Group of consolidated companies
MAHLE GmbH, Stuttgart (parent company) as well as 14 German and 66 foreign subsidiaries are included in the consolidated financial statements. In addition, four companies were valued at equity. The consolidated companies are shown in the statement of shareholdings filed with the Commercial Register at Stuttgart district court ("Amtsgericht Stuttgart"). The following companies were consolidated for the first time in 2005:

• MAHLE Donghyun Filter Systems (Tianjin) Co., Ltd., Tianjin/China as of January 1
• MAHLE de México S. de R.L. de C.V., Ramos Arizpe Coahuila/Mexico as of January 1
• MAHLE Bearings (Yingkou) Co., Ltd., Yingkou/China as of January 1
• MAHLE Engine Components (Thailand) Co., Ltd., Bangkok/Thailand as of January 1
• MAHLE Powertrain Ltd., Northampton/Great Britain as of January 1
• MAHLE Powertrain, LLC, Novi/USA as of January 1
• MAHLE Componente de Motor SRL, Timisoara/Romania as of February 1
• MAHLE Technologies Holding (China) Co., Ltd., Shanghai/China as of
  March 1
• MAHLE Guangzhou Filter Systems Co., Ltd., Guangzhou/China as of
  March 1
• MAHLE Filter Systems India Ltd., Gurgaon/India as of April 1
• MAHLE Farplas Filtre Sistemleri A.S., Gebze/Turkey as of September 1

The companies consolidated for the first time accounted for EUR 139.6 million of the balance sheet total, and EUR 159.4 million of total sales.

In 2005 two companies were merged into other Group companies and three Group companies were withdrawn from the Group of consolidated companies.

In the year under report, nine companies were not consolidated due to their immateriality for the preparation of the consolidated financial statements (previous year: 12).

Method of consolidation
Consolidation was performed using the book value method. Under this method, the value of the investments on the books of the parent company as of the date of the first consolidation upon acquisition of the holding is offset against the underlying equity of the subsidiaries. Any differences resulting from this process are shown net in the balance sheet. Credit differences are amortized over ten years. Specific valuation allowances of EUR 31 339.9k were also recorded. As of December 31, 2005, this resulted in an asset balance of EUR 133 611.4k, comprising:

Credit differences of EUR 7 million arising from capital consolidation in previous years have been released to the income statement.

Intercompany transactions and receivables and payables were offset against each other. Intercompany profits were eliminated.

Deferred taxes resulting from consolidation measures affecting net income were formed at the Group-wide tax rate of 24%.