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					                                                                                              Corporation/Pro Forma/Management Report




Continental Corporation Pro Forma
(Old Structure)
q Sales up 7.2%
q Sales up 5.5% before consolidation and exchange rate changes
q Adjusted EBIT up 12.4%



As a result of the acquisition of Siemens VDO, the organ-    Before changes in the scope of consolidation and spe-
izational structure of the Continental Corporation was       cial effects, EBIT rose by €205.3 million or 12.4% to
changed. The former Automotive Systems division was          €1,867.4 million (2006: €1,662.1 million). The adjusted
dissolved and integrated into the three new divisions        return on sales amounted to 12.3% (2006: 11.3%).
Chassis & Safety, Powertrain and Interior together with
the activities of Siemens VDO. Siemens VDO was con-          The ROCE was 20.3% (2006: 18.7%). Before changes in
solidated for the first time on December 1, 2007. For this   the scope of consolidation, all divisions contributed to
reason, the Earnings, Financial and Net Assets Position      absolute value creation, i.e., a positive Continental Value
section is preceded by a pro forma section that presents     Contribution (CVC), in 2007.
the Continental Corporation and the previous Automotive
Systems division in the “old” structure without Siemens      Special effects in 2007
VDO, comparable with the previous year.                      Special effects in 2007 resulted in a loss of €58.5 million
                                                             for the Corporation. For comments on individual special
Sales up 7.2%;                                               effects, please refer to page 68 of the Management
Sales up 5.5% before consolidation and exchange              Report.
rate changes
Consolidated sales in 2007 rose by 7.2% compared with        Special effects in 2006
the same period of the previous year to €15,960.1 million    Special effects in 2006 resulted in a loss of €75.2 million
(2006: €14,887.0 million). The automotive electronics        for the Corporation. For comments on individual special
business acquired from Motorola contributed €1,090.7         effects, please refer to page 69 of the Management
million to sales. Before changes in the scope of consoli-    Report.
dation and exchange rate effects, the increase was
5.5%. All divisions were able to outperform 2006: Auto-      Procurement
motive Systems by 3.5%, Passenger and Light Truck            Raw material prices on the international commodities
Tires by 6.9%, Commercial Vehicle Tires by 6.9%, and         markets rose in 2007, again driven by strong demand
ContiTech by 7.1%.                                           and speculation. The total procurement volume for the
                                                             Continental Corporation rose by 4.1% to €10.1 billion
EBITDA up 12.2%                                              (2006: €9.7 billion).
Consolidated EBITDA improved compared to the previ-
ous year by €281.5 million, or 12.2%, to €2,583.0 million    Research and development
(2006: €2,301.5 million). EBITDA amounted to 16.2% of        Research and development expenses rose by €69.3
sales (2006: 15.5%).                                         million or 10.2% year-on-year to reach €746.3 million
                                                             (2006: €677.0 million), or 4.7% of sales (2006: 4.5%).
Earnings up 14.9%;
Adjusted EBIT up 12.4%                                       The automotive electronics business acquired from
Consolidated EBIT improved compared to the previous          Motorola incurred research and development expenses
year by €237.9 million, or 14.9%, to €1,839.8 million        in 2007 of €108.3 million.
(2006: €1,601.9 million), achieving a return on sales of
11.5% (2006: 10.8%) and a ROCE of 20.3% (2006:               Depreciation and amortization
18.7%). The automotive electronics business acquired         Total depreciation and amortization for the Corporation
from Motorola contributed €3.1 million to EBIT, including    rose compared to fiscal year 2006 by €43.6 million to
expenses for integration and restructuring measures.         €743.2 million (2006: €699.6 million) or 4.7% of sales




                                                                                                                                        59
     Management Report/Pro Forma/Corporation




                       (2006: 4.7%). In 2007 impairment losses of €26.2 million     Capital expenditure
                       were recognized (2006: €38.2 million).                       Additions to property, plant, and equipment and soft-
                                                                                    ware in the Corporation amounted to €854.4 million, up
                       Operating assets                                             €49.4 million on the previous year (€805.0 million). Capi-
                       Consolidated operating assets increased by €481.0            tal expenditure amounted to 5.4% (2006: 5.4%) of sales.
                       million to €9,058.6 million compared with year-end 2006
                       (€8,577.6 million). This rise resulted primarily from the    Capital expenditure in 2007 resulting from the automo-
                       acquisition of the Matador Group, which resulted in          tive electronics business acquired from Motorola
                       additions to operating assets amounting to €246.5 mil-       amounted to €77.8 million (2006: €11.9 million).
                       lion. Other changes in the scope of consolidation such
                       as the purchase of the Thermopol Group and AP Italia         Employees
                       collectively increased operating assets overall. Total       The workforce of the Continental Corporation increased
                       additions amounted to €136.7 million. These were more        to 91,135, up 5,911 or 6.9% compared to 2006
                       than offset by exchange rate effects of €218.9 million.      (85,224). This was due primarily to the first consolidation
                                                                                    of the Thermopol Group (+594), AP Italia (+510) and the
                       Non-current assets rose by a total of €227.7 million to      Matador Group (+2,531). Increased order volumes in all
                       €5,943.0 million (2006: €5,715.3 million). Of this amount,   divisions led to an overall rise in the workforce.
                       property, plant, and equipment accounted for an addi-
                       tion of €166.6 million and other intangible assets ac-
                       counted for an addition of €32.0 million, both of them
                       mainly due to the purchase of the Matador Group and
                       AP Italia. Conversely, exchange rate effects reduced
                       property, plant, and equipment and intangible assets by
                       €68.3 million. Capital expenditure on property, plant, and
                       equipment and software exceeded depreciation and
                       amortization, resulting in an increase of €111.2 million.
                       Goodwill additions from the acquisition of AP Italia and
                       the Thermopol Group were almost entirely offset by
                       negative exchange rate effects.

                       Working capital increased by €193.1 million to €2,692.9
                       million, of which €91.6 million relates to the changes in
                       the scope of consolidation described above. This was
                       offset to a certain extent by exchange rate effects
                       amounting to €80.9 million.




60
                                                                                             Corporation/Pro Forma/Management Report




Continental Corporation in € millions                                     2007       2006             Change in %
Sales                                                                  15,960.1   14,887.0                    7.2
EBITDA                                                                  2,583.0    2,301.5                   12.2
in % of sales                                                              16.2       15.5                     —
EBIT                                                                    1,839.8    1,601.9                   14.9
in % of sales                                                              11.5       10.8                     —
Research and development expenses                                        746.3      677.0                    10.2
                                1
Depreciation and amortization                                            743.2      699.6                     6.2
Operating assets                                                        9,058.6    8,577.6                    5.6
EBIT in % of operating assets                                              20.3       18.7                     —
                      2
Capital expenditure                                                      854.4      805.0                     6.1
                                              3
Number of employees at the end of the year                              91,135     85,224                     6.9

                 4
Adjusted sales                                                         15,227.9   14,737.6                    3.3
                5
Adjusted EBIT                                                           1,867.4    1,662.1                   12.4
Adjusted EBIT in % of sales                                                12.3       11.3                     —
1
    Excluding write-downs of investments
2
    Capital expenditure on property, plant, equipment and software
3
    Excluding trainees
4
    Before changes in the scope of consolidation
5
    Before changes in the scope of consolidation and special effects




                                                                                                                                       61
     Management Report/Pro Forma/Corporation




                                                                                                   1
                       Sales in € millions                  2007       2006    Adjusted sales in € millions                        2007          2006
                       Automotive Systems                 6,636.7    5,994.4   Automotive Systems                              6,033.2        5,994.4
                       Passenger and Light Truck Tires    4,975.6    4,693.6   Passenger and Light Truck Tires                 4,912.1        4,693.6
                       Commercial Vehicle Tires           1,452.4    1,468.3   Commercial Vehicle Tires                        1,445.9        1,390.0
                       ContiTech                          3,063.9    2,868.7   ContiTech                                       2,998.3        2,797.6
                       Other/consolidation                 -168.5     -138.0   Other/consolidation                                -161.6        -138.0
                       Continental Corporation           15,960.1   14,887.0   Continental Corporation                       15,227.9        14,737.6
                                                                               1
                                                                                   Before changes in the scope of consolidation



                                                                                                  2
                       EBIT in € millions                   2007       2006    Adjusted EBIT in € millions                         2007          2006
                       Automotive Systems                  668.3      532.2    Automotive Systems                                  689.9         630.5
                       Passenger and Light Truck Tires     738.7      650.9    Passenger and Light Truck Tires                     763.8         655.2
                       Commercial Vehicle Tires            124.1      136.2    Commercial Vehicle Tires                            108.4          97.3
                       ContiTech                           362.8      318.6    ContiTech                                           359.4         315.1
                       Other/consolidation                  -54.1      -36.0   Other/consolidation                                 -54.1         -36.0
                       Continental Corporation            1,839.8    1,601.9   Continental Corporation                         1,867.4        1,662.1
                                                                               2
                                                                                   Before changes in the scope of consolidation and special effects




                       ROS in %                             2007       2006    Adjusted ROS in %                                   2007          2006
                       Automotive Systems                    10.1        8.9   Automotive Systems                                   11.4          10.5
                       Passenger and Light Truck Tires       14.8       13.9   Passenger and Light Truck Tires                      15.5          14.0
                       Commercial Vehicle Tires               8.5        9.3   Commercial Vehicle Tires                              7.5              7.0
                       ContiTech                             11.8       11.1   ContiTech                                            12.0          11.3
                       Other/consolidation                     —          —    Other/consolidation                                    —               —
                       Continental Corporation               11.5       10.8   Continental Corporation                              12.3          11.3




                       Operating assets in € millions       2007       2006
                       Automotive Systems                 4,092.8    3,863.0
                       Passenger and Light Truck Tires    2,753.8    2,615.7
                       Commercial Vehicle Tires            893.1      844.1
                       ContiTech                          1,284.5    1,231.9
                       Other/consolidation                   34.4       22.9
                       Continental Corporation            9,058.6    8,577.6



                       ROCE in %                            2007       2006
                       Automotive Systems                    16.3       13.8
                       Passenger and Light Truck Tires       26.8       24.9
                       Commercial Vehicle Tires              13.9       16.1
                       ContiTech                             28.2       25.9
                       Other/consolidation                     —          —
                       Continental Corporation               20.3       18.7




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