Recent Years

Acquisition

-In Mar. 2008, the Group announced that the purchase of the clutch lining manufacturer Raybestos by the Group was finalized. The acquisition of the world's largest independent clutch lining manufacturer will enable the Group to further develop its expertise in technologically advanced clutch linings and friction technology and open up new opportunities for growth with its now extended product portfolio. The acquisition includes the German company Raybestos Industrieprodukte GmbH, in Morbach, and the Chinese company Raybestos Friction Products Ltd. in Suzhou, China. The companies generated sales of approximately EUR 50 million (FY 2007) with around 550 employees. The backdrop to the acquisition is the development of LuK's activities in clutch linings following increasing demands on linings caused by increasing torques as well as transmission concepts with dry twin clutch transmissions. (From a press release on Mar. 12, 2008)

-In Jan. 2009, the Group has concluded the takeover of Continental AG and paid 75 euros per share to those shareholders who tendered their shares to the Group. The Group now holds 49.90 percent of the voting stock of Continental as the largest shareholder. (From a press release on Jan. 8, 2009)

Contracts

-In 2009, the Group supplies wheel bearing with spur gear teeth (FAG brand) for the BMW X1. (From a press release on Aug. 24, 2009)

-In 2009, the Group provides Alfa Romeo with electro-hydraulic fully variable valve control system - UniAir (INA brand). The system is for the MultiAir engine to be installed in the Alfa Romeo MiTo. Volume production of the UniAir system already started in May 2009. (From a press release on Aug. 24, 2009)

-In 2009, the Group supplies 7-speed Direct Shift Gearbox (DSG) or dual-clutch transmission (Luk brand) for the Volkswagen Golf. (From a press release on Aug. 24, 2009)

-In Oct. 2009, the Group announced that dual mass flywheel with centrifugal pendulum-type absorber developed by LuK will be used for the first time in the BMW 320d. (From a press release on Oct. 15, 2009)

-In Oct. 2009, the Group announced that it supplies steel multi-link chain (Luk brand) for Subaru's new CVT Lineartronic. (From a press release on Oct. 15, 2009)

-In Nov. 2009, the Group announced that its fully-variable hydraulic valve control system UniAir is used in the MultiAir models of the Fiat Punto Evo. (From a press release on Nov. 12, 2009)

-In Dec. 2009, the Group celebrated the production of its one-millionth ball screw drive. The ball screw drives have been manufactured at its Herzogenaurach facility in Germany since 2007 and are used in the electromechanical steering of the Volkswagen Tiguan. Besides Volkswagen, customers for the product include TRW, a provider of automotive steering systems. (From a press release on Dec. 9, 2009)

Development in Germany

-In Feb. 2009, the Group's partners and IG Metall have agreed on cooperation for safeguarding the future of the Conti/Schaeffler Group. The partners will introduce co-determination and part with a portion of their shareholding in the Group to reduce debts. It was also confirmed that the Schaeffler family will remain the main partners of the Group in the future. (From a press release on Feb. 23, 2009)

-In Apr. 2009, Continental and the Group have signed a purchasing cooperation agreement to achieve significantly improved cost structures. The two companies expect the joint effort will result in a total cost benefit of up to 400 million euros for the period between 2009 and 2011. (From a press release on Apr. 3, 2009)

Development Outside Germany

<Mexico>
-In Nov. 2008, the Group has opened a new manufacturing plant, its second Mexican production facility, in Irapuato, Mexico. The new Irapuato facility is expected to initially employ approximately 400 employees and will manufacture INA and FAG-branded products for the automotive and industrial sectors, including rolling bearings and engine & chassis components. (From a press release on Nov. 6, 2008)

<Japan>
-The Group will enhance its activities to promote business with Japanese automakers. It plans to address the needs of each manufacturer trying to respond to the CO2 emission regulation, mainly with its lightweight bearings for wheel hub applications with high assembly precision and with its fully variable valve control system which allows the opening and closing of engine valves several times during one cycle. (From an article in the Nikkan Jidosha Shimbun on Nov. 27, 2009)

Joint Venture

-In May 2006, Schaeffler Group, Georg Fischer Automobilguss GmbH and Knorr-Bremse Systeme fur Nutzfahrzeuge GmbH signed a co-operation agreement for the development, production and sale of wheelends for trucks, trailers and buses in Europe. The companies intend to develop innovative solutions aimed at increasing the operating life, improving the serviceability and reducing the weight of brake discs and wheel bearings. (From a press release by the company on Sep. 14, 2006)

Awards

Year	Award	Company	Subsidiary/ Facility
2009	Supplier of the Year (Powertrain sector)	Ford	-
2009	Supplier of the Year Award	Volvo	-
2009	Q1 Award	Ford	Elfershausen, Germany
2009	Achievement Award	Toyota	-

R&D Structures

-Approximately 4,800 employees work on new products and technologies in more than 32 research and development centers all over the world.

Patents

-The Group owns the rights to more than 14,000 patents and patent applications and around 1,100 inventions are filed for patent applications every year.

R&D Facilities

<Germany>
-In April 2006, Luk announced the expansion of the Development Centre in Bussmatten (From a press release by the company on Mar. 15, 2006)

<China>
-In June 2007, the Group opened its new R&D center in Anting, Shanghai, as a further step to focus even more on the Chinese market and to emphasize the country's strategic relevance in Asia. The Group started the construction of 21,000-meter-square new Group's R&D center in 2005, with the total investment of 220 million FMB. In the beginning a total of close to 100 engineers will focus on the adoption of state-of-the-art know how for products for the Asian markets. In the near future it is planned that R&D staff in Anting is to be extended to more than 250 engineers as part of the worldwide network of Schaeffler R&D centers. (From a press release on June 4, 2007)

<Japan>
-The Group's Automotive Division will open an R&D center in Japan. As CO2 emission regulations are scheduled to be tightened in many countries of the world and new orders for fuel efficiency technologies are well expected, the Company has decided to establish a new R&D function to enhance its marketing efforts toward Japanese automakers. The new center will open by 2012 in Yokohama City, where its Japanese subsidiary is located. The Yokohama development center of Continental AG, which the Group had acquired, is included as possible sites. (From an article in the Nikkan Jidosha Shimbun on Oct. 23, 2009)

Product Development

Dual Mass Flywheel
-In June 2008, LuK has announced the new development in in vibration damping. Through the integration of a centrifugal pendulum-type absorber, the damping capacity of the Dual Mass Flywheel can be increased by an additional speed-adaptive component. The stiffness of the pendulum is generated by the centrifugal force during operation. The centrifugal pendulum-type absorber -- known as a "speed-adaptive absorber" -- causes the frequency to change depending on the speed. The first centrifugal pendulum-type absorber DMF is due to enter series production in the summer of 2008 for an international premium automobile manufacturer. (From a press release on June 2, 2008)

Twin tandem bearings
Under its FAG brand, the Group has developed 4-row angular contact ball bearing, "twin tandem bearing" which replace the conventional tapered roller bearing inside a vehicle's wheel-hub assembly. The result: significantly reduced fuel consumption. This new wheel-hub assembly is particularly suited for use in SUVs, light trucks, and delivery vans. Replacing tapered roller bearings with FAG's twin tandem bearings on both axles can reduce fuel consumption toward improving fuel economy and reducing emissions

UniAir system
-INA developed UniAir which is a further fully variable valve control. UniAir is an example of cam-actuated, electro-hydraulic valve train system and can be used in both internal combustion and diesel engines and is supplied by the existing engine oil circuit. When UniAir is used in the internal combustion engine, the fuel consumption is significantly reduced, together with increased performance and torque. When used in the diesel engine, emission control is decisively improved. The optimization of the combustion temperature and the compression ratio in the cylinder allow the production of NOx to be drastically reduced. Cost-intensive exhaust treatment is eliminated. Volume production is conceivable as early as spring 2009.

Investment Outside Germany

<China>
-In June 2007, the Group opened its new factory in Taicang, Jiangsu province. The new 110,000 square meter facility focuses on needle bearings, wheel bearings, as well as other components for transmission and engine applications.

<India>
-In Mar. 2007, the Group opened a new plant in Pune/India.