Group of consolidated companies
MAHLE GmbH, Stuttgart, Germany, (parent company) as well as 17 German and 65 foreign subsidiaries are included in the consolidated financial statements. In addition, three companies were valued at equity. The consolidated companies are shown in the statement of shareholdings. The following companies were consolidated for the first time in 2006:

• MAHLE Trading Japan Co., Ltd., Okegawa, Japan, as of January 1
• MAHLE GmbH & Co. Grundstücksvermietung OHG, Düsseldorf, Germany, as of June 30
• MAHLE NFV GmbH, Hamburg, Germany, as of January 1
• MAHLE AKO GmbH, Flintbek, Germany, as of June 1
• MAHLE Trading (Shanghai) Co., Ltd., Shanghai, China, as of January 1

The companies consolidated for the first time accounted for EUR 5 million of the balance sheet total and EUR 28.5 million of total sales.

In 2006, two companies were merged into other Group companies and one Group company was liquidated.

In the year under report, 9 companies were not consolidated because of their immateriality for the preparation of the consolidated financial statements (previous year: 9).

Exemption regulations for german companies
The following subsidiaries make use of the exemption provision of Sec. 264, para. 3 HGB concerning the publication of their financial statements:

MAHLE International GmbH, Stuttgart; MAHLE Filtersysteme GmbH, Stuttgart; KLF GmbH, Stuttgart; MWP MAHLE-J.Wizemann Beteiligungen GmbH, Stuttgart; MAHLE Ventiltrieb GmbH, Stuttgart; MAHLE Aftermarket GmbH, Stuttgart; MAHLE Industriebeteiligungen GmbH, Stuttgart; MAHLE Versicherungsvermittlung GmbH, Stuttgart; MAHLE NFV GmbH, Hamburg.

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. Impairment losses of EUR 22,523k were also recorded. As of December 31, 2006, this resulted in an asset balance of EUR 105,105k, comprising:

Credit differences of EUR 5,653 million arising from capital consolidation in previous years have been released to the income statement.

Associated companies were valued at equity according to the book value method. Values were determined at the time of their initial inclusion in the consolidated financial statements. This did not result in any material effects in the year under report.

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%.