datacolor ag

Datacolor aGFINANCIAL REPORT 2 0 1 4

Report of the Board of Directors Datacolor AG 3

Information and Key Figures Datacolor Share Information 4

Key Figures Datacolor 5

Corporate Governance Group Structure 6

Executive Bodies 7

Information for Investors 10

Compensation Report 2013 / 14 12

Commentary to the Business Year 2013 / 14 16

Financial Report

Datacolor Consolidated Income Statement 18

Consolidated Balance Sheet 19

Consolidated Cash Flow Statement 20

Consolidated Statement of Changes in Equity 21

Notes to the Consolidated Financial Statements 22

Report of the Statutory Auditor on the Consolidated Financial Statements 41

Datacolor AG Balance Sheet 42

Income Statement 43

Statement of Changes in Equity 43

Notes 44

Proposed Appropriation of Available Earnings 46

Report of the Statutory Auditor on the Financial Statements 47

Addresses 48

Financial year from October 1, 2013 through September 30, 2014

Datacolor aGFINANCIAL REPORT 2 0 1 4

3

Report of the Board of Directors

In fiscal 2013 / 14, Datacolor successfully implemented its growth strategy and again significantly reinforced its strong market position as one of the world’s leading suppliers of digital color management solutions. Data-color not only further strengthened its leadership in the global textile industry – one of its core markets – with attractive pioneering solutions, but also launched various innovative products, consolidating its position in key growth markets such as the automotive and plastics industries as well as the paint and dye sectors. All regions and markets contributed to the very strong performance achieved in fiscal 2013 /14. The North America region, receiving noticeable impetus from the accelerating recovery of the US economy, reported exceptionally good results. Sales reported in the Asia-Pacific region (notably the growth markets of China and India) and in Europe contributed to the positive sales trend in the year under review.

Datacolor’s successful redirectioning as a market-driven growth company is now clearly bearing fruit. Strategic investments in research and development, expansion of the direct distribution structure through the merger of the sales organization with service and support functions, and new marketing hires – especially in product management – have greatly improved the Company’s customer focus and enhanced market management. In addition, the growth strategy was supported by acquisitions of technology firms in market segments important for Datacolor. In line with this strategy, Italian software specialist Media Logic, a leading developer of innovative customized solutions for the industrial and retail paint markets, was acquired in the year under review.

In fiscal 2013 /14, Datacolor also invested in the modernization of its operational headquarters in Lawrenceville, USA, creating a contemporary, open-concept work environment. The extensively renovated office building reflects the Company’s aim to actively promote a culture of open communication as well as close and efficient collaboration.

New product launches optimally focused on customer needs, plus Datacolor’s comprehensive range of servi-ces, are a solid foundation on which to meet the demanding growth targets for the coming years. The Board of Directors consciously accepts the fact that the momentarily high levels of product and market investments and the successful implementation of the growth strategy are impacting on Datacolor’s operating result.

As Datacolor’s balance sheet remains very solid, and given the encouraging successes resulting from the significant market share gains achieved by the pursuit of our strategy, the Board of Directors of Datacolor AG is proposing to the general meeting of shareholders that a dividend of CHF 11 (fiscal 2012 / 13: CHF 11) be dis-tributed for fiscal 2013 /14.

In the complex economic and political environment encountered during the year under review, Datacolor took a major step forward in implementing its growth strategy. This will generate benefits over the long term. On behalf of the Board of Directors, I would like to thank management and all employees for their valuable efforts.

Werner DubachChairman of the Board of Directors

Report of the Board of Directors

Analogous translation of the original German version of “Geschäftsbericht 2014”. In case of differences of interpre-tation arising in comparison to the German version, the wording of the original German version is valid.

1) Calculation is based on the weighted average number of shares outstanding (issued shares less treasury shares).2) According to the proposal of the Board of Directors on November 5, 2014.3) Distribution in percentage of the share price as of September 30.

Average number of employees 370 331

Personnel expenses 32.4 27.2

Total assets 58.9 54.4

Shareholders' equity 35.5 34.5

as a % of assets 60.3% 63.5%

Net liquidity including financial assets 28.5 29.6

Per share data1)

Average number of shares 156 119 154 740

Earnings per share in USD (non-diluted) 26.26 29.35

Free Cash Flow in USD -13.36 -1.15

Shareholders' equity in USD 227.70 223.24

Dividend in CHF2) 11.00 11.00

Share price data as of September 30 in CHF 562.50 420.50

Yield in %3) 2.0% 2.6%

Datacolor Share Information Key Figures Datacolor

54

KEY FIGURES

in USD million 2013 / 2014 2012 / 2013

Net sales 70.0 61.2

Change relative to previous year in % 14.4% 9.5%

EBITDA 6.5 6.8

Change relative to previous year in % -3.2% -0.6%

as a % of net sales 9.3% 11.0%

EBIT 4.4 5.2

Change relative to previous year in % -14.7% -4.2%


Profit for the year 4.1 4.5

Change relative to previous year in % -9.7% 7.7%


as a % of average shareholders' equity 11.7% 13.7%

Cash flow from operating activities 6.3 8.0

Change relative to previous year in % -21.3% 76.6%


Cash flow from investing activities -8.3 -8.2

Change relative to previous year in % 2.0% 383.7%

as a % of cash flow from operating activities -132.6% -102.2%

Free Cash Flow -2.0 -0.2

Change relative to previous year in % 1 048.9% -106.3%

as a % of net sales -2.9% -0.3%

SHARE INFORMATION

Stock exchange informationExpected dividend ex date (subject to approval by AGM) December 16, 2014

Listing SIX Swiss Exchange (Zurich)

Security ID 853 104

ISIN CH0008531045

Reuters DCN.S

Bloomberg DCN

Investdata DCN

Capital structure 30.09.2014 30.09.2013

Share capital in CHF 168 044 168 044

Conditional share capital in CHF 4 580 4 580

Number of registered shares 168 044 168 044

Nominal value per share in CHF 1 1

Registration restrictions none none

Voting restrictions none none

Opting out / opting up none none

Significant shareholders (in %) 30.09.2014 30.09.2013

Dubach family* 54.77% 52.64%

Keller family* 16.72% 16.72%

Corisol Holding AG 7.72% 7.72%

* Shareholder Dubach family und Keller family form a group of shareholders.

Shareholders by category (in %) 30.09.2014 30.09.2013

Significant shareholders 79.21% 77.08%

Private investors 83.91% 83.11%

Corporate investors 16.09% 16.89%

Non-registered shareholders 3.53% 2.90%

Share distribution 30.09.2014 30.09.2013

Number of registered shares Numbers of shareholders Numbers of shareholders1 – 100 601 619

101 – 1 000 13 16

1 001 – 10 000 3 4

>10 000 4* 4*

Total 621 643

*including treasury shares of Datacolor AG

Share price data in CHF 2013 / 14 2012 / 13

First trading day 426.75 (02.10.2013) 415.00 (16.10.2012)

Low 406.25 (05.12.2013) 396.25 (10.04.2013)

High 575.00 (11.09.2014) 450.00 (05.08.2013)

Last trading day 562.50 (22.09.2014) 420.50 (25.09.2013)

Average share price 484.37 418.79

Market capitalization in million as of September 30 94.5 70.7

76

GROUP STRUCTURE

Introduction

Datacolor endorses a state of the art Corporate Gover-nance with transparency for all stakeholders. Professional processes and individual accountability on all levels of the organization are the foundation for sound governance.

The following information meets the requirements of the Directive on Information Relating to Corporate Governance (Corporate Governance Directive, DCG) of the SIX Swiss Exchange. Datacolor is further orientated to the Swiss Code of Best Practice for Corporate Governance. If not mentioned otherwise all information is as of September 30, 2014.

The information on Corporate Governance can also be retrieved utilizing the following link:

http://www.datacolor.com/company/investor-relations/corporate-governance/.

Roles and duties of Datacolor AG

Datacolor AG as top holding company of the Datacolor Group manages its business by means of objectives, it is involved in the planning process and monitors adherence to the budget. Once the three-year plan and the budget have been approved by the Board of Directors, the Execu-tive Committee acts on its own authority within the limits of the budget and the rules of competence. The Executive Committee is responsible for consolidation, financing, con-trolling, asset management and investor relations.

Datacolor AG is a Swiss public limited liability company with its head office in Lucerne. Refer to note 28 for a dis-closure of controlled subsidiaries; the market capitalization is disclosed on page 4.

Strategy

Datacolor develops, produces and distributes products and services to worldwide industrial customers as well as professional and hobby applications in the area of color measurement, management, communication and calibra-tion. Datacolor’s debt-free balance sheet enables it to achieve long-term growth targets with continuing organic growth and targeted acquisitions.

The Company aims to achieve significant growth by providing innovative hardware and software products, in-creasing market penetration, developing new markets, alli-ances and acquisitions. Its range comprises products and systems solutions that are competitive in terms of quality, performance and ease of use. The products are tailored to customer requirements and able to offer a large poten-tial for generating added value. Providing services for its products is a growing core activity.

Datacolor aims for market leadership in defined mar-kets and geographical segments.

Corporate performance is achieved by a flexible, lean and customer-oriented organization. The production depth is restricted to what is strategically necessary.

While meeting the requirements of a publicly listed company, the stable shareholder basis is a key driver of Datacolor’s attainment of its long-term goals.

ExECUTIvE BODIES

Board of Directors of Datacolor AG

Werner Dubach, 1943, CHChairman, Board member since 1981Dipl. Ing. Chem. ETH Zurich, MBA Wharton University of Pennsylvania

Until January 2009, CEO and Chairman of Eichhof Holding AGUntil 1981, Director of the Eichhof Group’s Beverages division1975–1979 Technical Director of the Eichhof Brewery1971–1975 Management Assistant of the Eichhof Brewery

Conzetta AG, Zurich, Member of the Board

Anne Keller Dubach, 1956, CHBoard member since 2012Lic. phil. I, University Zurich, SEP Stanford Graduate School of Business

Since 2007 Head Corporate Citizenship, Swiss Re, Zurich2000–2007 Head Corporate Sponsorship / Head Brand Communication, Swiss Re, Zurich1995–2000 Project Lead Marketing Services / Head Cultural Spon-soring Credit Suisse1991–1995 Project Lead Media / Marketing Analysis, Dr. Thomas Held, Zurich1988–1991 Product Management Magazines / Head Market-ing / Promotions Rincovision, Ringier

Swiss Institute for Art Research SIK-ISEA, Zurich, Chairman, Member of the Board of Trustees

Peter Beglinger, 1945, CHDeputy Chairman, Board member since 1992Dr. iur. University of ZurichUntil 2007 law office in Zurich, Counsel

1979–2006 own law office in Zurich1976–1978 legal adviser to the executive management of Jacobs AG1974–1976 law office Wenger & Vieli, Zurich1974 admitted to the bar

Würth Finance International B.V., NL, Member of the Board

Hans Peter Wehrli, 1952, CHBoard member since 2001Prof. Dr. oec. publ. University of ZurichProfessor of Business Administration, University of Zurich

Belimo Holding AG, Hinwil, Chairman of the Board Swiss Prime Site AG, Olten, Chairman of the Board

Fritz Gantert, 1958, CHBoard member since 2004Dr. sc. techn., Dipl. Masch.Ing. ETH Zurich

Since 2012 Enterpreneur, Independent Board Member2007–2012 General Manager Security Communication Division, Member of the Executive Board, Ascom Holding AG2001–2006 CEO of Schaffner Group1998–2001 Sarna Kunststoff Holding AG,1988–1998 Ascom

Corporate Governance Corporate Governance

Fritz Gantert, Peter Beglinger, Werner Dubach, Anne Keller Dubach, Hans Peter Wehrli

98

Board of Directors

Elections and term of officeMembers of the Board of Directors are elected by the An-nual General Meeting of Shareholders for an individual term of office of three years. Newly elected members complete the terms of their predecessors. There are no limitations on terms of office.

Internal organizationThe Board of Directors is self-constituting. It appoints com-mittee members and the secretariat.

DutiesThe Board of Directors is the supreme executive body of the Holding company. It adopts resolutions which deter-mine the Company’s fundamental direction and oversees the work of senior management.

CommitteesThe Board of Directors has established committees to sup-port its work. The primary role of these committees is to prepare business affairs and oversee the implementation of Board resolutions. Furthermore, the Board of Directors may delegate the final handling of certain affairs to the committees, provided that delegation of such tasks is not prohibited by law. The Board of Directors has established two committees: the Finance Committee as well as the Human Resources and Compensation Committee. Fur-thermore, the Steering Committee acts as a supervisory and control instrument. – The Finance Committee prepares the financial plan, the

budgets and the statements for submission to the Board of Directors. Amongs other things, it issues instructions and monitors the appropriation of liquidity and the ex-ecution of asset management operations.

– The Human Resources and Compensation Commit-tee drafts proposals for the remuneration of the Board of Directors. It also submits proposals to the Board for appointments to the position of CEO and CFO. The Committee sets the fixed and variable components of remuneration for the top levels of management, taking into account the labor market, performance and achieve-ment of established targets. If the Committee deliber-ates on the remuneration of a member of the Human Resources and Compensation Committee, this member shall withdraw from the proceedings.

Finance Committee: Werner Dubach, Albert Busch (CEO), Dr. Mark Leuchtmann (CFO)Human Resources and Compensation Committee: Dr. Peter Beglinger, Dr. Fritz Gantert

Principles of operation of the Board of Directors and its committeesThe Board of Directors meets as often as business re-quires, a minimum of four times a year. Committee meetings are held in addition to Board meetings. Board meetings usually last for between half a day and a day.

In 2013 /14, the following number of meetings were held:– Board of Directors 4– Finance Committee 10– Human Resources and Compensation Committee 2

Areas of competency

Board of DirectorsThe Board of Directors represents the Company externally and manages all company activities unless responsibility has been transferred to another Company body in accor-dance with the law, the Articles of Association or other policies. The non-transferable and inalienable duties are governed in Art. 716a of the Swiss Code of Obligations.

Unless stipulated otherwise by law, Articles of Asso-ciation or directives issued by the Board of Directors, the Board of Directors delegate operational management of the Company to the CEO, together with the authority to delegate associated task. The Company’s Organization Regulation governs the breakdown of responsibility be-tween the Board of Directors and the Executive Committee and can be obtained on the following website: http://www.datacolor.com/content/corporate-governance.

Executive CommitteeExecutive Committee members are appointed by the Board of Directors and the Human Resources and Com-pensation Committee, respectively.

Information and control instruments vis-à-vis the Execu-tive CommitteeThe Executive Committee informs the Board of Directors about the current status of the business, the consolidated balance sheet, the income statement and deviations to the budget on a monthly basis. On the occasion of the four meetings of the Board of Directors during the year, the Ex-ecutive Committee reports on significant business transac-tions and on the results of the group-wide management of financial and operating risks.

Findings of the following bodies also contribute to the regular decision-making process:– External auditor KPMG AG, Lucerne (auditor for Data-

color AG), which conducts its audit in accordance with Swiss law and Swiss auditing standards.

– Internal Audit and Risk Management, which monitors the existence and adequacy and permanently seeks improvements to the internal control system. Further, a systematic process captures strategic, operational and financial risk and develops and executes measures to mitigate and eliminate risks.

Corporate Governance Corporate Governance

Albert Busch, 1967, NL / USACEO BS / MS in Electrical EngineeringMS in Industrial Management

Since 2008 with Datacolor, since January 2009 CEO1991–2008, NV Bekaert SA, management roles

Mark Leuchtmann, 1972, DE / CHCFODr. rer. pol. TU MunichSwiss Certified Accountant

Since 2009 with Datacolor2007–2009 Private Equity Fund, Director2005–2007 Zurich Financial Services, Head Financial & Transaction Analysis1999–2005, PricewaterhouseCoopers, Manager

Brian Levey, 1957, USAVice President Sales and SupportSales and SupportBS in Chemistry

Since 1996 with Datacolor, management roles1984–1996 Beckmann Instruments, management roles

Ross McGovern, 1978, GBVice President Human Resources MS in Human Resources ManagementBS English and Politics

Since 2012 with Datacolor2001–2011 General Electric Company, management roles Tae Park, 1963, USAVice President R&D and OperationsBS in Electrical Engineering / Biomedical Engineering

Since 2010 with Datacolor2007–2010 Power Medical Internventions, Sr. VP of Engineering-Operations, 2006–2007 Kovio, Program / IP Manager, 1993–2006 Osirix, CTO1989–1993 Trans-Lite, Director of Engineering, 1985–1989 Charm Bioengeneering, Sr. Biomedical Engineer

Patrice Jaunasse, 1964, FRVice President Sales and Support MS in Engineering, Electronics, Telecom und Computer

Since 2012 with Datacolor2002–2011 Tektronix, General Manager and Sales Director EMEA1998–2002 Nettest Telecom Instrumentation, President and Sales Director1989–1998 Hewlett Packard Instrumentation, management roles Sales

Albert Busch, Ross McGovern, Brian Levey, Tae Park, Mark Leuchtmann, Patrice Jaunasse

Datacolor Executive Committee

1110

Share capitalThe share capital amounts to CHF 168 044 consisting of 168 044 registered shares with a nominal value of CHF 1 each. The registered shares entitle the holder to one vote at the General Meeting, provided that the shareholder is re-corded with voting rights in the Datacolor AG share register.

Authorized capitalThere is no authorized capital.

Conditional capitalThe share capital can be increased by a maximum amount of CHF 4 580 (previous year: CHF 4 580) by issuing 4 580 registered shares with a nominal value of CHF 1 each. This conditional capital increase was implemented to enable the exercise of option rights by the members of the Board of Directors and the Executive Committee. Shareholders are excluded from this purchasing right.

Changes in capitalRegarding capital changes caused by exercised options refer to note 21 and statement of changes in equity.

Participation certificatesThere are no participation certificates.

Limitations on transferability and nominee registrationsThere are no limitations with regard to transferability and nominee registrations.

Convertible bonds and optionsDatacolor AG has no outstanding convertible bonds. Re-garding options, refer to information on compensation above, note 2 and note 21 to the consolidated financial statement.

Share listingDatacolor AG’s shares are listed on SIX Swiss Exchange Zurich under security number 853 104. See Information about Datacolor Share on page 4 for an overview of the stock market listing and details of the market capitaliza-tion.

Legal status of shareholdersShareholders in Swiss public limited companies are granted extensive statutory participation and protection rights by law. These participation rights are further supple-mented by the Company Articles of Association. These en-sure that, pursuant to the Code of Obligations, the Annual General Meeting of Shareholders is convened by placing a one-time announcement in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt) and by sending a written invitation to the registered shareholders. An item is added to the agenda of the Annual General Meeting of Shareholders if the corresponding request is received no later than 40 days before the date of the

meeting. Every shareholder may, besides the independent proxy provided for by law, allow his or her shares to be rep-resented at the Annual General Meeting by a shareholder with a written proxy form.

voting rights limitationsEvery shareholder entered with voting rights in the share register is entitled to vote. No new entries in the share register are made during the 22 days before the Annual General Meeting of Shareholders. There are no limitations on voting rights.

Entry in the share registerThe entry of purchasers in Datacolor AG’s share register is not subject to any conditions.

Cross-shareholdingsThere are no cross-shareholdings.

Shareholdings in companiesThere are no shareholdings in listed companies. Percent-age shareholdings in unlisted companies are disclosed in note 28 to the consolidated financial statements.

Significant shareholdersRefer to Datacolor share information on page 4. Share-holders ’Dubach family‘ and ’Keller family‘ form a share-holder group.

Duty to make an offerThe Company’s Articles contain no provisions regarding a duty to make an offer.

Clauses on changes of controlThere are no clauses on changes of control.

Auditors

Duration of the mandate and term of office of the lead auditorDatacolor AG has appointed KPMG AG, Lucerne as audi-tor. In each case, the mandate is granted by Datacolor AG’s Annual General Meeting of Shareholders for a period of one year. The mandate was first given to KPMG in 1992. Toni Wattenhofer has replaced Thomas Studhalter as au-ditor in charge for the audit of fiscal 2013 / 14.

Audit feeKPMG received an audit fee of TUSD 224 for the fiscal year 2013 / 14.

Additional fees In addition to the audit fee, KPMG provided other services for TUSD 55. The major portion of other services related to tax consultancy.

Corporate GovernanceCorporate Governance

Supervisory and control instruments vis-à-vis the audi-torsThe Board of Directors holds at least two meetings a year with the auditor in charge of the mandate. The matters dealt with at these meetings include the planning and conduct of audits, the focus points of the audits and the findings thereof, the main points arising from management letters, the reports on special audits and the reports of the auditor and the group auditor. The Board of Directors has appointed a steering committee to manage the audits and to monitor implementation of the auditors’ proposals. This committee is made up of the Chairman, the CEO and the CFO of Datacolor AG and the auditor in charge of the man-date and meets regularly while audit work is conducted.

Information policy

PublicationsDatacolor AG publishes a semi-annual report and an annual report in accordance with Swiss GAAP FER. Additionally, shareholders and the capital market are kept informed of current changes and developments through press releases. As a company listed on SIX Swiss Ex-change, Datacolor AG is aware of its duty to disclose events relevant to its share price (ad hoc disclosure of price-sensitive information). Information of the periodical financial reporting as well as ad-hoc news releases and further information on the Datacolor Group can be ac-cessed through website under the following link: http://www.datacolor.com/company/investor-relations/.

Financial calendarShareholders’ meeting December 12, 2014Semi-annual report May 5, 2015Press release October 30, 2015Publication annual report November 13, 2015Shareholders’ meeting December 10, 2015

INFORMATION FOR INvESTORS

1312

Compensation for fiscal 2013 / 14 Compensation for fiscal 2013 / 14

The Compensation Report contains information on the re-muneration of the Board of Directors and the Executive Committee, which were previously included in the Corpo-rate Governance Report and in the notes to the financial statements of Datacolor. In compliance with regulation against excessive compensation of publicly listed compa-nies (so called “VegüV”), effective as of 1 January 2014, all information on the remuneration of the members of the Board of Directors and Executive Committee is restated in the remuneration report. The information provided in this Compensation Report relates to the financial year 2013 / 14, unless otherwise noted.

According to VegüV, the General Assembly must vote on the remuneration in the future. In addition, the statutes have to contain, among other principles of the tasks and responsibilities of the Compensation Commit-tee, the performance-based remuneration and the alloca-tion of equities, convertible and option rights to members of the Board of Directors and Executive Committee. It is intended to accommodate the statutes at the General Meeting of 12 December 2014. The following information therefore do not readily apply to the 2014 / 15 fiscal year.

1. General principles

The success of Datacolor depends to a large extent on the quality and commitment of its employees. The key ob-jectives of the remuneration policy are to attract qualified employees, motivate and retain them. The performance orientated variable compensation and in particular the option-based component of the compensation promotes entrepreneurial thinking and action. The key principles are:• Compensation is performance-based and market-

driven,• Employees participate in the economic success,• Compensation determination is fair and transparent,• Short- and long-term compensation components are in

a balanced ratio.

2. Principles of the compensation system

The remuneration of the members of the Board of Direc-tors and the members of the Executive Committee con-sists of three components :• Fixed basic compensation,• Performance-related bonus,• Performance-based allocation of stock options.

2.1 Compensation of the Board of DirectorsThe members of the Board of Directors (all are non-exec-utive) are remunerated with a fixed cash compensation.

This fixed basic compensation includes a quarterly Board remuneration, lump sum representation and other allow-ances and other payments based on individual agree-ment (namely the employment agreement of Werner Du-bach with Datacolor Holding AG) and respective social security deductions. The Board members do not partici-pate in the independent pension fund (“Gemeinschafts-stiftung”) in Switzerland and no pension contributions are paid by Datacolor.

The variable compensation is paid either in cash, or on request, to the extent defined annually at the discre-tion of the Board of Directors, remunerated in the form of options on registered shares of Datacolor AG. The fixed compensation is determined at the sole discretion of the Board of Directors.

The variable compensation depends on the Com-pany‘s financial success, reflected in the organic growth of sales as well as the operating profit EBIT. However, the weighing of the latter is at the discretion of the Board of Directors. The Board of Directors‘ decisions are not based on benchmarks.

For further terms and conditions relating to the op-tions on shares of Datacolor AG, which Board members may opt for as their variable compensation component (see above), refer to note 21 in the consolidated financial statements.

2.2 Compensation of the Executive CommitteeThe compensation of the Executive Committee consists of a fixed base salary in cash, a variable performance-based bonus in cash that can be used to purchase stock options, plus contributions to pension funds and social insurances.

The fixed base salary is mainly determined by the func-tion to be executed, the responsibility to be assumed, the individual’s qualifications and experience, as well as the market environment. In determining the range of fixed compensation, the Human Resources and Compensation Committee refers to the results of renowned compensa-tion studies of the relevant US-American technology sec-tor market.

The criteria for determining the variable compensation (performance-related bonus) are defined in the respective regulations adopted by the Human Resources and Com-pensation Committee; these criteria are valid for several years and were last reviewed by the Human Resources and Compensation Committee in 2011.

Initially, the total pool available for performance-related bonuses payments is determined based on the two finan-cial value drivers, organic growth in sales (without acqui-sitions or divestitures) compared to previous year figures and budget (60% weighting) as well as the operating EBIT compared to budget (40% weighting). The Board of Di-rectors sets respective targets for the financial value driv-ers during the budgeting procedure for a period of one year. The pool for performance related bonus payments

COMPENSATION REPORT

may reach a maximum of 200% of the budgeted target value of the variable compensation.

From the pool of performance related bonuses, the Executive Committee members (and other employees eli-gible to bonus payments) receive individual performance-related bonuses based on the achievement of their respective individual performance goals. Measurable individual goals are agreed during the management-by-objectives process at the beginning of the year between the Chairman of the Board of Directors and the CEO as well as between the CEO and the members of the Execu-tive Committee.

In case the actual realized EBIT falls below the target set by the Board of Directors by more than 50% (minimum threshold), the payment of variable performance-related bonuses is subject to approval by the Human Resources and Compensation Committee. No minimum threshold is determined for the achievement of the organic sales growth component. If actual realized EBIT exceeds the budgeted EBIT target, 25% of the exceeding amount is allocated to the variable compensation pool. In case of an overachievement the additional contribution to the vari-able compensation pool is limited to 200% of the total budgeted variable compensation pool for all employees (maximum threshold).

The performance-related bonus depends on the ac-complishment of individual performance objectives and the financial success of the Company.

For the CEO, the performance-related bonus may be a maximum of 82% and for the other members of the Ex-ecutive Committee a maximum of 72% to 80% of the an-nual target salary. The target salary is defined by the fixed basic compensation plus the performance-related bonus. The performance-related bonus is determined at 100% by the attainment of the individual targets.

The members of the Executive Committee will have the possibility to use a portion of their variable compen-sation (performance-related bonus) as determined by the Human Resources and Compensation Committee to purchase options on registered shares of Datacolor. A three-year blocking period is ensuring that the Company‘s long-term success is rewarded. For further information in-cluding other parameters of the share option plan refer to note 21 Share option plan.

The pension and social insurance expenses include employer contributions to social security as well as the mandatory and non-mandatory occupational benefits. The expense regulations for the members of the Executive Committee are basically the same as those applicable for all other employees of the respective group company. Additional rules apply on lump-sum compensation of rep-resentatives and petty expenses for the members of the Executive Committee residing in Switzerland that have been approved by the relevant cantonal tax authorities. The employment contract of members of the Executive Committee does not foresee a company car for their use.

No employment agreement has termination periods exceeding six months. The employment agreements with the Executive Committee members do not provide for any termination pay.

Executive Committee members do not hold any ex-ecutive nor consulting function in any important interest group and do not hold any official or political administra-tive positions. No management agreement exists.

3. Competences and determination procedures

The overall compensation system and the stock option participation plans are drawn up by Corporate Human Resources and submitted to examination by the CEO, the Human Resources and Compensation Committee for final approval by the Board of Directors. In fiscal year 2013 / 14, no external consultants were called in.

The Human Resources and Compensation Committee consists of two members of the Board of Directors: Dr. Peter Beglinger (Chairman), Dr. Fritz Gantert (Member).

The Human Resources and Compensation Commit-tee (i) proposes the terms of the employment contract and the annual variable compensation for the Chairman of the Board for approval by the Board of Directors, (ii) proposes at the request of the Chairman, the conditions of labor contracts and the target remuneration for the remain-ing members of the Board and the CEO for approval by the Board of Directors, and (iii) propose upon the CEO’s request amendments to contract terms, the target remu-neration and the annual variable compensation for the other members of the Executive Committee for approval by the Board of Directors. For the determination of the per-formance-related bonus of the Executive Committee, the Human Resources and Compensation Commission does not draw on benchmarks .

The Board of Directors approves upon the request of the Human Resources and Compensation Committee, the conditions of employment contracts and the target remu-neration for the Board of Directors (including the Chair-man), the CEO and the other members of the Executive Committee and determines at the request of the Human Resources and Compensation Committee the annual vari-able remuneration for the Chairman of the Board. Further-more, the Board of Directors determines the classification for the allocation of options under the stock option plan to the individual beneficiaries and approves the compensa-tion system (including the compensation and bonus regu-lations).

The Chairman proposes the conditions of labor con-tracts and the target remuneration for the members of the Board of Directors (excluding Chairman) and the CEO for review by the Human Resources and Compensation Com-mittee and approval by the Board of Directors. The Chair-

14 15

Compensation for fiscal 2013 / 14 Compensation for fiscal 2013 / 14

man determines the annual variable remuneration for the members of the Board of Directors (excluding Chairman) and the CEO .

The CEO proposes the conditions of employment con-

tracts, the target remuneration and the annual variable remuneration for the Executive Committee members for review by the Human Resources and Compensation Com-mission and approval by the Board of Directors.

4. Compensation for fiscal 2013 / 14 and 2012 / 13

4.1 Board of DirectorsThe total compensation of the members of the Board of Directors, which are all non-Executive, amounted in the reporting period to TUSD 778 (previous year: TUSD 551). In the year under review, the Board’s variable compensation amounted to 28% (previous year: 23%) of the fixed compensation. The details of the compensation in the reporting period and previous year respectively are disclosed in the tables below.

4.2 Executive Committee In the reporting period the variable compensation of the Executive Committee members amounts from 44% to 99% of the fixed base salary (previous year between 45% and 76%).

Remuneration 2013 / 14

in TUSD Remuneration paid in cash

Pension costs

Stock option based compensation Total

Remuneration of the Board of Directors 2013 / 14

Werner Dubach, Chairman 282 0 125 407

Dr. Peter Beglinger, Deputy Chairman 79 0 50 129

Anne Keller Dubach, member 47 0 33 80

Prof. Dr. Hans Peter Wehrli, member 47 0 33 80

Dr. Fritz Gantert, member 49 0 33 82

Total 504 0 274 778


Pension costs


Highest total remuneration

Albert Busch 570 16 50 636


Pension costs


Remuneration of the Board of Directors 2012 / 13






Total 287 0 264 551


Pension costs


Board of Directors and Executive Committee

To five non-executive members of the Board of Directors 504 0 274 778

To six members of the Executive Committee 2 006 73 216 2 295

Total 2 510 73 490 3 073


5. Base salary and variable compensation for fiscal 2014 / 15

According to Art. 18 of the Regulation against excessive compensation at publicly listed companies (VegüV) and Art. 21 of the revised bylaws, the General Assembly will have to approve the total amounts of fixed and variable remuneration of Directors and the Executive Committee in the future. This vote will take place for the first time in accordance with Art. 31 para. 2 VegüV at the General Assembly in 2015.

6. Compensation of former members of the Board Directors and Executive Committee

No compensation was made in fiscal 2013 / 14 (previous year: TUSD 263) to former members of the Executive Committee.

7. Loans

In fiscal 2013 / 14 no loans to current or former members of the Board Directors and Executive Committee were granted or were outstanding at September 30, 2014. No loans have been granted to related parties by current or former members of the Board Directors and Executive Committee or were outstanding at the end of the reporting period and the previous year respectively

8. Shareholdings and options

The total number of shares held by the Board of Directors and the Executive Committee amounted to 122 831 (previous year: 118 534). In the reporting period 5280 options (previous year: 4 680) were granted to the Board of Directors and the Executive Committee. No receivables from and payables to related parties were outstanding at the end of the reporting period and previous year with the exception of the independent pension fund.


Pension costs




in TUSD2014

Numbers of shares

2013 Numbers of shares

2014 Numbers

of options

2013 Numbers

of optionsInvestments as of September 30

Werner Dubach, chairman 92 032 88 455 2 700 2 440

Dr. Peter Beglinger, deputy chairman 1 524 1 164 1 080 1 080

Anne Keller Dubach, member 28 100 28 100 480 240



Executive Committee 0 0 9 000 7 900

Total 122 831 118 534 14 700 13 100


Pension costs




To five members of the Executive Committee 1 558 87 144 1 789

Total 1 845 87 408 2 340

16 17

Datacolor in fiscal 2013 / 14 Datacolor in fiscal 2013 / 14

Strong increase in sales In fiscal 2013 / 14, Datacolor increased consolidated net sales by 14% to USD 70.0 million (2012 / 13: USD 61.2 million). The result was impacted by the strategic invest-ments made to achieve the growth targets. EBITDA came to USD 6.5 million (USD 6.8 million), EBIT to USD 4.4 mil-lion (USD 5.2 million) and net income to USD 4.1 million (USD 4.5 million).

Stable growth in all regionsThe substantial contribution made by all regions to the significant growth in sales was largely driven by the con-sistent implementation of Datacolor’s growth strategy, and by the positive investment climate. The expansion of the direct sales and service organization accelerated this encouraging development, especially in China, Tur-key and Brazil. In fiscal 2013 / 14, the North and South America region accounted for 31.5% of sales (31.0%), the Asia-Pacific region for 33.3% (32.9%), and Europe for 35.2% (36.1%).

Continued high investments in the futureIn fiscal 2013 / 14, Datacolor continued to build on its lead-ing position in the global market for digital color manage-ment solutions. The Company consolidated its leading positions in the apparel and textile industries and in the photography retail market. With innovative, easy-to-oper-ate software and hardware solutions for color measure-ment and communication, Datacolor also secured further market share in the paint and pigment-manufacturing segment of the specialty chemicals sector, as well as in the automotive and plastics industries.

Through the acquisition of the Italian company Media Logic in July 2014, Datacolor expanded its range of unique solutions for precise and convenient color formu-lation and mixing for paint retailers. The integration of Media Logic has significantly strengthened Datacolor’s position in the global retail paint market.

During the year under review the direct sales orga-nization was expanded in key growth regions, in line with the corporate strategy. A company was set up in São Paolo, Brazil, to promote closer cooperation with Brazilian customers. This means that Datacolor is ide-ally equipped to offer products and services geared to customers’ requirements in this market. At the same time, the Brazilian company will manage sales activities in the entire South America region.

The headcount was increased by 39 to 370 full-time equivalents in the year under review. In order to speed up the development and marketing of innovative solutions, this strategy-led expansion was focused on R&D as well as on sales and marketing. Patrice Jaunasse has joined the management team as head of Sales and Support. His predecessor Brian Levey now heads the newly created Marketing area.

In the year under review, Datacolor’s operational headquarters in Lawrenceville, USA, were extensively renovated. The redesigned office offers a state-of-the-art, open-concept work environment, promoting efficient collaboration between the different functions and direct communication among staff. The sales office in Shang-hai, China, was expanded and modernized to create sufficient space for additional personnel to reinforce the regional sales and support team.

Continued launch of product innovations As in previous years, Datacolor launched numerous inno-vative and easy-to-use products for industrial and retail customers in fiscal 2013 /14. The family of handheld spec-trometers was expanded with a new product line that en-ables measurement of color, appearance and gloss of materials with just one device.

Also launched in the year under review, was “Chro-maCal™”, a color calibration system that provides sci-entists with a first-ever, easy-to-use application for calibrating digital microscope images to a consistent color standard.

The spectrophotometer “45IR” is currently the only de-vice to satisfy the specific quality control requirements for security inks. The new portable “45IR” is a measuring instrument that permits central banks, banknote printers and security ink producers to effectively and securely verify compliance with standards for counterfeit-proof documents.

The new “MATCH PIGMENT® 3.0” represents a major update to Datacolor’s formulation software solution for color developers in the paint, plastics and pigment in-dustries. This unique Datacolor software draws on the latest developments in information and color technology, offering customers more efficiency, increased productiv-ity and even greater color matching precision.

“SpyderHD™” is a new Datacolor product for retail customers, which in addition to offering the familiar pho-tographic applications can also be used by videogra-phers. “SpyderHD™” is the most extensive and flexible solution on the market for easy-to-master, precise moni-tor calibration. Datacolor’s recently launched “Spyder-CHECKR24” is an affordable color reference target that contains proprietary software, offering photographers fast and accurate in-camera color matching.

Financial figures Significantly higher capacity utilization at the production site in China led to an improved gross profit margin of 65.8% (65.3%). Because of increased business volume, operating working capital grew by USD 1.9 million to USD 11.4 million (USD 9.5 million). A further increase in R&D, marketing and sales spending impacted profitability fig-ures, reflected in the EBITDA margin of 9.3% (11.0%) and the EBIT margin of 6.3% (8.5%).

DATACOLOR IN FISCAL 2013 /14

Datacolor utilized tax loss carry forwards in the fiscal year under review. Tax expenses decreased to USD 0.8 million (USD 1.0 million) and the tax ratio to 16% (18%). Total assets were slightly higher at USD 58.9 million (USD 54.4 million). Accounting for approximately 49% of total assets, cash and cash equivalents together with financial assets came to USD 28.5 million (USD 29.6 million). USD 11.9 million are invested in current financial assets. With a high equity capital ratio of 60.3% (63.5%), Datacolor is free of debt and has a strong balance sheet.

Datacolor AGThe parent The parent company Datacolor AG (holding company for Datacolor investments) posted a profit of CHF 0.6 million (CHF 0.0 million) in its statutory financial statements for fiscal 2013 / 14. As at September 30, 2014,

the shareholders’ equity of Datacolor’s holding company amounted to CHF 21.5 million (CHF 22.7 million). The de-crease was mainly due to the distribution of a dividend of CHF 1.7 million, representing 38% of the consolidated profit for fiscal 2012 / 13.

Outlook Thanks to its dynamic, market-led and efficient organiza-tion, Datacolor is well placed to continue implementing its growth strategy both consistently and successfully. The Company has a well-filled development pipeline con-taining innovative products to meet customers’ increas-ingly sophisticated demands. Furthermore, the enlarged sales, support and service organization as well as the global marketing organization are driving sales growth forward in line with strategic objectives.

This report contains forward-looking statements that reflect management’s views with respect to future events. Such statements are subject to risks and uncertainties. Datacolor disclaims any liability that actual results correspond to the forward-looking statements and does not assume any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report.

1918

Datacolor

CONSOLIDATED INCOME STATEMENT

in TUSD 2013 / 14 2012 / 13

Gross sales 70 389 61 483

Sales deductions -400 -274

Net sales 3 69 989 100.0% 61 209 100.0%

Cost of goods sold -23 961 -21 210

Gross profit 46 028 65.8% 39 999 65.3%

Sales and marketing expenses -24 084 -19 092

Administrative expenses -10 723 -9 534

Research and development expenses -6 829 -6 134

Other operating income / expenses 19 -61

EBIT 4 411 6.3% 5 178 8.5%

Financial income 6 2 084 909

Financial expenses 6 -1 607 -562

Profit before income taxes 4 888 7.0% 5 525 9.0%

Income taxes 7 -788 -984

Profit for the year 4 100 5.9% 4 541 7.4%

USD USD

Earnings per share 4

non-diluted 26.26 29.35

diluted 24.81 27.80

CHF CHF

Earnings per share1)

non-diluted 23.56 27.45

diluted 22.26 26.00

1 The earnings per share in CHF has been calculated from USD to CHF by using the corresponding average rate of the period.

Datacolor

CONSOLIDATED BALANCE SHEET

in TUSD 30.09.2014 30.09.2013

Assets

Cash and cash equivalents 8 16 624 21 890

Current financial assets 9 11 919 5 514

Trade receivables 10 8 819 7 513

Other receivables 11 1 585 1 265

Inventories 12 5 445 4 004

Current tax assets 241 265

Prepaid expenses 221 126

Current assets 44 854 76.1% 40 577 74.6%

Property, plant and equipment 13 10 594 9 193

Intangible assets 14 2 690 1 855

Non-current financial assets 9 16 2 239

Deferred tax assets 7 766 555

Non-current assets 14 066 23.9% 13 842 25.4%

Assets 58 920 100.0% 54 419 100.0%

Liabilities and shareholders' equity

Financial liabilities 16 0 0

Trade payables 2 842 2 006

Current tax liabilities 1 198 991

Other liabilities 17 2 043 1 737

Accrued liabilities 18 14 527 12 206

Short term provisions 19 415 512

Current liabilities 21 025 35.7% 17 452 32.0%

Other liabilities 17 1 631 1 601

Long term provisions 19 384 393

Deferred tax liabilities 331 430

Non-current liabilities 2 346 4.0% 2 424 4.5%

Liabilities 23 371 39.7% 19 876 36.5%

Share capital 153 153

Treasury shares -4 354 -4 100

Capital reserves -974 175

Retained earnings 40 724 38 315

Shareholders' equity 35 549 60.3% 34 543 63.5%

Liabilities and shareholders' equity 58 920 100.0% 54 419 100.0%

2120

Datacolor Datacolor

CONSOLIDATED CASH FLOW STATEMENT

in TUSD 2013 / 14 2012 / 13

Profit before income taxes 4 888 5 525

Depreciation of property, plant and equipment 13 1 496 1 146

Amortization of intangible assets 14 555 432

Result from the disposal of non-current assets 13 16 -6

Changes in provisions 19 -253 249

Other non-cash positions 60 -63

Interest income net 6 -12 -20

Income from securities and dividends, net 6 -416 -160

Change in fair value of derivatives 15 -35 -7

Income taxes paid -802 -826

Cash flow before changes in working capital 5 497 6 270

Changes in trade receivables 10 -1 404 -61

Changes in other receivables and prepaid expenses 11 -309 -296

Changes in inventories 12 -1 473 -217

Changes in trade payables 860 12

Changes in other and accrued liabilities 17 / 18 3 111 2 274

Cash flow from operating activities 6 282 7 982

Investments in property, plant and equipment 13 -2 942 -1 050

Divestments of property, plant and equipment 13 14 6

Investments in intangible assets 14 0 -102

Divestments of financial assets 9 -15 578 -7 184

Disvestments of financial assets 9 10 903 135

Investments in affiliates 26 -1 218 0

Interest and dividends received 494 35

Cash flow from investing activities -8 327 -8 160

Purchase of treasury shares -1 348 -631

Exercise of stock options 411 213

Consideration received for issue of stock options 0 43

Repurchase of stock options 0 -126

Dividends paid -1 914 -1 832

Cash flow from financing activities -2 851 -2 333

Decrease in cash and cash equivalents -4 896 -2 511

Cash and cash equivalents at beginning of the year 21 890 24 035

Translation differences on cash and cash equivalents -370 366

Cash and cash equivalents at end of the year 8 16 624 21 890

1) The share capital as of September 30, 2014 consists of 168 044 (previous year: 168 044) registered shares with a nominal value of CHF 1 each, translated to CHF / USD with the spot rate as of September 30, 2008.

2) Equals the historical purchase value of 12 091 treasury shares (previous year: 13 036). Shares purchased before Oc-tober 1, 2008 were translated at the CHF / USD closing rate as of September 30, 2008. In the reporting period ended September 30, 2014 Datacolor purchased 2 735 (previous year: 1 432) registered shares at an average share price of CHF 439.24 (previous year: 406.80) for a total amount of TUSD 1 348 (previous year: TUSD 631).

3) The capital reserve comprises reserves from capital contributions confirmed by the Swiss tax authorities (refer to the statutory financial statements of Datacolor AG) and the result of the execution of stock options.

4) The retained earnings contain legal reserves that are subject to certain legal restrictions with regard to their distribution.5) A dividend of CHF 11 (previous year: CHF 11) per share was distributed in the reporting period.6) For further information regarding the excercice of stock options refer to note 21 to the consolidated financial statements.7) In the reporting period immaterial goodwill of TUSD 11 resulting from the acquisition of the Media Logic Group has

been offset with equity.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in TUSDShare

capital1)

Treasury shares2)

Capital reserves3)

Retained earnings4)

Accumulated translation

differencesTotal retained

earnings

Totalshareholders

equity

Balance as of 1. October 2012 153 -4 325 2 340 33 279 136 33 415 31 583Dividends paid5) -1 832 0 -1 832Excercise of stock options 6) 856 -333 0 523Purchase of treasury shares -631 0 -631Translation differences 359 359 359Profit for the year 4 541 4 541 4 541

Balance as of 30. September 2013 153 -4 100 175 37 820 495 38 315 34 543

Balance as of 1. October 2013 153 -4 100 175 37 820 495 38 315 34 543Dividends paid 5) -838 -1 076 -1 076 -1 914Excercise of stock options 6) 1 094 -311 0 783Purchase of treasury shares -1 348 0 -1 348Offset of goodwill7) -11 -11 -11Translation differences -604 -604 -604Profit for the year 4 100 4 100 4 100Balance as of 30. September 2014 153 -4 354 -974 40 833 -109 40 724 35 549

2322

Datacolor Datacolor

1 General policies for the consolidated financial statements

GeneralDatacolor AG is a Swiss limited company, domiciled in Lu-cerne and is the parent company of the Datacolor Group, a worldwide leading provider of solutions for color measure-ment, management, communication and calibration.

Basis of preparationThe consolidated financial statements were prepared in accordance with Swiss GAAP FER and comply with Swiss law. The consolidated financial statements have been pre-pared in US Dollar (USD) and were rounded to the nearest thousand unit. The consolidated financial statements are prepared on a historical cost basis, except for financial current assets and derivative financial instruments which are recorded at market value.

The preparation of consolidated financial statements in accordance with Swiss GAAP FER requires management to make estimates and assumptions that affect the re-ported amounts of revenues, expenses, assets and liabili-ties, and the disclosure of contingent liabilities at the date of the financial statements. Such estimates and assump-tions are based on management’s best judgment at the date of the financial statements. In case such estimates deviate in the future from the actual circumstances, the original estimates and assumptions will be modified as ap-propriate for the year in which the circumstances change.

Scope of consolidationThe consolidated financial statements include the finan-cial statements of Datacolor AG and its subsidiaries that are controlled by Datacolor AG. Control is presumed to exist when Datacolor AG owns, directly or indirectly through subsidiaries, more than one half of the voting power of an enterprise or otherwise exercises manage-ment control. Refer to note 28 to the consolidated finan-cial statements for a listing of all Group entities that are included in the consolidation.

The closing date for the financial statements of Data-color AG and all its subsidiaries is September 30, with the exception of Datacolor Technology (Suzhou) Co., Ltd., Datacolor Trading (Shanghai) Co., Ltd., Datacolor Color Technologies Trading and Service Company LLC, Tur-key, Datacolor Gestâo de Soluções em Cores e Imagens Ltda., Brazil and Mediacol s.r.l., Italy (all as of December 31) as well as Datacolor Solutions Private Ltd., domiciled in Mumbai, India (March 31) for which interim financial statements as of September 30 are prepared for consoli-dation purposes.

After the formation of a Sales and Service Company on December 4, 2013 the subsidiary in Sao Paulo, Brazil began operating activities. On July 8, 2014 Datacolor took over control of Mediacol s.r.l., Reggio Emilia. The scope of the consolidation changed accordingly. In the previ-

ous reporting period the scope of consolidation has been extended by the Turkish subsidiary.

Principles of consolidationThe assets and liabilities included in the consolidated fi-nancial statements are measured according to uniform principles. Intragroup balances, intragroup transactions and material unrealized profits resulting from intragroup transactions are eliminated in the course of consolidation. Acquired (disposed) subsidiaries are consolidated (de-consolidated) upon the date of change of control.

Foreign currency translationThe financial statements of Datacolor AG and its subsid-iaries are translated into US Dollar (reporting currency) for consolidation purposes. Assets and liabilities of sub-sidiaries denominated in foreign currency are translated at the exchange rate prevailing at the balance sheet date, the income statement is translated into the reporting cur-rency at average exchange rate of the respective report-ing period. Foreign currency differences deriving from the translation of equity and results of subsidiaries are recorded directly in retained earning

In the financial statements of the individual subsid-iaries transactions in foreign currencies are recorded at the exchange rate prevailing at the date of transaction. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange at the balance sheet date. All resulting differences are recognized as exchange gains or losses in the income statement of the individual subsidiary.

Cash flow statementThe fund ‘cash and cash equivalents’ forms the basis for the disclosure of the cash flow statement. The cash flow from operations is calculated using the indirect method.

Segment reportingSegment information is presented following different geo-graphic areas and disclosing segment net sales, assets and average number of employees.

2 Accounting principles

Net sales and revenue recognitionNet sales include all invoiced sales and services to third parties. Net sales is considered realized when the eco-nomic benefits and risks associated with the ownership and legal title of sold products or rendered services are transferred to the transacting third party.

The major portion of net sales results from sales of hardware and software products. Revenue resulting from such transactions is recognized based on the underlying incoterms. As a result of the global customer base and various international distribution channels different inco-

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

terms are applied. Most maintenance contracts of the service business have a term of 12 months. Therefore, these sales are recognized on a proportioned basis over the contract period. Datacolor AG and its subsidiaries are not undertaking project business that would require an estimate of the project realization.

Stock option planAs part of the performance oriented, variable compen-sation for members of the Executive Committee and the Board of Directors, a portion of the variable compensation can be used for the purchase of stock options for obtain-ing Datacolor registered shares. The maximum number of stock options is determined by the Human Resource and Compensation Committee and depends on the at-tainment of individual performance objectives within the past period and the operating performance of the Data-color Group.

The option premium is fixed and the strike price is valuated using the Black-Scholes-formula. The options are not linked to any further conditions. After allotment, the stock options have a blocking period of three years. Subsequent to the three year blocking period the options can be exercised within the following seven years. On execution of the stock option there is a settlement with Datacolor shares.

The option premium of the expected option allocation is recorded under payroll expenses in the period in which the service has been rendered. For options which can already be exercised or for which the blocking period expires within one year, the fair value of the personnel expense at the date of allotment is recorded under ac-crued liability. For stock options with a remaining blocking period of at least one year the equivalent value of payroll expenses recorded at granting of options is disclosed under other non-current liabilities. In case of a termina-tion of the employment relationship during the blocking period, the fair value of the option can be paid out in cash in exceptional cases. The option holder receives at the minimum the initially paid option premium.

At the date of termination of an employment relation-ship of an option holder and when a cash settlement becomes apparent, the Group records the expected fair value compensation less the initial payroll expense. If the termination of the employment relationship incurs after the balance sheet date but before the external reporting date, material transactions will be disclosed as post balance sheet events.

Deferred income taxesDeferred income taxes are provided following the com-prehensive balance sheet liability-method and reflect in general all future temporary differences. The measure-ment of the deferred taxes is based on current tax rates applicable for the respective taxable entity.

Deferred tax assets deriving from tax losses carried

forward are only capitalized when the likelihood of recov-erability is high and future taxable profits are sufficient to recover tax benefits stemming from the tax losses.

Impairment of assetsThe carrying amounts of non-current assets are reviewed for impairment at each balance sheet date or if there are indications that an asset may be impaired. If an indication of potential impairment exists, the recoverable amount of the respective asset is determined. If the carrying values exceed the estimated recoverable amounts, the assets are written down to their recoverable amounts. Impair-ment losses are recognized in the income statement. The recoverable amount is the higher of the estimated asset’s net selling price and its value in use. The net selling price is the amount recoverable from the sale of an asset in an arm’s length transaction between independent parties less the cost of disposal. The value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life.

Employee benefit obligationsThe subsidiaries of Datacolor Group have different em-ployee benefit plans in accordance with local regulations and customs in the respective countries. These plans are organized in legally independent and autonomous foundations. The plans cover most of the employees and provide benefits in case of death, disability, retirement or termination of employment. Plans are funded pre-dominantly by a combination of employee and employer contributions. Contributions are based on a certain per-centage of the insured salary.

Employee benefits of Datacolor Group are organized with external pension insurance solutions or savings in-stitutions respectively, where Datacolor is not exposed to any further contribution commitments beyond the regular contributions owed and recognized.

Cash and cash equivalentsCash and cash equivalents include cash, bank accounts, demand deposits, money market instruments as well as short-term deposits with terms not exceeding a period of three months. Cash and cash equivalents are recorded at nominal value.

Current financial assetsCurrent financial assets are investments in marketable securities that can be permanently liquidated at efficient markets. They are measured at fair value, whereas un-recognized gains or losses are recorded in the financial result of the income statement.

Trade receivablesThe net trade receivables balance represents invoiced amounts less economically determined allowance for

2524

Datacolor Datacolor

specific debtor risk and less general allowance based on experience and reflection of the specific aging structure. The general allowance is based on the assumption that the risk of default is increasing the more the receivable is overdue.

InventoriesInventories are measured at the lower of acquisition or production cost respectively, or net realizable value. Cash discounts are considered as a decrease in acquisition cost.

Property, plant and equipmentTangible fixed assets comprise the categories buildings, machinery and equipment and vehicles.

Property, plant and equipment are recorded at acqui-sition cost less accumulated depreciation and any impair-ment loss. Land is depreciated only if periodic appraisals reveal a sustained impairment loss. Material elements of specific fixed asset items with different useful lifetimes are depreciated as separate objects. Property, plant and equipment are depreciated on a straight-line basis ac-cording to economic criteria corresponding to the esti-mated useful life. Essentially, these are:Buildings 30 – 40 yearsMachinery 3 – 10 yearsEquipment 10 – 20 yearsInstruments for demonstration use 3 yearsIT 3 – 7 yearsInstallations 10 – 20 yearsVehicles 5 – 12 years

Intangible assetsIntangible assets comprise the categories goodwill, trade-marks, licenses and patents, capitalized development costs and other intangibles. – Goodwill: Goodwill represents the difference between the cost of

the acquisition and the fair value of the identifiable as-sets acquired less liabilities assumed. Material goodwill is amortized on a straight-line-basis over a life time of five to a maximum of twenty years.

– Trademarks, licenses, and patents: Trademarks, licenses, and patents are initially recorded

at acquisition cost. Expenditures for internally generated trademarks are recognized as an expense in the current period. Acquired trademarks, licenses, and patents are amortized on a straight-line basis of five to ten years.

– Capitalized development costs and other intangible as-sets:

Research costs are charged to the Income statement. Development cost are only capitalized, if the following criteria are cumulatively fulfilled: The development costs are identifiable and controlled by Datacolor, will gener-ate a measurable future benefit for more than one year, the expenses can be captured and measured sepa-rately and it is likely that sufficient funds are available for finalizing and commercially exploiting developed products.

Other intangible assets, primarily software, are capi-talized at their acquisition costs and amortized on a straight-line basis of five to ten years.

Derivative financial instrumentsDerivative financial instruments are recognized as current or non-current financial assets or liabilities, depending on the term. Datacolor AG and its subsidiaries are not ap-plying Hedge Accounting. Therefore, market gains and losses on the hedging instruments are recognized directly in financial result in the income statement until the under-lying transaction of a hedged risk is recognized in the bal-ance sheet. Derivative financial instruments are disclosed at market value in the balance sheet.

LiabilitiesLiabilities are recorded at their nominal value.

ProvisionsProvisions are made for potential present obligations with uncertain timing or amounts as a result of a past event and for which a future outflow of resources is probable. The amount is based on the best possible estimate of the expected outflow of resources. The break down into short-term and long-term provision is based on the expected use within one year.

Treasury sharesTreasury shares are reported at historical acquisition cost and shown as a deduction from equity.

Contingent liabilities Contingent liabilities are measured on the basis of the re-spective probability and impact of future unilateral cash outflows and are disclosed in the notes to the consoli-dated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The figures below are stated in thousands of US dollars (TUSD) unless otherwise indicated.

3 Segment reporting

4 Earnings per share (EPS)

Earnings per share were calculated by dividing the Datacolor Group‘s profit for the year by the average number of shares outstanding (issued shares less treasury shares). Diluted earnings per share include the effect of dilution, which would arise as a result of exercising outstanding stock options.

Geographical segmentsin TUSD 2013 / 14 in % of Total 2012 / 13 in % of Total

Net sales to third parties 69 989 100.0% 61 209 100.0%

Europe 24 637 35.2% 22 111 36.1%

Americas 22 013 31.5% 18 955 31.0%

Asia Pacific 23 339 33.3% 20 143 32.9%

in % of Total in % of Total

Assets 58 920 100.0% 54 419 100.0%

Europe 31 834 54.0% 29 907 55.0%

Americas 14 865 25.3% 13 839 25.4%

Asia Pacific 12 221 20.7% 10 673 19.6%

in % of Total in % of Total

Average number of employees 370 100.0% 331 100.0%

Europe 76 20.5% 66 20.0%

Americas 120 32.5% 103 31.1%

Asia Pacific 174 47.0% 162 48.9%

in TUSD 2013 / 14 2012 / 13

Profit for the year 4 100 4 541

Average number of shares outstanding 156 119 154 740

Basic earnings per share in USD 26.26 29.35

Effect of dilution: Number of share options 9 133 8 620

Adjusted average number of shares for diluted earnings per share 165 252 163 360

Diluted earnings per share in USD 24.81 27.80

2726

Datacolor Datacolor

5 Personnel expenses

In the reporting period the personnel expenses increased mainly by strategic headcount additions in the Sales and Marketing organization.

6 Financial result

7 Income taxes

Deferred tax assets amounting to TUSD 766 (previous year: TUSD 555) consist primarily of temporary differences be-tween tax and Swiss GAAP FER balance sheet and capitalized tax assets deriving from tax losses carried forward. The total amount of tax losses carried forward is USD 9.3 Mio. (previous year: USD 10.0 Mio.) and the predominant part can be used without any time restrictions. Deferred tax assets and liabilities are recorded on the basis of local tax rates with an average tax rate of 22.0% (previous year: 23.0%).

8 Cash and cash equivalents

Bank accounts, postal accounts and short-term deposits generated interest at market rates.

in TUSD 2013 / 14 2012 / 13

Salaries 25 697 21 082

Social security costs 5 070 4 413

Pension costs 20 686 630

Other personnel expenses 990 1 099

Personnel expenses 32 443 27 224

in TUSD 2013 / 14 2012 / 13

Current income taxes -1 164 -862

Deferred income taxes 376 -122

Income taxes -788 -984

in TUSD 2013 / 14 2012 / 13

Interest income 12 20

Dividend income 0 15

Gain on securities 492 145

Foreign exchange gains 1 580 729

Financial income 2 084 909

Foreign exchange losses -1 607 -562

Financial expenses -1 607 -562

Financial result, net 477 347

in TUSD 30.09.2014 30.09.2013

Cash on hand, postal accounts 3 6

Cash at bank 16 621 21 884

Cash and cash equivalents 16 624 21 890

9 Financial assets

In the reporting period the net amount of TUSD 4 640 (previous year: TUSD 7 200) have been invested in marketable short- and longterm financial assets. These financial assets are subject to different investment risks. Refer to note 15 risk management.

10 Trade receivables

11 Other receivables

12 Inventories

in TUSD 30.09.2014 30.09.2013

Work in progress 102 1% 93 1%

Semi-finished and finished goods 5 045 61% 4 221 66%

Trading goods 3 171 38% 2 106 33%

Gross inventories 8 318 100% 6 420 100%

Allowances -2 873 -35% -2 416 -38%

Net inventories 5 445 65% 4 004 62%

in TUSD 30.09.2014 30.09.2013

Trade receivables, gross 9 411 100% 7 997 100%

Allowance for doubtful debts -592 -6% -484 -6%

Trade receivables, net 8 819 94% 7 513 94%

in TUSD 30.09.2014 30.09.2013

Securities held for trading 11 884 5 507

Positive replacement value of derivative instruments 35 7

Current financial assets 11 919 5 514

Other financial assets 16 2 239

Non-current financial assets 16 2 239

Financial assets 11 935 7 753

in TUSD 30.09.2014 30.09.2013

Other receivables from

– Third parties 515 32% 327 26%

– Government 327 21% 288 23%

– Pension funds 14 1% 111 9%

– Related parties 57 4% 132 10%

Prepayments to third parties 672 42% 407 32%

Other receivables 1 585 100% 1 265 100%

2928

Datacolor Datacolor

13 Property, plant and equipment

Other mobile fixed assets contain primarily machines, equipment, instruments for demonstration use, IT, installations and vehicles.

In the reporting period, the loss on the disposal of property, plant and equipment amounted to TUSD -16 (previous year: gain TUSD 6).

In the reporting period other mobile fixed assets were reduced by TUSD 4 431 (previous year: TUSD 540). The dis-posals relate primarily to fully amortized mobile fixed assets which have been replaced as a result of the renovation of the facility in Lawrenceville (USA).

The fire insurance value of the tangible fixed assets amounted to USD 26.4 Mio. (previous year: USD 27.7 Mio.).

in TUSDOperating properties

Other mobile fixed assets

Total property, plant and equipment

Acquisition or production costs

Balance as of 1.10.2012 11 989 10 385 22 374

Additions 143 907 1 050

Reclassifications 0 0 0

Disposals -185 -540 -725

Translation differences 0 59 59

Balance as of 30.09.2013 11 947 10 811 22 758

Additions 1 281 1 661 2 942

Changes in scope of consolidation 0 20 20

Disposals 0 -4 431 -4 431

Translation differences 0 -200 -200

Balance as of 30.09.2014 13 228 7 861 21 089

Accumulated depreciation

Balance as of 1.10.2012 5 020 8 075 13 095

Additions 293 853 1 146

Disposals -185 -540 -725


Balance as of 30.09.2013 5 128 8 437 13 565

Additions 299 1 197 1 496


Disposals 0 -4 401 -4 401

Translation differences 0 -165 -165

Balance as of 30.09.2014 5 427 5 068 10 495

Net carrying amount

Balance as of 30.09.2013 6 819 2 374 9 193

Balance as of 30.09.2014 7 801 2 793 10 594

14 Intangible assets

Capitalized development costs and other intangible assets include primarily the group-wide utilized ERP system and the acquired software solution of the Media Logic Group.

As in the previous year from the total research and development expenses amounting to TUSD 6 829 (previous year: TUSD 6 134) no expenses were capitalized because not all criteria for a capitalization were met (refer to note 2 Ac-counting principles).

In the reporting period the balance of activated development expenses and other intangible assets and the cor-responding accumulated amortizations has been reduced by TUSD 2 115 (previous year: TUSD 3 571). The reduction consists basically of fully amortized development expenses for software.

in TUSD Capitalized development costs and other

intangible assets

Trademarks, licenses,

patents Total

Acquisition or production costs

Balance as of 1.10.2012 13 028 137 13 165

Additions 57 45 102

Disposals -3 571 0 -3 571


Balance as of 30.09.2013 9 651 182 9 833

Additions 0 0 0

Changes in scope of consolidation 1 416 84 1 500

Reclassifications 35 -35 0

Disposals -2 115 0 -2 115

Translation differences -285 -6 -291

Balance as of 30.09.2014 8 702 225 8 927

Accumulated amortization

Balance as of 1.10.2012 10 969 17 10 986

Additions 427 5 432

Disposals -3 571 0 -3 571


Balance as of 30.09.2013 7 956 22 7 978

Additions 516 39 555


Reclassifications 2 -2 0

Disposals -2 104 0 -2 104

Translation differences -189 -3 -192

Balance as of 30.09.2014 6 181 56 6 237

Net carrying amount

Balance as of 30.09.2013 1 695 160 1 855

Balance as of 30.09.2014 2 521 169 2 690

3130

Datacolor Datacolor

15 Risk management and Internal controls

Due to its international business, the Datacolor Group is exposed to different operational and strategical risks which are assessed on an ongoing basis by a centralized risk management process. The risks classifications are based on the analysis of the probability and exposure. As a result, action plans to reduce or avoid risks are prepared. On a yearly basis, a consolidated risk report is presented to the Board of Directors for approval.

For identified risks relating to financial reporting and accounting, a risk assessment is performed. The group wide internal controls framework for the financial reporting defines relevant key controls that reduce financial risks. Moreover, the Datacolor Group is targeting to develop a control environment that ensures a disciplined management of the exist-ing risks.

The financial risks include credit, investment, liquidity, foreign exchange and interest.

Credit riskCredit risk is the risk of incurring financial losses arising when customers or a counterparty of a financial instrument are unable to meet their obligations.

Credit risks are managed by adequate controls of the daily business and performing a risk assessment before enter-ing a transaction.

The default risk in terms of trade receivables is limited, since the customer base of the Datacolor Group consists of a large number of customers from various geographical regions. Nevertheless, the risk management process stipulates an individual customer risk assessment in the establishment of customer credit limits.

Investment riskDatacolor invests excess liquidity not used to fund operating activities in various financial asset classes to generate financial returns. The financial performance of individual investments is impacted by various influencing factors. In-vestment decisions follow an internally issued investment policy, that stipulates guidelines with respect to permissible financial asset categories and investment diversification.

Risk of illiquidityThe centralized cash management ensures that the Datacolor Group has always sufficient liquidity to settle outstanding liabilities on time. The Executive Committee implemented guidelines and processes for a liquidity planning adopted to the Group’s needs.

Foreign currency riskThe Datacolor Group is exposed to foreign currency risks by virtue of its international focus. These risks occur in trans-actions which take place in currencies other than the functional currency of the Company concerned, in particular when purchasing or selling goods. Such transactions are primarily settled in EUR and USD. The individual companies plan their expected payment flows on a regular basis and report these to the Group Executive Committee.

The difference between incoming and outgoing payments in a specific foreign currency, particularly in USD and EUR, is considered as not immaterial. Remaining net positions are monitored by Group Management and hedged on a selective basis if deemed necessary.

The following exchange rates of the most important currencies for the Group were used for translation into US Dollar:

Interest riskInterest risk comprise an interest-rate related cash flow risk, i.e. the risk that future interest payments will change due to fluctuations in the market interest rate, together with an interest rate related risk of a change in fair value, i.e. the risk that the fair value of a financial instrument changes due to fluctuations in the market interest rate.

The consolidated financial statements of the Datacolor Group as per September 30, 2014 do not include any financial liabilities that are subject to an interest rate change risk.

Forward exchange contractsIn the course of its business activities, Datacolor generates cash surpluses in EUR that are exchanged by foreign cur-rency forward instruments into USD.

As of September 30, 2014 foreign exchange contracts in the amount of TUSD 414 (previous year: TUSD 541) were pending. The replacement value amounts to TUSD 35 (previous year: TUSD 7).

16 Financial liabilities

No financial liabilities were in place either in the reporting period or in the previous year.

Available and unused credit lines for Datacolor Group remain unchanged at CHF 6.5 million (previous year: CHF 6.5 million).

in TUSD 30.09.2014 30.09.2013

Financial liabilities - banks 0 0

Current financial liabilities 0 0

Credit lines available (CHF 6.5 Mio.) 6 833 7 179

Unused credit lines (CHF 6.5 Mio.) 6 833 7 179

Forward exchange contracts Contract value Positive fair value Negative fair value Purpose

in TUSD 2014 2013 2014 2013 2014 2013

Forward exchange contracts as of September 30 414 541 35 7 0 0 Hedging

Balance Sheet Income Statement

Currency Unit 30.09.2014 30.09.2013 2013 / 14 2012 / 13

CHF 1 1.05 1.10 1.11 1.07EUR 1 1.27 1.35 1.36 1.31GBP 1 1.62 1.61 1.66 1.56CNY 1 0.16 0.16 0.16 0.16

32

Datacolor Datacolor

33

17 Other liabilities

The non-current liabilities include the long-term portion of the stock option plan of TUSD 1 301 (previous year: TUSD 1 268). Refer to note 2 Accounting principles.

18 Accrued liabilities

The liability resulting from the stock option plan amounts to TUSD 1 687 (previous year: TUSD 1 660) of which the non-current part is disclosed under other non-current liabilities. Refer to note 2 Accounting principles and note 21 Stock option plan.

in TUSD 30.09.2014 30.09.2013

Deferred revenue for service contracts and shipments 6 473 5 982

Employee related accruals 5 667 4 003

Stock option plan 386 392

Year-end closing (audit, tax consulting, bookkeeping) 395 330

Other accrued expenses 1 606 1 499

Accrued liabilities 14 527 12 206

19 Provisions

Provisions for warranty cover potential warranty claims, which are likely to incur based on the experience of past war-ranty cases. The calculation is based on realized sales transactions for which a warranty promise has been given, the probability of warranty cases and associated internal and external warranty costs.

Provisions for restructuring and other provisions cover among others operational rent obligations for abandoned lease objects with a residual rental period up to 2016.

in TUSD 30.09.2014 30.09.2013

Other current liabilities against

– Third parties 51 91

– Government 457 479

Prepayments from third parties 1 535 1 167

Other current liabilities 2 043 1 737

Other non-current liabilities 1 631 1 601

Other liabilities 3 674 3 338

in TUSD WarrantyRestructuring /

Other Total

Balance as of 1.10.2012 353 298 651

Additions 313 209 522

Used -273 0 -273


Balance as of 30.09.2013 396 509 905

Presented in consolidated balance sheet as:

Short term provision 396 116 512

Long term provision 0 393 393

Balance as of 1.10.2013 396 509 905

Additions 368 0 368


Used -354 -267 -621

Reclassification 0 0 0


Balance as of 30.09.2014 415 384 799

Disclosed in the consolidated balance sheet as:

Short term provision 415 0 415

Long term provision 0 384 384

3534

Datacolor Datacolor

Grant

Number of outstand-

ing options 30.09.2013

and expected granting

Exercise price

(CHF)1)

Expira-tion of

blocking period

Expira-tion of

exercise period

Reclas-sifi-

cation

Number of options exercised

2013 / 14

Number of options re-purchased

2013 / 14

Number of outstanding

options 30.09.2014


Fiscal Year

2010 (strike price CHF 194) 1 900 244 1.10.13 1.10.20 -1 600 300

2010 (strike price CHF 31) 2 080 156 1.10.13 1.10.20 -2 080 0

2011 (strike price CHF 210) 2 700 260 1.10.14 1.10.21 2 700

2011 (strike price CHF 85) 1 740 210 1.10.14 1.10.21 1 740

2012 (strike price CHF 210) 2 700 260 1.10.15 1.10.22 2 700

2012 (strike price CHF 77) 1 980 202 1.10.15 1.10.22 1 980

2013 (strike price CHF 288) 3 300 338 1.10.16 1.10.23 3 300

2013 (strike price CHF 128) 1 980 253 1.10.16 1.10.23 1 980

Total carry forward 18 380

2014 (expected granting) 410 1.10.17 1.10.24 3 900


Total 18 380 0 -3 680 0 20 580

1) including the option premium of CHF 50 or CHF 125 respectively.

Grant

Number of outstand-

ing options 30.09.2012


Exercise price

(CHF)1

Expira-tion of

blocking period

Expira-tion of

exercise period

Reclas-sifi-

cation

Number of options exercised

2012 / 13

Number of options re-purchased

2012 / 13

Number of outstanding

options 30.09.2013


Fiscal Year

2009 (strike price CHF 173) 1 040 223 1.10.12 1.10.19 -1 040 0

2009 (strike price CHF 11) 1 840 136 1.10.12 1.10.19 -1 840 0

2010 (strike price CHF 194) 2 500 244 1.10.13 1.10.20 -600 1 900

2010 (strike price CHF 31) 2 080 156 1.10.13 1.10.20 2 080

2011 (strike price CHF 210) 3 200 260 1.10.14 1.10.21 -500 2 700

2011 (strike price CHF 85) 1 740 210 1.10.14 1.10.21 1 740

2012 (strike price CHF 210) 2 700 260 1.10.15 1.10.22 2 700

2012 (strike price CHF 77) 1 980 202 1.10.15 1.10.22 1 980

Total carry forward 17 080



Total 17 080 0 -2 880 -1 100 18 380

1) including the option premium of CHF 50 or CHF 125 respectively.

20 Employee benefits

Economic benefit / economic liability and pension expenses

Most pension plans are financed through contributions from the employer and employee. Contributions are calculated as a percentage of the insured salary.

In Switzerland the pension plan is regulated through an independent fund (“Gemeinschaftsstiftung”). The actuarial coverage according to Art. 44 BVV 2 was at 113.1% as of September 30, 2014, at 110.3% as of December 31, 2013 and 110.3% as of September 30, 2013. In contrary to an independent collective foundation (‚Sammelstiftung’), the community foundation (,Gemeinschaftsstiftung’), is not required to prepare individual statements for each associated company in accordance with Art. 48b BVV2. Therefore no economic share of the Company is disclosed.

The pension liability of TUSD 158 (previous year: TUSD 415) originates from pension plans of the German subsidiary. The amount of service duration depending pension liability is based on actuarial calculations. Other foreign plans are pure defined contribution plans. In the reporting period a pension entitlement determined by an actuarial valuation in the amount of TUSD 254 has been released at fair value without any effect on the income statement.

21 Stock option plan

As part of the performance-related compensation stock options to obtain Datacolor registered shares are granted to the Board of Directors and certain members of the Executive Committee. For the exercise of the option rights conditional share capital of CHF 4 580 for 4 580 registered shares with a nominal value of CHF 1 each is available (see page 10 Information for Investors). The strike price and option repurchase values are calculated using the financial option pric-ing model Black-Scholes. The option premium is set at CHF 125 for member of the Board of Directors and CHF 50 for beneficiary from the Executive Committee.

The expenses recorded in the reporting period amount to TUSD 493 (previous year: TUSD 441) and the total liability recorded amounts to TUSD 1 687 (previous year: TUSD 1 660) of which the current portion of TUSD 386 (previous year: TUSD 392) is disclosed as accrued liability and the non-current portion of TUSD 1 301 (previous year: TUSD 1 268) is recorded in other non-current liabilities. In the reporting period 3 680 options have been exercised. For fiscal year 2012 / 13 the expected grant was 5 280 options corresponding with effective grant.

The exercise price of options expected to be granted for the reporting period corresponds with the fiscal value and has been determined by using the Black-Scholes valuation model. The following significant input patterns were used in the valuation process: The average share price of the financial year 2013 / 14 of CHF 484 (previous year: CHF 419), a discount of 6% per year of the blocking period, exercise prices shown in the table below, the standard deviation of expected share price returns of 21.2% (previous year: 20.0%), a dividend yield of 4.0% (previous year: 4.0%), the option term of ten years and the annual risk-free interest rate of 0.52% (previous year: 1.09%). The volatility variable applied in the valuation model is based on the actual volatility since January 1, 2011 using weekly share prices.

Surplus / deficit ac-cording to pension plans under Swiss

GAAP FER 26 Economic share of

the Company

Change com-pared to previous year, recognized

in the period

Accrued contri-butions for the

period

Pension plan ex-penses in personnel

expenses

in TUSD 30.09.14 30.09.14 30.09.13 2013 / 14 2013 / 14 2012 / 13

Pension plans without own assets (abroad) 0 158 415 -257 0 538 471Pension plans with surplus / deficit (Switzerland) 0 0 0 0 0 148 159

Total 0 158 415 -257 0 686 630

Remuneration of the Board of Directors


Investments as of September 30

The total number of shares held by the Board of Directors and Executive Committee amounted to 122 831 (previous year: 118 534). In the reporting period 5 280 options (previous year 4 680) were granted to the Board of Directors and Executive Committee.

No material receivables or liabilities between the Company and its related parties existed at the end of both the re-porting period and the previous year, with the exception of pension plans.

Additional information on the governing bodies, together with the content and procedures for determining compensa-tion and participation programs are described in the section Corporate governance.

23 Leasing liabilities

As in the previous year, no obligations from finance lease contracts existed at the balance sheet date.The following overview shows future liabilities arising from non-capitalized operating lease contracts arranged in

order of the due dates:

The leasing expenses in the financial year amount to TUSD 154 (previous year: TUSD 133).

3736

Datacolor Datacolor

in TUSDRemuneration

paid in cash Pension costsStock option

based compensation Total






Total 287 0 264 551

in TUSDRemuneration




in TUSD 30.09.2014 30.09.2013

Due in reporting period + 1 year 112 105

Due in reporting period + 2 years 59 60

Due in reporting period + 3 years 9 39

Due in reporting period > 3 years 0 5

Total operating lease liabilities 180 209

22 Related parties and companies

Datacolor AG has related party relationships with its subsidiaries, their pension plans and with members of the Board of Directors and with the Executive Committee.

Group companiesA list of the Datacolor Group subsidiaries is included in note 28 to the consolidated financial statements. Transactions

between Datacolor AG and its subsidiaries and between subsidiaries of Datacolor Group are eliminated in the course of consolidation. There are no associated companies or joint ventures.

Total payments to non-executive members of the Board of Directors were TUSD 778 in the reporting period (previous year: TUSD 551).

The remuneration paid to the Board of Directors and Executive Committee in the reporting year is shown below:


In the reporting period no remunerations has been paid to former members of the Executive Committee (previous year: TUSD 263).

Remuneration of the Board of Directors

Highest total remunerationRemuneration 2012 / 13

Remunerations paid to former members of the Executive Committee in financial year 2012 / 13 amounted to TUSD 263 (previous year: TUSD 195).

in TUSD Remuneration paid in cash Pension costs




To six members of the Executive Committee 2 006 73 216 2 295

Total 2 510 73 490 3 073

in TUSDRemuneration








Total 504 0 274 778

in TUSDRemuneration




in TUSD Remuneration paid in cash Pension costs




To five members of the Executive Committee 1 558 87 144 1 789

Total 1 845 87 408 2 340

in TUSD2014

Numbers of shares

2013 Numbers of shares

2014 Numbers

of options

2013 Numbers

of optionsInvestments as of September 30

Werner Dubach, chairman 92 032 88 455 2 700 2 440

Dr. Peter Beglinger, deputy chairman 1 524 1 164 1 080 1 080

Anne Keller Dubach, member 28 100 28 100 480 240



Executive Committee 0 0 9 000 7 900

Total 122 831 118 534 14 700 13 100

3938

Datacolor Datacolor

27 Subsequent events

The consolidated financial statements were approved for publication by the Board of Directors on November 5, 2014. They have yet to be approved by the general meeting.

The Board of Directors is to propose to the general meeting that a dividend of CHF 11 per share paid for the of finan-cial year 2013 / 14. Refer to the proposed appropriation of availabe earning in the report of Datacolor AG.

Between the balance sheet date and November 5, 2014 no further significant events which might have an influence on the information presented in the 2013 / 14 annual financial statements or require disclosure in this report occured.

28 Group entities

1) These companies are held directly by Datacolor AG.

Company Location CurrencyShare

capital in ‘000

Ownership interest

in %

Datacolor

Datacolor Holding AG1) CH-Lucerne CHF 10 000 100

Datacolor AG Europe CH-Dietlikon CHF 2 000 100

Datacolor Logistik AG CH-Lucerne CHF 1 000 100

Datacolor International France SAS FR-Paris EUR 274 100

Datacolor GmbH DE-Marl EUR 256 100

Datacolor Asia Pacific (HK) Ltd. HK-Hong Kong HKD 10 100

Datacolor Inc. US-Lawrenceville USD 35 808 100

Datacolor International Ltd. GB-Altrincham GBP 75 100

Datacolor Belgium BVBA BE-Melle EUR 186 100

Datacolor Italia s.r.l. IT-Bergamo EUR 20 100

Mediacol s.r.l. IT-Reggio Emilia EUR 10 100

Datacolor Technology (Suzhou) Co., Ltd. CN-Suzhou USD 3 200 100

Datacolor Trading (Shanghai) Co., Ltd. CN-Shanghai CNY 1 364 100

Datacolor Solutions Private Ltd. IN-Mumbai INR 100 100

Datacolor Color Technologies Trading and Service Company LLC TR-Istanbul TRL 100 100

Datacolor Gestâo de Soluções em Cores e Imagens Ltda. BR-Sao Paulo BRL 350 100

MABAG AG1) CH-Lucerne CHF 100 100

24 Contingent liabilities

There were no sureties, guarantee obligations or pledged assets in favor of third parties either in the reporting period nor in the previous year.

The Company is involved in legal disputes, lawsuits and court cases in the ordinary course of business. As far as the Company can ascertain at the current point in time, such disputes are not expected to exceed existing provisions or otherwise exert a material influence on its financial situation or operating result.

25 Securing of own liabilities

No assets were pledged to secure own liabilities either in the reporting period or in the previous period.

26 Acquisitions

In the reporting period Datacolor acquired the Media Logic Group with headquarter in Reggio Emilia (Italy). The group consists of Media Logic s.n.c. (private company according to Italian Law) and Mediacol s.r.l. Datacolor took over control on July 8, 2014. The private owned Media Logic Group is specialized in the development of customized software solu-tions focused on the industrial paint market.

The table below shows acquired assets and assumed liabilities at fair value on the day of acquisition assessed at fair value and the resulting goodwil. The translation of transaction values denominated in EUR into USD was undertaken using the transaction rate on the day of acquisition.

The goodwill resulting from the Media Logic acquisition amounting to TUSD 11 has been offset with equity. Refer to the consolidated equity table. The contribution to revenue and EBIT stemming from the first consolidation of Media Logic is immaterial.

in TUSD July 8, 2014

Trade receivables 87

Other receivables 106

Property, plant and equipment 20

Intangible assets 1 500

Total assets 1 713

Financial liabilities (net) 76

Other and accrued liabilities 111

Long term provisions 134

Net assets 1 392

Goodwill 11

Purchase price 1 403

Acquired cash and cash equivalents 76

Pending purchase price -261

Cash outflow from acquisition (net) 1 218

41

REPORT OF THE STATUTORY AUDITOR ON THE CONSOLIDATED FINANCIAL STATEMENTS

to the General Meeting of Shareholders of Datacolor AG, Lucerne

As statutory auditor, we have audited the accompanying consolidated financial statements of Datacolor AG, which com-prise the income statement, balance sheet, cash flow statement, statement of changes in equity and notes, as set out on pages 18 to 39 for the year ended September 30, 2014.

Board of Directors’ ResponsibilityThe board of directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Swiss GAAP FER and the requirements of Swiss law. This responsibility includes designing, imple-menting and maintaining an internal control system relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We con-ducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consoli-dated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements for the year ended September 30, 2014 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Swiss GAAP FER and comply with Swiss law.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and indepen-dence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the board of directors.

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

KPMG AG

Toni Wattenhofer Sandro MascarucciLicensed Audit Expert Licensed Audit ExpertAuditor in Charge

Lucerne, November 5, 2014

4342

INCOME STATEMENT

in TCHF 2013 / 14 2012 / 13

Service income 1 172 1 125

Income from investments 500 0

Administrative expenses -1 472 -1 436

Other income / expenses 25 -68

Financial income 337 445

Financial expenses -7 -58

Income taxes -1 -1

Profit for the year 554 7

BALANCE SHEET

in TCHF 30.09.2014 30.09.2013

Assets

Cash and cash equivalents 57 538

Financial assets 0 429

Other receivables

– Group companies 780 1 061

– Related parties 99 88

Prepaid expenses 13 4

Current assets 949 3.9% 2 120 8.4%

Investments in group companies 2 10 100 10 100

Treasury shares 3 4 290 4 292

Loans to group companies 2 8 700 8 700

Non-current assets 23 090 96.1% 23 092 91.6%

Assets 24 039 100.0% 25 212 100.0%

Liabilities and shareholders' equity

Other current liabilities

– Third parties 2 27

– Group companies 593 495

Accrued liabilities 4 666 836

Current liabilities 1 261 5.2% 1 358 5.4%

Other non-current liabilities 4 1 238 1 148

Non-current liabilities 1 238 5.2% 1 148 4.5%

Liabilities 2 499 10.4% 2 506 9.9%

Share capital 3 168 168

Legal reserves 84 84

Capital contribution reserve 3 19 769

Reserve for treasury shares 3 4 290 4 292

Available earnings 16 979 17 393

Shareholders' equity 21 540 89.6% 22 706 90.1%

Liabilities and shareholders' equity 24 039 100.0% 25 212 100.0%

Datacolor AG Datacolor AG

STATEMENT OF CHANGES IN EQUITY

in TCHFShare

capitalLegal

reservesCapital contri-bution reserve

Reserve for treasury

sharesFree

reservesAvailable earnings

Total share-holders’

equity

Balance as of 1.10.12 168 84 2 476 4 651 0 17 027 24 406

Dividends paid -1 707 0 -1 707

Allocation / Reclassification -1 707 1 707 0 0


Changes in treasury shares -359 359 0

Balance as of 30.09.13 168 84 769 4 292 0 17 393 22 706

Balance as of 1.10.13 168 84 769 4 292 0 17 393 22 706

Dividends paid 0 -750 -970 -1 720

Allocation / Reclassification -750 750 0 0


Changes in treasury shares -2 2 0

Balance as of 30.09.14 168 84 19 4 290 0 16 979 21 540

FINANCIAL STATEMENTS OF DATACOLOR AG

4544

NOTES

1 Accounting and valuation principles

The financial statements of Datacolor AG comply with the Swiss Code of Obligations.

Financial assetsCurrent financial assets contain marketable, easily realizable securities held for trading. The fair value of these assets is the market value as of the balance sheet date.

Investments and loansInvestments and loans are valuated at acquisition cost less accumulated amortization

Treasury sharesTreasury shares are valuated at historical acquisition cost.

2 Investments in and loans to Group companies

Loans to Group companies are given on a long-term basis for financing purposes. The significant direct and indirect investments of Datacolor AG in Group companies are disclosed note 28 of this report.

3 Shareholders’ equity

Share capitalThe share capital of Datacolor AG of CHF 168 044 (previous year: CHF 168 044) is fully paid-in and consists of 168 044 registered shares (previous year: 168 044) with a par value of CHF 1 each.

Conditional share capitalAs of September 30, 2014 there is available for conditional share capital of a maximum of CHF 4 580 (previous year: CHF 4 580) with a par value of CHF 1 each. In the year under review, no shares (previous year: 0) were issued out of the conditional share capital due to exercised stock options.

Capital contribution reserve

In fiscal year 2013 / 14 the amount of TCHF 750 (previous year: TCHF 1 707) has been paid out as part of the dividend distribution.

Treasury sharesDatacolor AG holds a total of 12 091 (previous year: 13 036) treasury shares, carried at TCHF 4 290 (previous year: TCHF 4 292). The voting rights for these shares are suspended. 12 091 treasury shares are reserved for the stock option plan of the Datacolor Group.

The share capital entitled to dividend payments amounts to CHF 155 953 (previous year: CHF 155 008).

In the year under review 3 680 options of the stock option plan (previous year: 2 880) were exercised and settled with treasury shares.

Significant shareholdersThe Board of Directors of Datacolor AG is aware of the following individual shareholders and jointly voting shareholders’ groups whose holdings exceed 5% of all voting shares:Dubach family 54,77% (previous year: 52,64%)Keller family 16,72% (previous year: 16,72%)Corisol Holding AG 7,72% (previous year: 7,72%)Shareholders ’Dubach family‘ and ’Keller family‘ form a shareholder group.

Additional informationInformation concerning compensation, loans and advances, as well as participations and options given to current and former members of the Board of Directors and members of the Executive Committee are disclosed in notes 22 to the consolidated financial statements.

4 Liabilities resulting from stock option plan

Information with respect to the stock option plan is disclosed in note 2 to the consolidated financial statements. The long-term portion of the liabilitiy stemming from the stock option plan of TCHF 1 238 (previous year: TCHF 1 148) is disclosed in the non-current liabilities. The accrued liabilities continue to include the short-term portion of the liability of TCHF 489 (previous year: TCHF 499).

5 Pledges and guarantees in favor of third parties

As of September 30, 2014 Datacolor AG has not provided any pledges or guarantees in favor of third parties.

6 Information on risk assessments

The assessment and control of risks within Datacolor Group is performed by applying a standardized, four level risk management approach that includes the risk elements identification, analysis, control and reporting. Further information is stated in note 15 Risk management and internal controls to the consolidated financial statements.

7 vAT taxation group

In the context of the taxation group for the Swiss value added tax Datacolor AG is jointly liable for the group companies Datacolor Logistik AG, Lucernce, Datacolor AG Europe, Dietlikon and Datacolor Holding AG, Lucerne.

2013 / 14 2012 / 13

Par value Carrying amount Par value Carrying amount

TCHF TCHF Number TCHF TCHF Number

Balance as of 1.10. 13 4 292 13 036 14 4 651 14 484

Shares purchased 1 1 201 2 735 2 582 1 432

Shares allotted -2 -1 203 -3 680 -3 -941 -2 880

Balance as of 30.09. 12 4 290 12 091 13 4 292 13 036


TCHF 2013 / 14 2012 / 13

Balance as of 1.10. 769 2 476

Additions 0 0

Disposals -750 -1 707

Balance as of 30.09. 19 769

4746

PROPOSED APPROPRIATION OF AvAILABLE EARNINGS

Proposal of the Board of Directors

Appropriation of available earnings

The Board of Directors proposes that the available earnings of TCHF 16 979 of Datacolor AG are distributed as follows:

Distribution of a dividend on dividend-entitled share capital TCHF 1 715Carry forward to new account TCHF 15 264

The dividend of CHF 11 per dividend-entitled share at par value of CHF 1 corresponds to a total distribution of TCHF 1 715. If this earnings appropriation proposal is accepted, the dividend will be paid free of expense net of 35% Swiss withholding tax on December 19, 2014. The effective dividend distribution is based on the dividend-entitled shares at the record day.

REPORT OF THE STATUTORY AUDITOR ON THE CONSOLIDATED FINANCIAL STATEMENTS

to the General Meeting of Shareholders of Datacolor AG, Lucerne

As statutory auditor, we have audited the accompanying financial statements of Datacolor AG, which comprise the balance sheet, income statement, statement of changes in equity and notes, as set out on pages 42 to 45 for the year ended September 30, 2014.

Board of Directors’ ResponsibilityThe board of directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the Company’s articles of incorporation. This responsibility includes designing, implementing and main-taining an internal control system relevant to the preparation of financial statements that are free from material misstate-ment, whether due to fraud or error. The board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the finan-cial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the ac counting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall pre-sentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements for the year ended September 30, 2014 comply with Swiss law and the Com-pany’s articles of incorporation.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and indepen-dence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the board of directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG AG

Toni Wattenhofer Sandro MascarucciLicensed Audit Expert Licensed Audit ExpertAuditor in Charge

Lucerne, November 5, 2014


ADRESSES

Headquarter Holding

Datacolor AGWaldstaetterstrasse 12CH-6003 Lucernewww.datacolor.com

Datacolor

USA

Datacolor Inc. 5 Princess Road08648 Lawrenceville NJ, USA Tel. +1 609 924 21 89 Fax +1 609 895 74 72 www.datacolor.com

Europe

Datacolor AG EuropeLoorenstrasse 9CH-8305 DietlikonTel. +41 44 835 37 11Fax +41 44 835 38 35www.datacolor.com

Asia

Datacolor Asia Pacific (HK) LimitedFlat 11, 9 / F Wing on Plaza62 Mody RoadTsimshatsui East, KowloonHong KongTel. +852 2 420 82 83Fax +852 2 420 83 20www.datacolor.com

datacolor ag

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