Annual Report and Accounts 2001 - PDF document

1 Annual Report and Accounts 2001 abi Broc
Annual Report and Accounts 2001 abi Brochure • Master 1 - 16 12/4/02 1:58 pm Page 2 NABI designs, produces and services buses and coaches anddevelops technology and business processes so as to deliverWe recognize the importance of stable and competitive long-term business relationships with all of our business partners and abi Brochure • Master 1 - 16 12/4/02 1:58 pm Page 3 2001 Financial Highlights20012000 Net income EBITDA Financial statusCash and cash equivalents23Total assets221191ong term debt3229Net debt / Equity0.931.28ShareholdersÕ equity7163 EBITDA margin (%)2001 Financial HighlightsHuman Resources AuditorsÕ ReportAudited Financial Statements6-year Financial SummaryInvestor, Supervisory BoardGlossary of Terms abi Brochure • Master 1 - 16 12/4/02 1:58 pm Page 4 United States in September, we were able toof buses and other passenger-carrying vehicleswith an innovative low-floor small bus;countryÕs largest priv

2 atized operating groups;Is building new,
atized operating groups;Is building new, or significantly enhancing, year-on-year to US$ 344 million, resulting from aaftermarket parts and service revenue to US$Net income was US$ 7.95 million (US$ 2.78increase in earnings per share to on Research and Development to create newthe Group with its own patented technology.to two important factors - rising sales in the US,where the Group is one of the few strong andthe first full year of consolidation of Optare intransit bus market continued - by the year-endamounts to three yearÕs production and is worthThe CompanyÕs unique blend of manufacturingHungary, where skills are high and manufacturingbeing undertaken in a state-of-the-art facility inNABI is a world leader in fiber-reinforcedoperations. In both appearance and technology,carried without a weight penalty, resulting inbuses using mostly steel construction. Now, at aThese vehicles offer such features as easy-accesslow-floor

3 designs built using SCRIMP¨technology, a
designs built using SCRIMP¨technology, a revolutionary fiber-reinforcedfor buses from its originator, TPI CompositesTPI was settled amicably allowing production ofvehicles were on order, including 56 45C-LFWLNG for the city of Phoenix, Arizona, 20 40C- NABI GROUP Annual Report andAccounts 2001 abi Brochure • Master 1 - 16 12/4/02 1:58 pm Page 5 and a further 8 45C-LFW LNG buses for empe, Arizona. Additionally, in January 2002 The delivery during 2001 of UK-built buses to aOptare Solo, is now in service at AEAÕsPuerto Rico. Re-engineering the Solo to meet low-floor design offers the operator significantcompetitive advantages. In particular, it deliversflat floor. The AEA order, which has the advantage ofprivate bus market. Selling into this fullythan in the transit bus sector, where publicthe 30LFN model. We received strong interest levels of customer support and service that In the UK, our subsidiary, the Optare Group -Bri

4 tainÕs third largest transit bus maker w
tainÕs third largest transit bus maker when utilizes innovative design and technology. low-floor products. Despite strong competition,the end of 2001. Work began on a substantialexpansion of the Rotherham facility toyear, enabling our total production of vehicles inbut by the fourth quarter our order-backlog hadstrengthened, with deliveries of some products,the last of the UKÕs major bus operators notUK operator, First Group, took delivery of its15 percent of UK turnover. OptareÕs range ofcoach-built vehicles is based on Mercedes-Benznew entry-level product were unveiled. 5 abi Brochure • Master 1 - 16 12/4/02 1:58 pm Page 6 The delivery of UK-sourced products into the market. Early in 2002 the companyÕs initial Hungarian operator. energies in establishing the UniTec brand, whichoffers customers a Ôone stop shopÕ approach toService Center in Upland, California. Theaftersales operation obtained the ISO9002posv‡r facility i

5 n Hungary that mostproduction management
n Hungary that mostproduction management attention is beingfocused. CompoBusª production is scheduledfieldÕ site was completed on schedule. Before grow Alero sales is well underway, start-up ofthe important new Kaposv‡r facility is onbusinesses in Hungary, the UK and the US.ogether, our executives have a wealth ofexperience and talent, enabling us to be leanerHowever, the inherent lack of liquidity in theBudapest Stock Exchange, where the CompanyÕsshares are listed, has played a critical role in theour strong order-backlog, delivery rates areunproductive issues last year.Continents. We can keep ahead only by theirChief Executive Officer NABI GROUP Annual Report andAccounts 2001 6 abi Brochure • Master 1 - 16 12/4/02 1:58 pm Page 7 und and Chief Executive of Rona & Co. A former President and Chief Executive Officerof IBJ Schroeder Bank and Trust Co.Age 55. Has held the position of Director,industry, he was previously chief

6 engineer ofAge 39. Director, Chairman of
engineer ofAge 39. Director, Chairman of the Audit &Manager at Rona & Co, he was formerly aJohn F. Horstmann,Age 52. Director, Chairman of the RemunerationMorris & Heckscher, where he is Chairman ofthe Reorganization and Commercial FinanceMark Pejacsevich,European Advisor at Robert Fleming Securities,own consultancy business in Hungary. A formerSenior Vice President of Hungaria Hotels Rt.experience in the bus industry.Calendar. These meetings deal primarily withof Shareholders. Written resolutions are passedfinancial matters, while the Remuneration(Back Row) Csaba Zolt‡n, Russell Richardson, Tam‡s Felsen, Mark Pejacsevich,(Front Row) Andy R‡cz, PŽter R—na, John F. Horstmann, abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 8 NABI GROUP Annual Report andAccounts 2001 abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 9 CompoBusª body production40C-LFW, 45C-LFW, composite UNITEC Service Center, sales and distribution 9a

7 posv‡r abi Brochure • Master 1 - 16 12/
posv‡r abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 10 for the private sector, the first of whichfull line of transit buses built by conventionalaposv‡r, allowing us to take advantage of therelatively low-cost, high-skills base in Hungarybuses a year, while continuing to focus on salesbeen widely appreciated outside the country, butthis is changing rapidly. Already major motorindustry players such as Volkswagen/Audi,advantage of a well-educated, highly-skilled andHungary itself is already part of NATO and willshortly join the EU as a full member, underliningthe post-War period. However, even during thatbus producer, supplying vehicles throughoutIndeed, the Technical University of Budapest issteel construction methods. However, NABI is NABI GROUP Annual Report andAccounts 2001 abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 11 using SCRIMP¨ technology. This is a patentedIn these times of environmental pressures on

8 sized bus sector, NABI has added to its
sized bus sector, NABI has added to its standardvehicle line the forty-five foot 45C-LFW model.category, and able to carry 20 percent more40C-LFW and the 45C-LFW - are both easy tomulti-year Transportation Equity Act for the increased substantially from around 3,700 units NABI has not competed previously - theproduct with which to compete. However, inwinning Optare Solo, this low-floor, mid- sizeogether, NABI and Optare engineers created drive, a new power unit and a powerful air-model to American Eagle constitutes an 11 abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 12 delivered buses to all seven of the countryÕsstrength of its wholly low-floor bus models. ItsExcel full-size single decker, Solo small bus andIts design - honored by both a QueenÕs AwardÒMillennium ProductÓ Award - has proved aor wheelchair bound passengers - but it has alow floor, full climate control, air suspension andfor itself, with principal purcha

9 sers beingcompanies and local authority-
sers beingcompanies and local authority-fundedorganizations that run rural, community, dial-a-these products - principally, the Nouvelle, Solerachassis sourced from Mercedes-Benz. However,model, is based upon the Ford Transit chassis.coachbuilder, have earned themselves a useful NABI GROUP Annual Report andAccounts 2001 abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 13 passenger-carrying operation, and secondly,and margin stream for the manufacturer. confirms the companyÕs considerable success insales, again underlining the importance of sellingaftermarket parts across the industry. consolidation of Optare. We plan to furthercomposite technology, low-cost manufacturingBus Rapid Transit, or BRT. This is the utilizationof specialized, high-capacity low-floor buses,rail. NABI finds itself ideally positioned to takehigh capacity, low-floor full-sized buses, butespecially with its super-capacity 45C-LFWoperator, the Los Ang

10 eles MTA. NABI 40LFWbuses are used exclu
eles MTA. NABI 40LFWbuses are used exclusively by the MTA for itshighly popular ÒRapid BusÓ BRT service. Thesetraffic lights. The MTA has also ordered 30 new 45C-LFW Compobusª vehicles tothe possibilities of NABIÕs 45C-LFW 13 abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 14 The introduction of SCRIMP¨, the fiber-aposv‡r Manufacturing Facility, has led to theSCRIMP¨ license and its related design know-technology. strengthen its capabilities through co-operationwith technology-orientated educationalof two new models: the 30LFN and the 60LFW,Completion of the design work on the 45C-LFW45-foot long, low-floor vehicle offers seating forcomposite outer skin. The Alero provides a safeand comfortable ride for passengers coupledengineering staff. New products for the UK andintroduced during 2002 that will provide thenew markets for the Group.NABI GROUP Annual Report andAccounts 2001 14 abi Brochure • Master 1 - 16 12/4/02 1:

11 59 pm Page 15 sound and socially respon
59 pm Page 15 sound and socially responsible manner. Thisand the public. We believe that responsiblecompanyÕs environmental commitment. Naturalpatented closed cycle technology.standard for workplace health and safety. It isprotection measures, the use of resources suchas electricity, natural gas and water were alltheir areas of responsibility. NABI also provides 15 abi Brochure • Master 1 - 16 12/4/02 1:59 pm Page 16 levels output and the expansion in Kaposv‡r. of Andy R‡cz, Chief Executive Officer, RussellRichardson, Chief Operating Officer, RogerFossey, Chief Financial Officer and PeterHorvath, Deputy Chief Financial Officer. Thisgroup works is a good indicator of the potentialNABIÕs Chief Operating Officer, and theManaging Director of Optare, Mr Russelledlake Saint 2001 Award for his Services tothe UK Bus Industry. Mr. Richardson, founder ofindustry. NABI GROUP Annual Report andAccounts 2001Human Resources abi Brochure

12 • Master 1 - 16 12/4/02 1:59 pm Page
• Master 1 - 16 12/4/02 1:59 pm Page 17 The management of NABI Rt. has prepared the accompanying financial statements for the years endedDecember 31, 2001and 2000, and is responsible for their integrity and objectivity. We maintain aIndependent AuditorsÕ Reportincome and comprehensive income, consolidated statements of shareholdersÕ equity, and cash flowsfor the years then ended. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statements based on ourof America. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includesmanagement, as well as evaluating the overall financial statement presentation. We believe that ourIn our opinion, the financial statements referred to above present fairly, in all material r

13 espects, theStatement of DirectorsÕ Resp
espects, theStatement of DirectorsÕ Responsibilities abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 2 NABI GROUP Annual Report andAccounts 2001 18 North American Bus Industries Rt. and its Subsidiaries (all amounts in thousands of US$) 200120001,9882,648and 2 as of December 31, 200075,95547,27564,72776,767repaid expenses and other current assets5,8132,529 2,9141,660 151,397130,879net of accumulated depreciation50,26338,683net of accumulated amortization of 486 as at December 31, 2000-487855 as of December 31, 200018,72819,239Deferred Income Taxes3081,0972001 and 94 as of December 31, 2000365470 Other Non-Current Assets119120 221,180190,97560,01036,10232,01848,0596581,525Current portion of long term debt3,0473,714Accrued liabilities and other current liabilities4,5984,979 6,2824,250 otal Current Liabilities106,61398,629Long-Term Liabilities2001 and 4,506 as of December 31, 200031,67829,4171,458-Obligations under residu

14 al value guarantees3,046- 7,647- otal Lo
al value guarantees3,046- 7,647- otal Long-Term Liabilities43,82929,417net of accumulated accretion of 724 as of December 31, 2001 and 646 as of December 31, 200072150ShareholdersÕ Equity:outstanding as at December 31, 2001 and December 31, 2000, respectively)25,47425,43325,61225,53020,35112,398 Accumulated other comprehensive loss(771)(582) otal ShareholdersÕ Equity70,66662,779 otal Liabilities and ShareholdersÕ Equity221,180190,975 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 3 19North American Bus Industries Rt. and its Subsidiaries For the years ended December 31, 2001 and 2000(all amounts in thousands of US$, except earnings per share which is in US$) 20012000344,034247,602 Deferred Revenue Recognized849-otal Revenue344,883247,602 Cost of SalesGross Profit44,83233,233(29,737)(21,948) Amortization of Goodwill(874)(777)14,22110,508(4,983)(5,443)(764)(793)(104)(94)45331 947(949)Income before Income Taxes and Cumula

15 tive Effect of Change in Accounting Poli
tive Effect of Change in Accounting Policy9,3623,560 Income Tax Expense(1,410)(781)Net Income Before Cumulative Effect of Change in Accounting Policy7,9522,779 Cumulative Effect of Change in Accounting Policy7,9521,744 Foreign currency translation loss(189)(582) 7,7631,162Basic Earnings Per Share Before Cumulative Effect of Change in Accounting Policy1.730.62 Cumulative Effect of Change in Accounting Policy Basic Earnings Per Share 1.730.39Diluted Earnings Per Share Before Cumulative Effect of Change in Accounting Policy1.670.61 Cumulative Effect of Change in Accounting Policy Diluted Earnings Per Share1.670.38 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 4 NABI GROUP Annual Report andAccounts 2001 AccumulatedTotal Number of Share Additional Retained OtherShareholdersÕSharesCapitalPaid in CapitalEarningsComprehensive Equity 4,470,000 24,951 18,859 10,655 - 54,465 Issuance of warrants- -5,300 - - 5,300 Stock options e

16 xercised146,600 482 1,371 - - 1,853 Net
xercised146,600 482 1,371 - - 1,853 Net income- - - 1,744 - 1,744 Foreign currency translation adjustment- - - - (582)(582) December 31, 20004,616,600 25,43325,53012,398 (582)62,779 Stock options exercised8,000 28 41 - - 69 Purchase of treasury shares65,162 (220)(659)- - (879)Sale of treasury shares(65,162) 233 700 - - 933 Net income- - - 7,952 - 7,952 Foreign currency translation adjustment- - - - (189)(189) December 31, 20014,624,600 25,474 25,612 20,351 (771)70,666 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 5 21North American Bus Industries Rt. and its Subsidiaries For the years ended December 31, 2001 and 2000(all amounts in thousands of US$, except earnings per share which is in US$) 200120007,9521,744Adjustments to Reconcile Net Income to Net CashProvided by (used in) Operating Activities:5,7824,425848308(849)-2,0321,395952855(78)(78)10494764793997(1,352)174299Foreign currency translation loss(441)-(28,680)

17 (15,976)12,040(33,689)(3,284)(1,097)23,9
(15,976)12,040(33,689)(3,284)(1,097)23,9088,569(381)1,169Increase in obligations under residual value guarantees3,046-8,496- Other (liabilities) assets- Net cash provided by (used in) operating activities33,382(32,192) (18,277)(6,093) (18,277)(25,137)Cash Flows from Financing Activities691,85354-(867)1,525roceeds from issuance of notes payable39,37588,720rincipal payments on notes payable (55,805)(60,410)6,55229,510(3,767)(6,415)(1,565)(1,028) ayment of debt issuance costs- Net cash (used in) provided by financing activities(15,954)53,192Effect of Foreign Exchange Rate Changes on Cash189582(660)(3,555) Cash and Cash Equivalents, Beginning of Year2,6486,203 Cash and Cash Equivalents, End of Year1,9882,648 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 6 North American Bus Industries Rt. and its Subsidiaries For the years ended December 31, 2001 and 2000(all amounts in thousands of US$, except earnings per share which is

18 in US$) Supplemental Disclosure of Cash
in US$) Supplemental Disclosure of Cash FlowInformation:20012000Cash paid during the year for: interest, net of interest capitalized4,9113,8964,1314,050-7,-5, Liabilities assumed- 53,166See notes to consolidated financial statements. NABI GROUP Annual Report andAccounts 2001 22 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 7 First Hungary Fund, a closed equity fund registered in the Channel Islands.Optare Holdings Ltd. of Leeds, United Kingdom (ÒOptareÓ).As of December 31, 2001, 54% (December 31, 2000: 54%) of NABI Rt.Õsshare capital was owned by the First Hungary Fund Ltd.; the remainder ofconsisted of the following:Also as a result of the nature of operations, typically a significant portion ofdelivery of buses within the preceding months in the USA. As of December31, 2001 and 2000, 43% and 25%, respectively, of total accounts receivablewere due from one customer. Most of these accounts receivable werecollected sub

19 sequent to the year-end. 20012000 North
sequent to the year-end. 20012000 North American Bus Industries, Inc.100%100% Optare Holdings Ltd.100%100% 20012000Hungary21,33517,317United States of America17,75210,151 United Kingdom11,17611,215 50,26338,683 20012000Bus sales in the USA 264,859 171,004Bus replacement part sales in the UK 28,705 23,654Bus sales in the UK40,943 45,136Bus replacement part sales in the uk8,583 7,328Other sales944 480 Deferred revenue recognized849- 344,883247,602 20012000LA CMTA(Los Angeles, CA) 30%31%OCTA(Orange County, CA)17%4%City of San Antonio (San Antonio, TX)11%-Metropolitan Dade County (Miami, FL)6%1%City of Phoenix (Phoenix, AZ)5%5%Riverside Transit Agency (Riverside, CA)5%-RTD(Denver, CO)4%17%Mass Transit Authority (Baltimore, MD)4%7% Other5%14% 87%79% 13%21% 100%100% 23 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 8 2. Basis of Presentation and Summary ofSignificant Accounting PoliciesBasis of PresentationStates of America

20 (ÒUS GAAPÓ). Currency Translationand us
(ÒUS GAAPÓ). Currency Translationand uses the United States Dollar (ÒUS$Ó) as its functional currency toliabilities have been remeasured using the year-end exchange rates. TheOptare maintains its books in British Pounds, its functional currency. Theassets and liabilities of Optare are translated into US$ at year-end exchangeaverage exchange rates for the year. Foreign currency translation gains orrecorded as a separate component of shareholderÕs equity in the- Inventories are valued at the lower of cost (first-in, first-out- Property and equipment, except Buildings20 to 50 years Building and leasehold improvements10 years Plant and equipment4 to 11 years Office furniture and equipment5 to 11 years ehicles4 to 7 years Computer equipment5 years Demonstration and rental vehicles4 to 6 years Buses leased to customers10 yearsexpected useful lives of ten years (Note 6). The depreciation is included ininterest expense, respectivel

21 y.Estimated Warranties- Provisions are m
y.Estimated Warranties- Provisions are made for the estimated warrantycosts on buses sold. The warranty period for buses sold is specifically statedin the contract with the individual customer. Warranty terms and periodsprovisions provided to the Group by the componentÕs manufacturer.During 2001 and 2000, the Group incurred warranty costs of 3,709 and3,378 respectively. goodwill impairment, if any, is measured based on projected discounted NABI GROUP Annual Report andAccounts 2001Notes to the Consolidated Financial Statements December 31, 2001 and 2000 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 9 If impairment is indicated, any impairment losses are reported in the periodDebt Issuance Costs - interest expense on a straight-line basis over the lives of the related debtevenue Recognition -on a future date. Revenue on such sales is deferred and the differencedate on which the option can be exercised by the customer.

22 The deferredrevenue and the GroupÕs obl
The deferredrevenue and the GroupÕs obligation under the buy-back option are reportedcompleted and accepted for shipment by the customer. With effect fromperiod prior to January 1, 2000 of the change in accounting policy.Forward Exchange Contracts - and development costs as they occur. R&D expenses amounted to 2,297 forIncome Taxes -enacted as of each balance sheet date. The effects of future changes in taxin accordance with Accounting Principles Board Opinion No. (ÒAPBÓ) 25,The Group adopted the disclosure-only provisions of Statement of FinancialAccounting Standards No. ("SFAS") 123, "Accounting for Stock-BasedThe Group accounts for variable stock option plans in terms of SFAS 123.ecent Accounting Pronouncements -In June 2001, the FASB issuedSFAS 142, ÒGoodwill and Other Intangible AssetsÓ. SFAS 142 requires thatamortized, but are instead tested for impairment at least annually.of an intangible asset with an indefinite l

23 ife. As of January 1, 2002, thethe supp
ife. As of January 1, 2002, thethe supply of buses and bus replacement parts. Analyses of sales bycountry, major customers and the location of the Group's property andand notes payable denominated in British Pounds Sterling (ÒGBPÓ) issued tothe former Optare shareholders (the ÒOptare NotesÓ) (Note 8). amortization of goodwill based on SFAS 142. The consolidated statement ofOriginal Goodwill20,093Acquisition expenses(250) Deferred tax assets and liabilities684 Adjusted Goodwill20,527 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 10 4. Foreign Exchange Contractdenominated in U.S. dollars and British Pounds and various European2001 2,925 (2000: 5,935) denominated in US Dollars and British Poundsto market. 20012000aw materials29,29036,005ork-in-process23,56413,711 Finished goods11,87327,051 64,72776,7676. Property and Equipment 20012000eal estate18,87719,639Factory furniture, equipment and vehicles21,60816,891Office fur

24 niture and equipment10,2199,028Equipment
niture and equipment10,2199,028Equipment under capital leases651651Buses under lease (note 9.)8,308-Demonstration vehicles1,2411,125ental vehicles289966 Construction in progress5,2071,32066,40049,620 Less: Accumulated depreciation(16,137)(10,937) 50,26338,683In 2001, the Group delivered buses to a US customer, which are a subjectto a conditional buy-back arrangement and have been treated as operatingleases (Note 9). At December 31, 2001 the gross amount of equipmentand related accumulated amortization recorded in property, plant, andBuses under lease8,308 Less: Accumulated depreciation(480) ended December 31, 2001 and 2000, respectively. The Group had an agreement with a producer of composite structuresbased in the United States of America under which it had made paymentsmanufacturing. In August 2001, following a revision of the agreement,sales of buses manufactured using the composite technology. denominated in various cu

25 rrencies, with various banks. Informati
rrencies, with various banks. InformationDecember 31, 2001December 31, 2000Amount BorrowingsAmount Borrowings of LineOutstandingof LineOutstandingNABI Inc.44,00028,50047,60039,100NABI Rt.7,00050114,4006,580 Optare18,6363,01714,6362,379 69,63632,01876,63648,059December 2001, a facility of 15,000, which matured in January 2002, hasbeen renewed for a further year. The Lines require payment of interest periodically, ranging from one tothree months. Interest on borrowings is based on London Inter-Bank Offerate (LIBOR) plus margin. As of December 31, 2001 and 2000 NABI Rt.The Lines require the payment of interest periodically, ranging from one tooption, based on either LIBOR, Base Rate plus margin. As of December 31,4,182, respectively, revolving facility to cover OptareÕs overdrafts and arespectively, outstanding under the overdraft facility leaving 2,779 and1,803, respectively, available for future borrowings. Interest is payabl

26 e 26 NABI GROUP Annual Report andAccount
e 26 NABI GROUP Annual Report andAccounts 2001Notes to the Consolidated Financial Statements December 31, 2001 and 2000 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 11 December 31 of each year, audited financial statements prepared in Long-term DebtLong-term debt (ÒDebtÓ) consists of the following at December 31, 2001 and 2000: 20012000December 31, 2000 - annual principal payments of 6,667 commencing January 31, 2004 through January 31, 2006 and interest at 9.3% (an effective rate of 14.6%) per annum payable semi-annually16,25815,494through January 15, 2006 with interest at LIBOR plus margin (an effective rate of 3.2% as of 6,0006,000Optare Notes denominated in GBP due December 7, 2002, interest at the Barclays Rate, as defined, plus margin (an effective rate of 4.5% at December 31, 2001), payable semi annually1,8584,524through November 5, 2007 with interest at Base Rate, as defined, plus margin (an effective rate

27 of 8.25% 2,8263,485 Development loan -
of 8.25% 2,8263,485 Development loan - repayable in July 31, 2003, interest free118- 6,4343,000 1,231628 34,72533,131 (3,047)(3,714) 31,67829,417and Metropolitan Property and Casualty Insurance Company (collectivelyÒMetropolitanÓ) (the ÒMetropolitan AgreementÓ) through which NABI Inc.issued to Metropolitan 20,000 in senior notes, of which 13,045 were used330,258 shares of its common stock for an exercise price of HUF 5,4462000, determined through the use of the Black Scholes Option Pricingexchange. The Group has the option to purchase the Shares prior to suchshare price as defined in the warrant agreement (Share Price). If the Groupexercise, the Group is required to pay Metropolitan an amount equal to theShares multiplied by the lower of the Share Price on the exercise date or abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 12 90 days after the exercise date. Additionally, NABI Rt. has the option toShare Price equal

28 s or exceeds 150% of the exercise price
s or exceeds 150% of the exercise price for 20Notes are guaranteed through the issuance by a bank of a guarantee facilityNABI Inc. is required to redeem the Optare Notes at the option of the2,505 of the Optare Notes (2,934 in 2000). NABI Inc. recorded a foreignNotes Payable to a Hungarian and a UK Bank floor bus (60-LFW) under the Central Technological Development Program.The Group is a lessee under certain capital leases for property, plant andrespectively. 20023,04720039,47720049,14220058,98920067,489 Thereafter323 9. Obligations under Residual Value Guaranteesand Deferred Revenue95-1, Revenue Recognition on Sales with a Guaranteed Minimum Resale10. Fair Value of Financial Instruments totaled 22,738 and 17,741 as of December 31, 2001 and 2000, respectively, 20012000remeasurement effects487(674) Other460(275) 947(949)12. Income Taxes 20012000Current taxes1,8174,865 Deferred taxes(407)(4,084) 1,410781 28 NABI GROUP Annual Re

29 port andAccounts 2001Notes to the Consol
port andAccounts 2001Notes to the Consolidated Financial Statements December 31, 2001 and 2000 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 13 29 NABI GROUP Annual Report andAccounts 2001 200120001,685641Ð Tax holiday(827)(1,091)Ð Research and development(381)(37) 307(21) 35329162(26) 2111,024 1,410781 20012000735-352540(215)(210)1,568928174161 300241 2,9141,660roperty, plant equipmentForeign interest expense2762 281(176) 3081,097 roperty, plant equipment(1,458)- (1,458)-required by law. NABI Rt. had no unfunded employee benefits at DecemberNABI Inc. sponsors a 401(k) Plan (the ÒNABI Inc. PlanÓ), effective July 1,Optare PlanÓ). Optare matches 2 per cent of employee contributions andaverage market price calculated over the 60 trading days preceding the date2001 and 2000 were $2.05 and $9.06, respectively. The fair values wereestimated using the Black-Scholes Option Pricing Model based on theaccordingly, no compensati

30 on cost has been recognized for its stoc
on cost has been recognized for its stock optionsin the financial statements. Had the Group determined compensation costbased on the fair value at the grant date for its stock options under SFAS abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 14 ro forma net income reflects only options granted in the current year.under SFAS No. 123 is not reflected in the pro forma net income amounts 20012000Net incomeAs reported7,9521,744-forma7,7161,401Basic earnings per shareAs reported1.730.39 -forma1.680.31OptionsWeighted Average OutstandingPrice in US (*)342,40012.5254,00021.87 (146,600)13.30 (6,000)9.50243,80013.24 115,16215.30 (8,000)8.97 (65,000)19.58 As at December 31, 2001285,96213.81US using the applicable year-end US / HUF exchange rate.Exercise PriceOptionsAverage in US (*)Remaining Life14.3465,1620.1913.45115,8000.5610.5743,0002.0514.6612,0002.58 16.5550,0004.24 10.57-16.55285,9621.92US using the applicable year-end US

31 /HUF exchange rate.these matters will no
/HUF exchange rate.these matters will not have a material adverse effect on the GroupÕs NABI GROUP Annual Report andAccounts 2001Notes to the Consolidated Financial Statements December 31, 2001 and 2000 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 15 199619971998199920002001 ehicles sold (units)3023304505019601,319ehicles sales7590121133216307Aftermarket parts & services sales3814173138Net sales7899134151248345Cost of sales6885115130214300Gross Profit101419213345EBITDA55981523Operating Income33661114Income before Income Taxes446539Net income334428CAPEX24710618* Cash and cash equivalents536632Current assets28466262131151Current liabilities1813293399107orking capital113333283244otal assets41608188191221Long-term debt60002932Net debt72988065Shareholders equity164651546371 Gross margin (%)12.9313.9814.3314.1413.4213.00EBITDA margin (%)5.965.236.795.536.096.57Operating margin (%)4.123.194.723.964.244.12Current ratio1.63.6

32 2.11.91.31.4Net debt / equity ratio0.460
2.11.91.31.4Net debt / equity ratio0.460.050.170.151.280.93SG&A / Sales (%)8.8110.799.6210.188.868.62eturn on shareholders equity (%)19.637.078.626.682.7811.25 2,765,3004,470,0004,470,0004,470,0004,616,6004,624,600Book value per share (US$)5.8010.3911.3712.1813.6015.28Earnings per share (US$)1.150.940.980.810.391.73Share price (US$)High-29.0125.221.4825.5716.07Low-20.464.7711.714.9510.29Close-24.5212.3320.9916.2913.19P/E ratioHigh-30.925.726.565.69.3Low-21.84.914.438.35.9Close-26.112.625.941.87.6P/BV ratioHigh-2.82.21.81.91.1Low-2.00.41.01.10.7 Close-2.41.11.71.20.9 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 16 1. Changes in Investments, Presentation of Entities 2. Sales Revenuerevenues to US$ 38.2 million in 2001 from US$ 31.5 million in 2000. Totalyear where, because of a buy-back provision contained within the salepercent in 2000 to 13.00 percent in the current year.4. Operating income and EBITDArelating to (i)

33 a legal fee of US$ 2.2 million and (ii)
a legal fee of US$ 2.2 million and (ii) a write-off of US$ 0.85compared with 8.86 percent in 2000.improvement. EBITDA margin was 6.57 percent for 2001 and 6.09 percent5. Interest expense (less income)year, resulted in a net decrease in borrowing costs of 3.4 percent.6.Profit before and after taxgiven in 2000. Consequently, net income at US$ 7.95 million was 1867. Receivables10. Property, Plant and Equipmentroperty, plant and equipment increased from US$ 38.7 million to US$ 50.3new manufacturing site at Kaposv‡r, Hungary, initially for the production ofCompoBusª products and other fiber-reinforced composite components. NABI GROUP Annual Report andAccounts 2001 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 17 balance over its remaining period of expected benefit can be recovered12. Short Term LoansShort term borrowing decreased from US$ 48.1 million at the end of 200013. Accounts Payable14. Warrantiesarranty provision

34 s increased primarily due to the increas
s increased primarily due to the increased number of15. Long Term Loansof US$ 3.4 million in respect of the first stage of investment at Kaposv‡r. 16. Obligations under Residual Value Guaranteesin 2001 (2000: nil).17. Deferred RevenueGroup issued US$ 20 million of senior notes together with warrants foraccounts in GBP, a foreign currency translation adjustment appears inequity (i) the authorized and issued number of shares increased by 8000The following table shows the year-end headcount by year and country: 20002001HU647734US696638 UK405504 otal17481876 HUHUF 2.8 million USUS$ 33.6 thousand UKGBP 18.5 thousand abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 18 34 NABI GROUP Annual Report andAccounts 2001Investor, Supervisory Boardterms. NABI shares lost 19% during the year and the companyÕs marketof trading volume. Trading activity became highly concentrated on the fivelargest issues that accounted for approximately 9

35 0% of total turnover. Thebought and sold
0% of total turnover. Thebought and sold 65,162 shares. In the latter transaction seven additionalinto dematerialized form during the previous year. Alongside the majority owner, the First Hungary Fund (54.06%), theshares in excess of 5% of the total number of outstanding shares. NABIÕsDecember 31, 2000December 31, 2001 Shares(Ô000) %Shares(Ô000)73.523,39471.053,286Domestic13.5162413.65631Foreign60.012,77057.402,655Depositaries26.191,20928.701,326 Employees0.29130.2512 otal100.004,616100.004,624 20012000 Highest price (US$)16.0725.57 Lowest price (US$)10.2914.95 rice as of December 31, 200113.1916.29 Market capitalization (US$ million)6175 ield (%)(19.0)(22.4) BUX yield (%)(8.0)(20.4) Number of shares traded1,374,3233,650,821 Number of shares outstanding4,624,6004,616,600 ree float2,124,6002,116,600 ADR DepositaryNABI ADRThe Bank of New YorkRatio: 1 ADR = 1 Ordinary Share101 Barclay Street, 22 WestExchange: OTCNew York, NY1

36 0286Symbol: NABHYUSACUSIP: 656761 10 3 a
0286Symbol: NABHYUSACUSIP: 656761 10 3 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 19 Communications System of the BSE (www.bse.hu). Direct mailing of newsNABIÕs Supervisory Board meets regularly to oversee the CompanyÕs NamePositionBeginning of mandateRe-election due by Charles A. HuebnerChairman1997.03.312003.05.31 Bl‡ga L‡szl—Member1997.03.312003.05.31 M‡ty‡s L‡szl—Member2000.04.272003.05.31 Sz—ke Zolt‡nMember (Employee representative)2000.04.272003.05.31 enyeres LajosMember (Employee representative)2000.04.272003.05.31 Company Facts Date of the effective Articles of AssociationSeptember 17, 2001 Place of the latest court registrationBudapest Date of the latest court registrationFebruary 19, 2002 Number of the latest court registration01-10-043464/44 Share-capital of the Company at the closing of the year4 624 600 000 Ft Length of the CompanyÕs existenceSince 1992 Business year of the CompanyFrom January 1 to Dec

37 ember 31 Carriers of Company publication
ember 31 Carriers of Company publicationsMagyar T—kepiacActivities of the Company (based on TEçOR)34.10 Manufacture of road vehicles50.10 Trade of vehicles50.30 Trade of vehicle parts 71.21 Rental of land vehiclesDuring 2001, the CompanyÕs financial and environmental statements and abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 20 36 NABI GROUP Annual Report andAccounts 2001Glossary of Terms40C-LFW45C-LFWAlternative Fuel Vehiclecalled a bellow. This allows the vehicle to bend when in operation for sharp turns and curves and yet have a continuousinterior.NABIÕs fiber-reinforced composite material based integral of transit buses that are significantly lighter thanA high-capacity bus having two levels of seating, one over the other, connected by a stairway. Total bus height is usually ExcelLow-floor Vehiclestep-on boarding from the ground.MuliplexA system of electrical wiring, pioneered by NABI in the USA and Optare in th

38 e UK, using one Ôring mainÕ which reduce
e UK, using one Ôring mainÕ which reducesSeemans Composite Resin Infusion Molding Process, used for the manufacturing of composite bus shells. NABI holds theexclusive right to the bus industry application of this patented technology.Small UK single-deck bus also known as NABI 30LFN in the US and holder of QueenÕs Award for Innovation andMillenium Products Award.A bus normally with a rear-mounted engine, low-back seating and without luggage compartments or restroom facilities abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 21 UNITEC Parts &Servicel: +44-113-264-5182Fax: +44-113-260-6635el: +36-1-401-7212el: +36-1-401-7399eleti Ipari Parkaposv‡r, 7400el: +36-82-705-205 Anniston, AL 36207el: +1-256-831-4296el: +1-740-369-105620350 Ventura Blvd., Suite 205el: +1-818-610-0330Denby Wayel: +44-1709-535100 abi Brochure • Master 17 - 37 12/4/02 1:53 pm Page 22 el: +36-1-401-7212 abi Brochure • Master 1 - 16 12/4/02