January 27, 2004 -- During the first nine months (April 1 to December 31, 2003) of fiscal year 2003/2004, Heidelberg recorded incoming orders of Euro 2.8 billion (previous year: Euro 3.1 billion). Incoming orders in the third quarter were just short of Euro 1 billion. They thus matched the previous quarter and, after adjustments for currency fluctuations, were on a par with the previous year. Sales in the period under review were Euro 2.5 billion (previous year: Euro 2.9 billion). Adjusted for currency effects, this represents a fall of 9 percent compared with the previous year. Sales in the third quarter were just below Euro 1 billion and as such were well above sales in the previous quarters. After adjustments for currency fluctuations, sales matched those for the third quarter of the previous year. "The slow signs of recovery in the global economy are now also being paralleled by the first positive trends in the graphic arts industry", stated Bernhard Schreier, Chief Executive Officer of Heidelberger Druckmaschinen AG. "We believe that, after three years of strongly negative trends, we are beginning to see the turnaround. Slight increases in advertising budgets give reason for hope. The course for the restructuring operations already announced by the company will have been set by the end of the fiscal year in March 2004. Positive operating profit for the third quarter; net loss of Euro 725 million per December 31, 2003 The operating result for the period under review improved compared to the half-yearly figure by Euro 3 million to a loss of Euro 90 million (previous year: Euro 48 million). The cost-cutting measures in the third quarter alone generated savings of around Euro 55 million. All in all, they succeeded in reducing the level of the structural costs in the first nine months by some Euro 115 million compared to the same period last year. In conjunction with the new alignment, the company set aside a total of Euro 525 million in the third quarter for non-recurring expenditure, predominantly depreciations on book values. This results in an income before tax of Euro minus 685 million (previous year: Euro minus121 million). The net loss per December 31, 2003 was Euro minus 725 million (previous year: Euro minus 82 million). As of December 31, 2003 the Heidelberg Group had a workforce of some 23,400 worldwide (previous year: 24,700). By the end of fiscal year 2004/2005, Heidelberg will have reduced its worldwide workforce by a total of some 4,200 jobs compared to April 1, 2002, of which 3,000 jobs (adjusted) have already been reduced. 300 of these were reduced in the third quarter of the current fiscal year alone. Costs and earnings in all divisions improved over the previous quarter The cost-cutting measures introduced resulted in improvements in costs and earnings in all division compared to the previous quarter. The Digital Division achieved a break-even operating result, while Web Systems and Postpress reduced their losses significantly. Sales in the Sheetfed Division were around Euro 1.7 billion after three quarters, a substantial Euro 450 million down on the previous year. This was due primarily to the weak first half of the year. The operating result was Euro 14 million (previous year: Euro 210 million). Here, too, the quarterly trend in operating results is beginning to show the first positive effects of the cost cutting. The operating result in this division during the third quarter virtually doubled on the previous quarter. Prospects for fiscal year 2003/2004 - drop in sales of around 10 percent expected; target is still to achieve break-even operating result before restructuring Given the stabilizing order situation in the last two quarters of this fiscal year, Heidelberg expects sales in fiscal year 2003/2004 to be around 10 percent down on the previous year. The stated target of achieving a break-even operating result prior to restructuring will continue to be pursued. "The planned efficiency-enhancing measures in production, sales and administration amounting to Euro 200 million are being realized and will cut structural costs significantly already this year", stated Dr. Herbert Meyer, CFO at Heidelberg. "All in all, the consistent realization of the new alignment will enable us to raise the company's productivity significantly in both the short and medium term. We are confident of reaching Heidelberg's planned financial targets."