Group is dependent on the general economic climate and international construction industry trends. The affiliates Weidemann GmbH and – to a lesser extent – Kramer-Werke GmbH and Wacker Neuson Linz GmbH are dependent on developments in the agricultural industry.

The US property and subprime crises were precursors to the recession in the real economy in 2009, which had a severe negative impact on the construction and agricultural markets – the effects of which are still being felt in 2011. A repeat downturn in the US economy could squeeze demand for the Group's products and services. The weak development of key early indicators for construction activity in the US, for instance, could still trigger significant price adjustments. The US property market must stabilize, however, in order for the American construction industry to recover in the long-term and not trigger another recession. As a result, there is a fundamental risk that our core markets in the US and Europe could be again hit by a downturn in the construction industry.

The large number of state investments in infrastructure projects has helped stabilize the sector. When these investment programs come to an end in our core markets in the US and Europe, the number of publicly financed construction projects may fall. Construction investments in some EU countries may also be delayed due to high national debt in these countries. Both scenarios would curb demand for Wacker Neuson Group products and services. We are countering this risk by adopting proactive go-to-market strategies and diversifying target markets in various industries. We are also launching new products – above all compact equipment – and expanding the Wacker Neuson dealer network.

The German, Austrian and Swiss markets account for a sizeable chunk of our consolidated earnings. Unfavorable market trends in these three countries would have a disproportionately strong impact on Group earnings. We are countering this risk with proactive, flexible go-to-market strategies through our direct sales channels in Germany, Austria and Switzerland.

The Wacker Neuson Group is also affected by seasonal fluctuations. Sales may therefore fluctuate during the year.

The international nature of our business means our company is exposed to a large variety of political, economic and other risks.

The Wacker Neuson Group faces tough international competition. However, we are maintaining the price strategy accepted by our customers. We are countering the potential risk of losing market share here by offering attractive financing solutions, for example, and strengthening our spare parts and service offerings.

If individual distribution partners do not sell the expected volumes of our products, there is a risk that our company might not be able to achieve revenue and profit targets. Wacker Neuson is constantly expanding its dealer network. Our strategy depends on dealers offering the full product portfolio for both the construction and agricultural industries. There is a risk that certain dealers may elect to only offer part of our portfolio and that dealers in the existing network may switch to competitor products. We are countering this by maintaining close contact with our sales partners and addressing their individual needs with attractive offers.

The company has also identified a risk inherent in variations in customer and supplier structures from one country to another. Within an individual country, the loss of a major customer (due to insolvency or market consolidation, for instance) can have a serious impact on demand for products and services from the affiliate concerned. We are countering this risk by proactively maintaining strong customer relationships and flexible collaboration concepts.

Demand on the international market is becoming increasingly concentrated due to mergers among our customer base. Customer takeovers by financial investors are also possible here. This type of development can have a positive or negative impact on our unit sales and revenue, neither of which can be predicted at this stage The Wacker Neuson Group is countering this risk through closer customer communication and by continuing to build its brands.

Performance-related risks (risks associated with procurement, production and R&D)

At around 29 percent, performance-related risks account for the second largest share of total risk (previous year: 9.9 percent).

The Group requires components and raw materials to manufacture its products – particularly steel, aluminum and copper. Our production uses structural steel components, precast

parts, as well as hydraulic and chassis components containing varying amounts of crude steel. Due to the economic recession in fiscal 2009, many suppliers cut back their production capacity to such an extent that they had difficulty meeting orders during the upswing. Supply bottlenecks can lead to delays in our shipments and may also result in increased prices. There is a continued risk that suppliers may not be able to keep up with demand or could run into financing difficulties, although this risk has now fallen significantly. The company is countering this risk by maintaining close contact with our suppliers and ensuring they are more involved in planning. We are also drawing up special standard agreements and developing new collaboration strategies. To secure delivery capabilities, Wacker Neuson is increasing inventory where necessary.

Increases in the price of raw materials, in particular for steel but also for other components, caused by current demand and exchange rate fluctuations can push up cost of sales for the Wacker Neuson Group. The company is countering this risk through longer-term contracts and more flexible procurement strategies. We are maintaining regular contact with our business partners and suppliers to jointly develop forward-looking solutions. Passing on price increases to a reasonable degree is generally accepted as standard practice by the market.

We also rely on supplier parts and raw materials being free of defects and meeting the relevant specifications and quality standards. Defects in premanufactured products can impact quality and slow production, which may ultimately delay product delivery. The Wacker Neuson Group is countering this risk with a quality management system that also covers our suppliers.

The Wacker Neuson Group depends on developing new products and bringing these to market in good time. It is essential that we comply with national and international laws and directives and factor these into product development. If we do not continue to do this, our competitive position and growth opportunities may be impaired. The company's R&D department therefore continuously works to develop new products and enhance our existing portfolio, always aligning its activities with market demands and observing applicable regulations, laws and directives.

Strategic business risks (risks arising from business decisions, investments, entering new markets, launching new products and acquiring and integrating new companies)

We are continuing to expand our compact equipment segment as well as our sales and service network in line with our long-term strategy. This involves investments, which may not necessarily be recouped. Unforeseeable risks can also arise within individual projects and delay execution. We are countering these risks by adapting our execution strategy to current market dynamics, carefully examining all planned investments and possible imminent risks, pursuing a lean project management policy and maintaining a high equity ratio.

The company is also exposed to risks in connection with its ongoing international expansion activities. We are establishing our compact equipment offering in Europe, the Americas and, in the medium term, Asia. We have identified customer demand here. However, if our medium- to long-term expansion plans do not pan out as anticipated, or if we are unable to harmonize national sales channels due, for example, to lower than anticipated demand for our products in certain countries, there is still a risk that we might have to change or downscale our long-term growth strategies. We are countering this risk by regularly evaluating the success of our measures, ensuring a high degree of flexibility in line with market dynamics and through intensive training for our sales teams.

We also consider and carefully assess alliances and acquisitions as a means of gaining market share and expanding our product portfolio. However, failure to evaluate risks accurately when acquiring another company or entering into a partnership may have a negative impact on Group business development and growth prospects.

We have secured our OEM partnership with CLAAS Global Sales GmbH and our strategic alliance with Caterpillar Inc., Peoria, USA, with long-term contracts. The company is countering the risk of these OEM alliances being terminated through close collaboration, regular contact and the ongoing improvement of processes and product quality.

In addition, loss of suppliers (due to insolvency, for instance) can threaten our ability to deliver products and meet sales targets for specific areas. This also applies to delayed parts and component deliveries from suppliers. We are minimizing these risks through proactive go-to-market strategies and special standard agreements securing delivery capabilities.

Planned changes to the company's legal structure could prove difficult and time-consuming.

The financial risks (risks associated with financial instruments, exchange rate and interest fluctuations, and financing) are explained in the Notes to the Consolidated Financial Statements (items 23 and 30). Financial risks account for around 12 percent of overall risk (previous year: 49.5 percent).

Legal risks (risks related to pending legal proceedings, patent and trademark law and tax law)

If the company were unable to protect its intellectual property sufficiently, this would impair its competitive ability. We are reducing this risk through intensive patent and intellectual property management.

Our market-leading products are being copied – in particular by Chinese manufacturers – and this can distort sales. We are minimizing this risk by enforcing our intellectual property rights more aggressively while expanding our international sales and service network.

Warranties and product liability claims can result in claims for damages and injunctions. We are minimizing this risk by taking the greatest of care in the development and manufacture of our products on the one hand and, on the other, by drafting contracts carefully and ensuring they are properly enforced. The Group also minimizes the risk of disputes with third parties over intellectual property rights through extensive prior investigations and research.

No legal proceedings are currently underway or pending that might pose significant risks to the Wacker Neuson Group's financial situation. The Group has concluded insurance policies worldwide to protect against liability risks and potential damages attributable to the company.

Other risks (risks associated with human resources, IT and the environment)

The company uses IT in numerous areas. Failure of these systems could negatively impact on our production and goods flow, for example, and lead to loss of revenue. The company is countering this risk through IT backup strategies. We are pursuing a strict project management policy to counter risks that can occur during the implementation of global IT systems as well as to prevent additional costs.

Increasingly strict regulations governing noise, environmental and user protection can entail additional costs for the Wacker Neuson Group. We are counteracting this risk by adjusting our price policy.

In light of current market developments, the Wacker Neuson Group is looking to recruit qualified mechanical engineers. The labor market may not meet our need for qualified staff. The company is countering this risk with dedicated recruitment efforts.

Summary of Group risk situation (assessment of risk situation by management)

Compared with fiscal 2010, the value of potential damages has dropped overall.

Viewed as a percentage of overall risk, our main risks lie in the performance, financial, economic and industry categories. Together, these three categories represent around 90 percent of total risk (previous year: 92 percent).

We are not currently aware of any other significant risks to the Group. Furthermore, we have not identified any individual or collective risks to our continued existence as a going concern that might negatively affect the company in the foreseeable future.

The risk profile of the Wacker Neuson Group is not currently analyzed and evaluated by an external body such as a rating agency.

Distribution of risk

as a %

Risk category	Percentage share of total risk
Environment and industry risks	48.7
Performance-related risks	29.1
Financial risks1	12.1
Strategic business risks	0.1
Legal risks	3.5
Other risks	6.5

The financial risks (risks associated with financial instruments, exchange rate and interest fluctuations, and financing) are explained in the Notes to the Consolidated Financial Statements (item 23 and 30).

Opportunities

Opportunities relate to internal and external developments that can have a positive impact on the Group. The responsibility for identifying and managing opportunities in a timely manner is vested in the same committees that make project decisions in response to changing market and customer requirements and not by specific individuals. These committees may include members of the Executive Board, executives at our affiliates, plus senior employees from research and development, product management, quality management, sales and service and strategic procurement. Our decision-making process focuses on opportunities while at the same time taking the associated risks into account. In future, we intend to develop this process into a Group-wide, standardized opportunity management system. Selected potential opportunities for the Wacker Neuson Group are outlined in the section "Opportunities and outlook for future development of the Wacker Neuson Group".

X. Information in accordance with Section 315 (4) and Section 289 (4) HGB as well as the Executive Board report in accordance with Section 176 (1) Sentence 1 AktG ( German Stock Corporation Act)

According to Section 315 (4) of the HGB, listed companies must disclose information on the composition of capital, shareholders' rights and restrictions, participating interests and corporate bodies that may be relevant for takeovers in the Group Management Report. The same information must also be disclosed in the Management Report, pursuant to Section 289 (4) of the HGB. Furthermore, according to Section 176 (1) Sentence 1 of the AktG, the Executive Board must submit a report containing this information to the AGM. The following contains a summary of the information pursuant to Section 315 (4) and Section 289 (4) of the HGB as well as the corresponding explanatory comments pursuant to Section 176 (1) Sentence 1 of the AktG. p. 94

Composition of subscribed capital

At December 31, 2010, the company's share capital amounted to EUR 70,140,000, divided into 70,140,000 individual no-parvalue nominal shares, each representing a proportionate amount of the share capital of EUR 1.00 according to Article 3 (2) of the Articles of Incorporation of Wacker Neuson SE. There is only one type of share; all shares are vested with the same rights and obligations as outlined in detail in particular under Sections 12, 53a, 188 ff and 186 of the AktG. Unless otherwise specified in the charter of an SE, the provisions of the AktG apply to Wacker Neuson SE in accordance with Section 9 (1) letter c) ii), Section 10 of Council Regulation (EC) No 2157/2001 of October 8, 2001 on the Statute for a European company (SE) (referred to as charter of an SE in the following).

Restrictions affecting voting rights or the transfer of shares

Information on the pool agreement

There is a pool agreement between some shareholders and companies of the Wacker family on the one hand, and companies and shareholders of Neuson on the other. Prior to each AGM of Wacker Neuson SE, the pool members decide how to exercise voting and petition rights in the meeting. Each pool member undertakes to exercise their voting and petition rights in the AGM in line with the pool's decisions, or to have these rights exercised in this manner. If the pool does not reach a decision with regard to a resolution on the allocation of retained earnings, adoption of the annual financial statements by the AGM, approval of Executive and Supervisory Board members' actions, appointment of the auditor, upholding minority interests and compulsory changes to the Articles of Incorporation as a result of changes to legislation or jurisdiction, the pool members have the right to freely exercise their voting rights. In all other cases, the pool members must vote to reject the proposal. The Neuson shareholders appoint two members to the Supervisory Board, and the Wacker shareholders appoint two further members to the Supervisory Board.

Shares can be transferred without restriction to spouses, registered partners, pool members' children, children adopted when they were minors by pool members, siblings, foundations set up by pool members that are either charitable foundations or in which the beneficiaries and the controlling members of the management board satisfy the aforementioned criteria, and companies where the direct or indirect shareholders also satisfy the aforementioned criteria. If shares are transferred to any such persons, they must join the pool agreement. If shares are transferred to third parties, either for a fee or free of charge, the other pool members have the right to acquire these shares. If the shares are to be sold to third parties off the stock exchange, all of the other pool members have a preferential purchase right. If a pool member intends to transfer shares in such a way that more than 50 percent of voting rights in Wacker Neuson SE would be held by third parties who do not satisfy the criteria defining those individuals to whom transfers can be freely made, the remaining pool members have the right to also sell their shares. If a pool member is excluded from the pool for good reason, the other pool members have a right to acquire the shares or a preferential purchase right. This also applies if a pool member ceases to qualify as a pool member.

Information on the partnership agreement of Wacker Familiengesellschaft mbH & Co. KG

Some of the Wacker family shareholders hold part of their shares via Wacker Familiengesellschaft mbH & Co. KG, which in turn also holds shares via Wacker-Werke GmbH & Co. KG. Economic ownership of the shares is attributed to the Wacker family shareholders.

The pool agreement has precedence over the regulations of the partnership agreement as long as Wacker Familiengesellschaft mbH & Co. KG is party to the above pool agreement. A partners' meeting is held prior to every AGM of Wacker Neuson SE. In this meeting, the Wacker family shareholders define how

they will vote and exercise their petitioning rights. Votes in the AGM are to be cast in line with the pool's decisions. Two of the Wacker family shareholders have the right to propose one member of the Supervisory Board each to the shareholders, this member is then to be elected by the remainder.

Only the acquisition and preferential purchase rights in the pool agreement apply to family members who are party to the pool agreement. In the case of a sale by a family member who is not a pool member, acquisition and preferential purchase rights apply if shares are sold to third parties who do not fulfill the criteria defining those individuals to whom shares can be freely transferred set forth in the abovementioned pool agreement. If a family shareholder exits the company as a result of a termination, the remaining pool members have a preferential purchase right to buy the shares for a period of two years from the date this shareholder exits the company. In addition, the partners' meeting can resolve that the exiting family shareholder does not receive compensation in cash but in the form of the shares to which they are financially entitled. After May 14, 2012, each exiting family member can demand to receive their compensation in the form of the shares to which they are financially entitled.

Pool agreement between Lehner and Neuson shareholders

The Lehner shareholders have issued a Neuson shareholder with power of attorney with regard to the shares they acquired prior to the merger and during the merger between the company and Neuson Kramer Baumaschinen AG (now Wacker Neuson Beteiligungs GmbH). The Neuson shareholder is independently responsible for exercising these voting rights. He is not subject to any instructions, and will always exercise these in the same way as for the shares that he himself holds. These shares are thus subject to the provisions of the pool agreement mentioned above.

The Neuson shareholder has a preferential purchase right to buy these shares in the event of a transfer to entities other than the Neuson shareholder or to Lehner shareholders.

The Executive Board is not otherwise aware of any restrictions affecting voting rights or the transfer of shares.

Direct or indirect participating interests in equity that exceed ten percent of voting rights

The Executive Board is aware of the following direct or indirect participating interests in the share capital of the company that exceed 10 percent of voting rights at December 31, 2010 – these are calculated and allocated in accordance with provisions of the German Securities Trading Act (WpHG):

	Direct share of	Voting rights allocated	Percentage of voting
as a % at Dec., 31, 2010	voting rights	to the stakeholder 1	rights in total 1
Stakeholder with duty to disclose interest
Wacker Familiengesellschaft mbH & Co. KG	5.29	57.80	63.09
Wacker-Werke GmbH & Co. KG	28.14	35.31	63.45
IWZ AG (Interwac)	0.00	63.09	63.09
VGC Invest GmbH	5.06	63.09	68.15
Christian Wacker	0.74	63.09	63.84
Dr. Ulrich Wacker	0.00	68.15	68.15
Andreas Wacker	0.74	63.09	63.84
Barbara von Schoeler	0.26	63.09	63.35
Petra Martin	0.00	63.09	63.09
Dr. Andrea Steinle	0.00499	63.09	63.10
Ralph Wacker	0.74	63.09	63.84
Susanne Wacker-Waldmann	0.74	63.09	63.84
Benedikt von Schoeler	0.00	63.09	63.09
Jennifer von Schoeler	0.00	63.09	63.09
Leonard von Schoeler	0.00	63.09	63.09
Vicky Schlagböhmer	0.00	63.09	63.09
Christiane Wacker	0.00	63.09	63.09
Georg Wacker	0.00	63.09	63.09
Baufortschritt – Ingenieurgesellschaft mbH	0.00	63.09	63.09
PIN Privatstiftung	0.00001	63.09	63.09
NEUSON Industries GmbH	0.00001	63.09	63.09
Johann Neunteufel	0.00001	63.09	63.09
NEUSON Ecotec GmbH	29.01	34.08	63.09
Martin Lehner	0.46	62.76	63.22
Adolf Lehner	0.33	62.76	63.09
Herta Lehner	0.33	62.76	63.09

Votes bound through the pool agreement – see "Information on the pool agreement" under "Restrictions affecting voting rights or the transfer of shares" on p. 84 in the Notes– are added together. The figures are rounded to two decimal places.

Bearers of shares with extraordinary rights that grant the holders controlling powers

There are no shares with extraordinary rights that grant the holders controlling powers.

Type of control of voting rights if employees hold participating interests and if they do not directly exercise their controlling rights.

The company's employees can exercise the controlling rights due to them from shares directly, as is the case for other shareholders, according to statutory provisions and the Articles of Incorporation.

Statutory provisions and provisions of the Articles of Incorporation regarding the appointment and dismissal of members of the Executive Board and changes to the Articles of Incorporation

Members of the Executive Board are appointed and dismissed according to Sections 84 and 85 of the AktG. The Executive Board of Wacker Neuson SE must have at least two board members according to Article 6 (1) of the Articles of Incorporation of Wacker Neuson SE. The Supervisory Board otherwise determines the number of Executive Board members (Article 6 (2) Sentence 1 of the Articles of Incorporation). The Supervisory Board is responsible for appointing and dismissing Executive Board members; a simple majority of votes cast suffices for these decisions. Executive Board members shall be appointed for a maximum term of six years (Section 9 (1) and Section 39 (2) and Section 46 of the regulation on the charter of an SE, Sections 84 and 85 of the AktG, Article 6 (2) Sentence 1 of the Articles of Incorporation). The Supervisory Board can appoint a Chairman of the Executive Board, a Deputy Chairman of the Executive Board and a Spokesperson for the Executive Board (Article 6 (2) Sentence 2 of the Articles of Incorporation). A Spokesperson and Deputy Chairman have been appointed.

Sections 179 ff of the AktG must be observed in the event of changes to the Articles of Incorporation. The AGM resolves on changes to the Articles of Incorporation (Sections 119 (1) No. 5 and 179 (1) of the AktG). Under the charter of a European company (Societas Europaea or SE) such as Wacker Neuson SE, all decisions affecting the Articles of Incorporation must be approved with a majority of at least two thirds of the votes cast, unless the legislation of the state where the SE is based mandates or allows a larger majority to apply (Section 59 (1) of the regulation on the charter of an SE). Each member state is free,

however, to rule that a simple majority of votes cast suffices, provided at least half of the subscribed capital is represented (Section 59 (2) of the regulation on the charter of an SE). German legislation has instituted this option in Section 51 (1) of the law governing implementation of the SE in Germany. This does not apply to changes relating to the object/purpose of the company or relocation of the company seat. Similarly, it does not apply to instances where the law mandates that the votes cast must represent a higher percentage of the subscribed capital (Section 51 (2) of the law governing implementation of the SE in Germany). Accordingly, Article 21 (1) of the Articles of Incorporation states that unless otherwise stipulated by law, changes to the Articles of Incorporation require a two-thirds majority of the votes cast or – if at least half of the share capital is represented – a simple majority of votes cast.

The Supervisory Board is entitled to approve changes to the Articles of Incorporation that are merely a matter of wording (Section 179 (1) Sentence 2 of the AktG, Article 15 of the Articles of Incorporation).

The Executive Board's powers, in particular with regard to the possibility of issuing or buying back shares

Treasury shares

By a resolution passed at the AGM on May 28, 2010, the Executive Board is authorized, with the prior approval of the Supervisory Board, to acquire 7,014,000 treasury shares via the stock exchange by November 27, 2011. This acquisition may also be performed by one of the company's group companies or for its or their account by third parties. In so doing, the shares acquired as a result of this authorization together with other shares in the company that it has already acquired and still holds may not at any time total more than 10 percent of the existing share capital. Shares may not be purchased for the purpose of trading company shares on the stock exchange.

The compensation paid by the company per registered share (without incidental acquisition costs) may not be more than 10 percent higher or lower than the arithmetic average of the closing prices for shares in the company in XETRA trading (or a comparable successor system) on the Frankfurt Stock Exchange on the last five stock market days prior to the date on which the undertaking to acquire the shares was entered into. The authorization can be exercised in whole or in parts, in the latter case also on multiple occasions.

The Executive Board may also redeem the treasury shares still to be acquired without a renewed resolution to be passed by the AGM with the permission of the Supervisory Board. The

authorization can be exercised in whole or in parts, in the latter case also on multiple occasions. The redemption is performed such that the share capital is not changed, but that the proportion the other shares represent in the share capital is increased in accordance with Section 8 (3) of the AktG (Section 237 (3) No. 3 of the AktG). The Executive Board is authorized to change the number of shares in the Articles of Incorporation accordingly.

The Executive Board is authorized, with the approval of the Supervisory Board, to use shares in the company that were acquired as a result of the above authorization as (partial) compensation as part of mergers or to acquire companies, participating interests in companies or parts of companies. The acquired treasury shares may also be sold to Executive Board members and members of executive bodies of associated companies within the framework of an executive profitshare model, which has yet to be approved by the Supervisory Board. The Supervisory Board will determine the extent to which shares will be sold to members of the Executive Board within the framework of this plan when deciding on the overall executive profit-share model. In addition, the Executive Board is authorized, with the approval of the Supervisory Board, to sell the treasury shares still to be acquired at a price that is not substantially lower than the stock market price on the date of the sale. The price at which shares in the company can be sold may not be more than 5 percent lower than the arithmetic average of the closing prices of shares in the company in XETRA trading (or a comparable successor system) at Frankfurt Stock Exchange on the last five stock market days prior to the date of the general sale. In this case, the number of the shares to be sold together with the new shares that were issued after this authorization was issued excluding subscription rights in accordance with Section 186 (3) Sentence 4 of the AktG, and together with treasury shares already sold, may not exceed 10 percent of the company's share capital which exists on the date the resolution passed at the AGM came into effect. The authorization to redeem/sell shares can be availed of in full or in several partial amounts. The shareholders' subscription rights to treasury shares in the company are excluded to the extent that these shares are redeemed or sold according to the above authorizations.

Authorized Capital I

According to Article 3 (3) of the Articles of Incorporation, the Executive Board is authorized to increase the company's share capital by April 12, 2012, with the approval of the Supervisory Board, by issuing new, registered shares against cash contributions, in full or in partial amounts, on one or several occasions, however at the most by a maximum of EUR 1,000,000 (Authorized Capital I).

Shareholders' statutory subscription rights are excluded:

• JJ If employees of the company and its affiliates and executive bodies of affiliates (to the extent that these are not simultaneously members of the company's Executive Board) are offered shares at an issue price that is 15 percent lower than the issue price;
• JJ For fractional amounts;
• JJ Otherwise, if the issue price of the new shares is not significantly below the company's market price and the new shares issued to the exclusion of subscription rights do not exceed a total of 10 percent of the share capital, neither at the time the authorization takes effect, nor at the time of exercising. Shares must be added to the above 10 percent threshold if they were issued or are to be issued to service options or convertible bonds to the extent that the bonds are issued in corresponding application of Section 186 (3) Sentence 4 of the AktG excluding subscription rights; in addition, the sale of treasury shares is to be added if the sale was made as a result of a valid authorization to sell treasury shares that applied on the date that Authorized Capital I came into effect in corresponding application of Section 186 (3) Sentence 4 of the AktG excluding subscription rights.

Subject to the approval of the Supervisory Board, the Executive Board also decides on the content of the respective share rights and the other conditions of the share issue including the issuing amount.

Authorized Capital II

According to Article 3 (4) of the Articles of Incorporation, the Executive Board is still authorized to increase the company's share capital by April 12, 2012, with the approval of the Supervisory Board, by issuing new, registered shares against contributions in kind, in full or in partial amounts, on one or several occasions, however at the most by a maximum of EUR 5,360,000 (Authorized Capital II).

The shareholders' statutory subscription rights are excluded to grant shares against the contribution of companies and participating interests in companies or parts of companies to the company.

Subject to the approval of the Supervisory Board, the Executive Board also decides on the content of the respective share rights and the other conditions of the share issue including the issuing amount.

The authorized capital provisions described above reflect the practices typical of listed businesses similar to the company. They are not intended to obstruct takeover bids.

Key company agreements that are subject to a change of control clause following a takeover bid and the resulting impact

A long-term cooperation agreement with the company Caterpillar covering the OEM production of mini excavators includes a provision that allows Caterpillar to terminate the agreement under certain conditions should a competitor to Caterpillar acquire a direct or indirect share in the company in excess of 25 percent or a share in excess of 15 percent combined with a seat on the company's Supervisory Board. The list of competitors is specified in detail in the agreement.

Compensation agreements between the company and the members of the Executive Board or its employees for the event of a takeover offer

There is no such agreement.

Concluding remark

During the period under review, the Executive Board had no reason to address issues concerning a takeover, or engage with disclosure details stipulated under the German Takeover Directive Implementation Act (Übernahmerichtlinie-Umsetzungsgesetz). The Executive Board therefore does not see the need to add further details to the information provided above.

XI. Declaration on corporate governance according to Section 289a HGB

On March 21, 2011, the Executive Board of Wacker Neuson SE issued a corporate governance declaration pursuant to Section 289a of the German Commercial Code (HGB). This is available on the Wacker Neuson SE website at www.wackerneuson.com/ declaration-on-corporategovernance

XII. Remuneration framework

Information on the Executive Board

According to the Vorstandsvergütungs-Offenlegungsgesetz (German Executive Board Remuneration Disclosure Act), listed companies must disclose individualized information on the Executive Board's remuneration in the notes to the annual and consolidated financial statements, broken down into performance-related and non-performance related components as

well as long-term incentives. The Act stipulates that information may be withheld if the AGM resolves this with a majority of 75 percent of votes cast. This type of resolution can be passed for a maximum period of five years. The company has availed of this opportunity for fiscal years 2006 to 2010 inclusive by way of a resolution passed at the AGM on May 15, 2006.

The Executive Board's remuneration is defined by the entire Supervisory Board and reviewed at regular intervals. Defining the structure and amount of the remuneration is based on the company's size and economic position as well as the tasks and performance of the members of the Executive Board.

The Executive Board's remuneration comprises:

• JJ A fixed annual basic salary
• JJ A variable annual salary
• JJ A special bonus (paid for the years up to and including fiscal 2010)
• JJ Transitional pay, compensation upon an early exit
• JJ Remuneration in the case of accident, illness or death
• JJ Non-cash remuneration and other additional remuneration
• JJ A pension commitment

The individual remuneration components are as follows:

The annual fixed salary is paid in equal monthly installments.

The variable salary is based on consolidated earnings after tax – for the last time in the 2010 fiscal year – as reported in the approved consolidated financial statements for the respective fiscal year. From fiscal 2011 onwards, the variable salary will be based, on the one hand, on average consolidated earnings after taxes for the previous three fiscal years and, on the other, on the return on assets as reported in the consolidated financial statements. An upper threshold for the variable remuneration has been agreed in the same amount for all Executive Board members.

Members of the Executive Board shall also receive a special bonus for the last time in fiscal 2010. For part of the Executive Board, this bonus was tied to the financing of shares in the company within the framework of an executive profit-share model with a view to committing the Executive Board members to the company in the long term. The other members of the Board received the special bonus during an interim period pending introduction of a new executive profit-share model. This profit-share model for active members of the Executive Board has been terminated without replacement in response to the German Law on the Appropriateness of Executive Board Remuneration (VorstAG); as a result, no special bonuses will be paid as of fiscal 2011.

If the Executive Board members' employment contract is terminated prematurely, but not for good cause, the members of the Executive Board each receive compensation in the amount of their average discounted annual remuneration for the remainder of the contractual period including their variable remuneration and the special bonus. If the contract is terminated after the age of 55 and prior to the member reaching the age of 60, the members of the Executive Board may claim transitional payments.

If they are temporarily prevented from working through no fault of their own, members of the Executive Board continue to receive their fixed annual salary and bonus for a limited period. Widows and dependent children receive corresponding payments for a limited period.

The non-cash remuneration and other remuneration includes a subsidy for health insurance, premiums for life insurance in favor of the Executive Board members, premiums for accident insurance, the use of a company car, etc.

The members of the Executive Board receive an old-age pension for life upon reaching the age of 60 unless the employment relationship with the company was terminated for good cause that is the fault of the Executive Board member. In addition, an invalidity pension is paid in the event of disability or professional incapacity, and a widow's and orphans' pension is paid in the event of death. Other remuneration may have to offset again these amounts payable.

Total remuneration for the Executive Board

Total remuneration for the Executive Board in the period under review amounted to EUR 6.2 million (previous year: EUR 3.0 million). The increase here is largely attributable to the departure of an Executive Board member (payments for non-compete obligations, profit shares and bonuses). Total remuneration for the Supervisory Board for the same period amounted to EUR 0.3 million (previous year: EUR 0.3 million). At the AGM on May 15, 2006, a resolution was passed to refrain from itemizing this information in accordance with Section 285 (1), no. 9a clauses 5 to 9 in conjunction with Section 314 (2), clause 2 HGB in conjunction with Section 315a, (1) HGB.

Information on the Supervisory Board

By a resolution passed by the AGM on May 28, 2010, the remuneration structure for the members of the Supervisory Board was set down in article 14 of the Articles of Incorporation. In line with this provision, the fixed remuneration for each individual member of the Supervisory Board amounts to EUR 20,000. The Chairman of the Supervisory Board receives twice this amount, and his/her Deputy receives 1½ times the fixed remuneration. Members of committees receive an additional

remuneration, with the Chairman of each committee receiving twice the regular committee remuneration. In addition, the members of the Supervisory Board receive a meeting fee for each Supervisory Board meeting in which they participate.

The variable remuneration for the individual members of the Supervisory Board is based on the consolidated earnings after taxes. It is capped at 1½ times their respective fixed remuneration. It is calculated in line with the company's approved consolidated financial statements taking Section 113 (3) of the AktG into account. Meeting fees are added to the variable remuneration. In addition, members of the Supervisory Board are reimbursed for their out-of-pocket expenses and any VAT that may be due on their remuneration and out-of-pocket expenses.

XIII. Supplementary report

Events/transactions of particular importance since the reporting date

A resolution shall be put forward at the upcoming AGM on May 26, 2011 to structure Wacker Neuson SE as a holding company. Operating segments Production Germany, Sales Germany and Sales Europe will be separated from Wacker Neuson SE in their entirety – all assets, legal relationships and employees included – and established as separate legal entities. Central Group and corporate functions will remain at Wacker Neuson SE under the umbrella of what is now central administration. The three operating segments will be divested into three German companies registered in Munich and structured as GmbH & Co. KG limited partnerships. A divestiture and incorporation contract will be proposed for approval at the AGM. Under the proposed holding structure, Wacker Neuson SE shall hold all shares and 100 percent of the capital in the three new German affiliates.

The following management information should be noted when considering the planned separation of business. The 2007 merger between the former Wacker Construction Equipment AG and the former Neuson Kramer Baumaschinen AG involved the Neuson-Kramer subgroup, which was already structured as a holding, joining the Wacker Group. Since the merger, therefore, significant parts of the company are already being managed under a holding structure. However, the former Wacker subgroup retained the traditional parent company structure with the result that production, logistics and sales operations are all managed under the umbrella of a single legal entity – Wacker Neuson SE. The change in structure follows through on the merger by aligning both subgroups. In addition, the move will align the legal organizational structure with the international structures that were also already in place at the former Wacker subgroup. The wholly owned American subsidiary, Wacker Neuson Corporation, also transitioned from a parent company to a holding structure on January 1, 2011 and now manages production, logistics and sales within the framework of separate legal entities.

The move is also prompted by the desire to align the legal organization more closely with the operating management setup by establishing a central management structure within the Wacker Neuson SE holding. The objective of the new holding structure is ultimately to also increase transparency over costs, product diversity and areas of responsibility. This will result in a transparent matrix across regions and product segments, unified under a central management body, standardized IT platform and common sales network.

These measures shall not result in any changes for shareholders in our company as Wacker Neuson SE will remain the sole owner of the new companies. In financial terms, the new legal structure does not affect the Group's net assets and earnings situation.

On March 11, 2011, Japan was hit by a powerful earthquake. This triggered a tsunami, which devastated the country's eastern coast and shut down nuclear power plants. This situation could have an impact on individual Wacker Neuson suppliers. According to our latest information, our suppliers' facilities are not directly affected due to their location. Nevertheless, rolling blackouts as well as disruptions to Japan's logistics and general infrastructure may delay deliveries of premanufactured parts. If the situation continues, it may also ultimately delay deliveries of Wacker Neuson products. The Group is closely following developments among its suppliers here. However, due to current difficulties in obtaining information from Japan, we are as yet unable to make any exact assessments.

There have been no other significant events since the reporting date that could have an impact on the future business development of the Group.

Impact on earnings, financial position and net assets

With the exception of the uncertain supply situation in Japan, there have been no other events since the reporting date that could have a significant impact on the Group's earnings, financial position and net assets.

XIV. Opportunities and outlook

Overall economic outlook

• JJ Recovery of the global economy continues, but at a slower pace
• JJ Some EU countries experience financing problems
• JJ Germany remains driving force in Europe

According to leading economic research institutes, the global economic recovery is set to continue in 2011, albeit at a slower pace as the rebound reaction to the global drop in production and world trade should soon have largely leveled off.

Economic institutions expect recovery in the US to maintain pace in 2011 but to develop along more moderate lines from 2012 as economic recovery packages are phased out. Although the US economy picked up in January of the current fiscal year, experts feel that recent adjustments to US property prices continue to pose a risk to the global economy.

Economic growth in Asia remains strong as predicted. Expansion plans in China include infrastructure projects. In India and other emerging Asian economies, experts predict continued dynamic expansion. Growth is also forecast for the Middle East and Africa.

Regional contributions to world GDP growth1

Based on market weights.

Quelle: IMF; calculations by the EEAG; 2009 and 2010: forecast by the EEAG.

In the EU, economic researchers expect total GDP to increase again in 2011. However, due to the slight slowdown in the pace of global economic recovery, less momentum is expected from exports. In addition, the financing difficulties experienced by a number of EU countries have not yet been finally resolved. Only slight growth is expected in particular for Portugal, Italy, Ireland, Greece, Spain, Great Britain and Hungary as restrictive fiscal policies could dampen corporate investment. Those European economies that are well-positioned for exports to Asian markets will continue to profit from the dynamic growth in this region.

The German economy is currently experiencing a strong upturn. Domestic demand is on the rise and demand for exports remains very high. Positive sales forecasts mean that corporate investment plans for 2011 are largely focused on expansion. The business climate has improved and industrial production has picked up. Order intake has also increased significantly in recent times. Favorable income prospects, job security and low interest rates all bode well for the German economy.

EU 27 gross domestic product in 2011 Rate of change in GDP (as a %)

Source: ifo institute forecast (December 2010).

A further increase in the price of raw materials, particularly steel and steel products, is expected in the course of 2011. With regard to the currencies relevant to the Wacker Neuson Group, in January 2011 M&I Capital Markets forecast a weakening of the euro and a strengthening of the dollar by the end of 2011.

Outlook for construction and agricultural industries

• JJ Global construction and agricultural industries on the up
• JJ High demand for construction investment in emerging markets
• JJ European construction and agricultural industries overcome the effects of the economic crisis

Demand for construction machinery is set to continue to rise worldwide. Positive impetus is expected in many countries from vital infrastructure projects focusing on road and rail improvements, telecommunication services, water supplies, general renovation and modernization works, construction of public education buildings, as well as climate and environmental protection measures.

If the American construction industry is to recover and show early signs of construction activity, the real estate market must stabilize. Experts still see a risk in the high valuation of US residential property as this continues to create significant potential for price adjustments. The American Rental Association (ARA) expects the US (rental) market to start recovering in 2011, and it forecasts clear growth rates for 2012.

Infrastructure projects key driver for emerging markets

In Asia, and particularly in China, the construction equipment industry is set to continue to grow. Many emerging markets returned to the growth path comparatively quickly in 2010. To remain competitive, however, these countries must invest heavily in infrastructure over the coming years. The fastest movers here are the BRIC countries (Brazil, Russia, India and China), but countries such as Mexico, Argentina, South Africa and South Korea also plan to invest billions over the coming years in the construction of roads, airports, rail networks, utility services (energy, waste and water), and the construction of public buildings such as schools, universities and hospitals, as well as in telecommunication networks. These projects will fuel vdemand for construction equipment.

Spending on infrastructure in emerging markets 2008 – 2017

Source: Morgan Stanley Research, World Bank, Global Insights, e-Morgan Stanley Research incl. Real Estate

Experts predict strong growth rates in part for the European construction industry through 2012. Between 2011 and 2013, investments are due to rise significantly, particularly in Scandinavia, Germany, Switzerland, Great Britain, Poland, Hungary and Italy. The most dramatic decline in the last two years was experienced in European private non-residential construction, but also in industrial, public and commercial construction projects. Following on from the slight decline again predicted for 2011, moderate recovery is expected from 2012 onwards.

Financing through PPP projects on the rise

Industrial nations typically have to reconcile large national debts with the rising demand for investment funds. Publicprivate partnerships (PPPs) are an increasingly popular way of resolving this problem. In some countries, private businesses and government bodies have been cooperating for years on infrastructure projects. The benefits of this type of teamwork include lower public expense and more effective use of the resources invested. The UK started privatizing infrastructural facilities in the 1980s, with Australia and Canada following their example in the 90s. However, Germany still lags behind when it comes to PPPs. But this type of financing model for infrastructure projects is growing more and more important as it speeds the progress of even larger construction projects.

The prospects for Germany, Wacker Neuson's biggest sales market, are positive. According to the German ifo institute, investment particularly in residential construction and also in non-residential overground construction is due to rise in the coming months, boosted by low interest rates. Even if municipal bodies stretch investments over a longer time period because economic recovery packages are running out, many projects – such as highway extensions organized through PPPs – are set to fuel increased demand for construction equipment.

The German Engineering Federation (VDMA) forecasts a 10-percent rise in revenue for construction equipment manufacturers in 2011.

Cumulated construction and economic growth 2010 – 2013 (Europe)

Source: Euroconstruct (70th Conference), November 2010

Residential construction volume 1991– 2013 (Euroconstruct countries)

Source: Euroconstruct November 2010

Investments in European residential construction declined sharply in the last three years. Starting in 2011, investments are due to rise rapidly by 2013, particularly in Scandinavia, Germany, Switzerland, Great Britain, Poland, Hungary and Italy. Around 30 percent of products bought by Wacker Neuson customers are used in residential construction.

Development of non-residential construction output 2007 – 2013

Quelle: Euroconstruct November 2010

The most dramatic decline in the last two years was experienced in private non-residential construction. Industrial, public and commercial construction projects were hit hardest here. Following on from the slight decline again predicted for 2011, moderate recovery is expected from 2012 onwards. Around 70 percent of products bought by Wacker Neuson customers are used in non-residential construction.

Signs of recovery in the agricultural industry gather momentum

Global economic recovery has also benefited the agricultural industry. In addition, universal trends – such as the world's growing population and resulting increase in demand for foodstuffs – continue to have a positive effect on demand for agricultural equipment. The basic need for modern machines, particularly to work agricultural holdings efficiently, will continue to increase. Rising producer prices will have a positive effect on agricultural income, which should lead to a further increase in demand for equipment under our Weidemann brand.

According to the barometer for agricultural activity issued by the Association of German Farmers (DBV), investment among agricultural landholders in Germany has risen sharply in recent times. They are set to spend over EUR 7 billion over the next six months. The general mood is more upbeat in arable and dairy farming in particular. There are signs of a sharp rise in expenditure on equipment and agricultural buildings.

Opportunities and outlook for future development of the Wacker Neuson Group

• JJ Business model geared towards future market trends
• JJ Wider market reach for compact equipment sector
• JJ Positive business development expected to continue

In 2011, the Group will take another big step towards achieving its goals through a series of developments that underpin and strengthen the Group's business model. This refers chiefly to four main trends outlined in the following that could open up new sales markets for Wacker Neuson or prompt investments in our target markets.

• JJ End customers, dealers and professional rental companies select the manufacturer that offers the most attractive overall package consisting of innovative products, a strong brand, simple and efficient logistics and all-in service. A bundled package gives the customer a single point of contact to the manufacturer – greatly simplifying, for example, the purchase of spare parts. Wacker Neuson is one of the world's leading manufacturers with an exceptionally broad product portfolio of light and compact equipment.
• JJ The compact class is still largely at an early stage of the market lifecycle. We see the greatest medium-term potential for our compact offering in the European market (particularly in France and Great Britain), in the US and in South America. In Europe, we are using our existing sales network, while in the US we are focusing on establishing a network of exclusive Wacker Neuson dealers.
• JJ We will continue to expand our product offering in the light equipment segment to capitalize more effectively on opportunities in emerging markets such as South America, India and China. To do this, we are focusing on further developing our Group-wide sales and service network and consolidating our strong market position.
• JJ A broader agricultural portfolio will also bolster Group revenue in the medium term. We are currently focusing on adapting compact construction equipment for the agricultural industry and expanding the global reach of our agricultural portfolio.

We intend to remain on this path, continuing to invest in profitable projects and drive growth across all regions and business segments.

Taking a long-term view, climate change will create opportunities in the construction industry as attention increasingly focuses on environmental policies. The rise in weather-related damage, coupled with the necessary cleanup and repair work, will increasingly place the spotlight on preventive measures. This will be flanked by roadway reconstruction projects, more efficient repair procedures and redevelopment of residential property with a view to increasing energy efficiency.

Opportunities for Wacker Neuson

Global opportunities for the construction industry

Infrastructure projects in Eastern Europe, Asia, the US

Effects of climate change and greater focus on environmental protection

Expansion of telecom networks (including the broadband network)

Expansion and modernization of road and rail networks

Changing residential needs – due to rising urbanization, for example

Reconstruction projects (renovation, modernization)

Numerous economic action plans for infrastructure projects worldwide

Recovery in the non-residential construction sector

Global opportunities for the agricultural industry

Increasing global demand for foodstuffs and animal feed

Trend towards biofuels and other renewable raw materials

Structural shift towards fewer larger holdings (especially in Europe) with greater need for automation

Increasing industrialization of the agricultural industry, also in emerging countries

Development outlook by region

We see great potential for growth in the Americas region and plan to bolster our sales operations in this area. Investment plans among rental companies through 2012 are due to support this growth. Since launching our compact equipment on the US market, we have been focusing on expanding our network of exclusive Wacker Neuson dealers. In the coming years, we plan to distribute compact equipment throughout or almost throughout the entire region. Compact sales are also targeting the Canadian and South American markets. In these regions, our affiliates have been successfully selling light equipment for over 20 years – and in some cases, over 30 years. Especially in South America, the degree of construction site mechanization remains low in many areas. The economic upturn should drive mechanization at these sites over the coming years. We expect our strategy for the Americas region to yield strong growth in 2011 and 2012.

Total US equipment rental revenue in Million USD

Source: American Rental Association and IHS Global Insight, Inc., 2011

1 Launch of compact equipment	2 Alliance with Caterpillar (CE)	3 Wider portfolio for agriculture (CE)	4 Replacement expenditures (LE)
	JJ Strategic alliance for mini excavators up to 3t (20 years) JJ Growing market JJ Both companies to focus on their respective areas of expertise	JJ Rising demand for food and fodder JJ Biofuels and other rene wable resources JJ Fewer but larger holdings JJ Greater need for machinery	JJ Greater need for inno vative light equipment worldwide JJ Increased expenditure on replacement equipment among rental firms
JJ Global launch focused on growth markets outside Europe JJ Development of exclusive dealers JJ Maximization of potential synergies from merger JJ Gain of market share	JJ Higher volumes for more capacity utilization at production plant JJ Platform concept dilutes development and produc tion costs JJ Gain of market share in Europe and USA	JJ Market penetration in agriculture (e.g. Italy, Russia) JJ Introduction of new machines JJ International expansion	JJ Strengthening quality and innovation leadership position JJ Strengthening market position (especially in South America, India and China)

Wide compact equipment reach in existing markets CE = Compact equipment

In the Asia region, we plan to continue to drive the positive developments evident in recent years. We are focusing on expanding our sales networks in China and India – countries where we are already represented through sales and service stations. In these emerging markets and economies, where industry and logistics are developing rapidly, initial construction work calls for heavy equipment – required to access remote regions, lay roads and build other transport routes. Light and compact equipment is required at a later stage. We are carefully analyzing these dynamics to ensure that we closely align our go-to-market strategies with global economic trends.

In Europe, we aim to leverage the synergies of a shared distribution channel for light and compact equipment to generate additional profits. Our strong market presence in Europe, the depth and breadth of our product portfolio, superior rental, spare parts and repair services, and the benefits of a direct sales strategy have enabled the Group to outperform the market in capitalizing on the global upturn. For example, we plan to establish an efficient dealer network in Russia.

Development outlook by business segment

The quality of our products and scope of our services, flanked by our global presence and local proximity to customers in key sales markets, place us in a prime competitive position. We intend to consolidate our leading market position in the regions that we recently integrated in our business model. We are focused on expanding our quality and innovation leadership, establishing our strategic brand platforms across all markets, and evolving our service portfolio in line with market needs to become a full service provider.

Our current product portfolio is already fit for the future. We plan to launch new products that reach new customer groups. To secure our future success, we shall therefore continue to invest in research and development with the aim of further expanding our service portfolio and strengthening our position as one of the market's technology leaders.

We aim to further expand our strong global position as a supplier of light equipment. The variety of our product portfolio (with around 250 product categories) allows us to gain a foothold in less developed markets. Requirements placed on light equipment can differ significantly from one country to another and we see the greatest opportunities in emerging markets such as South America, India and China. Rental companies' plans to replace existing equipment will fuel sales of light equipment. Light equipment's share of total revenue is likely to fall slightly below the current figure of 40 percent in the medium term as compact equipment sales rise at a faster pace.

We see the greatest potential for growth in our compact equipment segment. We expect this business to grow steadily as it increases market share, also increasing its share of total Group revenue to over 40 percent in the medium term. We are confident that order intake will continue to develop positively in this segment.

The services business segment continues to perform well with the result that we plan to expand our service network further. Here, plans are guided by current market dynamics and customer needs. Particularly in the spare parts and repairs business, we will be evolving our service offering in line with customer requirements. Our new European used equipment center will enable us to bundle maintenance work and increase logistics flexibility in the delivery of used equipment. In the medium term, growth in the light and compact equipment segments will lead to increased revenue in the services segment. In the long term, we predict that services will account for around 20 percent of total revenue.

We intend to capitalize on the new opportunities that will be opening up for agricultural products under our Weidemann brand over the coming years. In addition to ongoing expansion in Italy and Russia, we are broadening our agricultural portfolio by adapting construction equipment to the specific needs of the agricultural industry. We are also adapting a wide range of attachments. These products will be distributed, for example, to agricultural holdings and municipal bodies under the Weidemann brand. This strategy will enable Weidemann GmbH to always provide the right vehicle and the right attachment for its customers' agricultural needs. We expect that revenue in this segment will rise in synch with the overall rise in Group revenue.

Group forecast

Capitalizing on medium and long-term opportunities Following on from strong revenue growth in 2010, we are confident about our prospects for 2011. And we have good reason to be, as the first few weeks of 2011 have shown positive developments in both the construction and agricultural industries. Customer demand for light and compact equipment remains high and we started the year with a healthy order book for compact equipment.

In light of the global revival of construction markets and growing global demand for infrastructure projects, we expect business to continue improving. In addition, we anticipate increased investment from rental companies in the US and Europe in both 2011 and 2012.

It is also a positive sign that our customers' financing situation has not deteriorated overall. The economic recovery has apparently prompted banks to see more promising prospects for companies and refrain from scaling back financing schemes.

Double-digit revenue growth expected for 2011

For fiscal 2011, management predicts a rise in revenue in excess of 15 percent compared with fiscal 2010 – this corresponds to an increase of over EUR 870 million. It also expects profit before interest, tax, depreciation and amortization (EBITDA) to improve, with an EBITDA margin of at least 12 percent. So if the company matches 2008 revenue levels, we are aiming for an EBITDA margin that is even higher than the 2008 figure (11.6 percent). This takes into account the anticipated impact of increases in materials procurement, exchange rate fluctuations and additional go-to-market measures. From today's perspective, repercussions from the major earthquake in Japan could affect some of our suppliers in this region. This, in turn, could lead to production delays at Wacker Neuson and negatively impact revenue and earnings. We are doing everything in our power to minimize the prospect of negative effects. Management remains committed to its forecast for 2011, qualified, however, by the assumption that the situation in Japan stabilizes.

The Wacker Neuson Group is financially stable, showing liquidity of EUR 36.6 million and an equity ratio of over 80 percent. As the uncertainty surrounding economic recovery continues to abate, we are now in a position to reduce liquid funds. Again, we aim to finance day-to-day operations in the current fiscal year with operating cash flow. To meet rising demand while still driving growth, we are planning investments in property, plant and equipment to the value of approximately EUR 100 million (2010: EUR 76 million) in fiscal 2011. In addition to renewal/maintenance expenditure, we will be channeling these funds into construction of our new production facility for compact equipment at our Hörsching site (near Linz, Austria) and into expansion of our sales and service station network. Since investments for 2011 will again exceed write-offs, we are expecting a negative free cash flow. Increased investment during 2011 will lead to an increase in the net financial debt, currently at a low figure. This will, however, remain below the value of investments. Annual investments are due to remain at around EUR 50 million in the medium term and the working capital target is less than 35 percent of revenue.

Planned changes to the company structure

A resolution shall be put forward at the upcoming AGM on May 26, 2011 to structure Wacker Neuson SE as a holding company. Following through on the merger, the change in structure will align both subgroups. For more information, see the "Supplementary report" chapter.

Future cost trends

Taking the upward trend in revenue into account, we will accordingly adjust costs as necessary. The Group plans to gradually increase headcount during the year in line with increases in demand. In 2011, we plan to increase staff capacity (including temporary staff) in the US and Austria. In 2009, we were able to reduce our break-even point (at EBIT level) to around EUR 600 million. For 2011, the break-even point is around EUR 690 million as we are adapting our structures to the expected growth in revenue.

As material costs increase, we cannot avoid increasing our prices for products and services accordingly. We forecast further increases in material costs of around 2 percent overall and have adapted our sales prices accordingly. Effective January 1, 2011, we increased our prices for light and compact equipment and for replacement parts by 3-4 percent. We did not increase equipment prices in the last two years.

Future partnerships

Additional acquisitions and partnerships remain part of our medium- and long-term strategy insofar as these strengthen our product offering and provide added value to our customers or enable us to expand our international footprint. We aim to maintain our solid balance sheet structure with a high equity ratio.

The Group is currently developing numerous mini excavator models for our alliance partner, Caterpillar Inc. We expect this 20-year alliance agreement to make an initial contribution to revenue during the second half of 2011 at the earliest. However, we do not expect to see the full impact on revenue and economies of scale until 2012.

Outlook to 2013

If the market develops as expected, we are also aiming for a double-digit increase in revenue in 2012. Over the last two years, we have successfully implemented measures aimed at improving efficiency and reducing costs – and we intend to step up these measures in future. This should contribute to even higher earnings in 2012, and help us emerge in an even stronger position from the economic crisis.

From today's perspective and assuming market trends remain positive, the Group predicts that 2013 revenue will return to pre-crisis or similar levels. In 2007, the newly merged Wacker Neuson reported pro-forma revenue of around EUR 1 billion. We will also be keeping a close eye on cost developments and conclude that a 15 percent EBITDA margin and 10 percent EBIT margin are also realistic by 2013.

Overview

	2011	2012	2013
Revenue growth	>15%	Double-digit	Increase to approx. EUR 1 billion
EBITDA margin	>12%	Additional increase	Approx. 15%
Investments in property, plant and equipment	Approx. EUR 100 million	Approx. EUR 80 million	Approx. EUR 50 million
Working capital to revenue ratio	< 35%	< 35%	< 35%

Summary forecast

Global economic recovery is fuelling demand for Wacker Neuson light and compact equipment. Even in the first few weeks of 2011, the compact equipment segment reported that its order book remains healthy.

It is our aim to return to pre-crisis levels as soon as possible. We expect strong performance in fiscal 2011 and fiscal 2012. Investments from professional rental companies is due to increase worldwide in 2011 and 2012. The rental market is growing in importance worldwide and the drop in investment experienced over the last three years has led to a backlog in demand for equipment – for rental fleets also. The global trend to expand and improve infrastructure (such as road and rail networks and telecommunications) and building modernization projects offer great opportunities for our business model. This applies particularly in emerging markets. In addition, our compact equipment portfolio, especially compact excavators and wheel loaders, are still at the beginning of their market lifecycle worldwide – so we foresee the greatest growth potential in this segment.

We can win new market shares and improve our reach in existing markets by expanding our global sales network. This expansion will probably push our margins slightly below precrisis levels in the medium term. However, we view this as an investment in our future growth.

Our financial position is already very healthy with an equity ratio of over 80 percent and liquidity of EUR 36.6 million. Our strong financial and asset position will help drive growth over the coming two years.

We want our shareholders to share in the success of the Group. We therefore aim to continue our sound dividend policy and plan to make dividend payments in the coming years provided our projections are accurate.

Munich, March 21, 2011

Wacker Neuson SE, Munich

The Executive Board

Richard Mayer Martin Lehner (Spokesperson) (Deputy Chairman)

Günther C. Binder Werner Schwind

Contents Consolidated Financial Statements

Consolidated Income Statement	100
Consolidated Total Profit/Loss for the Period	101
Consolidated Balance Sheet	102
Consolidated Statement of Change in Equity	103
Consolidated Cash Flow Statement	104
Consolidated Segmentation	105

Notes to the Consolidated Financial Statements 106

General information on the company	106
General information on accounting standards	106
Changes in accounting under IFRS	106
Accounting and valuation methods	110

Explanatory Comments on the

	Income Statement	115
1	Revenue	115
2	Other income	115
3	Personnel expenses	115
4	Other operating expenses	115
5	Financial result	116
6	Taxes on income	116
7	Earnings per share	117

Explanatory Comments on the

	Balance Sheet	118
8	Property, plant and equipment	118
9	Investment properties	119
	10 Intangible assets	119
	11 Other investments and other
	non-current assets	122
	12 Inventories	123
	13 Trade receivables	123
	14 Other current assets	123
	15 Cash and cash equivalents	123
	16 Non-current assets held for sale	124
	17 Equity	124

18 Provisions for pensions and
similar obligations	125
19 Other provisions	128
20 Financial liabilities	130
21 Trade payables	132
22 Other current liabilities	132
23 Derivative financial instruments	133
Other Information	135
24 Contingent liabilities	135
25 Other financial liabilities	135
26 Additional information on
financial instruments	138
27 Events since reporting date	141
28 Segmentation	141
29 Cash flow statement	142
30 Risk management	142
31 Executive bodies	145
32 Related party disclosures	145
33 Auditor's fee	147
34 Declaration regarding the German
Corporate Governance Codex	147
35 Availing of exemption provisions
according to Section 264 (3) HGB	147
Responsibility Statement	148

Unqualified Auditors' Opinion 149

Consolidated Income Statement

For the period from January 1 through December 31

		Jan. 1 –	Jan. 1 –
in € K	Notes	Dec. 31, 2010	Dec. 31, 2009
Revenue	(1)	757,926	597,013
Cost of sales		- 506,881	- 412,911
Gross profit		251,045	184,102
Sales and service expenses		- 143,878	- 135,092
Research and development expenses		- 22,322	- 20,452
General administrative expenses		- 52,225	- 47,705
Other income	(2)	7,496	12,222
Other expenses1	(4)	- 3,416	- 106,209
Profit before interest and tax (EBIT)		36,700	- 113,134
Financial result	(5)	- 3,974	- 2,337
Profit before tax (EBT)		32,726	- 115,471
Taxes on income	(6)	- 8,098	5,526
Profit for the period before minority interests		24,628	- 109,945
Minority interests		- 694	- 159
Profit for the period		23,934	- 110,104
Earnings per share (in euros) (diluted and undiluted)	(7)	0.34	- 1.57

In 2009: of which € K 100,338 one-off write-downs on intangible assets.

Consolidated Total Profit/Loss for the Period

For the period from January 1 through December 31

in € K	Notes	Jan. 1 – Dec. 31, 2010	Jan. 1 – Dec. 31, 2009
Profit before minority interests		24,628	- 109,945
Items not recognized in profit/
loss for the period
Exchange differences		17,777	4,419
Deconsolidation result		- 133	264
Securing cash flows:
Profit/loss incurred in the current period	(23)	- 32	- 1,890
Tax effects from items in total profit/loss for the period	(23)	23	599
Items not recognized in profit/
loss for the period after tax		17,635	3,392
Total profit/loss for the period before minority interests and after tax		42,263	- 106,553
Of which are attributable to:
Shareholders in the parent company		41,569	- 106,712
Minority interests		694	159
Total profit/loss for the period after tax		42,263	- 106,553

Consolidated Balance Sheet

Balance at 31 December

in € K	Notes	Dec. 31, 2010	Dec. 31, 2009
Assets
Property, plant and equipment	(8)	292,577	267,408
Investment property	(9)	17,191	2,618
Goodwill	(10)	236,550	236,016
Intangible assets	(10)	90,605	87,624
Other investments	(11)	5,478	4,144
Deferred taxes	(6)	17,220	13,344
Other non-current assets	(11)	14,282	21,542
Total non-current assets		673,903	632,696
Inventories	(12)	183,980	148,301
Trade receivables	(13)	121,487	90,837
Marketable securities		1,133	6,165
Current tax receivables	(14)	12,457	8,715
Cash and cash equivalents	(15)	36,559	85,024
Non-current assets held for sale	(16)	698	0
Total current assets		356,314	339,042
Total assets		1,030,217	971,738

Equity and liabilities

Total liabilities		1,030,217	971,738
Total current liabilities		110,837	90,936
Other current liabilities	(22)	43,776	29,102
Current tax payable		470	413
Short-term provisions	(19)	12,317	13,583
Current portion of long-term borrowings	(20)	12,109	11,698
Short-term borrowings from banks	(20)	5,958	14,889
Trade payables	(21)	36,207	21,251
Total non-current liabilities		86,421	89,280
Long-term provisions	(18) (19)	30,246	30,167
Deferred taxes	(6)	23,957	25,530
Long-term borrowings	(20)	32,218	33,583
Total equity		832,959	791,522
Minority interests		2,341	2,473
Equity before minority interests		830,618	789,049
Net profit/loss	(17)	156,802	133,001
Other reserves	(17)	603,676	585,908
Subscribed capital	(17)	70,140	70,140

Consolidated Statement of Change in Equity

Balance at December 31

in € K	Subscri bed capital	Capital reserves	Exchange diffe rences	Other neutral changes	Net profit/ loss	Equity before minority interests	Minority interests	Total equity
Balance at January 1, 2009	70,140	618,397	- 36,914	1,033	256,432	909,088	2,731	911,819
Total profit/loss for the period	0	264	4,419	- 1,291	- 110,104	- 106,712	159	- 106,553
Dividends	0	0	0	0	- 13,327	- 13,327	- 417	- 13,744
Balance at December 31, 2009	70,140	618,661	- 32,495	- 258	133,001	789,049	2,473	791,522
Total profit/loss for the period	0	0	17,777	- 9	23,801	41,569	694	42,263
Change in consolidation
structure	0	0	0	0	0	0	- 540	- 540
Dividends	0	0	0	0	0	0	- 286	- 286
Balance at December 31, 2010	70,140	618,661	- 14,718	- 267	156,802	830,618	2,341	832,959

Consolidated Cash Flow Statement

For the period from January 1 through December 31

in € K	Notes	Jan. 1 – Dec. 31, 2010	Jan. 1 – Dec. 31, 2009
EBT		32,726	- 115,471
Other major non-cash income		41,144	140,309
Foreign exchange result		9,215	3,614
Gains/losses from sale of intangible assets
and property, plant and equipment		1,108	- 877
Book value from the disposal of rental equipment		4,858	7,217
Gains/losses from derivatives (cash flow hedging)		- 9	- 1,291
Financial result		3,974	2,337
Changes in inventories		- 35,679	68,729
Changes in trade receivables and other assets		- 29,892	46,423
Changes in provisions		- 1,187	3,350
Changes in trade payables and other liabilities		24,048	- 15,619
Interest paid		- 4,172	- 5,521
Income tax received/paid		- 3,428	1,950
Interest received		2,212	3,105
Cash flow from operating activities		44,918	138,255
Purchase of property, plant and equipment		- 75,618	- 36,281
Purchase of intangible assets		- 9,344	- 7,120
Proceeds from the sale of property, plant and equipment and intangible assets		1,205	3,753
Purchase of marketable securities		0	1,996
Change in consolidation structure		- 1,467	- 460
Cash flow from investing activities		- 85,224	- 38,112
Dividends		- 286	- 13,744
Proceeds/income from short-term borrowings		- 8,623	- 33,676
Proceeds/income from long-term borrowings		- 1,365	- 5,400
Payment of finance lease liabilities		- 58	- 223
Cash flow from financing activities		- 10,332	- 53,043
Increase/decrease in cash and cash equivalents		- 50,638	47,100
Effect of exchange rates on cash and cash equivalents		2,173	585
Change in cash and cash equivalents		- 48,465	47,685
Cash and cash equivalents at beginning of period		85,024	37,339
Cash and cash equivalents at end of period	(29)	36,559	85,024

Consolidated Segmentation

For the period from January 1 through December 31

Primary segmentation (geographical segments)

in € K	Europe	Americas	Asia	Consolidation	Group
2010
Segment revenue
Total external sales	779,171	245,573	43,526
Less intrasegment sales	- 180,259	- 38,664	- 2,164
	598,912	206,909	41,362
Intersegment sales	- 40,290	- 38,800	- 10,167
Total	558,622	168,109	31,195	0	757,926
EBIT	26,566	14,383	- 302	- 3,947	36,700
EBITDA	62,613	18,891	321	- 3,981	77,844
Net financial debt	- 3,754	20,062	- 2,243	- 339	13,726
Working capital	176,996	88,930	17,650	- 14,316	269,260

in € K	Europe	Americas	Asia	Consolidation	Group
2009
Segment revenue
Total external sales	626,782	151,327	33,711
Less intrasegment sales	- 137,412	- 22,911	- 1,046
	489,370	128,416	32,665
Intersegment sales	- 23,659	- 25,300	- 4,479
Total	465,711	103,116	28,186	0	597,013
EBIT	- 107,306	- 8,063	789	1,446	- 113,134
EBITDA	27,906	- 3,569	1,428	1,410	27,175
Net financial debt	- 29,736	10,639	- 3,882	- 1,875	- 24,854
Working capital	156,778	61,045	10,450	- 10,386	217,887

Secondary segmentation (business segments)

in € K	2010	2009
Segment revenue from external customers
Light equipment	296,606	213,494
Compact equipment	274,824	205,321
Services	192,386	183,273
	763,816	602,088
Less cash discounts	- 5,890	- 5,075
Total	757,926	597,013

Notes to the Consolidated Financial Statements

General information on the company

Wacker Neuson SE is a listed European company (Societas Europeea or SE) headquartered in Munich (Germany). It is entered in the Register of Companies at the Munich Local Court under HRB 177839.

Trading in the company's shares commenced in May 2007 in the Prime Standard segment of the German stock exchange on the regulated market. The company has been listed in the SDAX since September 2007.

General information on accounting standards

The following Consolidated Financial Statements for fiscal 2010 were prepared in accordance with the International Accounting Standards (IAS) as approved and published by the International Accounting Standards Board (IASB) and the International Financial Reporting Standards (IFRS) as interpreted by the Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) as adopted by the EU, and in supplementary compliance with the provisions of the German Commercial Code (HGB) set forth in Section 315a (1). All valid and binding standards for fiscal 2010 have been applied and give a true and fair view of the net assets, financial position and earnings of the Group.

The Consolidated Financial Statements comprise the consolidated income statement, the statement of comprehensive income, the consolidated balance sheet, the Notes to the Consolidated Financial Statements, the consolidated cash flow statement, as well as the consolidated statement of changes in equity. In addition, a Group Management Report, which was consolidated with the Management Report of the company, was prepared in accordance with Section 315a HGB. The income statement is prepared in the "cost-of-sales" format. The Consolidated Financial Statements have been prepared in euros (EUR). All figures are presented in thousand euros (EUR K), rounded to the nearest thousand, unless otherwise stated.

Wacker Neuson SE 's fiscal year corresponds to the calendar year. The Consolidated Financial Statements for fiscal 2010 (which include prior-year figures) were approved for publication by the Executive Board on March 21, 2011.

Changes in accounting under IFRS

Standards and interpretations applied for the first time in the Consolidated Financial Statements. The following standards, amendments to standards and interpretations are mandatory as of January 1, 2010.

Name	Description	Mandatory as of1	Date of endorsement
IFRS 1	First-time application of International Financial Reporting Standard (further exceptions)	Jan. 1, 2010	June 23, 2010
IFRS 1	First-time application of International Financial Re porting Standard (amended version)	Jan. 1, 2010	Nov. 25, 2009
IFRS 2	Share-based payment (recognition of Group cash-settled share-based payment transactions)	Jan. 1, 2010	Mar. 23, 2010
IFRS 3	Business combinations (amended version)	July 1, 2009	June 3, 2009
IAS 27	Consolidated and separate financial statements (recognition of changes in ownership interests in subsidiaries that entail a loss of control and changes that do not entail a loss of control)	July 1, 2009	June 3, 2009
IAS 39	Financial instruments: Recognition and measure ment (suitable underlying transactions)	July 1, 2009	Sept. 15, 2009
IFRIC 15	Agreements for the construction of real estate	Jan. 1, 2010	July 22, 2009
IFRIC 16	Hedges of a net investment in a foreign operation	July 1, 2009	June 4, 2009
IFRIC 17	Distributions of non-cash assets to owners	Nov. 1, 2009	Nov. 26, 2009
IFRIC 18	Transfers of assets from customers	Nov. 1, 2009	Nov. 27, 2009
	Improvements to IFRS (2007 – 2009)	Jan. 1, 2010	Mar. 23, 2010

For fiscal years that start on or after this date.

The standards and interpretations to be applied for the first time in this fiscal year do not have any significant impact on the accounting and valuation methods used by the Group.

Standards and interpretations that have been published but not yet applied

The following financial reporting standards have been published but have not yet come into force, which is why there is no obligation to apply them yet. Should these financial reporting standards be endorsed by the European Union (EU endorsement), earlier voluntary adoption would be feasible.

		Mandatory	Date of
Name IFRS 1	Description Limited scope first-time ex emption from comparative IFRS 7 disclosures	as of1 July 1, 2010	endorsement June 30, 2010
IFRS 7	Financial instruments: Disclosure requirements (derecognizing financial assets)	July, 1, 2011	tbd Q2/2011
IFRS 9	Financial instruments	Jan. 1, 2013	delayed
IAS 24	Related party disclosures (amended version)	Jan. 1, 2011	July 19, 2009
IAS 32	Financial instruments: Presentation requirements (classification of rights issues)	Feb. 1, 2010	Dec. 23, 2009
IFRIC 14	Prepayments of a minimum funding requirement	Jan. 1, 2011	July 19, 2010
IFRIC 19	Extinguishing financial liabilities with equity instru ments	July 1, 2010	July 23, 2010
	Improvements to IFRS (2008 – 2010)	Jan. 1, 20112	tbd Q4/2011

1 For fiscal years that start on or after this date.

2 Varies, in some cases as of July 1, 2010 (IFRS 3 and IAS 27).

First-time application of the above-mentioned standards and interpretations is unlikely to substantially change the current accounting and valuation methods of the company, with the exception of the following amendments:

JJ Standard IFRS 9 (Financial Instruments), which deals with the classification and measurement of financial assets, was published on November 12, 2009. This standard must be applied for fiscal years beginning on or after January 1, 2013. This is the first phase of the project to replace IAS 39. Entities can only apply this standard in Europe once it has been adopted in Europe. This is not yet the case.

Line of business

With its roots dating back to 1848, Wacker Neuson SE is a leading global manufacturer of high-quality light construction equipment, weighing up to approximately 3 tons, and compact construction equipment, weighing up to approximately 14 tons. Wacker Neuson provides a comprehensive one-stop offering, extending from development and production through sales and rentals to repairs and maintenance for light equipment, plus development and production of compact equipment. The entire product portfolio comprises over 300 product groups. Following the merger with the former Neuson Kramer Baumaschinen AG (now Wacker Neuson Beteiligungs GmbH) and its affiliates in 2007, the new consolidated Wacker Neuson Group offers its products and services under the new main brand "Wacker Neuson". The company will also continue to market some compact equipment under the "Weidemann" and "Kramer Allrad" brands in the future. Furthermore, the company CLAAS Global Sales GmbH, which has a direct 5.1 percent stake in Kramer-Werke GmbH, distributes telescopic loaders developed and manufactured by Kramer to the agricultural industry under the brand "CLAAS".

Closing date

The closing date for all companies included in the Consolidated Financial Statements is December 31 of the respective year. The current accounting period is January 1, 2010 through December 31, 2010.

Consolidation structure

In addition to the parent company, Wacker Neuson SE, the Consolidated Financial Statements as at December 31, 2010 include the following entities in which the company has the following direct or indirect shareholdings:

			Direct	Indirect
Company Name	City	Country	as a %	as a %	Segment
Drillfix AG	Volketswil (near Zurich)	Switzerland	100		Europe
Wacker Neuson Equipment Private Ltd.	Bangalore	India	100		Asia
Wacker Neuson Beteiligungs GmbH	Leonding (near Linz)	Austria	100		Europe
Wacker Neuson Linz GmbH	Leonding (near Linz)	Austria	100		Europe
Wacker Neuson Rhymney Ltd.	Tredegar	Great Britain	100		Europe
Kramer-Werke GmbH	Pfullendorf	Germany	95		Europe
PADEM Grundstücks-Vermietungsgesell schaft mbH & Co. Objekt Gutmadingen KG	Düsseldorf	Germany	95	90	Europe
STG Stahl- und Maschinenbautechnik Gutmadingen GmbH	Geisingen	Germany	100	95	Europe
Wacker Neuson Grundbesitz
GmbH & Co. KG	Pfullendorf	Germany	100	95	Europe
Wacker Neuson Grundbesitz Verwaltungs GmbH	Pfullendorf	Germany	100	95	Europe
Wacker Neuson Finance Immorent GmbH	Leonding (near Linz)	Austria	98		Europe
Wacker Neuson AB	Södra Sandby (near Malmö)	Sweden	100		Europe
Wacker Neuson AG	Volketswil (near Zurich)	Switzerland	100		Europe
Wacker Neuson AS	Hagan (near Oslo)	Norway	100		Europe
Wacker Neuson A/S	Karlslunde	Denmark	100		Europe
Wacker Neuson B.V.	Amersfoort	Netherlands	100		Europe
Wacker Neuson Corporation	Menomonee Falls
	(near Milwaukee)	USA	100		Americas
Wacker Neuson GmbH	Moscow	Russia	100		Europe
Wacker Neuson GmbH	Vienna	Austria	100		Europe
Wacker Neuson Kft.	Törökbálint (near Budapest)	Hungary	100		Europe
Wacker Neuson Limited	Hong Kong	China	100		Asia
Wacker Neuson Machinery
Trading (Shenzhen) Ltd. Co.	Shenzhen	China	100		Asia
Wacker Neuson Limited	Samutprakarn (near Bangkok)	Thailand	100		Asia
Wacker Neuson Ltda.	Huechuraba (near Santiago)	Chile	100		Americas
Wacker Neuson Ltd.	Mississauga (near Toronto)	Canada	100		Americas
Wacker Neuson Ltd.	Waltham Cross (near London)	Great Britain	100		Europe
Wacker Neuson Limited	Auckland	New Zealand	100		Asia
Wacker Neuson Makina Limited Sirketi	Küçükbakkalköy (near Istanbul)	Turkey	100		Europe
Wacker Neuson Manila, Inc.	Dasmariñas (near Manila)	Philippines	100		Asia
Wacker Neuson Máquinas Ltda.	Jundiaí (near Sao Paolo)	Brazil	100		Americas
Wacker Neuson Oy	Kerava (near Helsinki)	Finland	100		Europe
Wacker Neuson Pty Ltd	Springvale (near Melbourne)	Australia	100		Asia
Wacker Neuson (Pty) Ltd	Florida (near Johannesburg)	South Africa	100		Europe
Wacker Neuson, S.A.	Torrejón de Ardoz (near Madrid)	Spain	100		Europe
Wacker Neuson S.A. de C.V.	Mexico City	Mexico	100		Americas
Wacker Neuson S.A.S.	Brie Comte Robert (near Paris)	France	100		Europe
Wacker Neuson Sp. z.o.o.	Jawczyce (near Warsaw)	Poland	100		Europe
Wacker Neuson srl con socio unico	San Giorgio di Piano
	(near Bologna)	Italy	100		Europe
Wacker Neuson s.r.o.	Prague	Czech Republic	100		Europe
Weidemann GmbH	Diemelsee-Flechtdorf	Germany	100		Europe

In fiscal 2010 the consolidation structure changed as described below; however these changes do not have any significant impact on the Group's net assets, financial position and earnings:

• JJ Wacker Neuson Oy in Kerava, Finland, discontinued business and was deconsolidated on December 31, 2010.
• JJ During minor restructuring at Kramer-Werke GmbH, the new company Wacker Neuson Grundbesitz GmbH & Co. KG including general partner Wacker Neuson Grundbesitz Verwaltungs GmbH was established as an affiliate of Kramer-Werke GmbH.

The following companies have not been included in the consolidation structure in view of their limited significance.

Company Name	Country	Direct as a %	Indirect as a %	Equity in € K	Net profit for the period in € K
Wacker Neuson Kragujevac d.o.o.	Serbia	100		413	- 1,598
Wacker Neuson Lapovo d.o.o.	Serbia	100		1,597	- 20
Wacker Neuson Immobilien GmbH	Germany	100	95	2,058	0
Wacker Neuson Wohnungsbau GmbH	Germany	100	95	45	0
Bauma Baumaschinen Handels
und Vermietungs GmbH	Austria	100		- 43	- 144

Fiscal 2010 saw the following changes to the structure of non-consolidated companies:

• JJ matrics Beratungsgesellschaft m.b.H. in Leonding, Austria, was liquidated as planned during the year under review.
• JJ In August 2010, Wacker Neuson GmbH, Vienna, Austria acquired a 100 percent holding in Bauma Baumaschinen Handels- und Vermietungs GmbH in Schwechat, Austria, for a purchase price of EUR K 1,191. It only has a minor impact on the Group's net assets, financial position and earnings.

No significant acquisitions or disposals were made in fiscal 2010.

Consolidation principles

The Consolidated Financial Statements are based on the annual financial statements of the domestic and foreign companies included in the Group, which were prepared in accordance with IFRS. The annual financial statements of these companies were prepared according to the uniform accounting and valuation methods applied by the company.

Equity was consolidated according to the acquisition method. For the first consolidation of subsidiaries acquired after January 1, 2003, all identifiable assets, liabilities and contingent liabilities of the acquired companies are recognized at fair values.

During initial consolidation, positive balances remain after reevaluation of all hidden assets and liabilities. After January 1, 2003, these are capitalized as goodwill resulting from equity consolidation and are subject to an annual impairment test.

Intercompany receivables and payables as well as purchases and sales between consolidated Group companies have been eliminated. Group inventories and fixed assets have been adjusted for intercompany profits and losses.

Consolidation transactions affecting income are subject to deferred tax, whereby deferred tax assets and deferred tax liabilities are offset provided that the term of payment and the creditors are the same.

Exchange differences

Annual financial statements of the affiliates included in the Group that are prepared in foreign currencies have been translated into euros according to the concept of the functional currency. The functional currency is taken to refer to the relevant national currency, with the exception of the Philippines (US dollar). Thus, assets and liabilities are translated at the

spot rates of exchange effective at the balance sheet date, whereas income and expenses are translated at the average annual rates of exchange.

Exchange differences arising from the application of different exchange rates for balance sheets and income statements are recorded directly as a separate item of equity and thus have no impact on the financial result.

With respect to exchange differences without effects on profits, please refer to the statement of changes in equity.

The exchange rates of the main currencies relevant to the Group are as follows:

1 Euro equals		2010	2009	2010	2009
		Annual average rates		Rates at balance sheet date
Australia	AUD	1.4383	1.7629	1.3121	1.6010
Brazil	BRL	2.3237	2.7626	2.2102	2.4994
Chile	CLP	673.6688	770.8597	621.5312	725.4943
Denmark	DKK	7.4486	7.4460	7.4555	7.4419
UK	GBP	0.8575	0.8907	0.8630	0.8932
Hong Kong	HKD	10.2664	10.8170	10.3382	11.0914
India	INR	60.4041	67.4647	59.6528	66.8570
Japan	JPY	115.2189	130.4779	108.5936	132.5913
Canada	CAD	1.3684	1.5792	1.3277	1.5031
Mexico	MXN	16.6861	18.8839	16.4480	18.6376
Norway	NOK	8.0062	8.7075	7.8231	8.3086
New Zealand	NZD	1.8348	2.2051	1.7292	1.9873
Philippines	USD	1.3213	1.3955	1.3282	1.4303
Poland	PLN	3.9922	4.3516	3.9675	4.1320
Russia	RUB	40.2052	44.2682	40.5280	43.3528
Sweden	SEK	9.4936	10.5939	8.9814	10.2628
Switzerland	CHF	1.3693	1.5089	1.2442	1.4886
South Africa	ZAR	9.6328	11.5160	8.8512	10.5714
Thailand	THB	41.8465	47.9766	40.1316	47.7704
Czech Republic	CZK	25.2987	26.4944	25.1760	26.4110
Turkey	TRY	1.9975	2.1674	2.0625	2.1633
Hungary	HUF	276.3604	281.4997	279.5330	272.6986
USA	USD	1.3213	1.3955	1.3282	1.4303

Accounting and valuation methods

Recognition of profits and revenue

In the case of contracts for the sales of goods, profits are realized when the goods are delivered (passing of risk), whereas profits arising from the provision of services are realized on completion of the work. Operating expenses are recognized when the service has been rendered, or at the date the costs are incurred. Interest income is accrued based on the outstanding principal of the loan and the applicable interest rates.

Property, plant and equipment

In accordance with IAS 16, tangible assets are recognized at acquisition costs less scheduled straight-line depreciation.

Financing costs are capitalized provided there is a qualified underlying asset.

Investment properties

Land and buildings held for the purpose of generating rental revenue are disclosed at net book value. Straight-line depreciation occurs using the pro rata temporis method.

Goodwill/acquisitions

Acquisitions are reported according to the acquisition method. Consequently, income of the acquired company is included in the Consolidated Financial Statements as of the date of acquisition. For foreign companies that are acquired or founded, related acquisition costs are converted to euros at the spot rate effective at the date of purchase.

Reported goodwill is subject to an impairment test at the end of each fiscal year to verify its value. Goodwill is not subject to scheduled straight-line amortization.

Intangible assets

Intangible assets with a limited useful life are capitalized at acquisition cost and amortized on a straight-line basis depending on their projected useful life.

Intangible assets with an unlimited useful life are not subject to scheduled amortization but are tested for impairment at least once a year.

Financing costs are capitalized provided there is a qualified underlying asset.

Leases

When the Group is the lessee

Leasing transactions regarding tangible assets in which the Group as the lessee bears all material risks and rewards from the use of the leased object are treated as finance leases according to IAS 17. In such cases, the lessee recognizes the leased object as an asset in the balance sheet and the payment obligation of future lease installments is disclosed as a liability item. Treatment as a finance lease leads to a depreciation expense on the income statement, dependent upon the useful life of the leased object and the related interest expense.

All other leasing contracts are classified as operating leases. In such cases, the leasing installments or the rental payments are shown as an expense in the income statement.

When the Group is the lessor

Leasing contracts are classified as finance leases if the lease agreement transfers all material risks and rewards associated with the leased object to the lessee. All other leasing contracts are classified as operating leases.

Amounts to be paid by lessees resulting from finance leases are entered as receivables in the amount of the net investment value ensuing from the leasing contract. Income from finance leases is distributed across accounting periods in such a way that regular periodic interest is recognized on the outstanding net investment value resulting from the leasing contract.

Rental income from operating leases is distributed and reflected in the income statement on a straight-line basis over the duration of the relevant leasing contract. Initial direct costs attributable to the negotiation and conclusion of a leasing contract are to be allocated to the book value of the leased asset and distributed on a straight-line basis over the duration of the leasing contract.

Inventories

Inventories of work in process and finished products, as well as raw materials and supplies, are valued at their acquisition and manufacturing costs respectively, in accordance with IAS 2. To the extent that acquisition and manufacturing costs of inventories are above fair value, they are written down to net realizable value at the balance sheet date. The net realizable value corresponds to the estimated realizable sales price under normal business conditions, less estimated manufacturing and sales costs. If the net realizable value of formerly written-down inventories has increased, corresponding writeups will be made.

In determining acquisition costs, incidental acquisition costs are added and rebates to purchase prices are deducted. Manufacturing costs include all expenses which are allocable either directly or indirectly to the manufacturing process.

Acquisition and manufacturing costs for inventories were, for the main part, determined on the basis of the FIFO method; in other words, on the assumption that those assets that were acquired first will be consumed first. The moving average cost procedure is also used to simplify valuation.

Production orders are not included.

Financial instruments and hedging transactions

Non-derivative financial instruments

Non-derivative financial instruments as disclosed on the assets side of the balance sheet comprise investments, marketable securities and receivables. These items are recognized at amortized cost. Assets are recognized in the balance sheet for the first time when a Group company becomes party to a contract. Financial assets are recognized as of the day of performance. Assets are derecognized upon transfer of ownership or expiration of contractual rights to cash flows.

The carrying amounts of assets valued at amortized cost are verified if there is any indication that the book value exceeds the useful value or the net realizable value (impairment test). Should the book value exceed the net realizable value, the asset is written down.

Trade receivables and other receivables are recognized at their nominal values less allowance for doubtful accounts based on the probable default risk. Non-current receivables are discounted at standard interest rates.

Credit balances with financial institutions are recognized at their nominal values. Liabilities are valued at their nominal values or at their higher repayment amounts effective at the closing date. Financial liabilities are recognized in the balance sheet for the first time when a Group company becomes party to a contract. Financial liabilities are derecognized when paid.

Derivative financial instruments

The Wacker Neuson Group utilizes standard financial instruments such as interest rate swaps/caps and foreign exchange forward contracts exclusively for hedging purposes and to minimize risks. These kinds of financial instruments are concluded centrally in the US and Europe and always have a corresponding underlying transaction.

Derivative financial instruments are utilized to hedge against interest rate risks and exchange rate risks. The goal of hedging activities is to reduce risks arising from variable interest rate borrowing and future transactions in foreign currencies. Their maturities are termed to match the terms of the corresponding underlying transactions, and range from several months to several years.

Derivative financial instruments are recognized at fair value when the contract into entered into and also when the contract is subsequently reevaluated at the respective closing date. The fair values are calculated based on market information available on the closing date and with the help of recognized actuarial principles.

Recognition of gains and losses from derivative financial instruments is subject to the requirements for hedge accounting as set forth in IAS 39. To this end, upon initiation of such a transaction, both the hedging instrument and the underlying transaction are compared and the goals for risk management and the underlying strategy are documented. The Group verifies initially and continually whether or not the derivatives in a hedging relationship will effectively compensate for the changes in cash flow of the underlying transactions. Derivative financial instruments that do not satisfy hedge accounting requirements are allocated to the assets or liabilities held for trading and designated at fair value through profit or loss when first recognized and also in subsequent fiscal years. Profits and losses realized through fair value fluctuations are immediately recognized.

The interest rate swaps employed by the Group are treated as cash flow hedges in the balance sheet and changes in fair value are recorded directly in equity. An interest rate swap concluded in 2010 does not fulfill the formal requirements of hedge accounting and is therefore recognized in the balance sheet as being held for trading. In foreign exchange forward contracts that are part of an effective hedge instrument as set forth in IAS 39, hedge accounting in accordance with IAS 39 is applied. Foreign exchange forward contracts without an effective hedge instrument must be reported in the balance sheet as assets/liabilities held for trading purposes.

Research and development

Research expenses are recognized in the consolidated income statement in the period in which they are incurred.

Development costs are capitalized providing the criteria as set forth in IAS 38.57 onwards are fulfilled.

Development costs capitalized from 2008 onwards are written down over a period of six years. Development costs capitalized in previous years are written down over a period of four to five years. Amortization is taken using the straight-line method.

Trade receivables and other assets

Both trade receivables and other assets are principally valued at amortized cost. They are, as a rule, valued at nominal value prior to allowances for uncollectable accounts. Provided they are financial instruments, they are classified in the category "loans and receivables". Allowances are recognized for the full amount for those receivables and other current assets for which there is a high probability of default. Furthermore, general credit, interest and cash discount risks are recognized.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits. They belong to the category "loans and receivables" and have maturities of three months or less. Cash and cash equivalents are recognized at current value, which, for liquid funds, is equivalent to the nominal value in euro.

Non-current assets held for sale

Non-current assets or groups of assets and liabilities are treated in the balance sheet as being held for sale as defined by IFRS 5 if their carrying value is principally realized through a sale transaction rather than through continued use. Assets classified according to IFRS 5 are valued at the lower of carrying amount or fair value less costs to sell.

Government subsidies

Government subsidies are only recognized if there is reasonable assurance that the relevant criteria are fulfilled and the funding will be approved. Expense-related subsidies are recognized by reducing the book value of the asset. The subsidy is then recognized as income through a reduced write-down value over the duration of the depreciable asset's useful life.

Pensions and similar obligations

Provisions for pensions and similar obligations from defined benefit plans are recognized following the projected unit credit method, taking into consideration future adjustments in remuneration payments and in pensions in compliance with the regulations as set forth in IAS 19.

Pension obligations in Germany are calculated using the demographic tables for 2005 G developed by Prof. Klaus Heubeck. Pension obligations abroad are calculated using accounting principles and parameters specific to the corresponding country.

Provisions for pensions as disclosed in the balance sheet are calculated from the value of the actual pension obligations less the fair value of plan assets as of the balance sheet date. Actuarial gains and losses are recognized according to the 10-percent corridor rule.

Service cost for vested rights to future pension payments results from the changes in the present value of the obligation. The interest portion of the increase in pension provisions is disclosed under financial results. Payments under defined contribution benefit plans are recognized directly as an expense.

Other provisions

Other provisions are recognized in accordance with IAS 37 if the Group has a present legal or constructive obligation as a result of a past event, which will probably result in an outflow of resources with economic benefits, and when a reliable estimate of the amount can be made. Other provisions are made for all recognizable obligations. Valuation is based on estimations of the expected settlement amount on due consideration of all business circumstances.

Other provisions are set up for all recognizable risks as well as for all contingent liabilities in the amount of the probable occurrence.

Financial liabilities

Financial liabilities are recognized at amortized cost by applying the effective interest method and are disclosed under financial liabilities recognized at amortized cost.

Deferred taxes

With respect to temporary differences between valuations for tax purposes and balance sheet purposes, for consolidation transactions affecting income as well as for tax loss carryforwards, deferred tax assets and liabilities are set up.

Deferred tax assets on tax loss carry-forwards are only recognized if the associated reductions in tax are likely to arise in the next five years (maximum) and if they will be applicable in subsequent periods. Deferred tax was recognized for loss carry-forwards in the year under review.

Deferred tax is calculated at the tax rate valid or approved at the balance sheet date of the company likely to be affected by the reversal effects.

Material discretionary decisions, estimates and assumptions

In preparing the Consolidated Financial Statements, it has been necessary to make estimates and assumptions which may influence the carrying amounts of assets and liabilities, income and expenses as well as contingent liabilities as recognized in the balance sheet. The following significant estimates and assumptions, together with the uncertainties associated with the accounting and valuation methods applied are crucial in understanding the underlying risks of the financial report and the impact these estimates, assumptions and uncertainties could have on the Consolidated Financial Statements:

The value of goodwill, assets with an unlimited useful life, development costs (at least one impairment test per year)

The company carries out an impairment test on goodwill, assets of unlimited useful life and capitalized development costs once a year or more often if there is indication that an asset has been impaired. This involves making estimates regarding the forecast and discounting of future cash flows. For more information on the assumptions indicating impairment and the sensitivity of these assumptions, please refer to item 10 "Intangible Assets" in these Notes.

Indications for tangible and intangible asset impairment (specific to events or circumstances)

At each closing date, the Group determines whether there are any grounds to assume that the book value of a tangible asset or an item under other intangible assets has been impaired. In fiscal 2010, no grounds were identified that would indicate tangible or intangible asset impairment.

Useful lives of tangible assets and other intangible assets

At the end of each fiscal year, the Group assesses the estimated useful lives of tangible assets and other intangible assets. The company management assumes that the assessments of the relevant expected useful lives are appropriate. Estimations did not need to be adjusted in 2010.

Taxes on income and earnings

At each closing date, the Group determines whether the probability of future tax benefits is sufficient to justify deferred tax assets. The recognized deferred tax assets may be lower if the estimates regarding scheduled taxable income and the tax benefits realizable through available tax strategies are lowered, or should changes to current tax legislation restrict the timeframe or feasibility of future tax benefits. Refer to item 6 "Taxes on income" in these Notes for more detailed information.

Employee benefits

Pensions and similar obligations are calculated in accordance with actuarial valuations. These valuations are based on a number of factors including statistical values in order to anticipate future events. These factors include actuarial assumptions such as the discount rate, expected return on plan assets, expected salary increases and mortality rates. These actuarial assumptions can deviate considerably from the actual obligations as a result of changed market and economic conditions, resulting in a change in the associated future outlay. For more detailed information, please refer to item 18 "Provisions for pensions and similar obligations" in these Notes.

Legal risks

Legal risks result from legal action against Wacker Neuson SE or individual Group companies. The outcome of these disputes could have a substantial impact on the net assets, financial position and earnings of the Group. Company management regularly analyzes the current information available about these cases and recognizes provisions to cover probable obligations. Assessments are performed by internal and external lawyers. When reaching a decision on the need to recognize provisions, company management takes sufficient account of the probability of an unfavorable outcome and takes due care to estimate the amount of the obligation sufficiently reliably.

Explanatory comments on the income statement

1 Revenue

With respect to the presentation and composition of revenue by geographic regions and by business segments, please refer to the section on segment reporting.

2 Other income

in € K	2010	2009
Rental income on investment
properties	1,665	1,661
Foreign exchange gains	1,548	4,559
Income passed on	897	1,043
Proceeds from sale of property,
plant and equipment	378	1,902
Recovery of receivables written off	344	173
Insurance reimbursements	214	226
Reimbursements for personnel	212	713
Other income	2,238	1,945
Total	7,496	12,222

3 Personnel expenses

Personnel expenses are composed as follows:

in € K	2010	2009
Wages and salaries	143,449	130,289
Social security contributions	29,481	27,698
Other personnel costs	7,405	10,788
Expenses for pensions	2,758	1,723
Total	183,093	170,498

The expenses for pensions include the expense for pension benefits without the interest portion of the additions to provisions for pensions, which is recognized under financial results. Other personnel costs include redundancy payments to the following extent:

in € K	2010	2009
Redundancy payments	2,102	7,889

The average number of employees broken down according to fields of activity is as follows for the period under review:

in € K	2010	2009
Management	33	41
Administration	275	275
Sales	682	719
Service	573	599
Logistics	219	245
Production and technology	1,170	1,148
Other (cleaning staff, trainees)	146	162
Total	3,098	3,189

4 Other operating expenses

in € K	2010	2009
Realisierte Währungsverluste	1,323	3,405
Losses on foreign-exchange forward contracts	793	104
Losses on the disposal of property, plant and equipment	759	695
Other expenses	541	1,667
	3,416	5,871
Value adjustments on goodwill/
brands	0	100,338
Total	3,416	106,209

Impairment was recognized on goodwill attributed to the Neuson Kramer Group and/or the Neuson brand value for the first time during fiscal 2009. This resulted in a write-down of EUR K 100,338 on intangible assets with unlimited useful lives.

5 Financial result

in € K	2010	2009
Interest and similar income	2,094	2,993
Income on disposals of financial assets	58	211
Unrealized gains and losses	- 1,914	- 61
Interest and similar expenses	- 4,212	- 5,480
Total	- 3,974	- 2,337

Interest expenses include expenses for interest resulting from finance lease contracts in the amount of EUR K 28 (previous year: EUR K 54). Interest income from finance lease contracts in the amount of EUR K 337 (previous year: EUR K 760) is included in interest and similar income.

Profit/loss arising from changes in the fair value of derivative financial instruments as part of cash flow hedging was recognized under equity during the fiscal year with no effect on income.

Reconciliation of calculated tax to actual tax expense:

in € K	2010	2009
EBT	32,726	- 115,471
Tax at the applicable rate:
29.46% (previous year: 29.46%)	9,641	- 34,018
Variance in tax rates	- 1,381	- 597
Tax effects of non-deductible
expenses and tax-exempt income	724	818
Tax effects of non-deductible
goodwill impairment	0	26,378
Other	- 886	1,893
Total	8,098	- 5,526

Taxes on income are calculated by applying the Group's unified tax rate of 29.46 percent to profit before tax (EBT). There was no change in the Group tax rate compared with the previous year.

Our tax assessment for the current year is based on a corporate income tax rate of 15 percent and a solidarity surcharge of 5.5 percent. Trade tax on income is no longer deductible for the assessment concerning corporate income tax. Trade tax is set at a uniform 3.5 percent.

Actual netted income tax receivables on the closing date amounted to EUR K 663 (previous year: EUR K 5,752).

6 Taxes on income

Expense for taxes on income is composed as follows:

in € K	2010	2009
Current tax expense	13,817	70
Deferred tax expense	- 5,719	- 5,596
Total	8,098	- 5,526

Deferred tax assets and liabilities are allocated to the following balance sheet items:

in € K	2010	2009
Deferred tax assets
Provisions for pensions	1,160	1,002
Property, plant and equipment	3,685	3,142
Loss carry-forwards	3,710	2,359
Inventories	6,853	5,301
Other	443	789
Liabilities	1,026	597
Receivables	343	154
Total	17,220	13,344
Deferred tax liabilities
Other intangible assets	- 18,906	- 19,389
Property, plant and equipment	- 7,523	- 8,101
Inventories	844	337
Provisions for pensions	1,187	1,029
Loss carry-forwards	836	800
Other	- 395	- 206
Total	- 23,957	- 25,530

Deferred tax recognized in the consolidated balance sheet arises from deferred tax as booked by the individual companies. Deferred tax assets and liabilities were netted at the level of the individual company as appropriate. This netting is accounted for in the above table by the positive amounts under the heading deferred tax liabilities.

The tax losses that were not utilized and for which no deferred tax entitlement was recognized in the balance sheet amount to EUR K 6,648 (previous year: EUR K 4,142).

With respect to deferred tax assets, EUR K 1,203 (previous year: EUR K 1,840) are allocable to individual companies which incurred losses in the current or prior reporting period. The reason for the capitalization lies in the improved earnings situation in subsequent years.

Deferred taxes from derivative financial instruments in the amount of EUR K 144 (previous year: EUR K 121) were recognized directly in equity.

7 Earnings per share

	2010	2009
Earnings of the current period attributable to shareholders in € K	23,934	- 110,104
Weighted average number of shares outstanding during current period	70,140	70,140
Undiluted earnings per share in €	0.34	- 1.57
Diluted earnings per share
in €	0.34	- 1.57

According to IAS 33, earnings per share are calculated by dividing the total profit/loss for the period attributable to Wacker Neuson SE shareholders by the weighted average number of shares issued.

There was no share dilution effect in the reporting period shown.

Explanatory comments on the balance sheet

8 Property, plant and equipment

			Office and	Payments on account/
	Land and	Machinery and	other equip	Assets under
in € K	buildings	equipment	ment	construction	Total
Acquisition costs
Balance at January 1, 2010	203,283	176,542	63,585	19,573	462,983
Currency translation differences	3,897	5,441	1,543	6	10,887
Additions	22,998	28,532	9,495	14,593	75,618
Disposals	- 2,012	- 17,073	- 6,717	0	- 25,802
Transfers	- 6,330	27	419	- 11,487	- 17,371
Balance at December 31, 2010	221,836	193,469	68,325	22,685	506,315
Accumulated depreciation
Balance at January 1, 2010	52,972	99,538	43,065	0	195,575
Currency translation differences	990	3,481	1,118	0	5,589
Additions	5,900	22,118	6,243	0	34,261
Disposals	- 716	- 11,913	- 6,332	0	- 18,961
Transfers	- 2,723	- 226	223	0	- 2,726
Balance at December 31, 2010	56,423	112,998	44,317	0	213,738
Balance at December 31, 2009	150,311	77,004	20,520	19,573	267,408
Balance at December 31, 2010	165,413	80,471	24,008	22,685	292,577
Useful life in years	3 – 50	2 – 10	1 – 20

				Payments
			Office and	on account/
	Land and	Machinery and	other equip	Assets under
in € K	buildings	equipment	ment	construction	Total
Acquisition costs
Balance at January 1, 2009	196,163	188,335	61,008	13,813	459,319
Currency translation differences	794	- 823	418	1	390
Additions	6,079	13,416	5,630	11,156	36,281
Disposals	- 2,507	- 26,434	- 3,701	- 32	- 32,674
Transfers	2,754	2,048	230	- 5,365	- 333
Balance at December 31, 2009	203,283	176,542	63,585	19,573	462,983
Accumulated depreciation
Balance at January 1, 2009	49,030	97,128	40,227	0	186,385
Currency translation differences	128	- 507	275	0	- 104
Additions	5,329	21,871	5,806	0	33,006
Disposals	- 1,336	- 18,918	- 3,279	0	- 23,533
Transfers	- 179	- 36	36	0	- 179
Balance at December 31, 2009	52,972	99,538	43,065	0	195,575
Balance at December 31, 2008	147,133	91,207	20,781	13,813	272,934
Balance at December 31, 2009	150,311	77,004	20,520	19,573	267,408
Useful life in years	3 – 66	2 – 10	1 – 20

Amounts recognized for land and buildings as well as office and other equipment include the book values of finance lease contracts. Machinery and equipment includes rental equipment.

Under the disposals of land and buildings, EUR K 712 relates to purchase costs and EUR K 14 to accumulated depreciation on the reclassification of a property in Tokyo, Japan, recognized in the balance sheet as "Non-current assets held for sale".

Capitalized borrowing costs only had a minor impact in 2010.

9 Investment properties

The table below shows the development of investment properties held during the years 2009 and 2010:

in € K	2010	2009
Acquisition costs
Balance at January 1	7,381	7,041
Exchange differences	6	7
Additions	223	0
Disposals	0	0
Transfers	17,335	333
Balance at December 31	24,945	7,381
Accumulated depreciation
Balance at January 1	4,763	4,333
Additions	255	251
Disposals	0	0
Transfers	2,736	179
Balance at December 31	7,754	4,763
Book value on January 1	2,618	2,708
Book value on December 31	17,191	2,618

Investment properties include the following land and buildings, which have all been rented to third parties or are intended to be rented to third parties:

Property	Book value in € K	Fair value in € K	Calculation method	Depreciation method	Useful life
Überlingen	12,158	13,195	Survey/German income approach	Linear	50 years
England	3,063	3,063	Survey	–	–
Gutmandingen	1,560	2,100	Survey/German income approach	Linear	17 years
Spain	219	222	Survey/German income approach	Linear	50 years
Dortmund	151	207	Discounted cash flow	Linear	3 years
South Africa	40	407	Official market prices	–	–

The reported depreciation methods and useful lives only affect the buildings listed.

The profit derived from investment property is shown in the table below:

in € K	2010	2009
Rental income	1,665	1,661
Depreciation and amortization	- 255	- 254
Other expenses	- 19	- 192
Total	1,391	1,215

a) Goodwill

Goodwill developed as follows:

in € K	2010	2009
As at Januar 1	236,016	326,059
Write-down resulting from impairment test	0	- 89,540
Post-purchase reduction in purchase price
for Weidemann GmbH	- 28	- 332
Foreign currency fluctuations	562	- 171
Goodwill as at December 31	236,550	236,016

b) Other intangible assets

	Licenses and	Other intangible	Internally produced	Payments on
in € K	similar rights	assets	intan gible assets	account	Total
Acquisition costs
Balance at January 1, 2010	20,077	101,422	7,901	4,411	133,811
Currency translation differences	464	361	98	155	1,078
Additions	4,906	0	1,508	2,930	9,344
Disposals	- 1,227	0	- 869	- 207	- 2,303
Transfers	1,082	0	1,462	- 2,508	36
Balance at December 31, 2010	25,302	101,783	10,100	4,781	141,966
Accumulated amortization
Balance at January 1, 2010	12,434	31,134	2,619	0	46,187
Currency translation differences	398	135	11	0	544
Additions	916	4,088	1,624	0	6,628
Disposals	- 1,184	0	- 817	0	- 2,001
Transfers	3	0	0	0	3
Balance at December 31, 2010	12,567	35,357	3,437	0	51,361
Book value on December 31, 2009	7,643	70,288	5,282	4,411	87,624
Book value on December 31, 2010	12,735	66,426	6,663	4,781	90,605
Useful life in years	3 – 8	0 – 7	6	–

			Internally
	Licenses and	Other intangible	produced	Payments on
in € K	similar rights	assets	intan gible assets	account	Total
Acquisition costs
Balance at January 1, 2009	18,935	101,532	5,096	2,618	128,181
Currency translation differences	- 105	- 110	- 3	- 34	- 252
Additions	1,761	0	1,406	3,953	7,120
Disposals	- 581	0	- 451	- 206	- 1,238
Transfers	67	0	1,853	- 1,920	0
Balance at December 31, 2009	20,077	101,422	7,901	4,411	133,811
Accumulated amortization
Balance at January 1, 2009	11,801	16,315	1,627	0	29,743
Currency translation differences	- 95	- 43	- 3	0	- 141
Additions	1,204	14,862	1,444	0	17,510
Disposals	- 476	0	- 449	0	- 925
Transfers	0	0	0	0	0
Balance at December 31, 2009	12,434	31,134	2,619	0	46,187
Book value on December 31, 2008	7,134	85,217	3,469	2,618	98,438
Book value on December 31, 2009	7,643	70,288	5,282	4,411	87,624
Useful life in years	3 – 8	0 – 8	6	–

The expected residual useful lives and residual book values of other intangible assets are as follows:

in € K	Book value on Dec. 31, 2010	Book value on Dec. 31, 2009	Useful life
Brands	54,040	54,040	Indefinite
Technologies	9,688	13,342	max. 3 years
Customer base	2,698	2,906	7 years
Total	66,426	70,288

Furthermore, other intangible assets include EUR K 22,000 for the brand name "Weidemann" resulting from the acquisition of Weidemann GmbH in 2005. Due to the strong market position of Weidemann GmbH, the brand name and trademark are considered to have an indefinite useful life.

Arising from the merger with the Neuson Kramer Group, EUR K 32,040 was recognized for the brand name. This is also considered to have an indefinite useful life due to the company's strong market position. Wacker Neuson SE does not own the "Neuson" logo. This is owned by the PIN Private Trust (PIN Privatstiftung), which is part of the group founded by Chairman of the Supervisory Board, Hans Neunteufel. Subject to certain assumptions, however, the company has an exclusive, irrevocable and unlimited license to use this brand in conjunction with the name "Wacker". The write-downs recognized for 2009 do include write-downs of the Neuson brand EUR K 10,798.

Intangible assets created internally refer to capitalized development costs.

The down-payments effected relate primarily to development costs for projects not yet completed at the closing date.

Capitalized borrowing costs only had a minor impact in 2010.

c) Impairment of goodwill and intangible assets with an unlimited useful life

The goodwill and indefinite-lived "Weidemann" and "Neuson" brands obtained through mergers were allocated for impairment testing to the following cash-generating units within the Americas or European segments:

• JJ Wacker Neuson Corporation (USA)
• JJ Weidemann GmbH (Germany)
• JJ Wacker Neuson Beteiligungs GmbH (subgroup/Austria)

The pro-rata book values break down as follows:

in € K	Dec. 31, 2010	Dec. 31, 2009
Weidemann GmbH
Book value of goodwill	24,232	24,260
Book value of the
indefinite-lived brand	22,000	22,000
Wacker Neuson Corporation
Book value of goodwill	7,870	7,308
Book value of the
indefinite-lived brand	–	–
Wacker Neuson
Beteiligungs GmbH
Book value of goodwill	204,448	204,448
Book value of the
indefinite-lived brand	32,040	32,040
Book value of goodwill	236,550	236,016
Book value of the
indefinite-lived brand	54,040	54,040

The carrying amounts of goodwill and indefinite-lived brands are verified during the annual impairment test. For this purpose, the book value is compared with the "fair value less cost to sell. The "fair value less cost to sell" is determined using the discounted cash flow method. Future cash flows are discounted to the respective balance sheet date. Value is impaired if "fair value less cost to sell" is lower than the book value. In fiscal 2010, no value impairments were recognized (previous year: EUR K 100,338). Of this 2009 amount, EUR K 89,540 was attributable to goodwill impairment and EUR K 10,798 to brand impairment. The 2009 impairment was allocated to the Europe segment.

The calculation of "fair value less cost to sell" is based on assumptions, which in turn are dependent on the following uncertain estimates:

• JJ Free cash flow
• JJ Discount rates
• JJ Price increases for raw materials and supplies
• JJ Underlying growth rates for cash-flow predictions outside of the budget period

Free cash flow – free cash flow is calculated based on a detailed planning phase from 2011 to 2020. Growth rates are determined for the first three budget years (up to 2013) based on market conditions. Adjustments were made based on payout plans. When performing the goodwill impairment test, it is assumed that the entire distributable cash flow is paid out each fiscal year. Distributable cash flow refers to free cash flow after interest payments, tax shields and increases and reductions in borrowings. Care is taken to ensure that the cash flow distribution does not reduce the share capital. After 2013, management anticipates results and growth rates that more strongly align with past values. In other words, the company is not expected to achieve the balanced position as assumed, for example, in the perpetual annuity assessment by the year 2014. The detailed planning phase from 2014 to 2020 is therefore derived from past company figures. In the process, a growth in revenue of 2.5 percent per year from 2014 to 2020 is allocated to the three cash-generating units Weidemann GmbH (Germany), Wacker Neuson Corporation and Neuson Kramer Gruppe (Wacker Neuson Beteiligungs GmbH).

Discount rates – reflect the management's assessment of the risks associated with cash-generating units. This includes a risk-free and risk-weighted rate. A weighted average cost of capital (WACC) after tax at a uniform rate of 8.38 percent (previous year: 9.35 percent) was applied.

Price increases of raw materials – actual past price fluctuations are used as indicators for estimating future price developments.

Growth rate estimates – management and affiliates estimate growth rates based on local market dynamics. A growth rate of 1 percent has been projected for perpetual annuity (previous year: 1 percent).

Sensitivity of assumptions – even if no growth rate had been applied in perpetual annuity or if WACC had been set 1 percent higher there would have been no need to recognize impairment for any of the cash-generating units.

11 Other investments and other non-current assets

At December 31, 2010, the book value of investments totaled EUR K 5,478 (previous year: EUR K 4,144). The companies in question are not consolidated. For further details, please see the information on the consolidation structure in the general information on accounting standards.

Other non-current assets are composed of the following components:

in € K	Dec. 31, 2010	Dec. 31, 2009
Non-current trade receivables	6,728	14,841
Investment securities	3,540	3,094
Loans	99	99
Other non-current assets	3,915	3,508
Total	14,282	21,542

The non-current trade receivables mainly result from hirepurchase agreements and finance leases.

12 Inventories

in € K	Dec. 31, 2010	Dec. 31, 2009
Raw materials and supplies	48,441	33,882
Works in progress	12,079	7,354
Finished goods	123,460	107,065
Total	183,980	148,301

An expense of EUR K 472,997 (previous year: EUR K 385,119) was recorded under acquisition and manufacturing costs for inventories.

Of the reported inventories, EUR K 47,397 (previous year: EUR K 35,785) are recognized at net realizable value. Writedowns on inventories recognized as an expense amount to EUR K 2,734 in the reporting period (previous year: EUR K 2,958). Write-ups on inventories recognized as income amount to EUR K 0 in the reporting period (previous year: EUR K 0).

Similar to 2009, no inventories were pledged as collateral for liabilities during the period under review.

13 Trade receivables

Trade receivables have the following components:

in € K	Dec. 31, 2010	Dec. 31, 2009
Trade receivables at nominal value	128,323	97,509
Less allowance for doubtful
accounts	- 6,836	- 6,672
Total	121,487	90,837

As of December 31, 2010, trade receivables (at nominal value) were broken down as follows:

in € K	2010	2009
Trade receivables	128,323	97,509
Nominal value of trade receivables written down or not due	118,497	91,337
Overdue at nominal value but not written down < 30 days	5,808	2,375
Overdue at nominal value but not written down 30 – 90 days	2,352	2,243
Overdue at nominal value but not written down > 90 days	1,666	1,554

Allowance for doubtful accounts developed as follows:

in € K	2010	2009
Balance at January 1	6,672	6,632
Exchange rate differences	172	76
Additions	2,046	2,508
Amortization/depreciation	- 1,203	- 1,451
Reversals	- 851	- 1,093
Balance at December 31	6,836	6,672

Trade receivables are derived from trading with a large number of companies from different industries and regions. Regular credit checks verify the financial stability of receivables. Allowances for doubtful accounts are made where necessary.

The fair value is a reasonable approximation of the book value since all receivables are due within less than one year.

14 Other current assets

in € K	Dec. 31, 2010	Dec. 31, 2009
Advance payments	4,380	4,354
Receivables from employees	2,760	1,193
Sales tax	2,479	994
Travel advances	810	169
Receivables from associated
companies	172	124
Derivatives	56	0
Other	1,800	1,881
Total	12,457	8,715

The fair value is a reasonable approximation of the book value since all items have a maturity of less than one year.

15 Cash and cash equivalents

in € K	Dec. 31, 2010	Dec. 31, 2009
Petty cash	32,063	51,789
Bank balances	4,317	33,100
Cash deposits	179	135
Total	36,559	85,024

Cash on hand and bank balances in foreign currencies are converted at the spot rates.

Interest accrues at variable rates on the daily cash bank balances. Depending on the company's liquidity requirements, short-term, term accounts running from one day to three months were set up. The term money yielded interest at the agreed prevailing rates.

Bank balances in the amount of EUR K 51,032 (including cash pool current account balances) were netted against liabilities from cash pool current bank balances amounting to EUR K 18,969, as a net balance (offset option) was agreed with the cash pool bank. Current account balances at December 31, 2010, after netting, amounted to EUR K 32,063 (previous year: EUR K 51,789).

16 Non-current assets held for sale

in € K	Dec. 31, 2010	Dec. 31, 2009
Non-current assets held for sale	698	0

In December 2010, a property in Tokyo, Japan, previously reported in property, plant and equipment, was reclassified as a non-current asset held for sale. Reclassification resulted from a brokerage contract closed in November 2010.

17 Equity

Subscribed capital amounting to EUR K 70,140 is divided into 70,140,000 individual no-par-value registered shares, each r epresenting a proportionate amount of the share capital of EUR 1.00. The share capital was fully paid-in at the closing date of the Consolidated Financial Statements.

In addition to subscribed capital, the components of equity are as follows:

in € K	Dec. 31, 2010	Dec. 31, 2009
Capital reserves	618,661	618,661
Other neutral assets	- 267	- 258
Exchange rate differences	- 14,718	- 32,495
Total	603,676	585,908

The capital reserves primarily result from share premiums in connection with the IPO and the merger with Wacker Neuson Beteiligungs GmbH (formerly Neuson Kramer Baumaschinen AG).

The company did not hold any treasury shares at December 31, 2010 or at any point during the 2010 fiscal year.

Retained earnings developed as follows:

in € K	Dec. 31, 2010	Dec. 31, 2009
Balance at January 1	133,001	256,432
Dividends for respective fiscal year	0	-13,327
Consolidated earnings	23,801	-110,104
Balance at December 31	156,802	133,001

No dividends were paid in 2010 (previous year: EUR K 13,327; per share: EUR 0.19).

Refer to the statement of changes in equity for further details on equity.

JJ Authorized Capital I

According to Article 3 (3) of the Articles of Incorporation, the Executive Board is authorized to increase the company's share capital by April 12, 2012, with the approval of the Supervisory Board, by issuing new, registered shares against cash contributions, in full or in partial amounts, on one or several occasions, however at the most by a maximum of EUR 1,000,000 (Authorized Capital I).

JJ Authorized Capital II

According to Article 3 (4) of the Articles of Incorporation, the Executive Board is also authorized to increase the company's share capital by April 12, 2012, with the approval of the Supervisory Board, by issuing new, registered shares against contributions in kind, in full or in partial amounts, on one or several occasions, however at the most by a maximum of EUR 5,360,000 (Authorized Capital II).

JJ Rights, preferential rights or restrictions on shares

There are pool agreements between some shareholders and companies of the Wacker family on the one hand, and companies and shareholders of Neuson on the other, which essentially regulate the exercise of voting and petition rights at the AGM and restrict the transfer of shares. The Lehner shareholders have issued a Neuson shareholder with a voting proxy for the shares they acquired. Two members of the Executive Board have received shares in the company as part of their remuneration. The company has an unrestricted, preferential purchase or acquisition right over some of these shares in the event that they are transferred. For detailed information, please refer to the Management Report "Restrictions affecting voting rights or the transfer of shares", page 85.

18 Provisions for pensions and similar obligations

in € K	Dec. 31, 2010	Dec. 31, 2009
Provisions for pension obligations	22,557	21,663
Provisions for other obligations
to employees	2,301	2,164
Total	24,858	23,827

Within the company there are different types of retirement benefit schemes worldwide for old age and surviving dependents' pensions. Most of the schemes provide for the payment of fixed lump-sum amounts. The others are defined retirement plans with a pension paid from retirement until death. The amounts to be paid are based on the respective employee's ranking (both with respect to salary as well as hierarchy) as well as her/his years of service to the company.

At the parent company pension commitments due to enter into effect as of retirement age also exist vis-à-vis Executive Board members as well as former executives and shareholders.

For the remaining domestic and foreign companies, the schemes partly provide for a lump-sum payment which is based on the salary at retirement age multiplied by a factor based on years of service with the company, and partly for pension payments from retirement until death based on the employee's earnings to those who fulfill the time-of-service requirements, which differ from country to country.

Foreign affiliates also have defined contribution plans. In such cases, the respective company makes contributions to the respective pension insurance schemes either because of legal requirements or contracted agreements. There is no further obligation for the company beyond these payments. The periodic contributions are recognized as an expense under profit before interest and tax (EBIT) in the respective year.

The actuarial valuation is based on the following assumptions:

	in	2010	2009
Benefit plans for parent
company
Discount rate	%	4.00	5.50
Future pension
increases expected	%	2.00	2.00
Expected return on
plan assets	%	4.00	4.00
Retirement age	years	60	60
Other benefit plans1
Discount rate	%	4.16	5.34
Future pension
increases expected	%	1.55	2.30
Expected return on
plan assets	%	5.44	5.59
Retirement age	years	63	63

Weighted average of the individual benefit schemes

Pension obligations are distributed as follows:

in € K	Dec. 31, 2010	Dec. 31, 2009
Provisions for pension plans, not funded	22,456	19,672
Provisions for pension plans, fully or partly funded	14,370	10,486
Total	36,826	30,158

in € K	2010	2009
Financing status	31,525	25,311
Actuarial gains/losses not yet recognized	- 6,726	- 1,582
Plan surplus	59	98
Accruals for pensions at December 31	24,858	23,827

The changes in the present value of pension obligations and of plan assets are as follows:

The losses above and beyond the 10-percent corridor are amortized over the average remaining years until retirement – some 15 years in Germany's case. Amortization of the related amounts in 2010 and 2009 is part of total pension expense.

Plan assets primarily comprise pension liability insurance where future payments are pledged in favor of the entitled recipient.

Pension expenses are as follows:

in € K	2010	2009
Current service costs	889	863
Interest expense	1,541	1,596
Expected return on plan assets	- 203	- 172
Actuarial gains/losses	- 37
Effect of plan curtailments and
settlements	643	- 305
Past service cost	- 14	- 70
Pension expense from defined
benefit plans	2,819	1,912
Pension expense from defined
contribution plans	659	547
Total pension expense	3,478	2,459

in € K	2010	2009
Changes in the present value
of pension obligations
Balance at January 1	30,158	25,951
Current service costs	889	863
Interest expense	1,541	1,596
Actuarial gains/losses	4,962	3,458
Changes in exchange rates	171	- 40
Paid benefits	- 1,481	- 1,630
Actuarial gains/losses	643	0
Curtailments and settlements	- 57	- 40
Present value of obligations at
December 31	36,826	30,158

in € K	2010	2009
Changes in fair value of plan assets
Balance at January 1	4,847	4,138
Expected return on plan assets	203	172
Actuarial gains/losses	- 183	- 50
Changes in exchange rate	17	0
Employer's contributions	458	614
Curtailments and settlements	- 41	- 27
Plan assets at December 31	5,301	4,847

Interest expense ensuing from pension obligations is recognized in the financial result. The remaining pension expense is part of personnel costs shown in the appropriate functional line of the income statement.

The valuation date for the current value of plan assets and the present value of obligations is December 31 for each year. The base value for the calculation of unaccrued interest concerning pension obligations is the present value of obligations as of January 1. The base value for the anticipated return on plan assets is the current value as of January 1. Transfers during the year are accounted for on a pro-rata basis.

The contributions expected to be made to German plan assets in 2011 amount to EUR K 600.

The following overview shows the projected pension pay-outs for the next five years:

in € K
Due in 2011	1,575
Due in 2012	1,548
Due in 2013	1,615
Due in 2014	1,586
Due in 2015	1,862

The following information applies to the period 2006 through 2010:

The following actual return on plan assets was recognized for fiscal years 2010 and 2009:

in € K	2010	2009
Actual return on plan assets	22	124

Only the Wacker Neuson Corporation (USA) benefits plan requires the payment of healthcare contributions. The following table shows the effects of a one percentage point increase or reduction in assumed healthcare costs:

in € K	Additions	Reversals
2010
Effect on service cost and interest expense	20	- 16
Effect on the present value of pension obligations	89	- 74
2009
Effect on service cost and interest expense	18	- 15
Effect on the present value of pension obligations	64	- 53

in € K	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007	Dec. 31, 2006
Present value of performance-oriented
obligations	36,826	30,158	25,951	27,606	14,137
Fair value of the plan assets	5,301	4,847	4,138	3,496	2,698
Plan surplus /deficit	31,525	25,311	21,813	24,110	11,439
Experience adjustments
of plan liabilities	276	194	129	80	24
of plan assets	- 188	- 62	83	110	- 184

Other provisions are as follows:

in € K	Balance Jan. 1, 2010	Currency	Utilization	Additions	Reversals	Balance Dec. 31, 2010
Provisions
Warranties	5,979	111	1,957	4,794	287	8,640
Obligations towards employees	10,062	60	5,177	2,134	554	6,525
Professional fees	368	3	318	504	53	504
Litigation costs	934	37	365	234	385	455
Other provisions	2,580	77	1,404	796	468	1,581
Total	19,923	288	9,221	8,462	1,747	17,705

in € K	Balance Jan. 1, 2009	Changes in consolidation structure / Currency	Utilization	Additions	Reversals	Balance Dec. 31, 2009
Provisions
Warranties	6,914	65	2,343	2,776	1,433	5,979
Obligations towards employees	5,949	74	2,131	6,224	54	10,062
Professional fees	361	3	364	385	17	368
Litigation costs	389	- 4	9	558	0	934
Other provisions	2,601	74	1,613	1,847	329	2,580
Total	16,214	212	6,460	11,790	1,833	19,923

The due dates of the above provisions are distributed as follows:

in € K	Short-term (< 1 year)	Long-term (> 1 year)	Balance Dec. 31, 2010
Provisions
Warranties	7,507	1,133	8,640
Obligations towards employees	3,000	3,525	6,525
Professional fees	502	2	504
Litigation costs	41	414	455
Other provisions	1,267	314	1,581
Total	12,317	5,388	17,705

in € K	Short-term (< 1 year)	Long-term (> 1 year)	Balance Dec. 31, 2009
Provisions
Warranties	4,920	1,059	5,979
Obligations towards employees	5,732	4,330	10,062
Professional fees	368	0	368
Litigation costs	308	626	934
Other provisions	2,255	325	2,580
Total	13,583	6,340	19,923

The increase in discounts for non-current provisions from December 31, 2009 through December 31, 2010 amounted to EUR K 20 (2009: EUR K 24) for obligations towards employees based on the respectively valid assessment basis.

Obligations towards employees includes other provisions for employees nearing pension age who are working part-time and for whom claims for reimbursement against the German tax office amounted to EUR K 335 in 2010 and EUR K 297 in 2009.

Company obligations from employee work accounts are offset against securities classified as assets, which are created in order to secure these claims. Obligations from work accounts amount to EUR K 669. The cost of acquiring the securities amounted to EUR K 659 and the fair value at December 31, 2010 was EUR K 669, of which EUR K 669 is offset.

20 Financial liabilities

Financial liabilities comprise the amounts recognized under the balance sheet items long-term borrowings (EUR K 32,218); short-term borrowings from banks (EUR K 5,958); and current portion of long-term borrowings (EUR K 12,109):

in € K	Dec. 31, 2010	Up to 1 year	1 to 5 years	Over 5 years
Borrowings from banks	39,998	17,956	18,833	3,209
Bonds	9,741	0	9,741	0
Liabilities from finance leases	546	111	435	0
Other non-current liabilities	0	0	0	0
Total	50,285	18,067	29,009	3,209

in € K	Dec. 31, 2009	Up to 1 year	1 to 5 years	Over 5 years
Borrowings from banks	40,075	16,421	20,098	3,556
Bonds	19,450	10,000	9,450	0
Liabilities from finance leases	582	103	385	94
Other non-current liabilities	63	63	0	0
Total	60,170	26,587	29,933	3,650

Borrowings from banks

Borrowings from banks include the following items:

	Dec. 31,	Interest rate	Interest
Borrowings from banks	2010 in € K	as a percentage	rate type	Due dates
Amortizing loans in USD	10,917	1 mo. USD Libor + 3.75	fixed1	May 31, 2012
Loan to purchase a tract of land	10,000	6 mo. Euribor + 1.85	fixed1	January 1, 2016
		Either 1, 3, 6 or
Financing of Weidemann GmbH	7,800	12 mo. EUR Libor + 0.65	fixed1	June 30, 2012
Long-term loan	4,756	6.00	fixed	> 1 year
Subtotal on fixed interest rate loans	33,473
				€ K 5,343 < 1 year or
Loans in Brazilian reals	5,910	11.88	variable	€ K 567 > 1 year
Loan in Chilean pesos	242	7.32	variable	< 1 year
Export incentive credit line				Can be terminated each year
	100	1.45	variable	on March 31
Other borrowings from banks	273	< 0.19	variable	< 1 year
Subtotal on variable interest rate loans	6,525
Total	39,998

Loan converted from variable to fixed rate through a hedge. For more information, see section 23 on derivative financial instruments in these notes.

	Dec. 31, 2009	Interest rate	Interest
Borrowings from banks	in € K	as a percentage	rate type	Due dates
		either 1, 3, 6 or
Financing of Weidemann GmbH	13,200	12 mo. EUR Libor + 0.65	fixed1	June 30, 2012
Amortizing loans in USD	11,606	1 mo. USD Libor + 3.75	fixed1	May 31, 2012
Long-term loan	5,014	6.00	fixed	> 1 year
Subtotal on fixed interest rate loans	29,820
				€ K 4,789 < 1 year or
Loans in Brazilian reals	5,325	11.88	variable	€ K 536 > 1 year
Amortizing loans in USD	4,405	1 mo. USD Libor + 3.75	variable	May 31, 2012
Loan to purchase a tract of land	425	6 mo. Euribor + 1.85	variable	January 1, 2016
				Can be terminated each year
Export incentive credit line	100	1.55	variable	on March 31
Subtotal on variable interest rate loans	10,255
Total	40,075

Loan converted from variable to fixed rate through a hedge. For more information, see section 23 on derivative financial instruments in these notes.

Refer to item 30 "Risk management" in these Notes for information on the sensitivity of interest risks associated with variable-interest borrowings.

fixed interest rates were reported in the following currencies (equivalent in EUR):

The following table lists the credit lines that have been confirmed in writing but were not utilized by Wacker Neuson SE:

in € K	2010	2009
First credit line
(3 mo. Euribor + 0.5 percent)	20,000	20,000
Second credit line in USD
(1 mo. Libor + 2.0 percent)	15,058	13,983
Third credit line (Eonia + 1.25 percent)	5,000	10,000
Fourth credit line (Eonia/Euribor as
fixed rate loan + 1.0 percent)	2,000	2,000
Fifth credit line (T4M + 0.9 percent)	300	0
Sixth credit line (14.5 percent)	194	185
Seventh credit line (11.0 percent)	56	47
Eighth credit line (7.5 percent)	25	25
Total	42,633	46,240

in € K	2010	2009
Euro	22,929	18,739
USD (USA)	10,917	16,011
BRL (Brazil)	5,910	5,325
CLP (Chile)	242	0
Total	39,998	40,075

The book values of borrowings from banks with variable and

The fair values of financial liabilities are reasonable approximations of the book values.

Bonds

Wacker Neuson Linz GmbH (legal successor to Neuson Finance GmbH) has issued a bond amounting to a total nominal value of EUR 10 million (book value: EUR K 9,741). This is listed on the Third Market multilateral trading facility (MTF) of the Vienna Stock Exchange.

	Dec. 31, 2010	Dec. 31, 2010
	Total nominal	Interest rate
in € K	value	as a %	Due date
			September 30,
Bundled bond	10,000	3.76	2010

In the previous year, Wacker Neuson Linz GmbH (legal successor to Neuson Finance GmbH) issued two bonds amounting to a total nominal value of EUR 20 million (book value: EUR K 19,450). These are listed on the Third Market multilateral trading facility (MTF) of the Vienna Stock Exchange.

	Dec. 31, 2010	Dec. 31, 2010
	Total nominal	Interest rate
in € K	value	as a %	Due dates
			September 30,
Bundled bond	10,000	3.76	2012
Bond with an			September 8,
Austrian bank	10,000	3.41	2010

Financial covenants

Financial covenants exist for the following financial instruments of Wacker Neuson SE:

JJ Loan contract to finance the purchase of Weidemann GmbH

The loan contract contains a clause under which the company is bound to pledge its shares held in Weidemann GmbH to the bank as security should circumstances arise or become public that would justify the issuing of a higher risk assessment by the bank. With respect to the borrower's share of the business in Weidemann GmbH, there is an obligation not to execute power of disposal (sale) and to refrain from making any binding declarations. Furthermore, Wacker Neuson SE is bound by contract to use the proceeds received from the sale of assets outside of ordinary business operations which exceed the threshold value of EUR K 10,000 per annum to make a special redemption payment.

JJ Bundled bond

Bond holders may recall their bonds as part of loans in the event of certain breaches of contract (if the issuer or guarantor defaults on payment or becomes insolvent, for example). Furthermore, bond holders may terminate their bonds as part of loans in the event of a significant change to the ownership

structure or controlling interests – also vis-à-vis a key affiliate (for example, through the sale of a majority shareholding) and this change has a negative impact on the ability of the bond issuer to meet liabilities. The change as described may also be a gradual process.

JJ Export incentive credit line (KRR credit line):

This credit is used exclusively to finance receivables from export trade. Amounts accruing to the bank under this loan agreement are secured by a global debt assignment provision and a bill of surety.

21 Trade payables

As of December 31, 2010, trade receivables (at nominal value) were broken down as follows:

in € K	2010	2009
Trade payables	36,207	21,251
Book value due < 30 days	34,571	15,521
Book value due 30–90 days	1,497	3,112
Book value due > 90 days	139	2,618

Interest does not accrue on trade payables.

22 Other current liabilities

in € K	Dec. 31, 2010	Dec. 31, 2009
Advance payments received	12,525	8,769
Other accruals	10,091	7,291
Deferred taxes	8,073	3,043
Value added tax	4,623	2,963
Advance payments received	1,240	808
Other	7,224	6,228
Total	43,776	29,102

The other accruals and other current liabilities in 2010 mainly consisted of costs for preparing the Annual Financial Statements, outstanding invoices, liabilities to customers, return obligations, bonuses and derivatives.

The fair values of the short-term borrowings are reasonable approximations of the book values.

23 Derivative financial instruments

Derivative financial instruments treated according to the hedge accounting criteria

The nominal amounts and market values of derivative financial instruments that satisfy hedge accounting criteria are recognized as follows at December 31, 2010 and December 31, 2009:

in € K		Dec. 31, 2010		Dec. 31, 2009
	Nominal Value	Market Value	Nominal Value	Market Value
Liabilities
Currency hedges	5,950	50	0	0
Interest hedges	18,717	361	24,806	379
Commodity hedges	0	0	0	0
Total	24,667	411	24,806	379

The market values recognized under the results for the period not reflected in income and deferred tax accruing on those amounts developed as follows during the fiscal year and were netted in the statement of comprehensive income:

in € K	Market values	Deferred taxes	Carried under equity
Liabilities
Balance at Jan. 1, 2010	379	- 121	258
+/- not reflected in income	32	- 23	9
+/- reflected in income	0	0	0
Balance at Dec. 31, 2010	411	- 144	267

The maturities of derivative financial instruments are as follows:

in € K	Up to 1 year	1 to 5 years	Over 5 years
	Nominal Value
Liabilities
Currency hedges	5,950	0	0
Interest hedges	11,724	6,993	0
Commodity
hedges	0	0	0
Total	17,674	6,993	0

Derivative financial instruments not treated according to the hedge accounting criteria

The derivatives concluded to hedge future foreign-exchange transactions (underlying transaction) do not satisfy formal hedge accounting criteria and are therefore classified as "held for trading" and recognized at fair value through profit or loss. The nominal and current values developed as follows at December 31, 2010 and December 31, 2009:

in € K		Dec. 31, 2010		Dec. 31, 2009
	Nominal Value	Market Value	Nominal Value	Market Value
Assets
Interest hedges	10,000	56	0	0
Total	10,000	56	0	0
Liabilities
Currency hedges	12,986	1,076	10,490	368
Total	12,986	1,076	10,490	368

The following table provides an overview of maturities of derivative financial instruments that do not satisfy hedge accounting criteria:

in € K	Up to 1 year	1 to 5 years	Over 5 years
		Nominal Value
Assets
Interest hedges	0	10,000	0
Total	0	10,000	0
Liabilities
Currency hedges	12,986	0	0
Total	12,986	0	0

The offsetting values from the underlying transactions are not included when calculating the market value of the derivative financial instruments. Thus, they do not represent the value that the companies would achieve from both the underlying transaction and hedging contract. The book values of derivatives correspond to the market values and there is no significant exposure to credit risks since all derivative contracts were entered into with banks that have a top credit rating.

Refer to item 26 "Additional information on financial instruments" in these Notes for information regarding net profits and losses from these financial instruments.

Other information

24 Contingent liabilities

Contingent liabilities, on the one hand, represent possible obligations that may be incurred depending on the outcome of a future event or events which are of an uncertain nature and not wholly within the control of the company. On the other hand, contingent liabilities represent present obligations for which payment is not probable or the amount of the obligation cannot be determined with sufficient reliability.

The Group has undersigned the following guarantees:

in € K	Dec. 31, 2010	Dec. 31, 2009
Guarantees	1,075	699

Furthermore, the company is liable to the amount of EUR 4.1 million (previous year: EUR 4.1 million) in connection with a contract with the city of Munich to develop a property.

In addition to the above-mentioned contingent liabilities, the Group undersigns various financial guarantees (sureties). It is highly unlikely, however, that these will be exercised. Therefore no value was booked.

The Group is liable for the following financial guarantees:

in € K	Dec. 31, 2010	Dec. 31, 2009
Book value	0	0
Nominal value	5,585	4,789

The financial guarantees refer to an agreement between the affiliate Wacker Neuson Máquinas Ltda. (Brazil) and a bank. The agreement was concluded to provide customers with financing options. The bank charges the affiliate for these transactions based on 0.3 percent to 0.8 percent of the purchase agreement (previous year: 0.5 percent to 1.0 percent). In the event of default, the affiliate is obliged to settle the outstanding receivables plus interest. Interest in 2010 amounted to roughly 12 percent, while in the previous year it fluctuated between 11 and 14 percent. At the balance sheet date, the value of receivables financed by the bank amounted to EUR K 5,585 (previous year: EUR K 4,789).

25 Other financial liabilities

a) Obligations for equipment rental and service.

The terms of the obligations for rental equipment and service contracts are as follows:

in € K	Dec. 31, 2010	Dec. 31, 2009
Obligations due within 1 year	11,948	10,947
Obligations due in 1 to 5 years	16,204	18,146
Obligations due in more than 5
years	8,221	8,479
Total	36,373	37,572

b) Lease obligations

Finance lease obligations

When the Group is the lessee (finance lease)

Finance lease contracts mainly concern the purchase of office and other equipment and the purchase of real estate.

The following table lists the net book values of the relevant assets at the closing date:

in € K	Dec. 31, 2010	Dec. 31, 2009
Office and other equipment	64	44
Buildings	747	784
Total	811	828

Lease contracts for office and other equipment contain, for the most part, a purchase option at the end of the basic term of the lease which is also to be exercised. The finance lease contract concerns the purchase of a self-occupied administration building by the Hungarian affiliate, Wacker Neuson Kft., which will terminate by 2015.

Future minimum lease payments and their present values are presented in the following table:

in € K 2010	Up to 1 year	1 to 5 years	Over 5 years	Total
Future minimum lease payments (nominal)	116	458	0	574
Less discount	- 5	- 23	0	- 28
Present value	111	435	0	546

Discount rate 3 – 6%

in € K 2009	Up to 1 year	1 to 5 years	Over 5 years	Total
Future minimum lease payments (nominal)	108	408	100	616
Less discount	- 5	- 23	- 6	- 34
Present value	103	385	94	582

Discount rate 3 – 6%

When the Group is the lessor (finance lease)

To the extent that the company is the lessor and has sold machines by way of finance lease, the receivable is capitalized to the amount of the net investment value ensuing from the lease contract. The sales proceeds are recognized in accordance with IAS 17.

The present values at closing date are as follows:

in € K 2010	Up to 1 year	1 to 5 years	Over 5 years	Total
Outstanding min. lease payments	518	2,007	0	2,525
+ Non-guaranteed residual value (nominal)	1,175	930	0	2,105
= Gross investment	1,693	2,937	0	4,630
- Unrealized investment income	- 48	- 201	0	- 249
= Net investment (present value)	1,645	2,736	0	4,381
- Present value of non-guaranteed residual values	- 1,138	- 846	0	- 1,984
= Present value of minimum lease payments	507	1,890	0	2,397

in € K 2009	Up to 1 year	1 to 5 years	Over 5 years	Total
Outstanding min. lease payments	332	7,354	0	7,686
+ Non-guaranteed residual value (nominal)	614	2,120	0	2,734
= Gross investment	946	9,474	0	10,420
- Unrealized investment income	- 23	- 717	0	- 740
= Net investment (present value)	923	8,757	0	9,680
- Present value of non-guaranteed
residual values	- 595	- 1,895	0	- 2,490
= Present value of minimum
lease payments	328	6,862	0	7,190

Operating leases

Insofar as a Wacker Neuson entity acts as a lessee, the lease payments are recognized as an expense over the term of the lease on a straight-line basis. This essentially refers to leased vehicles, computer hardware and other office equipment.

Outstanding commitments for future minimum lease payments under operating leases that cannot be terminated can be seen in the following table:

in € K 2010	Up to 1 year	1 to 5 years	Over 5 years	Total
Future minimum lease payments (nominal)	3,387	7,572	6,358	17,317
in € K 2009	Up to 1 year	1 to 5 years	Over 5 years	Total
Future minimum lease payments (nominal)	5,185	7,958	5,653	18,796

In 2010, a total of EUR K 4,929 (previous year: EUR K 6,656) for operating lease agreements was expensed.

c) Obligations resulting from investment decisions/ takeback obligations

Financial obligations ensuing from construction and investment projects amounting to EUR K 14,002 (previous year: EUR K 24,106) and from takeback obligations amounting to EUR K 2,622 (previous year: EUR K 1,618) exist. In addition, unconditional purchase commitments amounting to EUR K 107,559) also exist.

26 Additional information on financial instruments

The book and fair values of financial assets and liabilities are presented in the following table. It also shows how the individual items are categorized.

in € K	2010 Fair value	2010 Book value	Initial disclo sure	Held for trading	Held for sale	Hedges	Loans and receiv ables	Held to maturity	Leases and others (book value)	Non financial assets (book value)
IAS 39 classification (book value)
				Measured at fair value through profit or loss	with changes recog nized in equity	Measured at fair value	At residual book value
Assets
Other invest ments	5,478	5,478	0	0	5,478	0	0	0	0	0
Other non current assets	14,282	14,282	0	0	0	0	9,132	0	2,736	2,414
Trade receivables	121,487	121,487	0	0	0	0	119,842	0	1,645	0
Other current assets	12,457	12,457	0	56	0	0	4,279	0	0	8,122
Cash and cash equivalents	36,559	36,559	0	0	0	0	36,380	0	179	0

in € K	2010 Fair value	2010 Book value	Initial disclo sure	Held for trading	At residual book value	Hedges	Leases and others (book value)	Non financial assets (book value)
				IAS 39 classification (book value)
		Measured at fair value with changes
			Measured at fair value			recognized
				through profit or loss		in equity
Liabilities
Long-term borrowings	32,076	32,218	0	0	31,783	0	435	0
Trade payables	36,207	36,207	0	0	36,207	0	0	0
Short-term borrowings from banks	5,958	5,958	0	0	5,958	0	0	0
Current portion of long-term borrowings	12,109	12,109	0	0	11,998	0	111	0
Other current liabilities	43,776	43,776	0	1,076	2,670	411	0	39,619

in € K	2009 Fair value	2009 Book value	Initial disclo sure	Held for trading	Held for sale	Hedges	Loans and receiv ables	Held to maturity	Leases and others (book value)	Non financial assets (book value)
					IAS 39 classification (book value)
				Measured at fair value through profit or loss	Measured at fair value with changes recog nized in equity		book value	At residual
Assets
Other invest ments	4,144	4,144	0	0	4,144	0	0	0	0	0
Other non current assets	21,542	21,542	0	0	0	0	10,427	0	8,757	2,358
Trade receivables	90,837	90,837	0	0	0	0	89,914	0	923	0
Other current assets	8,715	8,715	0	0	0	0	2,005	0	0	6,710
Cash and cash equivalents	85,024	85,024	0	0	0	0	84,889	0	135	0

in € K	2009 Fair value	2009 Book value	Initial dis clo sure	Held for trading	At residual book value	Hedges	Leases and others (book value)	Non financial assets (book value)
		IAS 39 classification (book value)
		Measured at fair value with changes recog Measured at fair value nized in through profit or loss equity
Liabilities
Long-term borrowings	33,583	33,583	0	0	33,104	0	479	0
Trade payables	21,251	21,251	0	0	21,251	0	0	0
Short-term borrowings from banks	14,889	14,889	0	0	14,889	0	0	0
Current portion of long-term borrowings	11,698	11,698	0	0	11,595	0	103	0
Other current liabilities	29,102	29,102	0	368	3,294	379	0	25,061

Investments in equity instruments amounting to EUR K 5,478 (previous year: EUR K 4,144) that do not have a quoted market price in an active market are included in other investments. These equity instruments were valued at acquisition cost as the current value cannot be reliably determined. In the current fiscal year, an impairment loss against income of EUR K 1,978 is recorded (previous year: EUR K 0).

The following table shows the net profits and losses from financial instruments based on valuation categories. It does not include the effects on income of finance leases or of derivatives that qualify for hedge accounting as these are not allocated to any valuation categories set down in IAS 39. Similarly, interest and dividends have not been recognized on the net profits and losses from financial instruments.

in € K	2010	2009
Loans and receivables	8	- 1,684
Financial instruments measured at fair value through profit or
loss – initial disclosure	0	0
Financial instruments held for trading	- 652	- 265
Financial liabilities measured
at amortized cost	0	0

Net gain/loss from the category "loans and receivables" results from allowances for doubtful accounts on trade receivables.

The gains and losses from adjustments to the fair value of derivatives that do not meet hedge accounting requirements are included in the category of "assets held for trading".

Financial instruments in the form of foreign-currency trade receivables and payables are valued at the relevant spot rates applicable on the balance sheet dates. This resulted in expenses amounting to EUR K 213 (previous year: earnings of EUR K 1,701), which are reported in manufacturing costs incurred to generate sales revenue. Refer to items 2 and 4 "Other income" and "Other operating expenses" in these Notes for information on exchange rate fluctuations and adjustments to monetary holdings.

The table below shows the financial instruments subsequently valued at fair value. These are split into levels 1 to 3, depending on the extent to which fair value can be observed:

• JJ Level 1 fair value determination resulting from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• JJ Level 2 fair value determination based on inputs other than quoted prices included within level 1 (data) that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• JJ Level 3 fair value determination resulting from models that use inputs for the valuation of the asset or liability that are not based on observable market data (unobservable inputs).

in € K 2010	Level 1	Level 2	Level 3	Dec. 31, 2010
Financial assets categorized "at fair value through profit or loss"
Non-hedged derivatives	0	56	0	56
Total	0	56	0	56

in € K 2010	Level 1	Level 2	Level 3	Dec. 31, 2010
Financial liabilities categorized "at fair value through profit or loss"
Non-hedged derivatives	0	1,076	0	1,076
Total	0	1,076	0	1,076

in € K 2009	Level 1	Level 2	Level 3	Dec. 31, 2009
Financial assets categorized
"at fair value through profit or loss"
Non-hedged derivatives	0	0	0	0
Total	0	0	0	0
in € K 2009	Level 1	Level 2	Level 3	Dec. 31, 2009
Financial liabilities categorized
"at fair value through profit or loss"
Non-hedged derivatives	0	368	0	368
Total	0	368	0	368

27 Events after the balance sheet date

No other noteworthy events occurred after the balance sheet date.

28 Segmentation

Division and determination of operating segments

The internal organizational structure and management structure as well as the internal reports to the Executive Board and Supervisory Board, which are based on geographic segments, form the basis for determining the operating segments of the company. For information regarding geographical segmentation of companies, please refer to the section on consolidation structure (see the general information on accounting standards/consolidation structure). According to this structure, the companies are bundled geographically into regional markets (Europe, Americas and Asia). Reporting is also carried out internally according to business segments. This exclusively deals with revenue. Corporate governance will therefore continue to focus on geographical segments.

Products and services of operating segments

The products and services offered by the geographic operating segments can be divided into light equipment, compact equipment and services.

The light equipment business segment covers the manufacture and sale of light of equipment weighing up to approximately three metric tons in the following four business fields: concrete technology, soil and asphalt compaction, demolition and utility.

The compact equipment business segment covers the manufacture and sale of compact equipment weighing up to approximately fourteen metric tons.

The business segment services houses the company's activities in the business fields after-market (repair and maintenance) and rental.

Segment valuation methods

Segment valuation methods are based on the valuation methods used in internal reporting. Internal reporting is carried out exclusively in line with the applicable valid IFRS standard.

Transactions between the individual Group segments are based on prices that also apply to third-party transactions.

Reporting format

Segment reporting is covered in a separate Note.

Internal reporting reveals segment revenue and segment earnings, expressed as EBIT. EBITDA is also disclosed as a profit indicator.

The figures for working capital and net financial debt are also derived from internal reporting and included in external segment reporting for operating segments as segment assets and segment liabilities.

The operating segments are reported after elimination of transactions that have taken place within segments. The consolidation column thus contains only the eliminated transactions that took place between operating segments.

Revenue from external customers, categorized according to products and services, are recognized at Group level.

29 Cash flow statement

The cash flow statement is prepared in accordance with IAS 7. The cash flow statement reports cash flows resulting from operating activities, from investing activities as well as from financing activities. Insofar as changes in liquid funds are due to foreign exchange rate fluctuations, these are reported separately. The determination of cash flow from operating activities was derived using the indirect method.

Current liquid funds comprise cash and cash equivalents that are as reported on the balance sheet. Short-term borrowings from banks in the Group cash pool were offset against cash and cash equivalents.

in € K	Dec. 31, 2010	Dec. 31, 2009
Cash on hand	179	135
Bank balances	51,032	72,770
Cash deposits	4,317	33,100
Liabilities from group cash pool	- 18,969	- 20,981
Total	36,559	85,024

Non-cash operating expenses and income as well as the gain or loss on the sale of property, plant and equipment have been eliminated in the cash flow from operating activities.

The item "Book value from the disposal of rental equipment" recognized in the cash flow from operating activities includes the book values of rental equipment formerly recognized under fixed assets and reclassified on sale of the equipment as current assets.

Cash flow from investing activities comprises the cash outlay for intangible assets and property, plant and equipment.

The item outlining changes to the consolidation structure refers exclusively in fiscal 2010 to capital contributions to an affiliate not consolidated for reasons of materiality (see overview of equity investments in non-consolidated companies).

Cash flow from financing activities contains payments received from and made to shareholders. It also contains payments resulting from borrowing and repayment of debt.

30 Risk management

Capital management

The main aim of the Group's capital management policy is to maintain a high equity ratio to support business activities.

The Group actively controls and modifies its capital structure in line with changing market dynamics. The goal of the capital management policy is to secure the company's business and investment activities in the long term. To maintain a suitable capital structure, the Group can change dividend payments to shareholders or issue new shares. As of December 31, 2010, and December 31, 2009, no changes were made to objectives, guidelines or procedures within the framework of the capital structure control policy. The Group monitors its capital using net financial debt as an indicator; resulting from current net financial liabilities and non-current financial liabilities.

in € K	Dec. 31, 2010	Dec. 31, 2009
Current financial liabilities	18,067	26,587
Short-term financial liabilities	5,958	14,889
Current portion of long-term financial liabilities	12,109	11,698
Non-current financial liabilities (without provisions)	32,218	33,583
Total equity before minority interests	830,619	789,049
Total capitalization	880,904	849,219

in € K	Dec. 31, 2010	Dec. 31, 2009
Current net financial liabilities	- 18,492	-58,437
Short-term liabilities	18,067	26,587
less liquid funds	- 36,559	- 85,024
Net financial debt	13,726	- 24,854
Current net financial liabilities	- 18,492	- 58,437
plus non-current financial liabilities	32,218	33,583

The minimum capital requirements for equity stipulated under German stock legislation have been fulfilled. Equity is not subject to any further external minimum capital requirements.

Financial risk factors

Due to the global scope of its operations, the Group is exposed to various financial risks, including foreign currency risks, credit risks, liquidity risks and interest rate risks. The comprehensive risk management policy of the Group is focused on the unpredictability of developments in financial markets and aims to minimize any potential negative impact on the Group's financial position. It is the general policy of the company to reduce these risks by systematic financial management. The Group employs derivative financial instruments in a targeted way to hedge against certain risks.

The Group finance department is responsible for carrying out risk management in accordance with the rules and guidelines approved by the Executive Board. It identifies, evaluates and hedges against financial risks in close co-operation with the operating units of the Group. The Executive Board sets guidelines for risk management as well as fixed policies for specific areas of risk. These include dealing with foreign currency risks, interest rate risks and credit risks.

The guidelines also specify how derivative and other financial instruments and liquidity surpluses are to be used.

Currency risks

Currency risks arise from expected future transactions, assets and liabilities reported in the balance sheet, as well as from net investments in a currency that diverges from the functional currency (EUR). Exchange risks are naturally hedged by offsetting receivables against payables in a given currency.

Two major manufacturing affiliates prepare their balance sheets in US dollars. From the Group's perspective, the US dollar is therefore a foreign currency that represents a significant potential currency risk for financial instruments. If the USD/EUR exchange rate increased or decreased by 5 percent, changes in the financial assets and liabilities reported in the balance sheet in US dollars would have the following impact on profit before tax and equity:

	2010	2009
USD currency trends as a %	+ 5.00 / - 5.00	+ 5.00 / - 5.00
Impact on profit before tax (EBIT)
in € K	65 / - 72	- 87 / 97
Impact on equity in € K	65 / - 72	- 87 / 97

The Group is also subject to currency risks from individual transactions resulting from purchases and sales executed by a member company in a currency other than the functional currency.

Credit risks

The Group is not exposed to any material credit risks (default risks). Contracts for derivative financial instruments and financial transactions are concluded only with financial institutions with a high quality credit rating in order to keep the risk of default by the contracting party as low as possible. The book value of financial assets recognized in the Consolidated Financial Statements less impairment represents the maximum default risk. For further information on the book value of financial assets, please refer to item 26 "Additional information on financial instruments" in these Notes.

Continued weakness on construction and financial markets in some countries may present certain Group customers with financial difficulties, possibly culminating in insolvency. This would lead to a rise in accounts receivable and a subsequent increased risk of default. We are counteracting the risk of changes in individual customers' payment patterns through our active accounts receivable management policy, supplier "health-checks" and tools such as credit hedging.

Interest rate risks

Interest rate risks are caused by market fluctuations in interest rates. On the one hand, they impact the amount of interest payments for which the company is liable. On the other hand, they influence the market value of financial instruments.

The Group hedges its cash flow against interest rate risks arising from borrowings with variable interest rates primarily by means of interest rate swaps (payer swaps), which, taking the prevailing economic climate into consideration, convert the variable interest rate positions into positions with fixed interest rates.

Of the total financial liabilities listed in item 20 "Financial liabilities" in these Notes (EUR K 50,285; previous year: EUR K 60,170), EUR K 43,760 (previous year: EUR K 49,915) is attributable to fixed interest rate liabilities, which are not subject to changes in interest rate, and EUR K 6,525 (previous year: EUR K 10,255) to variable interest rate liabilities.

The following tables show how sensitive the Group's earnings before tax is to changes in interest rates that could be reasonably expected to occur based on the impact this would have on variable interest rate loans (EUR K 6,525; previous year: EUR K 10,255) and bank balances (EUR K 1,551; previous year: EUR K 2,038) resulting from a Group-wide cash pool system.

The effects on Group earnings before tax also reflect the impact on equity.

in € K	Book value at Dec. 31, 2010	Interest 2010	Impact on profit before tax (increase of 0.20%)	Impact on profit before tax (decrease of 0.20%)
Financial assets with variable interest rates
Bank balances cash pool	1,551	0.188%	3	- 3
Financial liabilities with variable interest rates
Other borrowings from banks	6,525	11.07%	- 13	13
Total			- 10	10

in € K	Book value at Dec. 31, 2009	Interest 2009	Impact on profit before tax (increase of 0.20%)	Impact on profit before tax (decrease of 0.20%)
Financial assets with variable interest rates
Bank balances cash pool	2,038	0.375%	4	- 4
Financial liabilities with variable interest rates
Other borrowings from banks	10,255	8.04%	- 21	21
Total			- 17	17

Liquidity risks

Liquidity risks involve the availability of funds needed to meet payment obligations on time. The company is assured a supply of liquid funds at all times by the lines of credit not currently used by the company. Liquidity is managed by the Group's treasury department via a Group-wide cash pool system. Refer to item 20 "Financial liabilities" in these Notes for further information on existing credit lines and financial covenants.

31 Executive bodies

Executive Board

In the year under review the Executive Board comprised five members up to and including September 15, 2010 and of four members at the reporting date:

• JJ Richard Mayer, Spokesperson for the Board (as of September 16, 2010), responsible for the light equipment segment, quality management as well as legal matters and human resources (departments added since September 16, 2010)
• JJ Martin Lehner, Deputy CEO, responsible for the compact equipment business segment
• JJ Günther Binder, responsible for finance, controlling, IT, investor relations and corporate communication (departments added since September 16, 2010)
• JJ Werner Schwind, responsible for sales, rentals, logistics, service, marketing, real estate and training
• JJ Until September 15, 2010: Dr. Georg Sick, Chairman of the Executive Board, responsible for investor relations, corporate communication, quality management, legal matters and human resources

Dr. Georg Sick resigned from his position as Chairman of the Executive Board and as a member of the Executive Board as of September 15, 2010.

The following members of the company's Executive Board have additional Supervisory Board positions or seats on comparable supervisory committees outside of the Wacker Neuson Group in Germany and abroad:

JJ Richard Mayer

Member of the Advisory Board of the EQUA association in Herrsching, Germany

JJ Günther Binder Member of the Supervisory Board of Volksbank Linz-Mühlviertel, Linz, Austria (until August 2010)

With the exception of the members stated above, no other members of the Executive Board have administrative, executive or supervisory functions or mandates for comparable

supervisory committees in Germany or abroad outside of the Wacker Neuson Group.

Supervisory Board

The following members are appointed to the Supervisory Board of Wacker Neuson SE as of the closing date:

• JJ Hans Neunteufel, engineer, Chairman of the PIN Private Trust (PIN Privatstiftung), in Linz, Austria, Chairman of the Supervisory Board
• JJ Dr. Ulrich Wacker, lawyer, Chairman of the EQUA association (EQUA-Stiftung), Herrsching, Germany, Deputy Chairman of the Supervisory Board
• JJ Kurt Helletzgruber, businessman, managing director of Dipl. Ing. Hitzinger Gesellschaft m.b.H., in Linz, Austria
• JJ Dr. Eberhard Kollmar, attorney-at-law and partner at Kollmar, Deby & Sinz Rechtsanwaltsgesellschaft mbH, Munich, Germany
• JJ Elvis Schwarzmair, Chairman of the Reichertshofen Works Council and Chairman of the Central Works Council, the Group Works Council, and the SE Works Council, Rohrbach, Germany
• JJ Herbert Santl, Chairman of the Munich Works Council, Munich, Germany (until December 31, 2010)
• JJ Hans Haßlach, Chairman of the Kramer-Werke GmbH Works Council, Deputy Chairman of the Group Works council, Deputy Chairman of the SE Works Council, Uhldingen-Mühlhofen, Germany (as of January 1, 2011)

The following members of the company's Supervisory Board have additional supervisory board positions or seats on comparable supervisory committees in Germany and abroad outside of the Wacker Neuson Group:

JJ Hans Neunteufel

Allgemeine Sparkasse Oberösterreich Bankaktiengesellschaft, Chairman of the Supervisory Board Oberösterreichische Technologie- und Marketinggesellschaft m.b.H. (Technology Organization of Upper Austrian Region), member of the Supervisory Board

For information on the remuneration of the Executive and Supervisory Boards, as well as remuneration for former Board members, please refer to item 32 "Related party disclosures" in these Notes.

32 Notes on business with related people and parties

In the case of the Group, IAS 24 defines a related party necessitating disclosures as shareholders, entities over which shareholders have control or significant influence (sister companies), non-consolidated companies, members of the Executive Board, members of the Supervisory Board and the pension fund.

Key trade relations with related parties were as follows during the period under review:

in € K	Current receivables Dec. 31, 2010	Current payables Dec. 31, 2010	Expenses for business transactions 2010	Income for business transactions 2010
Relations with shareholders	0	0	575	740
Relations with sister companies	85	209	3,738	766
Relations with non-consolidated companies	4,406	490	3,983	933
Pension fund	0	191	0	0
Total	4,491	890	8,296	2,439

	Current	Current	Expenses for	Income for
	receivables	payables	business	business
in € K	Dec. 31, 2009	Dec. 31, 2009	transactions 2009	transactions 2009
Relations with shareholders	124	0	392	784
Relations with sister companies	144	142	3,867	397
Relations with non-consolidated companies	2,498	108	1,945	767
Pension fund	0	193	0	0
Total	2,766	443	6,204	1,948

Relations with shareholders resulted mainly from goods and services traded with a shareholder. The goods and services delivered to the shareholder were valued at EUR K 740 (previous year: EUR K 784). These were counterbalanced with goods and services received by the shareholder to the value of EUR K 575 (previous year: EUR K 392). The goods and services were traded under the terms customary in the market, as agreed with third parties.

Relations with sister companies and entities over which shareholders have control or significant influence resulted from deliveries, IT service deliveries, and rental arrangements between affiliates and entities over which shareholders have control or significant influence.

Relations with non-consolidated companies resulted from goods and services traded between affiliates and Neuson Kramer subgroup companies that were not consolidated but where a shareholding exists or from purchasing company shares from non-consolidated affiliates (see general information on accounting standards/consolidation structure). In the year under review, value impairments on receivables and shareholdings were realized in the amount of EUR K 1,978 (previous year: EUR K 1,720).

Relations with the pension fund during the period under review and the previous year refer exclusively to a provision for voluntary support and pension benefits for employees of the parent company.

Total remuneration for the Executive Board in the period under review amounted to EUR K 6,210 (previous year: EUR K 2,964). Total remuneration for the Supervisory Board for the same period amounted to EUR K 260 (previous year: EUR K 255). At the AGM on May 15, 2006, a resolution was passed to refrain from itemizing this information in accordance with Section 285 (1), no. 9a clauses 5 to 9 in conjunction with Section 314 (2), sent. 2 HGB in conjunction with Section 315a, (1) HGB. At the closing date, current payables to the Executive Board in the amount of EUR K 1,935 were outstanding (previous year: EUR K 1,130).

Retirement commitments were agreed upon for members of the Executive Board. The value of pension obligations at the end of the accounting period totaled EUR K 4,207 (previous year: EUR K 4,848). The allocation amounted to EUR K 1,658 (previous year: EUR K 187). The reduction in pension obligations results from the reclassification of an active member of the Board as a former member of the Board.

Due to respective agreements, pension agreements have also been closed with former members of the Executive Board. The value of these pension obligations at the end of the accounting period totaled EUR K 16,097 (previous year: EUR K 10,829). In fiscal 2010, EUR K 517 (previous year: EUR K 504) was paid to former Executive Board members.

Differences between the year under review and the prior-year period are mainly due to reclassifications of members of the Board to former members of the Board.

33 Auditor's fees

The auditor's fee is disclosed as an expense in fiscal 2010 and is broken down as follows:

in € K	2010	2009
Auditing services	340	320
Other approval and assessment
services	154	174
Tax consultation services	396	328
Other services	70	22

34 Declaration regarding the German Corporate Governance Codex

The Executive and Supervisory Boards have issued a declaration stating which recommendations of the "Commission of the German Corporate Governance Code" have been and will be adopted. The declaration can be downloaded at any time from the Group website at www.wackerneuson.com.

35 Availing of exemption provisions according to Section 3 (264) HGB

Wacker Neuson SE avails of the exemptions set down in Section 264 (3) HGB for Weidemann GmbH and for Kramer-Werke GmbH for fiscal 2010.

Munich, March 21, 2011

Wacker Neuson SE

The Executive Board

Richard Mayer Martin Lehner (Spokesperson) (Deputy Chairman)

Günther C. Binder Werner Schwind

Responsibility statement

"To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Wacker Neuson Group, and that the Consolidated Management Report includes a fair review of the development and performance of the business and the position of the Wacker Neuson Group respectively the parent company Wacker Neuson SE, together with a description of the principal opportunities and risks associated with the expected development of the Wacker Neuson Group respectively the parent company Wacker Neuson SE."

Munich, March 21, 2011

Wacker Neuson SE, Munich

The Executive Board

Richard Mayer Martin Lehner (Spokesperson) (Deputy Chairman)

Günther C. Binder Werner Schwind

Unqualified Auditors' Opinion

We have audited the consolidated financial statements prepared by Wacker Neuson SE, comprising the balance sheet, the income statement, the statement of comprehensive income, the statement of changes in equity, the cash flow statement and the notes to the consolidated financial statements, together with the group management report, which is combined with the management report of the Company for the reporting period from January 1 through December 31, 2010.

The preparation of the consolidated financial statements and the combined management report in accordance with those IFRS as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a paragraph 1 HGB are the responsibility of the parent company´s management. Our responsibility is to express an opinion on the consolidated financial statements and on the combined management report based on our audit.

We have conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the "Institut der Wirtschaftsprüfer" (Institute of Public Auditors in Germany). Those standards require that we plan and perform the audit so that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the combined management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accountingrelated internal control system and the evidence supporting the disclosures in the consolidated financial statements and the

combined management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of the entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as the evaluation of the overall presentation of the consolidated financial statements and the combined management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion and based on the findings of our audit, the consolidated financial statements comply with those IFRS as adopted by the EU and the additional requirements of German commercial law pursuant to § 315a paragraph 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The combined management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group´s position and suitably presents the opportunities and risks of future development.

Munich, March 21, 2011

Rölfs WP Partner AG Wirtschaftsprüfungsgesellschaft

Reinke Jagosch Wirtschaftsprüfer Wirtschaftsprüfer (Public Auditor) (Public Auditor)

Technical Glossary

Breaker	Hammer which runs on a combustion engine or electrical motor and is used to break up or demolish concrete and asphalt.
Compact equipment	Group's strategic business segment covering equipment of up to around fourteen tons, particularly wheel loaders, skid steer loaders, four-wheel and track dumpers, telescopic handlers, track and mobile excavators and compact excavators.
Compactors	This equipment group includes rammers, vibratory plates and rollers. These are used, for example, in the construction of roads and paths to compact soil and asphalt.
Concrete technology	Business field in the light equipment segment. The equipment is mainly used for laying concrete walls, ceilings and floors.
Demolition	Business field in the light equipment segment. The equipment is used to break or cut asphalt and concrete.
Dumper	Compact construction vehicle primarily used for transporting backfill material.
Floor saws	Hand-guided saws equipped with a diamond blade like the cut-off saw mainly used for cutting concrete and asphalt floors.
Focus factory	Element of our manufacturing concept, where production is organized by business field. Each factory, staffed by a specialized team, is responsible for producing a single product group.
Heavy equipment	Large construction machinery defined by the company as having a total weight of over fifteen tons, typically transported to construction sites for specific projects and operated by specially trained employees.
Hydronic heating equipment	Mobile heating equipment to thaw frozen ground or heat buildings, making construction work less dependent on weather conditions.

Internal vibrator	Used for concrete compaction, mainly on construction sites. They consist of eccentric weights
	driven by an electrical motor, arranged in a waterproof steel tube for submersion in fresh concrete.
Light equipment	Group's strategic business segment. Covers predominantly hand-held and hand-guided devices as
	well as remote-controlled or ride-on equipment of up to around three tons.
Rebar cutter	Metal rods for reinforced concrete can be cut to measure with rebar cutters.
	Group's business field in the light equipment segment. The equipment is mainly used for laying concrete walls, ceilings and floors.
Skid steer loader	Small wheel loader either with four-wheel drive steering or rubber tracks which offers excellent
	maneuverability in small areas and easy handling even across the roughest terrain. Multi-purpose attachments are available.
Soil and asphalt	Business field in the light equipment segment. The equipment is mainly used for compacting soil and
compaction	asphalt in the construction processes involved in trenches, roads, paths, foundations and industrial buildings.
Telescopic handlers	Like wheel loaders, these compact machines may be used in construction and agriculture. The main
	difference is the detached cabin and enormous lifting heights.
Utility	Group's business field in the light equipment segment. Equipment such as generators, light towers, submersible pumps and mobile hydronic heating systems support construction site activities.
Vibratory plate	Soil and asphalt compaction device, mainly used to compact pipeline trenches and paving stones.
	Also used to precompact foundation soil.
Vibratory rammer	First developed in the 1930s by the Wacker Neuson, this pioneering product is used in soil and
(also rammer)	asphalt compaction, particularly in small spaces and narrow trenches.
Wet screed	Concrete technology equipment mainly used to manufacture large concrete floors, in industrial
	buildings for example, simultaneously leveling and compacting fresh concrete.
Wheel loader	Several types of wheel loader are available featuring different technology and attachments. The variety
	of applications include landscape, utility, pallet fork operation and lifting.

Financial glossary

Break-even point	The point at which costs or expenses and revenue are equal at EBIT level. If a company fails to generate enough sales to reach this point, it will make a loss. A break-even analysis is an important tool for corpo rate planning. It helps assess the impact of changes to the cost structure and determine the amount of sales (level of revenue generated) required to exceed the break-even point.
Capital employed	Invested capital: Capital employed represents the interest-bearing capital tied up in and required by the Group to function. It is equal to the Group's operating assets less the amount of non-interest-bearing available capital. Capital employed = non-interest-bearing assets less non-interest-bearing liabilities, less goodwill and less brand value.
Cash flow	Refers to a company's ability to finance itself, calculated by the excess of cash revenues over cash outlays in a given period of time (not including non-cash expenses/income).
Cash flow from financing activities	Cash balance resulting from changes to financial liabilities, the issue of shares, cash inflow from the disposal of treasury shares /cash outflow from the acquisition of treasury shares and dividend payments.
Cash flow from investment activities	Cash balance resulting from the acquisition of financial, tangible and intangible assets and the disposal of financial, tangible and intangible assets.
Cash flow from operating activities	Cash flow generated from operating activities.
Cash flow according to DVFA/SG	Cash flow according to the recommendations set down by the German association of finance analysis and asset management (Deutsche Vereinigung für Finanzanalyse und Asset Management, DVFA) and the Schmalenbach organization (Schmalenbach-Gesellschaft, SG). Cash flow according to DVFA/SG is calculated as follows:
	Profit/loss for the period
	+/- Write-downs/-ups on assets
	+/- Changes to pensions and other long-term provisions
	+/- Changes to special tax-free reserves
	+/- Other non-cash income/expense items of a substantial nature
	= Annual cash flow
	+/- Adjustment for one-off income/expense items of a substantial nature
	= Cash flow according to DVFA/SG
Compound annual growth rate (CAGR)	The average annual rate of growth of a single value over a given period of time. The CAGR of a specific value is calculated by taking the nth root of the total percentage growth rate of the value, where n is the number of years in the period being considered.
Corporate governance	Sound and responsible management and control of a company with the aim of creating long-term value.
Deferred taxes	Differences between the tax base and the carrying amounts in the IFRS accounts in order to disclose tax expense (actual and deferred) according to IFRS.
Derivatives	Derivatives are financial instruments, such as futures and options that derive their value from the value of other financial instruments or an underlying asset.

Discounted cash flow (DCF) method	Valuation method used to estimate the market value by discounting a company's future cash flows to their present value.
Earnings per share (EPS)	EPS is defined as net profit for the year divided by the number of shares.
EBIT (margin)	The earnings before interest and taxes (EBIT) margin is the ratio of EBIT to revenue.
EBITDA (margin)	The earnings before interest, taxes, depreciation and amortization (EBITDA) margin is a measure of a company's operational profitability. It is calculated as the ratio of EBITDA to revenue.
EBT	Earnings before taxes (EBT).
Equity ratio	Ratio of equity before minority interests to total capital; indicates the financial stability of a company.
Free cash flow	Free cash flow refers to the amount of cash readily available to a company.
Gearing	Net financial debt as a percentage of equity before minority interests.
Goodwill	When a company purchases another company for a price that is higher than the fair value (book value) of all assets and liabilities, the difference is recorded as goodwill.
Gross profit margin	Gross profit margin is a measure of operational efficiency, expressing the relationship between gross profit and sales revenue or the percentage by which sales exceed cost of sales.
Hedge	Provides protection against risks arising from unfavorable exchange rate fluctuations and changes to raw material and other prices.
IFRS (IAS)	International Financial Reporting Standards. Internationally recognized and applied accounting stan dards devised by the International Accounting Standards Board (IASB) in an effort to harmonize ac counting standards and principles worldwide.
NOPLAT	Net operating profit less adjusted taxes (NOPLAT) refers to earnings before interest and taxes (EBIT) minus adjusted taxes. NOPLAT shows the annual profit a company would achieve if it were financed purely from equity. NOPLAT = EBIT less (EBIT x corporate tax rate)
Operating leverage	Measures the relation between a company's fixed and variable cost structure. Operating leverage indicates how a percentage change in revenue as a result of new sales affects profitability.
Purchase price allocation (PPA)	This refers to a process whereby the purchase price paid for a company is allocated at fair value to the assets, liabilities and contingent liabilities acquired. The difference in value is disclosed as goodwill (see entry above).
Return on assets (after tax and before minority interests)	Return on assets is the ratio between profit for the period before minority interests and the average balance sheet total.
Return on sales (ROS)	Return on sales is the ratio between profit before minority interests and sales or revenue.
ROCE I (return on capital employed)	ROCE I indicates the efficiency and profit-generating ability of capital expenditure within a company. ROCE I = EBIT ratio to average capital employed as a %

ROCE II (return on capital employed)	ROCE II shows how much return a company realizes on the capital it invests after tax. ROCE II = NOPLAT in relation to average capital employed as a %
ROE (return on equity)	This indicator measures the return a company is getting on its equity. It shows the relation between earnings (after tax) and equity employed before minority interests. ROE = Earnings after tax in relation to average equity before minority interests as a %
Swap	A swap is an agreement between two parties to exchange cash flows at a future point in time. The agreement also defines how the payments are calculated and when they are to be made.
Tax shield	The reduction in income taxes that results from availing of tax deductions applicable to interest on bor rowings. It increases a company's equity value.
Weighted average cost of capital (WACC)	Indicates the minimum return on capital employed. It is calculated as the weighted average cost of equity and debt, whereby tax benefits are to be deducted from the cost of debt. Here, equity is taken at market value at the closing date and not at the balance-sheet value. The cost of equity is based on the risk-free return plus a company-specific market risk premium. This corresponds to the difference between the risk-free return and the overall market return depending on the leverage beta. The long-term conditions under which the Wacker Neuson Group can borrow funds are used to define debt costs. For shareholders and lenders, WACC indicates the return they might expect on the funds or capital they have provided. It also gives a company a good indication of the type of return it needs to generate on prospective investments. A company is producing value for its investors if return on capital employed (ROCE) exceeds WACC. WACC: (percentage of financing that is equity x cost of equity) + (percentage of financing on average that is debt x cost of debt) x (1 – tax rate) Equity costs = basic interest rate (risk-free return) + market risk premium x leverage ß
Working capital	The difference between current assets and current liabilities excluding liquid funds. Also known as net current assets, this is a key indicator of the liquidity of a company. Working capital = Total inventory plus trade receivables minus trade payables.
Working capital to revenue	Return on capital employed to generate revenue. Working capital to revenue = relationship between working capital and revenue.

7-Year Comparison1

in € million	2010	2009	2008	2007	2006	2005	2004
Revenue	757.9	597.0	870.3	742.16	619.3	503.2	411.2
Revenue Europe	558.6	465.7	676.2	520.7	391.1	301.1	239.3
Revenue Americas	168.1	103.1	166.9	196.1	205	182.7	154.1
Revenue Asia	31.2	28.2	27.2	25.3	23.2	19.4	17.8
Gross profit	251.0	184.1	293.4	282.5	255.7	212.6	182.4
EBITDA	77.8	27.2 (36.7)2	100.9	117.0	100.2	70.3	60.5
Depreciation and amortization	41.1	140.3 (40.0)3	43.0	38.1	23.6	19.6	18.6
EBIT	36.7	- 113.1 (- 3.2)3	58.0	78.9	76.7	50.7	41.9
EBT	32.7	- 115.5 (- 5.6)3	55.7	78.2	76.2	50.4	42.3
Profit for the period	23.9	- 110.1 (- 2.9)3,7	37.4	54.1	48.5	31.3	25.7
Number of employees	3,142	3,059	3,665	3,659	2,837	2,630	2,224
R&D percentage of revenue	2.9	3.4	2.9	2.8	2.5	2.7	2.6
Share
Earnings per share in €	0.34	- 1.57	0.53	1.1	1.19	0.77	0.65
Dividends per share in €	0.174	0	0.19	0.50	0.38	0.27	0.57
Key profit figures
Gross profit margin as a %	33.1	30.8	33.7	38.1	41.3	42.3	44.4
EBITDA margin as a %	10.3	4.6 (6.2)2	11.6	15.8	16.2	14.0	14.7
EBIT margin as a %	4.8	- 18.9 (- 0.5)3	6.7	10.6	12.4	10.1	10.2
Net return on sales (ROS) as a %	3.2	- 18.4 (- 2.1)7,8	4.4	7.3	7.8	6.2	6.2
Key figures from the balance sheet
Non-current assets	673.9	632.7	750.0	697.0	229.2	202.5	119.5
Current assets	356.3	339.0	428.6	517.5	245.8	240.6	195.7
of which inventory	184.0	148.3	217.0	175.1	100.2	99.0	73.3
of which liquid funds	36.6	85.0	65.6	76.8	36.4	47.6	47.7
Equity before minority interests	830.6	789.0	909.1	910.4	282.4	289.9	246.3
Net financial debt	13.7	- 24.9	59.0	- 43.1	45.1	9.4	- 43.1
Gearing as a %	1.7	- 3.2	6.5	- 4.7	16	3.3	- 17.5
Total liabilities	197.3	180.2	266.8	301.8	192.6	153.2	68.8
Balance sheet total	1,030.2	971.7	1,178.6	1,214.5	475.0	443.1	315.1
Return on assets (ROA) as a %	2.5	- 1.17,8	3.2	7.5	10.9	8.5	7.8
Equity ratio before minority interests as a %	80.6	81.2	77.1	75.0	59.5	70.1	75.6
Working capital	269.3	217.9	303.9	271.5	158.6	154.6	124.1
ROCE I as a %	6.9	- 2.48	10.8	23.9	28.5	21.4	19.5
ROCE II as a %	5.2	- 1.98	7.4	16.5	18.1	13.3	11.7
Weighted average cost of capital
(WACC)	7.9	8.6	–	–	–	–	–
Capital employed (average)	531.3	538.9	537.4	486.7	269.4	236.5	214.8
Return on equity (ROE) as a %	3.0	- 1.47,8	4.2	12.3	17	11.7	9.7
Cash flow
Cash flow from operating activities	44.9	138.3	38.15	55	49.1	44.9	43.6
Cash flow from investing activities	- 85.2	- 38.1	- 16.45	- 141.8	- 41.6	- 89.8	- 14.8
Investments (property, plant and
equipment and intangible assets)	85.0	43.4	101.8	84.0	31.9	37.6	20.6
Cash flow from financing activities	- 10.3	- 53.0	- 21.9	96.4	- 23.0	40.6	- 57.2
Free cash flow	- 38.8	100.6	23.4	62.1	22.6	10.3	28.8

All figures prepared according to IFRS.

Adjusted to discount restructuring costs (EUR 9.6 million)

³ Adjusted to discount restructuring costs in the amount of EUR 9.6 million and write-downs on intangible assets in the amount of EUR 100.3 million.

⁴ Dividend proposal for the AGM on May 26, 2011.

5 The item "Interest received" has been transferred from cash flow from investment activities to cash flow from operating activities.

6 The Austrian merger partner (formerly Neuson Kramer Baumaschinen AG) was consolidated for the first time on October 1, 2007. The revenue figures for 2007,

therefore, only includes Q4 revenue for this entity. Pro-forma Group revenue amounted to EUR 979.5 million.

Including deferred taxes in the amount of EUR -2.7 million (in conjunction with write-downs on brand value and intangible assets).

8 Adjusted to discount write-downs on intangible assets in the amount of EUR 100.3 million.

Publishing Details / Financial Calendar Content

Contact

Wacker Neuson SE

Katrin Neuffer Investor Relations Preussenstrasse 41 80809 Munich Germany

Phone +49 - (0)89 - 354 02 - 173 Fax +49 - (0)89 - 354 02 - 298

ir@wackerneuson.com www.wackerneuson.com

Publishing Details

Issued by: Wacker Neuson SE, Corporate Communication Department

Concept, design and realization: Kirchhoff Consult AG, Germany

Content:

Wacker Neuson SE

Print: Fritz Kriechbaumer, Munich, Germany

Financial Calendar 2011

March 24, 2011	Publication of financial results 2010, press conference
May 13, 2011	Publication of first-quarter report 2011, Analyst conference
May 26, 2011	AGM, Munich, Germany
August 11, 2011	Publication of half-year report 2011
November 11, 2011	Publication of nine-month report 2011

All rights reserved. Valid March 2011. Wacker Neuson SE accepts no liability for the accuracy and completeness of information provided in this brochure. Reprint only with the written approval of Wacker Neuson SE in Munich, Germany. The German version shall govern in all instances. In the event of discrepancies between the German and the English version, the German version shall prevail. Published on March 24, 2011.

Disclaimer

This Annual Report contains forward-looking statements which are based on the current estimates and assumptions by the corporate management of Wacker Neuson SE. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate and similar formulations. Such statements are not to be understood as in anyway guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by Wacker Neuson SE and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward-looking statements. Many of these factors are outside the Company´s control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. The Company neither plans nor undertakes to update any forward-looking statements.

Wacker Neuson SE Preussenstrasse 41 80809 Munich Germany Phone +49 - (0)89 - 354 02 - 0 Fax +49 - (0)89 - 354 02 - 390 www.wackerneuson.com