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Freudenberg is at home in many markets and different applications. The Group’s prod-ucts are not only used by customers in the automotive and mechanical engineering industries, but also by clothing manufacturers and medical technology businesses. Seals, nonwovens, vibration control components and specialty lubricants made by Freudenberg companies can be found in the construction, oil and gas, rail and civil aviation sectors. In fact, only very few industries can do without Freudenberg products. The Group even has a presence in the home with Vileda® and O’Cedar® brand household equipment.

Specialists with this kind of experience make the ideal partner for particularly challeng-ing projects. The longest crude oil pipeline in the world, a speciality lubricant for an observatory at one of the coldest places on Earth, or fresh air in one of Europe’s most famous concert halls – Freudenberg products fit the bill. They may often be invisible, but that in no way detracts from their reliability. This Annual Report brings you some exam-ples of Freudenberg’s exceptional versatility.

2010 Annual ReportFreudenberg Group

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Editorial Information

PuBlIShEd BY:Freudenberg & Co.Kommanditgesellschaft69465 Weinheim, Germanywww.freudenberg.com

PROJECT TEAM:Corporate Communications:Cornelia Buchta-NoackThomas hochKatrin JacobiGroup Accounting and Controlling:Frank ReutherSaskia RömerSabrina luckartAnja Killian

dESIGN:Struwe & Partner, düsseldorf, Germany

PhOTOS:Freudenberg GroupBaader PlanetariumMichaela Frey, EagleBurgmann Germany, Wolfratshausen, GermanyGewandhaus/Gert Mothesherrenknecht AGBernhard Mayr, Riess-Fotodesign, Garching, GermanyREuTERS/Jessica BachmanREuTERS/Str OldGerald Schilling, Ketsch, GermanyWerbeagentur Klass‘, hamburg, Germany

PROduCTION:druckhaus diesbach, Weinheim, Germany




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Highlights

Freudenberg group 1) 2006 2007 2008 2009 2010

Sales [E million] Germany 1,238 1,325 1,275 961 1,195 Eu (excluding Germany) 1,661 1,839 1,768 1,440 1,639 Other European countries 242 271 235 186 236 North America 1,216 1,164 953 810 1,132 South/Central America 197 217 269 232 280 Asia 413 431 461 483 877 Africa/Australia 86 94 89 89 122Total sales 5,053 5,341 5,050 4,201 5,481

Consolidated profit or loss 219 275 176 -250 322Cash flow from operating activities 333 407 393 456 468Cash flow from investing activities - 271 - 319 - 384 -195 -270depreciation and amortization 232 256 272 302 255Balance sheet total 4,470 4,628 4,861 4,688 5,398Equity 2,060 2,140 2,278 2,087 2,560Personnel expenses 1,535 1,592 1,534 1,481 1,606

Workforce (as at dec. 31) 33,526 34,330 32,738 32,142 34,319Workforce (annual average) 33,542 35,060 33,569 31,616 34,200

business AreAs 2006 2007 2008 2009 2010

Sales [E million] Seals and Vibration Control Technology 2,788 3,008 2,846 2,226 3,112 Nonwovens 1,017 1,034 997 911 1,079 household Products 627 650 656 627 677 Specialties and Others 885 927 809 688 890

Workforce (as at dec. 31) Seals and Vibration Control Technology 20,762 22,136 20,454 20,757 22,273 Nonwovens 5,575 5,550 5,455 5,010 5,020 household Products 2,215 2,348 2,381 2,309 2,347 Specialties and Others 4,974 4,296 4,448 4,066 4,679

1) The figures include all companies in which Freudenberg & Co. owns 50 % or more of the capital. Shareholdings of 50 % are consolidated to half the amount, shareholdings over 50 % in full. Companies in which Freudenberg & Co. Kommanditgesellschaft directly or indirectly holds a majority of the voting rights or has the right to determine financial and business policy in accordance with articles of association, statutes or contracts are fully consolidated.

Freudenberg group

Freudenberg is a family-owned group of companies active on the global stage. Its 16 Business Groups operate on vari-ous markets and in various sectors of industry.

Freudenberg offers its customers in the automotive, mechani-cal and plant engineering, textile and clothing, construction, mining and heavy industry, energy, chemical, oil and gas sectors tailor-made, innovative technological products and services. Customer groupings also include companies in the medical technology, civil aviation, rail vehicles and semi-conductor sectors.

Freudenberg develops and manufactures seals, vibration control technology components, filters, nonwovens, surface treatment products, release agents and specialty lubricants, medical technology, and mechatronic products.

Freudenberg develops software solutions and IT services primarily for small- and medium-sized enterprises. Final users enjoy the benefits of Freudenberg’s state-of-the-art household products marketed under the vileda®, O’Cedar® and Wettex® brands.

Creativity, quality, diversity and innovative strength are the company’s cornerstones. Reliability and responsible

conduct rank among the basic values of the company which was founded over 160 years ago. Freudenberg is committed to partnerships with customers, and believes in a long-term orientation, financial solidity and the excel-lence of over 34,000 associates in 59 countries around the globe.

Freudenberg sees itself as an enterprising corporation. Operative business is the responsibility of stand-alone companies whose management conducts business auto-nomously. The individual companies belong to one of sev-eral Business Groups. The executive bodies of the parent company Freudenberg & Co. Kommanditgesellschaft – the Management Board, the Board of Partners, and the Part-ners’ Meeting – have responsibilities similar to those of the Executive Board, the Supervisory Board and the Sharehold-ers Meeting in German corporations. The parent company’s Corporate Functions control, coordinate and monitor the activities of the Freudenberg Group and provide advice and support to Business Groups. The Management Board members are jointly responsible for the leadership of the Freudenberg Group.

Freudenberg is a family company. It is owned by some 300 heirs to the founding father Carl Johann Freudenberg.

Household productsbusiness Area

business groupFreudenberg household Products

parent Company Freudenberg & Co.

nonwovens business Area

business groupFreudenbergNonwovensFreudenberg PolitexNonwovensFreudenberg FiltrationTechnologies

specialties and others business Area

business groupFreudenberg Chemical SpecialitiesFreudenberg NOK MechatronicsFreudenberg ITFreudenberg New Technologies

divisionFreudenberg Service SupportFreudenberg Real Estate Management

seals and Vibration ControlTechnology business Area

business groupFreudenberg Seals and Vibra-tion Control Technology Europe*Freudenberg-NOK GeneralPartnership*NOK-Freudenberg Group ChinaVibracousticEagleBurgmanndichtomatik

Freudenberg Oil & Gas**helix Medical**Freudenberg Schwab**

* Brought together in Freudenberg Sealing Technologies Business Group effective January 1, 2011 ** New Business Groups since January 1, 2011

Highlights

Freudenberg group 1) 2006 2007 2008 2009 2010

Sales [E million] Germany 1,238 1,325 1,275 961 1,195 Eu (excluding Germany) 1,661 1,839 1,768 1,440 1,639 Other European countries 242 271 235 186 236 North America 1,216 1,164 953 810 1,132 South/Central America 197 217 269 232 280 Asia 413 431 461 483 877 Africa/Australia 86 94 89 89 122Total sales 5,053 5,341 5,050 4,201 5,481

Consolidated profit or loss 219 275 176 -250 322Cash flow from operating activities 333 407 393 456 468Cash flow from investing activities - 271 - 319 - 384 -195 -270depreciation and amortization 232 256 272 302 255Balance sheet total 4,470 4,628 4,861 4,688 5,398Equity 2,060 2,140 2,278 2,087 2,560Personnel expenses 1,535 1,592 1,534 1,481 1,606

Workforce (as at dec. 31) 33,526 34,330 32,738 32,142 34,319Workforce (annual average) 33,542 35,060 33,569 31,616 34,200

business AreAs 2006 2007 2008 2009 2010

Sales [E million] Seals and Vibration Control Technology 2,788 3,008 2,846 2,226 3,112 Nonwovens 1,017 1,034 997 911 1,079 household Products 627 650 656 627 677 Specialties and Others 885 927 809 688 890

Workforce (as at dec. 31) Seals and Vibration Control Technology 20,762 22,136 20,454 20,757 22,273 Nonwovens 5,575 5,550 5,455 5,010 5,020 household Products 2,215 2,348 2,381 2,309 2,347 Specialties and Others 4,974 4,296 4,448 4,066 4,679

1) The figures include all companies in which Freudenberg & Co. owns 50 % or more of the capital. Shareholdings of 50 % are consolidated to half the amount, shareholdings over 50 % in full. Companies in which Freudenberg & Co. Kommanditgesellschaft directly or indirectly holds a majority of the voting rights or has the right to determine financial and business policy in accordance with articles of association, statutes or contracts are fully consolidated.

Freudenberg group

Freudenberg is a family-owned group of companies active on the global stage. Its 16 Business Groups operate on vari-ous markets and in various sectors of industry.

Freudenberg offers its customers in the automotive, mechani-cal and plant engineering, textile and clothing, construction, mining and heavy industry, energy, chemical, oil and gas sectors tailor-made, innovative technological products and services. Customer groupings also include companies in the medical technology, civil aviation, rail vehicles and semi-conductor sectors.

Freudenberg develops and manufactures seals, vibration control technology components, filters, nonwovens, surface treatment products, release agents and specialty lubricants, medical technology, and mechatronic products.

Freudenberg develops software solutions and IT services primarily for small- and medium-sized enterprises. Final users enjoy the benefits of Freudenberg’s state-of-the-art household products marketed under the vileda®, O’Cedar® and Wettex® brands.

Creativity, quality, diversity and innovative strength are the company’s cornerstones. Reliability and responsible

conduct rank among the basic values of the company which was founded over 160 years ago. Freudenberg is committed to partnerships with customers, and believes in a long-term orientation, financial solidity and the excel-lence of over 34,000 associates in 59 countries around the globe.

Freudenberg sees itself as an enterprising corporation. Operative business is the responsibility of stand-alone companies whose management conducts business auto-nomously. The individual companies belong to one of sev-eral Business Groups. The executive bodies of the parent company Freudenberg & Co. Kommanditgesellschaft – the Management Board, the Board of Partners, and the Part-ners’ Meeting – have responsibilities similar to those of the Executive Board, the Supervisory Board and the Sharehold-ers Meeting in German corporations. The parent company’s Corporate Functions control, coordinate and monitor the activities of the Freudenberg Group and provide advice and support to Business Groups. The Management Board members are jointly responsible for the leadership of the Freudenberg Group.

Freudenberg is a family company. It is owned by some 300 heirs to the founding father Carl Johann Freudenberg.

Household productsbusiness Area

business groupFreudenberg household Products

parent Company Freudenberg & Co.

nonwovens business Area

business groupFreudenbergNonwovensFreudenberg PolitexNonwovensFreudenberg FiltrationTechnologies

specialties and others business Area

business groupFreudenberg Chemical SpecialitiesFreudenberg NOK MechatronicsFreudenberg ITFreudenberg New Technologies

divisionFreudenberg Service SupportFreudenberg Real Estate Management

seals and Vibration ControlTechnology business Area

business groupFreudenberg Seals and Vibra-tion Control Technology Europe*Freudenberg-NOK GeneralPartnership*NOK-Freudenberg Group ChinaVibracousticEagleBurgmanndichtomatik

Freudenberg Oil & Gas**helix Medical**Freudenberg Schwab**

* Brought together in Freudenberg Sealing Technologies Business Group effective January 1, 2011 ** New Business Groups since January 1, 2011

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Contents

2 Board of Partners, Management Board 3 Management of the Business Groups and Divisions 4 Report of the Board of Partners 6 Foreword of the Management Board

10 Management Report of the Freudenberg Group 13 Sales and Earnings Position of the Group 14 Financial Position and Net Assets of the Group 18 Review of Operations by Business Area 46 Research and Development 47 Human Resources 48 Responsible Conduct 51 Post-reporting Date Events 51 Risk Report 54 Outlook

Financial Report – Consolidated Financial Statements 60 Consolidated Statement of Financial Position 61 Consolidated Income Statement 62 Consolidated Statement of Comprehensive Income 63 Consolidated Statement of Cash Flows 64 Consolidated Statement of Changes in Equity 65 Notes to the Consolidated Financial Statements

111 Shareholdings of the Freudenberg Group

123 Independent Auditor’s Report

Company Boards

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MAnAGeMent BoARd

Dr. Dr. Peter Bettermann, Weinheim Speaker General Partner

Christoph Mosmann, Mannheim (from July 1, 2010)

Dr. Mohsen Sohi, Frankfurt General Partner (from May 1, 2010)

Jörg Sost, Neustadt an der Weinstraße General Partner (until June 30, 2010)

Dr. Martin Stark, Weinheim General Partner

BoARd oF PARtneRS*

Dr. Wolfram Freudenberg, Stuttgart Chairman of the Board of Partners Entrepreneur

Dr. Michael Rogowski, Heidenheim Deputy Chairman of the Board of Partners Chairman of the Supervisory Board of Voith AG (until March 2010) Chairman of the Foundation Council of Hanns-Voith-Stiftung (from April 2010)

Prof. Dr. Hans Christian von Baeyer Williamsburg, Virginia, USA Emeritus Professor of Physics

Dr. Ulrich Freudenberg, Mülheim an der Ruhr Businessman

Dr. Maria Freudenberg-Beetz, Weinheim Biologist

Dr. Mathias Kammüller, Ditzingen Managing Partner TRUMPF GmbH + Co. KG

Dr. Dieter Kurz, Oberkochen President and CEO of Carl Zeiss AG

Dr. Christoph Schücking, Frankfurt am Main Attorney and Notary Public

Prof. Dr. Wilhelm Simson, Munich Former CEO of E.ON AG

Mathias Thielen, Zurich, Switzerland Chief Financial Officer GE Money Bank AG Switzerland

Dr. Emanuel Towfigh, Bonn Senior Research Fellow at Max-Planck-Institut and Attorney

Martin Wentzler, Großhesselohe Attorney

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Management Business Group

division

Claus Möhlenkamp (Chairman),Dr. Arman Barimani, Ludger Neuwinger-Heimes

Freudenberg Seals and VibrationControl Technology Europe

Dr. Mohsen Sohi (President & CEO, until April 30, 2010), Dr. Ralf Krieger (Speaker since May 1, 2010),Dr. Michael Heidingsfelder (from May 1, 2010), Yoshindo Masumoto (from July 1, 2010),Brad Norton (from May 1, 2010)

Freudenberg-NOK General Partnership

Dr. Frank Heislitz (Co-General Manager),Kuni Hayashida (Co-General Manager, until June 30, 2010), Naohito Sakai (Co-General Manager, from July 1, 2010)

NOK- Freudenberg Group China

Hans-Jürgen Goslar (Chairman), Norbert Schebesta Vibracoustic

Christoph Mosmann (Chairman),Dr. Walter Steinbach, Jochen Strasser

EagleBurgmann

Ludger Patt (Chairman), Thomas Hahn (from July 1, 2010), Thomas Herr Dichtomatik

Bruce R. Olson (Chairman), Thomas Reibelt, Dr. René Wollert Freudenberg Nonwovens

Dr. Riccardo Sollini (President & CEO), Dr. Riccardo Forni, Dr. Rocco Marsico

Freudenberg Politex Nonwovens

Dr. Jörg Sievert (Chairman), Dr. Andreas Kreuter Freudenberg Filtration Technologies

Dr. Klaus Peter Meier (Chairman), Volker Christ, Arndt Miersch Freudenberg Household Products

Hanno D. Wentzler (Chairman), Dr. Jörg Matthias Großmann Freudenberg Chemical Specialities

Bruno Conrath (Speaker), Ludwig Neumann Freudenberg NOK Mechatronics

Michael Fichtner (Speaker), Dr. Jan Haaß (until April 30, 2010), Jörg Vierfuß (from May 1, 2010), Dieter Kull (from October 1, 2010)

Freudenberg IT

Dr. Jörg Böcking Freudenberg New Technologies

Dr. Ulf Kürschner (Speaker), Volker Kübler (from May 1, 2010), Jörg Vierfuß (until April 30, 2010)

Freudenberg Service Support

Martin Obermüller (Speaker), Gerhard Freiwald, Dr. Dirk Mahler, Wolfgang Scheffler (until July 29, 2010), Gerhard Schmitt

Freudenberg Real EstateManagement

* as at December 31, 2010

MAnAGeMent oF the BuSIneSS GRouPS And dIvISIonS*

Report of the Board of Partners

During the 2010 financial year, the Management Board and the Board of Partners held regular and detailed discussions on the progress of the company, its Business Groups and Divisions and major individual business transactions on the basis of oral and written reports from the Management Board. Business policy was agreed in consultation between the two bodies and updated where necessary in joint deliberations. Five meetings of the Board of Partners were held in the 2010 financial year.

In close consultation with the Management Board, the consequences of the economic and financial crisis were examined and conclusions drawn from the crisis, which was successfully overcome. The Board of Partners was actively involved in all major portfolio decisions. In the 2010 financial year, this related in particular to the purchase of shares in VistaMed Ltd., Carrick-on-Shannon, Ireland, the purchase of all remaining shares in Freudenberg Schwab GmbH, Hennigsdorf, Germany, and in Schwab Schwingungstechnik AG, Adliswil, Switzerland, as well as the purchase of SurTec International GmbH, Zwingenberg, Germany. The Board of Partners was also involved in the sale of the cylinder head and exhaust system gasket business for automotive OEMs and the vendor-specific aftermarket to ElringKlinger AG, Dettingen an der Erms, Germany.

At the recommendation of the Management Board, the Board of Partners set up an Ombuds Office as the point of contact for all associates in the Group wishing to report any potential infringement of Corporate principles. This may relate to a violation of the Guiding Principles or legal provisions, to cases of discrimination or to situations involving serious conflicts among colleagues. The Ombuds Office reports once a year to the Personnel Committee of the Board of Partners.

The Board of Partners participated in the ongoing decision-making process concerning the strategic orientation of Business Groups and issues such as electro-mobility, and drafted guidelines for the new strategy period 2012 to 2015.

The Board of Partners furthermore set up a working group to review the Freudenberg Group’s company law and tax law structures. In addition, the Board of Partners coordinated intensive liaison with Partners in the form of various information events and regional meetings, for example in the USA and the United Kingdom.

The Audit Committee met twice in the 2010 financial year, the Personnel Committee met four times. Dr. Mohsen Sohi joined the Management Board on May 1, 2010, and has been a General Partner since July 1, 2010. Dr. Sohi was formerly President & CEO of Freudenberg-NOK General Partnership, Plymouth, Michigan, USA. Christoph Mosmann also joined the Management Board as a further new member on July 1, 2010. He was Chairman of EagleBurgmann, Wolfratshausen, Germany, until December 31, 2010. Jörg Sost stepped down from the Management Board as General Partner effective June 30, 2010 to take retirement. He had been a member of the Management Board since July 1, 2005. We would like to thank Mr. Sost for his dedication and many years of successful service to the company.

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The Consolidated Financial Statements and the Management Report for 2010 were audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Mannheim, Germany, and were approved without reservation. The Board of Partners approved the Consolidated Financial Statements and the Management Report of the Freudenberg Group and the annual financial statements of Freudenberg & Co. Kommanditgesellschaft, Weinheim, Germany, and, following examination, concurred with the auditor’s findings. The Board of Partners expresses its thanks to all employees, the Management Board and the Business Group managing bodies. Their commitment and dedication have made an important contribution to the success of the Group.

Weinheim, April 1, 2011For the Board of Partners

Dr. Wolfram FreudenbergChairman

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Foreword of the Management Board

The upswing that started during the second half of 2009 and gathered pace in 2010 happened almost as swiftly as the downturn which sent the global economy into its worst crisis since the Second World War at the end of 2008 and in 2009. Driven by strong economic development in the automotive sector and growing momentum in many other sectors of industry during the course of the year, 2010 was a positive year for the Freudenberg Group. The booming economies in Asia and South America in particular generated an above-average stimulus for growth.

Even though this positive trend was very pleasing, the rapid switch from producing at a reduced level in the crisis to handling a strong-growth scenario presented a challenge for almost all sections of the company. For a time, many sites were operating to their capacity limits. Moreover, the rapid and erratic demand increase could often only be dealt with by even greater flexibility. In this situation Freudenberg reaped the benefits of having deployed instruments such as short-time work during the crisis. Bottlenecks at suppliers and raw material prices that rose significantly during the course of the year were further clear indications of an exceptionally swift economic recovery.

Freudenberg derived significant benefits from higher demand in many areas. Not only was the 2009 slump in sales entirely offset; at €5,481.4 million, sales even surpassed the 2008 level. The cost-cutting measures initiated during the crisis and the improved working capital management impacted positively on profit. Profit from operations increased €592.2 million to €430.6 million, well above the 2008 level. The systematic cash management implemented in 2009 continued in 2010 as well. Free cash flow totaled €198.3 million in the year under review despite more active investment and a sharp sales-driven rise in receivables. With an equity ratio of 47.4 percent Freudenberg has preserved its very good equity base.

Our rating also reflects these positive developments. Moody’s raised the outlook for the Baa1 rating to “stable”.

Freudenberg laid important organizational foundations for future business in 2010 which took effect on January 1, 2011. Freudenberg’s classic sealing business, formerly operated on a regional basis by the Freudenberg Seals and Vibration Control Technology Europe Business Group for Europe and the Freudenberg-NOK General Partnership Business Group for North and South America, has been brought together under the umbrella of the new Freudenberg Sealing Technologies Business Group. A global organizational structure for the Vibracoustic and Dichtomatik Business Groups already came into effect in mid-2010.

Preparations were also made to establish the stand-alone Business Groups for the future growth areas of oil and gas (Freudenberg Oil & Gas), medical technology (Helix Medical) and rail (Freudenberg Schwab) which came into effect on January 1, 2011. All three areas were further strengthened in the 2010 financial year through strategic acquisitions and organic growth. The intensified commitment on high-growth Asian markets was also continued.

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2010 was a special year for Freudenberg not only with regard to the surprisingly positive economic devel-opments and the strategic milestones. The Group also celebrated landmark anniversaries with its two Japa-nese partner companies NOK Corporation and Japan Vilene Company Ltd., both headquartered in Tokyo. Freudenberg has enjoyed a close partnership with both Japanese companies spanning 50 years, testifying to the success of the partners’ long-term approach. We will continue to foster and further develop these partnerships.

Turning to 2011, our mood is one of cautious optimism despite the good order situation for the coming months. Although the outlook is positive, we must remain vigilant because the pleasing developments in the world’s growth regions contrast with structural problems in many mature economies. High national debt and high unemployment in many countries along with continuing problems on financial markets bring significant risks for economic development which we must continue to monitor. This is compounded by sharp rises in the price of energy and materials similar to the hikes of 2007 and 2008. We will continue our adopted course of high operating flexibility and solid balance sheet indicators and will do everything we can to preserve and extend the improvements made during the economic crisis.

It is largely due to the dedication and flexibility of our associates that we were able to make the swift transition from very subdued business in many areas in 2009 to rapid growth in 2010. We would therefore like to express our warm appreciation to all employees.

Dr. Dr. Peter Bettermann Christoph Mosmann Dr. Mohsen Sohi Dr. Martin Stark

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8

Specialty lubricants in the Antarctic

It was a big challenge to come up with a special grease that remained pasty

despite the extremely low temperatures and low humidity. But we found a solution.

Dr. Wolfgang Sammer, Head of Corporate Development, Klüber Lubrication.

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It is one of the coldest places on Earth. The French-Italian scientific research station Dome Concordia is located on the plateau of East Antarctica, 3,500 meters above sea level. Even in the Antarctic summer, the temperature rarely rises above minus 35 degrees Celsius. In winter, it drops to minus 80 degrees Celsius.

The rarefied atmosphere, the clean and dry air, little wind and little light pollution make this inhospitable place ideal for astronomical observation. That is why the Bremerhaven-based Alfred Wegener Institute for Polar and Marine Research installed a robotic observatory there. The scientists in Bremerhaven can control the observatory located more than 16,000 kilometers to the south by the touch of a button. Given the sub-zero temperatures, that is a pretty difficult exercise and places the highest demands on material, electronics, motors, gears and all other components.

The Freudenberg subsidiary Klüber Lubrication provided Baader Planetarium, the company that built the station, with a special grease that was the only one of many products tested which proved suitable for use under such extreme condi-tions. All the moving parts are lubricated – gearboxes, actuators, guide rollers and seals. Klüber Lubrication guarantees lifetime lubrication of at least five years for the approximately 200 lubricating points. This dispenses with the need for maintenance or relubrication during this period. And that is just as well, because expeditions to the South Pole are expensive and almost impossible during the Antarctic winter months between February and November.

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In the 2010 financial year, the Freudenberg Group reported sales of €5,481.4 million (previous year: €4,200.8 million), representing a year-on-year increase of €1,280.6 million or 30.5 percent. The Group reported a consolidated profit of €321.7 million (previous year: € -249.6 million). At December 31, 2010, the Group’s workforce totaled 34,319 employees (previous year: 32,142 employees).

Matters of particular significance in the 2010 financial year

The measures such as focused cash management, rationalization, increased flexibility and capacity adjustments initiated at the end of 2008 and during 2009 to counter the economic and financial crisis were systematically continued in 2010; as a result, Freudenberg derived significant benefits from the economic upswing.

The restructuring process at Freudenberg Anlagen- und Werkzeugtechnik GmbH, Laudenbach, Germany, begun in 2009 was brought to a conclusion. Parts of the company were integrated in the Freudenberg Seals and Vibration Control Technology Europe and Vibracoustic Business Groups, the mechanical engi-neering and special tools activities and parts of the production systems business were sold to AWETIS Engineering + Manufacturing GmbH, Munich, Ger-many. Effective June 30, 2010, the minority sharehold-ing in Freudenberg Mektec Europa GmbH, Erkelenz, Germany, was transferred to the long-standing joint venture partner NOK Corporation, Tokyo, Japan. In addition, preparations were made for the sale of the cylinder head and exhaust system gasket business for automotive OEMs and the vendor-specific aftermarket to ElringKlinger AG, Dettingen an der Erms, Germany. The transfer was effected at the beginning of 2011.

Commitment in regional and sectoral markets of the future was systematically continued in 2010.

Management Report of the Freudenberg Group

The medical technology sector was strengthened, firstly through the purchase of a 50 percent share in VistaMed Ltd., Carrick-on-Shannon, Ireland, and secondly by the commissioning by Helix Medical Europe KG, Kaiserslautern, Germany, of a pilot plant for silicone sealing rings in Kaiserslautern. Further progress was made in the oil and gas busi-ness through the founding of TOO Freudenberg Oil & Gas, Atyrau, Kazakhstan, and the acquisition of Offshore Seals (Asia) Pte. Ltd., Singapore, a company specializing in seals for the oil and gas industry. The Freudenberg Seals and Vibration Control Technology Europe Business Group took over all the shares of the long-standing joint venture partner Schwab Holding AG, Zug, Switzerland, in Schwab Schwingungstech-nik AG, Adliswil, Switzerland, and in Freudenberg Schwab GmbH, Hennigsdorf, Germany, with a view to further developing vibration engineering activities for rail vehicles.

In the automotive vibration engineering sector, Vibracoustic took over all the shares of the joint venture partner Anvis Netherlands B.V., Venlo, Netherlands, and became the sole shareholder of Vibracoustic do Brasil Ltda., Taubaté-SP, Brazil. In October, Vibracoustic opened a plant in Yantai, China, to produce vibration engineering components and commercial vehicle air springs for the Chinese automotive industry.

In Australia, Freudenberg Filtration Technologies acquired a majority share in Micro Fresh Filters (Aust.) Pty. Ltd., Braeside, Australia. The company specializes in manufacturing filters for vehicles and machines used in the mining industry and now operates under the name of Freudenberg Filtration Technologies (Aust) Pty. Ltd. In addition, Freudenberg Household Products concluded a partnership agree-ment with the Spanish plastics specialist SpBerner Plastic Group S.L., Valencia, Spain. A sales coopera-tion in Spain and Portugal and two joint ventures in the USA have already been set up under this

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agreement. SurTec International GmbH, a surface technology company headquartered in Zwingen-berg, Germany, was acquired to strengthen the Freudenberg Chemical Specialities Business Group. SurTec supplies products and solutions for surface treatment and electroplating.

Global economic situation

The global economy made a marked recovery in 2010 after the severe recession of the previous year. This positive trend is to a significant extent attribut-able to economic stimuli introduced by national gov-ernments and central banks. Following a timid start to the year, there was a strong surge in global gross domestic product, particularly in the second quarter of 2010. Momentum faltered somewhat during the second half of the year as government economic programs expired and given the stronger prior-year figures, but the upward trend continued unbroken. In terms of the aggregate economy, the main drivers for economic growth were industrial production and for-eign trade, while in terms of geographic regions, the main impetus again came from the emerging econo-mies, led by China. Global gross domestic product for the full year rose by 5.0 percent year-on-year.

Given the weak prior-year figures, almost all national economies reported economic growth in excess of the long-term average in 2010: Chinese gross domestic product grew 10.3 percent, in India the growth rate was 9.0 percent. The Japanese economy recorded 4.3 percent growth, the rise in South Korea was 6.1 percent. Brazil (7.5 percent) and Argentina (8.0 percent) also recorded above-average growth. In contrast, the eurozone only grew 1.8 percent and presented a very mixed picture: At 3.6 percent, growth in Germany was well above average, but the other countries lagged quite significantly behind. At 2.9 percent, economic growth in the USA was in keeping with the long-term average.

Key sales sectors for the Freudenberg Group made a robust recovery in 2010 having weathered the crisis: There was a marked rise in global demand for new cars. While there had been strong demand for small vehicles in 2009, mainly as a result of the scrapping premiums, the premium segment showed increasing signs of recovery in 2010. There was a massive surge in the number of new car registrations in China in particular, where full-year growth ran at some 34.0 percent. There were also significant rises in Japan (7.0 percent), the USA (11.0 percent) and Brazil (11.0 percent). The EU-5 countries (Germany, France, Italy, United Kingdom and Spain), on the other hand, saw new car registrations contract by 9.6 percent, mainly as a result of a sharp drop in demand in Germany (- 23.0 percent).

The international mechanical and plant engineering sector gathered momentum as 2010 progressed, although there were regional and segment-specific differences, some of them quite significant. Overall, global sales grew by 17.0 percent year-on-year.

The textile and clothing industry continued to relocate to China, where production in 2010 grew 11.6 per-cent, while the recovery in the 27 EU Member States (1.4 percent), the USA (5.3 percent) and Japan (1.8 percent) was relatively muted.

While the construction industry survived the global economic crisis in pretty good shape, 2010 brought a drop in production in many regions. The main excep-tion was China, where the construction industry at times even showed signs of overheating.

Following a slight dip in 2009, medical technology returned to growth in 2010. Unlike previous years, however, momentum was only slightly higher than in other sectors.

The German electrical and electronics industry made a marked recovery in 2010. The upswing in the German

Management Report

12

chemical industry was even stronger, with this sector already returning to the pre-crisis level at the end of 2010.

Raw material prices were pushed up quite consid-erably in 2010 as a result of the global economic recovery and the ensuing rise in demand. The annual average price for crude oil was 28 percent above the prior-year level. There were at times quite significant fluctuations in the euro (EUR)/dollar (USD) exchange rate during the year, although the rate rallied strongly towards the end of the year. The annual average exchange rate was 1.32 USD/EUR, again down on the prior-year level (1.39 USD/EUR).

Products and markets

There were only minor shifts in the Freudenberg sales structure by sectors in 2010. With a share of 33 percent that remained unchanged year-on-year, the automotive industry is still by far the most impor-tant customer grouping for the Freudenberg Group, followed by the mechanical and plant engineering industry, where the share rose from 14 to 16 percent. The share of products retailed to final users accounts for 13 percent of sales (previous year: 15 percent). Other major customer groupings are the energy, water and chemical sector (seven percent), the textile and clothing industry (six percent), the construction industry (five percent) and the medical and pharma-ceutical industry (three percent). The share of sales attributable to the spare parts business runs at a steady six percent.

There was a marked shift in the breakdown of Freudenberg sales by regions. The share of sales gen-erated in Asia in particular rose significantly from 12 to 16 percent. The share of sales generated in North America also rose last year from 19 to 21 percent. In contrast, the share of sales generated in the EU (excluding Germany) declined from 34 to 30 percent.

There was a slight drop of one percentage point in the share of sales generated in Germany (22 percent) and in South and Central America (five percent).

Consolidated group

At year-end 2010, the number of companies in the Freudenberg Group totaled 480 located in 59 coun-tries. 422 of these companies were included in the consolidation. 383 companies, including 123 produc-tion and 149 sales companies, were fully consolidated.

Minority interests and joint ventures

Freudenberg holds a minority interest, either direct or via subsidiaries, in several companies, most of which are consolidated under the equity method. The most important minority shareholdings held by Freudenberg concern the Japanese companies NOK Corporation and Japan Vilene Company Ltd. (JVC), both Tokyo, where Freudenberg holds an interest of approximately 25 percent in the former and an interest of 28 percent in the latter company.

The NOK Group manufactures and supplies sealing products, flexible printed circuits, roll products for office equipment and further products such as specialty lubricants. At the reporting date of March 31, 2010, the company employed 36,802 associates. In the last financial year, NOK Group sales declined by 3.0 per-cent (€97.5 million) to €3,170.5 million. Adjusted for the changes in currency parities, sales fell by 11.1 percent.

The JVC Group manufactures nonwovens for the clothing, automotive, electrical and consumer goods industries as well as for applications in the medical sector and filtration. Production facilities are located in China, Japan, South Korea, Taiwan, Thailand and the USA. The JVC Group employed 1,530 associates as at

Sales structure by sectors[%]

Final users 13

Other industry sectors 11

Mechanical and plant engineering 16

Energy, water and chemical 7

Medical and pharmaceutical 3

Textile and clothing 6

Construction 5

Spare parts business 6

Automotive OEMs 33

Sales by regions [%]

Germany 22Africa/Australia 2

Asia 16

South/Central America 5

North America 21

EU (excluding Germany) 30

Other European countries 4

13Management Report – Sales and Earnings Position of the Group

March 31, 2010. Sales fell by €1.4 million (0.4 percent) year-on-year to €350.4 million. Adjusted for changes in currency parities, sales fell by 8.8 percent.

The two Japanese minority interests are consolidated on the basis of the interim financial statements as at December 31, 2010.

The 50th anniversary of the partnership between Freudenberg and these two Japanese companies was celebrated during the year under review. Numerous activities in the USA, Asia and Europe have been jointly established during the course of the decades-long partnership. More recent examples include setting up the NOK-Freudenberg Group China Business Group and opening a joint JVC-Freudenberg produc-tion facility in Thailand.

In India, Freudenberg cooperates with Sigma Corpora-tion India Limited, New Delhi, and NOK Corporation in the field of seals and vibration control technology. Business activities developed well.

SAleS And eARnInGS PoSItIon oF the GRouP

Record high for sales and earnings

In the 2010 financial year, the Freudenberg-Group reported sales of €5,481.4 million, thereby achiev-ing a new record. Sales were €1,280.6 million or 30.5 percent higher than for the crisis-ridden prior year. Adjusted for the effects of acquisitions and disinvestments to the amount of €292.4 million and exchange rate conversion effects, sales were 18.7 per-cent higher than the prior year. Sales increased in all Business Areas.

There was a disproportionately high rise of €592.2 mil lion in profit from operations to €430.6 mil-lion. This was chiefly attributable to the increase in contribution margins as a result of higher sales. Further-more, restructuring expenses to the amount of approxi-mately €183 million impacted the prior-year result. The success of these measures, the majority of which were initiated at the end of 2008 and in the first half of 2009 and implemented in 2009/2010, also contrib-uted significantly to the rise in earnings. Consolidated profit improved by €571.3 million to €321.7 million.

Function costs were significantly higher than the prior year in absolute terms, but declined relative to sales. One main factor impacting the prior year was that selling expenses and administrative expenses could not be fully adjusted to lower business volumes. In addition, restructuring measures led to improved cost structures and an increase in contribution margins in the year under review.

Sales development [E million]

2006 2007 2008 2009 2010

6,000

5,000

4,000

3,000

2,000

1,000

5,481

4,201

5,053 5,0505,341

Freudenberg Group

2009 2010Sales [E million] 4,200.8 5,481.4Consolidated profit/loss [E million] - 249.6 321.7Profit/loss from operations [E million] -161.6 430.6

Workforce 32,142 34,319

FInAnCIAl PoSItIon And net ASSetSoF the GRouP

Financing strategy

The parent company Freudenberg & Co. Kommandit-gesellschaft, Weinheim, (Freudenberg & Co.), is responsible for all the financing activities of the Freudenberg Group and also operates the cash management system for the entire Group. The Group companies obtain the financing they require via cash pools or loans provided by the parent company or, in some countries, in the form of bank loans guaranteed by the parent company. Freudenberg & Co. does not expose itself to financial risk through speculation with derivative financial instruments, but uses such instruments only for hedging, and therefore reducing interest rate and currency risks in connection with underlying transactions.

The global economic and financial crisis which gener-ated strong turbulence on credit and capital markets continued to impact financing costs and options for industrial companies. The Freudenberg Group is in a good position to tackle these challenges thanks to its conservative finance policy; the Group initiated comprehensive steps to ensure high reserves of liquid funds and committed credit lines with its core banks.

Cash flow from operating activities

Cash flow from operating activities for the 2010 financial year amounted to €468.1 million, repres-enting a year-on-year increase of €12.0 million or 2.6 percent. The improvement due to the stronger profit was partly offset by the sales-driven rise in working capital.

Cash flow from investing activities

The outflow of funds from investing activities in 2010 amounted to €269.8 million, €74.6 million higher than the previous year (€195.2 million). Major invest-ing activities included the new Freudenberg House-hold Products plant in Aurora, Illinois, USA, and the Vibracoustic plant in Yantai, China.

Cash flow from financing activities

Cash flow from financing activities in the 2010 finan-cial year was negative at €-73.5 million (previous year: €-150 million). This figure is almost exclusively attributable to payments to Partners and minority interests.

The Freudenberg Group can meet all of its payment obligations at any time.

14

Management Report – Financial Position and Net Assets of the Group

Assets, equity and liabilities dec. 31, 2009 dec. 31, 2010 Change [€ million] [%] [€ million] [%] [%]ASSetSIntangible assets, tangible assets and investment properties 2,098.7 44.8 2,168.3 40.2 3.3Other non-current assets 697.0 14.9 886.0 16.4 27.1non-current assets 2,795.7 59.7 3,054.3 56.6 9.2Inventories and current receivables 1,372.6 29.3 1,628.0 30.1 18.6Other current assets 516.9 11.0 664.3 12.3 28.5Current assets 1,889.5 40.3 2,292.3 42.4 21.3non-current assets held for sale and disposal groups 2.3 0.0 51.7 1.0 2,147.8 4,687.5 100.0 5,398.3 100.0 15.2equIty And lIABIlItIeS equity 2,086.7 44.5 2,560.1 47.4 22.7Long-term provisions 502.1 10.6 514.1 9.5 2.4Other non-current liabilities 806.9 17.3 860.1 16.0 6.6non-current liabilities 1,309.0 27.9 1,374.2 25.5 5.0Current liabilities 1,291.8 27.6 1,450.7 26.9 12.3liabilities in connection with non-current assets held for sale and disposal groups 0.0 0.0 13.3 0.2 – 4,687.5 100.0 5,398.3 100.0 15.2

At €5,398.3 million (previous year: €4,687.5 million), the total assets of the Freudenberg Group increased by €710.8 million.

The rise in the balance sheet total is chiefly attributa-ble to the increase in current assets, mainly as a result of higher inventories and current receivables due to the economic situation.

Other current assets also rose. This rise is chiefly reflected in securities and cash at bank and in hand. Net debt therefore declined year-on-year by €129.4 million to €301.8 million.

In addition, exchange rate effects from developments in the yen and positive results of associated compa-nies led to a rise in non-current assets.

The equity ratio rose to 47.4 percent (previous year: 44.5 percent). This was almost exclusively due to the positive result and exchange rate developments.

dec. 31, 2009 dec. 31, 2010 Change [€ million] [€ million] [%]Securities and cash at bank and in hand 503.1 647.6 28.7Financial debt 934.3 949.4 1.6Net debt 431.2 301.8 - 30.0

15

16

The breakthrough came on October 15, 2010, after more than ten years of construction work, when the east bore of the 57-kilometer Gotthard Tunnel through the Swiss Alps was completed. It was a historic milestone in a monumental project. Once completed, the Gotthard Base Tunnel will be the world’s largest railway tunnel, doubling freight tonnage on one of the key routes through the Alps and thereby significantly relieving the burden on road traffic.

If everything goes to plan and the first passenger and freight trains set off through the tunnel in 2017, travel time from Zurich to Milan will be cut by more than one hour. The tunnel through the Alps is, quite literally, a groundbreaking advancement in passenger and freight traffic.

The project would have been inconceivable without the state-of-the-art technology of Herrenknecht tunnel boring machines. These gigantic machines that work round the clock are highly reliable, in part thanks to Freudenberg’s large-diameter seals which make sure no rock, sand or water enters the main bearing. At the same time, they stop gear oil from escaping. Merkel Freudenberg Fluidtechnic developed special seals for this purpose. The profile, materials and production methods used on these shaft seals are designed to withstand the permanent stresses caused by hard excavated materials and strong vibrations. Even over periods lasting several years. Given the tight time schedule and extremely high costs in the event of machine failure, reliability has the highest priority.

Giant seals for a monumental tunnel

17

The sealing points are subjected to extremely high stresses during tunnel boring. Our

seals have already proved they can meet this challenge in hundreds of tunnel projects.

Susanne Nolting, production operative, Merkel Freudenberg Fluidtechnic.

18

Freudenberg Seals and vibration Control technology europe

As a technology specialist, Freudenberg Seals and Vibration Control Technology Europe is a supplier and development partner for customers in the auto-motive industry, mechanical engineering, process technology, the food and pharmaceutical industry, agricultural and construction machinery, rail vehicles and numerous other sectors. Since developing the Simmerring® in 1929, Freudenberg has gone from strength to strength with a unique and ever expand-ing range of sealing products. Regardless of whether the project involves customized individual solutions or complete sealing packages for complex specifica-tions – success is based on in-depth process know-ledge, innovative development methods and the high-est quality materials.

Together with the partners NOK Corporation, Japan, Freudenberg-NOK General Partnership, the Ameri-cas, Sigma Corporation India Limited, India, and NOK-Freudenberg Group China, Freudenberg Seals and Vibration Control Technology Europe has estab-lished a global network of production and sales com-panies. The partnership in Europe and the Americas was given an organizational framework effective January 1, 2011, when a joint Management Board assumed responsibility for leading the business of the new Freudenberg Sealing Technologies Business Group in these two regions.

18

RevIeW oF oPeRAtIonS By BuSIneSS AReA

Freudenberg’s activities are broken down into the four Business Areas of Seals and Vibration Control Technology, Nonwovens, Household Products, and Specialties and Others.

Seals and vibration Control technology Business Area

In the 2010 financial year, the Seals and Vibration Control Technology Business Area comprised the fol-lowing six Business Groups: Freudenberg Seals and Vibration Control Technology Europe, Freudenberg-NOK General Partnership, NOK-Freudenberg Group China, Vibracoustic, EagleBurgmann and Dichtomatik.From 2011 the Freudenberg Seals and Vibration Control Technology Europe and Freudenberg-NOK General Partnership Business Groups will be brought together under the organizational umbrella of the new Freudenberg Sealing Technologies Business Group. In addition, the newly-established Freudenberg Oil & Gas, Helix Medical and Freudenberg Schwab Business Groups will be assigned to this Business Area. Roughly three quarters of sales in this Business Area were generated by the automotive industry and the mechanical and plant engineering industry in 2010. These sectors, like other customer sectors, developed well. Consequently, sales in this Busi-ness Area rose to €3,112.0 million (previous year: €2,225.5 million). The headcount at year-end rose to 22,273 (previous year: 20,757).

Freudenberg Seals and vibration Control technology europe

2009 2010Sales [E million] 825.8 1,076.6Workforce 7,607 8,112

1919Management Report – Review of Operations by Business Area

Products and servicesSimmerrings, membranes, high-precision moldings, bellows, dust caps, hydraulic accumulators, O-rings, hydraulic and pneumatic seals, frame gaskets, silicone seals, shock absorbers, valve stem seals, special seals, brake components, vibration control technology for the general industry sector.

Production locationsAustria, Czech Republic, France, Germany, Hungary, Italy, Spain, Turkey, UK

Freudenberg Dichtungs- und Schwingungstechnik GmbH & Co. KG 69465 Weinheim | GermanyPhone: +49 (0) 6201 80-6666Fax: +49 (0) 6201 88-6666E-mail: [email protected]

Freudenberg Seals and Vibration Control Technology Europe reported a very satisfactory year in 2010. The Business Group benefited from the strong rise in demand from customers in all sectors. In addition, the comprehensive restructuring measures initiated during the 2009 crisis year impacted positively on break-even and therefore on profit. Sales by the Business Group in 2010 rose by 30.4 percent to €1,076.6 mil-lion (previous year: €825.8 million). All sales chan-nels and divisions contributed to the growth in sales. At 8,112, the headcount at year-end 2010 was also well above the prior-year level (previous year: 7,607).

The unexpectedly swift rise in demand from customers called for great flexibility on the part of associates, employee representatives and management during the year under review. Associates had to switch from short-time work to overtime and weekend shifts in record time. This was accomplished very successfully at all sites. The automotive and component supplier industry already showed the first signs of recovery during the last quarter of 2009. Since then, demand from car makers, and in particular the major component sup-pliers, has risen steadily. The fact that Freudenberg’s

development activities continued unabated during the economic crisis proved very worthwhile. The energy-saving sealing concept called LESS (Low Emission Sealing Solutions) has met with a positive response from automotive customers. There was a marked recovery in commercial vehicle business, where sales returned to the 2008 level following the slump of 2009.

There was also a significant increase in demand in mechanical engineering and other sectors of indus-try served by the Freudenberg Simrit sales channel. Growth was strongest in Germany, Scandinavia, Italy, Eastern Europe and Russia. Customer support in the form of global key accounts proved very effec-tive. Demand from heavy industry was also positive. Corteco, the sales channel for the independent auto-motive aftermarket, also reported a very good year.

Effective January 1, 2011, the activities of Freudenberg Seals and Vibration Control Europe and Freudenberg-NOK General Partnership, which continue to operate as independent legal entities, were brought together under the umbrella of the new Freudenberg Sealing Technologies Business Group. This new management structure is designed to ensure that customer demands are served worldwide even more effectively and new markets and customers are jointly accessed. Follow-ing the sale of the cylinder head and exhaust gasket business to ElringKlinger AG at the turn of the year, Freudenberg Sealing Technologies now has the task of reinforcing and strategically expanding the tradi-tional sealing business.

20

Freudenberg-noK General Partnership

Freudenberg-NOK General Partnership is a joint venture between Freudenberg and NOK Corpora-tion. The Business Group focuses on its competen-cies in sealing and elastomeric technologies. As the American partner within the sealing business network of Freudenberg and NOK, the joint venture integrates Japanese, German as well as American technology to serve customers with global products of the same quality.

By extending its technology expertise beyond the automotive market, Freudenberg-NOK General Part-nership also provides an extensive portfolio to the machining and civil aviation industries as well as the fluid power, marine, off-highway equipment, recrea-tional, oil and gas, and semiconductor markets.The Plymouth, Michigan, USA, location is home to the technical development center, where extensive sealing testing activities are conducted for the North American market.

Products and servicesSealing packages for engines, transmissions, brakes, axles and steering units; components; all rubber, plastic and PTFE components for suspension; electri-cal and fuel systems; and other sealing solutions for applications in a variety of industries.

Production locationsBrazil, Canada, Mexico, USA

Freudenberg-NOK General Partnership47690 East Anchor CourtPlymouth, Michigan 48170 - 2455 | USAPhone: +1 734 451 0020Fax: +1 734 451 0043E-mail: [email protected]

Freudenberg-NOK General Partnership, a joint venture in which Freudenberg holds a 75 per-cent share and NOK Corporation a 25 percent share, is responsible for the sealing technology business in the Americas. Total sales in 2010 were US $798.7 million, representing a year-on-year increase of 14.9 percent (previous year: US $695.4 million). Due to exchange rate effects, there was a more pronounced increase of 22.4 per-cent in sales expressed in euros, which ran at €604.5 million (previous year: €493.7 million). Adjusted for the mid-year carve-out of the Helix Medical, Vibracoustic and Dichtomatik businesses, the increase in sales is 29.8 percent. Sales development was supported by the global economic and financial improvements. North American vehicle production rose by 38.3 percent. Key markets in the general industry sector also improved. Overall, Freudenberg-NOK General Partnership sales exceeded market recovery in 13 of 15 principal market segments. The total headcount at year-end ran at 4,224, down 275 year-on-year. Adjusted for the divested businesses, the increase in headcount was 370.

The Business Group reversed many contingency actions taken due to the economic crisis. Such acti-vities included reduced work schedules, pay and benefit cuts for associates as well as travel restric-tions. To conclude its capacity adjustment actions initiated in 2009, the Group completed the closure process for the plants in Spencer, Iowa, USA, and Germantown, Wisconsin, USA.

Freudenberg-noK General Partnership

2009 2010Sales [US $ million] 695.4 798.7Workforce 4,499 4,224


Technology advances for the Business Group included low friction seals featuring a lip design which increases performance, continued development activities for single cavity, net-shape injection mold-ing which eliminates flash, and the introduction of FluoroXprene®, a fluoroelastomer which is a highly differentiated material bridging the gap between PTFE and rubber and allowing for highly varied end-use demands of the customer.

For 2011, Freudenberg-NOK General Partnership expects the North American automotive and overall economy to improve slightly, and modest sales level increases are anticipated for the year.

noK-Freudenberg Group China

NOK-Freudenberg Group China is an equal-share joint venture between NOK Corporation, Japan, and Freudenberg serving the high-growth Chinese market with locally produced and imported seal and vibra-tion control technology products.

The joint venture supplies numerous European, US, Japanese and Chinese customers in the automotive and general industry sectors in China. In cooperation with the partners NOK Corporation, Freudenberg Seals and Vibration Control Technology Europe

and NOK-Freudenberg General Partnership, the locally-manufactured product range is continuously expanded in line with market requirements. Market success is based on those factors which also account for the success of the Freudenberg/NOK Corporation network in other regions, namely technological leader ship and quality.

Products and servicesProduction and sale of seals for the automotive industry such as Simmerrings, valve stem seals, shock absorbers, steering column seals, drivetrain seals, bellows, dust caps, O-rings, frame gaskets, mem-branes and torsional vibration dampers. The product range also includes seals for general mechanical engineering applications such as hydraulic and pneu-matic seals or seals for washing machines as well as vibration control elements for the electronics and consumer goods industry which are either produced in China or imported from Europe, North America or Japan.

LocationsChina, Hong Kong

NOK-Freudenberg Group ChinaSuite 14 B to HInternational Ocean Shipping Building720 Pudong AvenueShanghai 200120 | P.R. of ChinaPhone: +86 21 5036-6900Fax: +86 21 5036-6307E-mail: [email protected]

In 2010, sales by the NOK-Freudenberg Group China joint venture again grew significantly, rising from €154.7 million to €221.7 million (+ 43.3 percent) due to the positive market environment in China, with growth thus noticeably higher than the average for the relevant sales markets. Sales are accounted for in the Freudenberg consolidated financial statements on a pro-rata basis (i.e. a share of 50 percent). The

noK- Freudenberg Group China[before pro-rata shareholding] 2009 2010Sales [E million] 154.7 221.7Workforce 1,790 1,905

2222

headcount at year-end also rose – albeit at a dispro-portionately lower rate than sales – increasing by 6.4 percent to 1,905 (previous year: 1,790), of which 953 associates are included in the Freudenberg con-solidation in line with the 50 percent shareholding.

NOK-Freudenberg Group China benefited exception-ally well from continued growth both in the automotive industry and the general industry sector. The Chinese automotive industry enjoyed another very successful year in 2010 as a result of the extension of existing sales incentive measures initiated by the Chinese gov-ernment and the introduction of new measures aimed at energy efficiency. From the end of the first quar-ter, the general industry segments topped the level achieved before the economic and financial crisis.

NOK-Freudenberg Group China successfully expanded its leading position in the automotive indus-try and in several general industry segments. There was a substantial rise in strategically important sales to Chinese automotive customers as a result of customer-specific strategies and product solutions tailored to the needs of Chinese customers. In the general industry sector, the position in China was reinforced by sales to direct customers as well as the local production of further product groups. The after-sales market was systematically developed by Corteco China Co., Ltd., Guangzhou, China, established in 2009.

Improvements in process technology, higher productiv-ity, a larger share of local procurement, systematic current asset management and quality improvements raised profitability.

Moving into 2011, the enormous price pressure from customers and competitors will continue to present a challenge for NOK-Freudenberg Group China. Added to this is the fact that the competitiveness of Chinese manufacturers is visibly progressing and international competitors are expanding their activities

in China with a view to participating in this attractive market. To remain successful in such an environment the Business Group will forge ahead with investments to train associates, improve quality, establish addi-tional sales locations close to customers and set up new production plants, particularly for new products.

2011 is expected to be another successful year for NOK-Freudenberg Group China. However, analysts are forecasting lower growth rates in the automotive sector as a large number of state incentive measures expired at the end of 2010. Inflation has risen sharply and tighter fiscal and monetary policy is anticipated which could have a negative impact by reining in infrastructure projects of particular importance to the general industry sector.

vibracoustic

Vibracoustic is the technology specialist for vibration control modules and components for the international automotive industry. The company enjoys a good reputation as an original equipment developer thanks to its proven system capability and a comprehensive product and service program. Vibracoustic and its partners NOK Corporation and Pyung Hwa Co. Ltd., Taegu, South Korea, have a presence at 32 locations worldwide and products are supplied to all leading automakers.

vibracoustic

2009 2010Sales [E million] 360.2 564.7Workforce 2,277 3,057


Products and servicesVibration control modules and components for the global automotive industry

LocationsBrazil, China, Czech Republic, France, Germany, Hungary, India, Mexico, Poland, Russia, South Korea, Turkey, USA

Vibracoustic GmbH & Co. KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-8808Fax: +49 (0) 6201 88-8808E-mail: [email protected] www.vibracoustic.com

In the 2010 financial year, Vibracoustic gener-ated sales of €564.7 million (previous year: €360.2 million). The vibration control engineering activities in North America, formerly managed by the Freudenberg-NOK General Partnership Business Group, were fully consolidated for the first time effec-tive July 1, 2010, and the Brazilian business formerly run as a joint venture with Anvis Netherlands B.V. was fully consolidated effective January 1, 2010. Even adjusted for these effects, the company’s sales never-theless returned to the 2008 level only one year after the economic crisis. As a result, Vibracoustic again outperformed the vibration control technology market.

Global automotive demand was already develop-ing very well at the beginning of the year and this positive trend continued. Apart from a further rise in sales in several Asian countries, the North American market in particular reported positive sales devel-opment. The commercial vehicles market showed pleasing signs of recovery, albeit noticeably more restrained than the passenger car market. Vibracoustic reported a marked rise in sales in all divisions as a result of the economic upturn, and in particular high unit sales of premium segment vehi-cles, as well as the successful rollout of numerous

new projects. The headcount rose to 3,057 (previous year: 2,277) as a consequence of the changes in the consolidation and the commissioning of a Vibracoustic production plant in China.

Vibracoustic’s innovative strength also contributed to positive business development: Vibracoustic is sup-plying engine mounts for all engine variants in the next-generation of the Daimler C-, E- and S-Class. Another customer named Vibracoustic a develop-ment partner for a lightweight, plastic engine mount bracket that reduces CO2. Vibracoustic used auto-motive technology from the passenger car segment for the first time to design a unique air spring solu-tion for commercial vehicles. Vibracoustic’s market-oriented innovation activities are confirmed by the start of series production of the flexible constant-velocity joint. These customer-oriented solutions take Vibracoustic into a field of application previously dominated by a single supplier.

Market potential in growth markets continues to be leveraged. The Business Group has laid the founda-tions for further globalization with the integration of the North American Vibracoustic activities, the full acquisition of the Brazilian company Vibracoustic do Brasil Ltda. and the new production facility in Yantai, China. Production of air springs for commercial vehicles and chassis components successfully com-menced in Yantai on schedule in July 2010. Devel-opment orders for chassis parts for Volkswagen’s new global Golf/Polo platform, chassis parts for the Chinese market and suspension subframe mounts for General Motors confirm the success of the Business Group’s new global structure.

Vibracoustic is also expanding its vibration technol-ogy business in the automotive centers of Japan and South Korea: The position with General Motors and Hyundai is to be strengthened in cooperation with the South Korean partner Pyung Hwa Anti-Vibration Systems Co., Ltd., Taegu, South Korea. More intense

24

collaboration with Japanese companies opens the door to Japanese carmakers.

There is a clear global structure to responsibilities and competences in Vibracoustics’s new worldwide organizational structure. Consequently, all divisions and regions have a stronger and more competitive orientation.

Vibracoustic expects these pleasing developments to continue in the first months of 2011. On January 17, 2011, Freudenberg and Trelleborg AB, Trelleborg, Sweden, signed a letter of intent regarding a poten-tial 50:50 joint venture between Vibracoustic and the automotive anti-vibration business of Trelleborg AB. Both companies plan to jointly develop and manufac-ture vibration control solutions for all car makers and all vehicle segments in all of the automotive industry’s major regions worldwide. The joint venture is subject to approval by the anti-trust authorities in particular.

eagleBurgmann

EagleBurgmann figures among the internationally leading companies for industrial sealing technology. The Business Group manufactures and markets a broad range of high-quality products – from individ-ual designs right through to large-batch productions, irrespective of whether highly complex dynamic seal systems such as mechanical seals and supply units or special gaskets for a diversity of applications and sectors of industry. A workforce of almost 5,500 cre-ative and motivated employees in over 70 subsidiar-ies develops and produces EagleBurgmann seal solu-tions which customers around the world can rely on. A close-knit sales and service network all over the world testifies to an international presence and cus-tomer proximity. The products are installed wherever safety and reliability are major design considerations when sealing demanding mediums under the most challenging technical conditions, for example in the oil and gas, refinery, chemical, pharmaceutical, energy, food processing, paper, water, marine, aero-space and mining industries.

Products and servicesMechanical seals, gas-lubricated seals, carbon floating ring seals, magnetic couplings, seal supply systems, stuffing box packings, flat gaskets, expan-sion joints, TotalSealCare® Services, environmen-tally-compatible solutions, standardization of sealing

eagleBurgmann



deadlines. The cost-cutting measures implemented in the 2009 crisis year brought the anticipated savings. Even though the situation has improved significantly, the systematic cost and liquidity management estab-lished over the last two years will be continued in 2011 in order to respond as swiftly as possible to changes in business conditions.

EagleBurgmann launched a strategic growth project in the USA in 2010 with a view to significantly increas-ing its market share. The project aims to expand operator business, penetrate the market and raise awareness among OEM customers and planning firms and improve the supply chain. Another major project at EagleBurgmann is the global rollout of an ERP standard software which will improve core processes.

The Business Group’s successful innovations include mechanical seals with a crystalline diamond coating used in numerous highly-challenging applications in pumps, compressors and mixing plants in the chemi-cal, oil and gas, refinery, pharmaceutical and water sectors. Scientists from various Fraunhofer Institutes and EagleBurgmann, as one of the partners in the alliance which developed this new material and made it ready for industrial application, received the Stifterverband Award for this innovation in mid-2010.

For 2011, the Business Group expects growth to continue, albeit at a slightly slower pace. This will call for additional production and administration capaci-ties and the project to build a new production hall in Eurasburg which was mothballed as a result of the crisis in 2009 will be reactivated. The project helps to meet market requirements in terms of speed and deliv-ery reliability by restructuring the production process.

systems and application testing, after-sales service with assembly, commissioning, repair and damage analysis, sealing technology seminars and practical training

Production locationsAustria, Brazil, China, Czech Republic, Denmark, Germany, India, Italy, Japan, Mexico, Turkey, USA

EagleBurgmann Germany GmbH & Co. KGÄußere Sauerlacher Straße 6-1082515 Wolfratshausen | GermanyPhone: +49 (0) 8171 23-0Fax: +49 (0) 8171 23-1214E-mail: [email protected]

EagleBurgmann derived particularly significant benefits from the swift economic recovery in many regions and sectors of industry; sales by the Business Group rose by 20.6 percent in the year under review to €678.7 million (comparative basis for 2009: €562.8 million). As a result of the crossover share-holding between Freudenberg and Eagle Industry Co., Ltd., Tokyo, Japan, the income statements of further companies in the EagleBurgmann Group were consolidated for the first time in the year under review. Prior-year sales included in the Freudenberg consolidated financial statements ran at €421.5 mil-lion. The headcount in 2010 was 5,495 (previous year: 5,265), 230 higher than the previous year.

For EagleBurgmann, the 2010 financial year was characterized by a sharp rise in orders following the drop in 2009, with order levels at year-end higher than 2008, even adjusted for exchange rate effects. Project business in particular gathered momentum over the course of the year, with growth strongest in Asia and South America. Order growth even sur-passed sales growth adjusted for currency effects. In response to the sharp rise in demand, short-time work at all German sites was terminated in the first half of the year. Global production capacities were increased flexibly so as to meet committed delivery

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Architecture and acoustics

I experienced the impressive acoustics and atmosphere in the Rose Center at first

hand while on a trip to New York. Our acoustic nonwoven did a very good job.

Christian Spiegel, Marketing Manager, Freudenberg Nonwovens.

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The building is an eye-catcher, silhouetted against the imposing New York skyline. The Planetarium of the American Museum of Natural History was built on Manhattan’s Upper West Side not far from Central Park in 2000. When it is illuminated at night, the 27-meter sphere within its glass box is a wonderful visual highlight among the sea of buildings. But it is not only its unique architecture that draws some three million visitors a year to the Rose Center for Space and Earth. Inside the sphere, visitors can experience the Big Bang and the vastness of space – some of the shows take place in two 3D theaters. An unusual Freudenberg product plays a key role in the exceptional acoustics at the Rose Center.

The SoundTex® acoustic nonwoven is used in the sphere’s outer shell as well as inside the Planetarium. Freudenberg Nonwovens supplied its customer Ceilings Plus, responsible for the ceiling and wall construction in the Rose Center, with approximately 2,000 square meters of the nonwoven, which has a thickness of only 0.2 millimeters. The wafer - thin material converts sound energy into thermal energy and therefore significantly improves acoustics wherever large crowds of people are to be found. SoundTex® properties are so special that the nonwoven has been selected by inter-national experts for inclusion in the Material ConneXion materials library. That is an honor only accorded to innovative materials.

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dichtomatik

Dichtomatik is a service-oriented partner active in the market for technical seals. The Dichtomatik group is a global organization with regional headquarters in Hamburg, Germany, for Europe and in Shakopee, Minnesota, USA, for North and South America; the group also operates its own companies in a further ten countries.

Dichtomatik is the market leader as regards product range and depth as well as effective logistics. Some 55,000 standard articles are available ex ware-house and the product program also includes roughly 115,000 custom-tailored variants. The seals are used in numerous applications ranging from industry to the technical trade. Dichtomatik’s service offering includes the procurement of special seals, technical consulting and customized deliveries.

Products and servicesO-rings, back-up rings, cords, x-rings, cover seals, rotary shaft seals, v-rings, axial seals VRM, radial seals, circlips, piston seals, rod seals, u-rings, pack-ings, wipers, guide rings, guide strips LocationsAustria, Brazil, Canada, France, Germany, Hungary, Italy, Mexico, Netherlands, Sweden, UK, USA

dichtomatik

2009 2010Sales [E million] 46.9 76.6Workforce 214 432

Dichtomatik Vertriebsgesellschaft für technische Dichtungen mbH Albert-Schweitzer-Ring 122045 Hamburg | GermanyPhone: +49 (0) 40 669 89-0Fax: +49 (0) 40 669 89-101E-mail: [email protected]

In 2010, Dichtomatik with its headcount of 432 (previous year: 214) generated sales of €76.6 million (previous year: €46.9 million) in an economic environ-ment that was beginning to recover. As Dichtomatik business in North and South America previously conducted under the umbrella of Freudenberg-NOK General Partnership was fully integrated in the Dichtomatik Business Group effective July 1, 2010, a year-on-year comparison based on these figures is only of limited value. If Dichtomatik business in America for 2009 and 2010, which was run by Freudenberg-NOK General Partnership until June 30, 2010, is fully included in the comparison, then sales rose by 37.1 percent and the headcount increased by 34.

Due to Dichtomatik’s customer structure with the focus on trade and mechanical engineering there was a slight time lag in the impact of the economic recovery compared with the automotive industry. Sales, which began to pick up in the fourth quarter of 2009, contin-ued on a strong growth path into the second quarter of 2010, reaching a significantly higher level than 2009 and continuing with a further slight upward trend during the second half of the year. Sales for the full year 2010 were slightly below the record level for 2008.

In addition to market activities, Dichtomatik invested in improving its service offering, both in Europe and America – the new internet shop developed in 2009 was rolled out across Europe in 2010. The sales organization in America was strengthened and reor-ganized with a view to achieving significantly closer proximity to the customer.


A further three service locations were set up in Mexico for the same purpose (current nationwide total: 17).

Business in Europe (branches in eight countries) and in North and South America (branches in Brazil, Canada, Mexico and the USA) was combined to form one Business Group effective July 1, 2010. The organization was realigned to reflect these global business operations, reinforcing and further expand-ing the successful business model worldwide.

For 2011 Dichtomatik expects sales growth to con-tinue, albeit at a noticeably slower pace and with correspondingly smaller increases in market share.

nonwovens Business Area

The Nonwovens Business Area comprises the Business Groups Freudenberg Nonwovens, Freudenberg Politex Nonwovens and Freudenberg Filtration Technologies.

In 2010 the Business Area generated sales of €1,078.6 million (previous year: €910.6 million). At year-end 2010, the headcount was 5,020 compared with 5,010 at the close of the previous financial year. The major customer groupings for this Business Area are the textile and clothing industry (Freudenberg Non-wovens), the automotive industry (Freudenberg Filtration Technologies and Freudenberg Nonwovens) and the construction industry (Freudenberg Politex Nonwovens).

Freudenberg nonwovens

Freudenberg Nonwovens develops, produces andmarkets nonwoven products for a wide range ofapplications. Nonwovens made by Freudenberg areused in interlinings for the garment industry and fortechnical applications such as battery separators, for acoustic purposes to provide sound absorption, as fireblockers in furniture and as cable insulation. In the medical and hygiene sector, nonwovens from Freudenberg offer the highest comfort and safety. Freudenberg was the first company to introduce non-wovens on the market and continues to set the global

Freudenberg nonwovens


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destroyed two production lines for hygiene products, the market was kept supplied at all times and there was marked growth. Rebuilding work was started immediately, two new hygiene product lines are scheduled to start operating in April 2011. In Europe, Industrial Nonwovens reported growth in excess of 25 percent, thus returning to the 2008 sales level. Recovery in the North American automotive industry generated a significant rise in sales. South America, which was not as hard hit by the 2008/2009 crisis, is back on its growth course.

The Interlinings Division improved its European business following completion of a comprehensive restructuring program. Two plants in Italy were closed and administration in Europe streamlined. At the same time, a premium price strategy and a differentiated range of services lifted the price level in Europe. Inter-linings business in Asia developed well. Thanks to a strong local presence, significant progress was made in growth in Latin America.

Going forward, the Interlinings Division plans to expand the international menswear business and press ahead with the market launch of new prod-ucts based on the Power Dot® Bonded nonwovens technology.

The Industrial Nonwovens Division benefited from the marked recovery in the automotive sector in all regions during the year under review. There was also a significant upturn in products such as battery separators and cable materials for the capital goods industry. The Division launched a multi-year develop-ment program for nonwoven-based battery separators for lithium-ion batteries.

Sales in the Spunlaid Division in Asia, USA and Europe lifted significantly as economic recovery gathered momentum. Continued strong demand for spunlaid in Asia, particularly for tuft and shoe materi-als, resulted in supply bottlenecks. The US market

standard with new ideas such as Lutradur ECO® and Vilene® Power Dot® Bonded. Freudenberg Non-wovens operates a global sales network and manu-factures at 20 locations worldwide. The company has enjoyed very close cooperation with Japan Vilene Company Ltd., the Japanese market leader in non-wovens, for many decades.

Products and servicesInterlinings, industrial nonwovens, spunlaid

Production locationsArgentina, Brazil, China, France, Germany, India, Italy, South Africa, South Korea, Spain, Taiwan, UK, USA

Freudenberg Vliesstoffe KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-5009Fax: +49 (0) 6201 88-5009E-mail: [email protected]

Freudenberg Nonwovens is divided into three Divi-sions: Interlinings, Spunlaid and Industrial Nonwo-vens. These Divisions develop and produce custom-ized nonwovens solutions. Demand already showed signs of a slight recovery back in the second half of 2009, with this trend continuing and intensifying in the 2010 financial year. Sales by the Business Group rose to €633.3 million (previous year: €531.2 mil-lion), representing a year-on-year rise of 19.2 percent. All market segments and regions contributed to this growth. The headcount declined from 3,310 at year-end 2009 to 3,151 as at December 31, 2010.

In 2010, some of the Business Group’s plants were operating at their capacity limits. Decommissioned capacity at the sites in Durham, North Carolina, USA, and Kaiserslautern, Germany, was reinstated to meet rising demand from customers. Business in Asia developed very well in 2010. Despite a fire at the Pyungtaek plant in South Korea which

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benefited from growth in the American automotive industry, where the Business Group supplies tuft backings for automotive carpets. Demand in Europe was also characterized by growth in automotive and hygiene products. However, Europe was more severely affected than other regions by significant increases in raw material prices.

For the 2011 financial year, Freudenberg Nonwovens expects to see continued strong demand in regions outside Europe, particularly Asia, and will be respond-ing to this with targeted investments. In the core markets of North America and Europe, the Business Group will be focusing on innovations such as bat-tery separators for lithium-ion batteries. Freudenberg Nonwovens will be passing on to customers the anticipated higher prices on raw material markets in the form of price increases.

Freudenberg Politex nonwovens

Freudenberg Politex Nonwovens, headquartered in Novedrate, Italy, is the world leader in the produc-tion and marketing of polyester nonwovens, mainly used as reinforcements for bituminous roofing mem-branes. A broad range of products is furthermore sold to the construction industry for different appli-cations. Padding materials for the furniture industry round off the product range. The majority of products

Management Report – Review of Operations by Business Area

Freudenberg Politex nonwovens


is manufactured with recycled polyester obtained in-house from post-consumer PET bottles. This integrated production cycle not only recycles waste, but also significantly reduces CO2 emissions.

Products and servicesRoofing: Staple and spunbonded polyester nonwo-vens (standard or glass filament-reinforced) used as backing for bituminous roofing membranesConstruction materials: Products for waterproofing, thermal insulation, sound absorption, heat reflection, drainage, reinforcements and other applicationsPadding: Voluminous polyester nonwovens for furniture

LocationsChina, France, Italy, Poland, Russia, USA

Freudenberg Politex S.r.l.Strada Provinciale Novedratese, 17/a22060 Novedrate (CO) | ItalyPhone: +39 031 793 111Fax: +39 031 793 202E-mail: [email protected] www.freudenbergpolitex.com

In 2010, Freudenberg Politex generated sales of €203.9 million (previous year: €185.2 million). Sales of roofing reinforcements recovered by some 11 per-cent compared with the previous year on a market which only grew some nine percent in the same period. Sales in the construction materials segment grew by 32 percent. The completion of restructuring measures in Poland and in Italy resulted in a reduction of headcount to 609 (previous year: 650).

The recovery on the construction market was slow all over the world; however the need for repair work and renovation sustained demand for roofing reinforce-ments, particularly on growth markets such as Russia and the Middle East. In addition, the need to develop infrastructures in emerging economies contributed fur-ther to sustaining the construction sector. Thanks to its know-how in both spunbond and staple technology,

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the Business Group was able to reaffirm its global leadership in the polyester roofing market.

The escalation of raw material prices continued throughout the year and besides impacting costs also put high pressure on the global balance between supply and demand, which in some cases resulted in material shortages. Freudenberg Politex was able to partially mitigate the effect on margins by increas-ing its sales prices and undertaking aggressive cost reduction programs. Sales growth and the almost complete exploitation of capacities kept performance on a par with the previous year and generated posi-tive cash flow.

In 2010, the Business Group continued its activities to prove the environmental sustainability of its products and processes. The main European product lines (Texbond®, Terbond® and Ecozero®) were certified with Environmental Product Declarations and products manufactured in Macon, Georgia, USA, obtained the UL Environment Label assessing the recycled content issued by Underwriters Laboratories Inc. (UL), North-brook, Illinois, USA, an independent product safety certification organization. Life Cycle Assessment studies, already demonstrating that the recycling of post-consumer PET bottles allows a 50 percent reduc-tion of CO2 emissions, will be periodically monitored in order to measure and improve further the environ-mental profile of products and processes. For 2011, Freudenberg Politex Nonwovens expects to consolidate its position in mature markets against a macroeconomic backdrop that remains volatile, and to follow growth on some emerging markets where construction demand will be stimulated by the need to modernize buildings and infrastructures. For this reason, activities in Russia will be expanded until 2012.

In response to expected further rises in raw mate-rial prices, Freudenberg Politex Nonwovens will be

introducing important innovations in terms of raw material consumption and process technologies. Tight cost control as well as the generation of adequate cash flows will also remain a priority.

Freudenberg Filtration technologies

Freudenberg Filtration Technologies develops and produces innovative filtration solutions worldwide which improve the efficiency of industrial processes, protect people and conserve resources, protect the environment and enhance the quality of life. Freudenberg filters are used successfully for intake, exhaust and recirculating air filtration in many industrial applications such as production, office and residential ventilation and in the transport (rail, marine, aviation) sector, energy production, healthcare, pharmaceutical, the food and beverage industry, and cleanrooms. In the field of liquid filtra-tion, Freudenberg Filtration Technologies provides solutions for coolant and lubrication applications, pool and spa, beverages and foodstuffs as well as products for the manufacture of membranes and filter candles. In the human protection filtration sec-tor, the Business Group provides filter solutions for office equipment, respiratory masks, vacuum clean-ers, air conditioning systems and other technically challenging applications. As a development part-ner and manufacturer for the automotive industry,

Freudenberg Filtration technologies


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Freudenberg Filtration Techno logies produces cabin air filters and engine intake air filters. A comprehen-sive range of system solutions (e.g. development and construction of filter plant) and services (e.g. filter-Cair air quality management and training) comple-ment the product portfolio.

Products and services Intake, exhaust and recirculating air filters for gen-eral ventilation applications; filters and filter media for residential applications, air conditioning systems, office equipment, respiratory masks and vacuum cleaners; filter media for liquid filtration; cabin air filters; engine intake air filters; filterCair air quality management; plant development and construction; filter testing; training and consulting

Production locations Argentina, Australia, Brazil, China, Germany, India, Italy, Japan, Mexico, Slovakia, South Africa, South Korea, Thailand, USA

Freudenberg Filtration Technologies KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-6106Fax: +49 (0) 6201 88-6106E-mail: [email protected] www.freudenberg-filter.com

Underpinned by rises in all regions and segments, Freudenberg Filtration Technologies generated sales of €241.4 million (previous year: €194.2 million) and employed 1,260 associates (previous year: 1,050) at year-end. The measures introduced in response to the economic crisis had a positive impact in a year char-acterized by dynamic business recovery. Further efforts are required, particularly in the industrial filtration busi-ness in Europe and North America. Thanks to the high level of flexibility at all production plants, there was a swift response to the rise in incoming orders.

Industrial air and liquid filtration activities developed well. In addition to strengthening existing customer


relations, progress was achieved in acquiring new customers and expanding the Viledon® brand product portfolio. Freudenberg Filtration Technologies won major orders in areas such as environmental technol-ogy, shipbuilding and aircraft construction, and to provide equipment for air intake systems for gas tur-bines and compressor stations. 2010 saw the global market launch of the micronAir® office fine dust filter for document shredders, a unique innovation.

In September 2010, Freudenberg Filtration Technolo-gies acquired the Australian company MicroFresh Filters (Aust.) Pty. Ltd. Now renamed Freudenberg Filtration Technologies (Aust) Pty. Ltd., the company is one of the market leaders in filter technology for the mining industry and raw material processing. With this step, the Business Group has expanded its product portfolio and laid the foundation for further growth in Australia and Oceania.

The crisis-driven reluctance to invest in maintenance or in retrofitting and expanding filtration plant at the beginning of the financial year was followed in the second half of the year by a rise in orders in Asia, South America and Europe. The Business Group won a major order from a Taiwanese petrochemical products manufacturer for the new “Viledon® eee.Sy” program (combined filtration and cooling solution for large gas turbines and compressors).

Demand for micronAir® cabin air filters for new vehicle OEM installation and the aftersales market grew in all regions, particularly South America and Asia. Production capacity in China was significantly expanded. The European spare parts business saw growth in combifilters (fine dust filters with an acti-vated carbon layer) in particular and market share in this segment was defended. Global business with engine intake air filters, where the conventional paper filters in the intake air system are replaced by high-quality synthetic filter mediums, continued to develop well.

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The main challenges facing the Business Group in 2011 are massive rises in raw material prices, an industrial filtration market that remains volatile, and the need to enhance productivity further. Plans include the introduction of new, high-efficiency industrial filters, expansion of the plant engineering and service business and expansion of business in the BRIC countries.

Freudenberg household Products


household Products Business Area

The Freudenberg Household Products Business Area comprises the Freudenberg Household Products Busi-ness Group, which is active in the mechanical clean-ing equipment and laundry care segments for final users (Consumer) and commercial cleaning companies (Professional).

Freudenberg household Products

Freudenberg Household Products is one of the lead-ing international manufacturers of brand cleaning articles and systems and laundry care products. The company is the market leader in almost all coun-tries. Products are marketed under the brand names of vileda®, O’Cedar® and Wettex®. The Business Group’s success factors are detailed knowledge of the market, innovations, new and effective products and a pronounced customer orientation. These are complemented by international market and customer research, innovation centers in all regions of the world and a dedicated sales network in over 30 countries.

Products and services Floor cleaning equipment, household cloths, cleaning

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articles, household gloves, mats, laundry care prod-ucts such as ironing boards and clothes driers

Locations Australia, Belgium, Canada, Chile, China, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Italy, Jordan, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovenia, Spain, Sweden, Turkey, UK, USA

Freudenberg Haushaltsprodukte KG Im Technologiepark 1969649 Weinheim | GermanyPhone: +49 (0) 6201 80-871000Fax: +49 (0) 6201 88-874000E-mail: [email protected]

The business of Freudenberg Household Products is divided into the Consumer Division (some 85 percent of sales) and the Professional Division. Sales rose by 8.0 percent to €676.8 million (previous year: €626.8 million). The headcount at year-end rose by 38 to 2,347.

In 2010, Freudenberg Household Products operated on mixed markets worldwide which showed signs of returning to growth. Growth was driven by the Asia/Pacific, South America, Russia and Middle East regions, while rising unemployment and higher taxes as a result of the financial and debt crises impacted consumer goods markets in almost all countries in North America and (Southern) Europe.

The Business Group nevertheless lifted competitiveness in all regions and almost all countries with sales rising month by month in 2010.

Streamlining processes and organization during the crisis strengthened Freudenberg Household Products. Main factors in the good development were increased investment in growth regions, product innovations


backed by publicity measures, cooperation with strategic partners and a marketing strategy oriented to customer benefit and sustainability.

One focus of Business Group activities in 2010 was the successful expansion of distribution and market presence in Asia/Pacific and Russia which led to a 45 percent rise in sales in the overall region and signi-ficant growth in all countries. The start-up of a factory in Gujarat, India, brought substantial expansion of business in this region.

A further focus of activities was the successful launch of the vileda® Naturals “green” product line manufactured from sustainable or recycled materials thereby meeting demanding sustainability criteria, the ProMist® integrated mop spray system, and the flexible FingerMop® dusting system; combined with further product enhancements and an advertising budget that had been doubled, these innovations triggered growth in all world regions.

Furthermore, a far-reaching partnership with the Span-ish company SpBerner Plastic Group S.L. was agreed. The first joint projects involved the transfer of SpBerner cleaning products distribution in Spain and Portugal to Freudenberg Household Products and setting up a new production joint venture in the USA featuring technologies new to Freudenberg Household Products and located at the Business Group’s facility in Aurora, Illinois, USA.

Freudenberg Household Products expects to outperform the market in the 2011 financial year. It is planned to significantly expand the regional presence in Asia and America. The Business Group will continue to focus on its strong innovation program, intensive cooperation with strategic retail partners and further expansion of distribution, particularly in emerging markets and the USA. Activities will also focus on setting up a new plant in Russia, a higher share of recyclates in products and active process, cost and environmental management in order to raise efficiency in all areas.

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Specialties and others Business Area

The Specialties and Others Business Area comprises inter alia the Business Groups Freudenberg Chemi-cal Specialities, Freudenberg NOK Mechatronics, Freudenberg IT, Freudenberg New Technologies, Freudenberg Service Support and Freudenberg Real Estate Management, the latter three primarily operating internally. During the year under review, the companies in this Business Area generated sales of €890.0 million (previous year: €688.2 million). At year-end 2010, the headcount was 4,679 com-pared with 4,066 at year-end 2009. Well over half of the sales generated by this Business Area are attributable to the Freudenberg Chemical Speciali-ties Business Group, which supplies the automotive and mechanical and plant engineering industries as well as many other sectors. The Freudenberg NOK Mechatronics Business Group produces almost exclusively for the automotive industry. Freudenberg IT is an IT service provider primarily serving small and medium-sized businesses in various branches of industry and the trade sector.

Freudenberg Chemical Specialities

The Freudenberg Chemical Specialities Business Group comprises the three largely autonomous divi-sions of Klüber Lubrication, Chem-Trend and OKS operating independently in their respective markets. Klüber Lubrication is one of the world’s leading manufacturers of specialty lubricants. Its tailor-made tribological solutions are almost exclusively sold direct to customers in virtually all industries and markets. Chem-Trend is one of the world’s leading producers of release agents for the manufacture of composites, rubber, plastic and polyurethane molded parts and for die casting. OKS is a specialist for high-performance lubricants focusing on the mainte-nance and repair market. OKS serves customers in trade and industry through industrial distributors.

SurTec International GmbH domiciled in Zwingen-berg, Germany, was acquired at the end of 2010 and will form the Business Group’s fourth division going forward. The company is a leading supplier of surface treatment and electroplating products.

Products and servicesOils, greases, waxes, pastes, bonded coatings, dry lubricants, solid lubricants, anti-corrosion products, chemotechnical products for MRO, hydraulic fluids, cleaning agents, release agents for die casting, com-posites, rubber and polymer processing

Freudenberg Chemical Specialities



– Europe and the countries of the North American Free Trade Agreement (NAFTA) – also contributed to good business development. Overall, sales are moving towards a balanced global distribution. Assuming growth in the emerging economies remains strong, this trend will continue for the coming years.

The Divisions also addressed the development and targeted coverage of market segments with particu-larly attractive growth prospects. Klüber Lubrication focused in particular on the food, pharmaceutical, marine and rail industries. Chem-Trend developed new technologies to leverage opportunities in non-automotive sectors, in particular wood composites, wind energy, precast concrete and plastics, thereby systematically and successfully reducing its former disproportionately high dependence on the auto-motive industry.

The trade specialist OKS extended its international presence by winning new distribution partners, par-ticularly in European countries outside Germany.

One important strategic goal of the Freudenberg Group is to expand business with chemical special-ties. A key milestone towards this goal was reached during the year under review when Freudenberg Chemical Specialities acquired SurTec International GmbH at the end of 2010. The Business Group has a very solid economic and organizational basis for pressing ahead with the integration of the new SurTec Division while at the same time harnessing growth opportunities as they arise. Major investment projects, such as increasing capacity at production plants or research and development, strengthen this basis and are targeted to extending the leading posi-tion in relevant markets and market segments.

Freudenberg Chemical Specialities expects business to continue to develop well, albeit at a slower pace, and anticipates marked sales growth in 2011 as well.

Locations Argentina, Australia, Austria, Belgium, Brazil, Chile, China, Czech Republic, Denmark, Finland, France, Germany, India, Italy, Japan, Malaysia, Mexico, Netherlands, Norway, Poland, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzer-land, Thailand, Turkey, UK, USA, Vietnam

Freudenberg Chemical Specialities KGGeisenhausenerstraße 781379 Munich | GermanyPhone: +49 (0) 89 7876-0Fax: +49 (0) 89 7876-1600E-mail: [email protected]

The Business Group generated sales of €581.0 mil-lion in 2010 (previous year: €437.5 million), repre-senting an increase of 32.8 percent. The headcount rose from 2,298 in the previous year to 2,406 in the year under review.

The 2010 financial year was characterized by continuous, at times tempestuous, growth across all market segments and regional markets. The stimulat-ing effect of government economic programs at the beginning of the year was swiftly replaced by self-sustained strong demand growth among industrial and commercial customers. Economic recovery in key industry sectors such as the automotive and mechani-cal and plant engineering sectors, led to above-average growth in all divisions and record sales for the financial year. Specialist trade restocking at the beginning of the year and the subsequent swift boost in customer demand also contributed to the positive developments. Almost all of the Business Group’s production plants were operating to full capacity, and in some cases even beyond.

Thanks to a strong international presence, the Busi-ness Group benefited from continued robust growth in the emerging economies of Asia and parts of South America. The market upswing in economic development in traditional industrial core markets

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Freudenberg noK Mechatronics[based on pro-rata shareholding] 2009 2010Sales [E million] 19.9 28.2Workforce 167 185

Freudenberg noK Mechatronics

Freudenberg NOK Mechatronics is a joint venture between Freudenberg and NOK Corporation. Busi-ness activities range from the development and production of mechatronic solutions based on large flexible printed circuits, ready-for-use SMD assembly flat wiring harnesses which can integrate switches, sensors, LED and other functional components, and connector technology. Actuators which reduce emis-sions round off the range of products. Experience in research, development and production drawn from the joint venture partners makes the company a com-petent and reliable development partner and sup-plier, particularly for the automotive industry, module suppliers and harness makers.

Products and servicesMechatronic solutions based on large flexible printed circuits including connector technology with and without SMD assembly, switch and touch control foils, heating and antenna foils, component assembly, actuators

LocationsGermany, Hungary

Freudenberg NOK Mechatronics GmbH & Co. KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-3896Fax: +49 (0) 6201 88-3896E-mail: [email protected]

The first signs of positive business development at Freudenberg NOK Mechatronics began to emerge during the fourth quarter of 2009. Total sales in 2010 ran at €56.4 million, 41.4 percent higher than the prior year and 15.6 percent up on the 2008 level on the back of new project rollouts in light-ing applications and actuators. On the basis of the pro-rata consolidation, sales of €28.2 million are disclosed in the consolidated financial statements of the Freudenberg Group. At year-end 2010, the headcount was 369, of which a headcount of 185 (previous year: 167) is attributable to Freudenberg on the basis of the pro-rata consolidation. This cor-responds to a rise of 10.8 percent.

These positive developments are due to the measures introduced in the crisis year: A systematic continua-tion of development work with customers, restructur-ing in administration and supply chain adjustments.

There were no delivery bottlenecks as a result of the unexpectedly swift rise in orders. In the external light-ing unit, new projects were won for rear lights and for the first time also for day running lights. FreudenbergNOK Mechatronics delivered its first complete sub-module. In the lithium-ion battery unit, work on bat-tery cell monitoring using flat-wiring based modules was intensified. The Business Group is at the pre-development stage with all well-known battery system manufacturers. There was global expansion in the customer base in the service-oriented window connec-tor segment, and high-volume projects were won, e.g. for the Ford Focus.

Further newly-developed products for hybrid and turbocharger applications were added to the regen-eration valve in the actuator division: All products improve efficiency and reduce CO2. This created further growth opportunities in this segment.

In total, the annual sales volume of new projects acquired by Freudenberg NOK Mechatronics in


2010 ran at €24 million, significantly higher than in previous years.

Given the good order situation at the beginning of the new year, positive developments are also expected for 2011.

Freudenberg It

Freudenberg IT is an internationally active outsourc-ing and consulting solutions provider for SAP and MES (Manufacturing Execution System). Preconfig-ured solutions offer the security of globally func-tioning standards. Freudenberg IT combines these standards with customized elements tailored to meet individual needs. The company designs, implements and optimizes IT infrastructures, runs SAP application hosting and supplies the relevant application man-agement services. Freudenberg IT’s Adicom® Soft-ware Suite offers a holistic all-round MES solution for planning and control in production and personnel for SMEs and large companies.

Products and servicesOutsourcing, consulting for SAP and MES (in-house Adicom® software)

LocationsChina, Germany, Hungary, Singapore, Spain, Ukraine, USA

Freudenberg It


Freudenberg IT KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-8000Fax: +49 (0) 6201 88-8000E-mail: [email protected]

In the 2010 financial year, Freudenberg IT grew sales by 16.7 percent to €88.2 million (previous year: €75.6 million). Some three quarters of sales are generated outside the Freudenberg Group. At year-end 2010, 650 associates worked for the Business Group at 18 locations worldwide, 149 more than the previous year.

In the 2010 financial year there was an improvement in international demand for IT consulting compared with the restrained demand of the previous year. The pleasing general economic situation was very clearly felt, and developments in IT consulting were therefore very positive. Demand for outsourcing services at mid-market customers also developed well. Orders in this division rose significantly in 2010. Overall, Freudenberg IT held its position well in its markets.

Freudenberg IT is particularly proud of successful recertification as an SAP Global Hosting Partner, certification as an SAP Global AMS Partner and as an SAP Partner in Cloud Services, all of which contributed to market success. Extensive investments and recruitment catered for more demanding market requirements.

In 2011, Freudenberg IT will further raise the quality level of its services and customer satisfaction under the motto of “Customer First”. For the Business Group, this is the main foundation for the sustained global market success of its operations.

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Freudenberg new technologies


management, patent and trade mark research, fuel cell components and venture capital

LocationGermany

Freudenberg New Technologies KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-2659Fax: +49 (0) 6201 88-3094E-mail: [email protected]

In the 2010 financial year, sales by the Freudenberg New Technologies Business Group, which is mainly active for customers in the Freudenberg Group, rose by €4.3 million to €29.0 million (previous year: €24.7 million). The largest share of sales is gener-ated by Freudenberg Forschungs dienste KG. At December 31, 2010, the headcount at Freudenberg New Technologies was 248, six more than the pre-vious year.

The New Business Development Division of Freudenberg New Technologies KG continued its work to identify and assess ideas for new business which are subsequently launched as projects under the stage gate process. The first project which origi-nated under the Group-wide “Your Idea – powered by Freudenberg” campaign reached the pilot phase in the 2010 financial year: Purtex® is a water-based polyurethane emulsion that significantly improves the properties of functional fabrics, particularly for outdoor applications (e.g. durable water repellent properties) as well as enhancing comfort (e.g. mois-ture transport, haptic properties). The first industrially manufactured products have already been finish tested at customers.

Freudenberg Forschungsdienste KG supports Freudenberg Business Groups in the development and introduction of new products and processes. After a weak start, there was a marked rise in orders in this Division, too, in the year under review, chiefly

Freudenberg new technologies

The Business Group comprises the lead company Freudenberg New Technologies KG together with the companies Freudenberg Forschungsdienste KG, Freudenberg FCCT KG and Freudenberg Venture Capital GmbH, all domiciled in Weinheim. This organizational structure allows a focused approach to innovation and new business at Freudenberg. The New Business Development Division at the lead company reinforces the innovative strength of Freudenberg. The Idea Pool takes up employees’ ideas and transforms them into concrete business projects. Freudenberg New Technologies KG is also responsible for cross-functional innovation activi-ties and public funding. Freudenberg Forschungs-dienste KG functions as a partner for customers in the development of new and the optimization of existing materials and processes and as a preferred service provider for damage analysis and other research services. Freudenberg FCCT KG develops fuel cell components such as seals, gas diffusion layers, humidifiers and filters. Freudenberg Venture Capital GmbH reviews participations in startup companies offering innovations in fields related to Freudenberg activities, putting up venture capital where appropriate.

Products and servicesDevelopment, testing, computation, analysis of polymer materials, intellectual property rights



Freudenberg Service Support operates the industrial parks in Weinheim, Neuenburg and Laudenbach. The Division comprises the companies Freudenberg Service KG and Freudenberg Verpflegungsdienste KG, both domiciled in Weinheim. Freudenberg Service KG supports its customers by providing a variety of services at the three industrial parks such as occupa-tional health and preventive healthcare, accounting, energy management, infrastructure and communi-cation management, a pension service, plant secu-rity and fire services. Freudenberg Service Support operates a co-generation plant at the Weinheim site providing environmentally-friendly energy generation and supply. Freudenberg Verpflegungsdienste KG is responsible for works catering for all sections of the Freudenberg industrial complex in Weinheim.

Products and servicesIndustrial park operation, energy services, infrastruc-ture and communication technology, shared service centers, catering

LocationGermany

Freudenberg Service KG69465 Weinheim | GermanyPhone: +49 (0) 6201 80-0Fax: +49 (0) 6201 88-0E-mail: [email protected]

with regard to business with affiliated companies. Significant progress was made in particular with the basic research projects in the fields of binding technology and compounding which were started in the 2009 crisis year. The first findings from these projects were already translated into series products in 2010. Computer tomography was established as an analysis method in 2010 and successfully deployed in numerous projects.

Fuel cells play a key role in future energy supplies for stationary and mobile applications. The automotive industry as well as energy suppliers and power tech-nology companies now have market-ready products. In non-automotive markets, the first fully-commercial-ized fuel cells can be found in leisure applications. The number of suppliers is increasing. Freudenberg FCCT KG develops and manufactures components for the global fuel cell market for automotive, non-automotive and domestic energy supply applications. The Division with its broad product portfolio of stack (seals, gas diffusion layer) and system components (filters, humidifiers) is very well positioned and has established itself as a leading supplier.

Freudenberg New Technologies will continue to press ahead with investments in promising fields in 2011, focusing on expanding the fuel cell market and bringing several New Business Development projects to market.



42

Freudenberg Real estate Management

The Freudenberg Real Estate Management Division was set up in 2008. Under the guidance of the lead company Freudenberg Immobilien Management GmbH, Weinheim, the Division is responsible for all real estate issues relating to Freudenberg companies worldwide.

Activities include the purchase of land and erection of buildings, the purchase or sale, hire or rental of production buildings, warehouses or offices as well as consultancy services on all real estate issues. In addition, Freudenberg Immobilien Management GmbH develops entire production facilities and new development concepts, e.g. for Weinheim Technology Park or other unoccupied industrial space.

Products and servicesThe provision of real estate for Freudenberg compa-nies and external firms; corporate real estate man-agement – the structured and efficient management of real estate; construction, purchase and sale of real estate; hire and letting of production, logistics and office space; infrastructure planning and technical facility management

LocationGermany

The Freudenberg Service Support Division is primarily an internal service provider and operates industrial parks at Freudenberg locations in Germany. In 2010 the Division generated sales of €53.7 million (previ-ous year: €57.9 million).

The decline in sales is attributable to the sale of the two companies Freudenberg Produktionsservice KG and Freudenberg Gebäudeservice KG effective April 1, 2009 and the transfer of business units to Freudenberg Immobilien Management GmbH effec-tive May 1, 2009. Adjusted for these effects, sales rose year-on-year.

Investments and expenditure in strategic growth fields proved successful. The shared service center for accounting set up in 2009 was followed by a shared service center for HR in 2010.

The energy management unit expanded its consult-ing services in the fields of energy procurement and energy efficiency offered to Freudenberg Group companies and external businesses.

Freudenberg Service Support successfully converted the telephone systems at many Freudenberg locations in Germany and other countries to a new technology.

Furthermore, Weinheim Industrial Park was one of the first industrial parks in Germany to set up a charging station for electric vehicles registered under the brand name of e-load® in June 2010.

At year-end 2010, the headcount at Freudenberg Service Support was 321 (previous year: 320).

Business development of the Service Support Division is closely linked with the development of the industrial parks in Weinheim, Laudenbach and Neuenburg.

Freudenberg Real estate Management



Given the present order situation, Freudenberg Real Estate Management expects business in 2011 to be positive.

Freudenberg Immobilien Management GmbH69465 Weinheim | GermanyPhone: +49 (0) 6201 80- 6724Fax: +49 (0) 6201 88- 6724E-mail: [email protected]

Contrary to the cautious outlook for 2010, there was slight growth in real estate business in 2010.

In the 2010 financial year, the Freudenberg Real Estate Management Division with its headcount of 49 (previous year: 48) generated sales of €47.7 million (previous year: €46.4 million), of which sales from letting and leasing accounted for €39.9 million (previ-ous year: €38.4 million).

An 8,000 square meter production facility was com-pleted for Vibracoustic in Yantai, China, in 2010. In addition, the Division acquired an approximately 50,000 square meter logistic and production hall in Aurora, Illinois, USA, for Freudenberg Household Products as well as completing an approximately 10,000 square meter extension for production purposes. A commercial property in Durham, North Carolina, USA, was acquired for Freudenberg IT.

Construction of the production facilities for Freudenberg Spezialdichtungsprodukte GmbH & Co. KG, Weinheim, in Berlin-Adlershof commenced during the course of the year. It is planned to hand over the property to the tenant in March 2011.

In Laudenbach, work began on building an approxi-mately 1,000 square meter production hall for AWETIS Engineering + Manufacturing GmbH. Real estate was sold in 2010 including properties in Poland, Hong Kong, China and Germany.

Freudenberg Real Estate Management’s quality man-agement system was certified to DIN EN ISO 9001 in December 2010.

44

It is a project peppered with superlatives. The state-owned Russian pipeline company Transneft is currently building the ESPO pipeline. The abbreviation stands for Eastern Siberia-Pacific Ocean. A 4,070 kilometer pipeline is to pump crude oil to the Pacific Ocean. When it is completed in 2014, this will be the world’s longest oil pipeline. It will supply Siberian crude to China, Japan and Korea.

In its final stage the pipeline will run from Taishet, a junction of the Trans-Siberian Railway, to a terminal in the Russian port of Kozmino on the Pacific Coast not far from the border with North Korea. The first 2,757-kilometer stage including pumping stations from Taishet to Skovorodino is already complete. Since New Year’s Day, Russia has been delivering crude to the Chinese city of Daqing via the new pipeline and an additional north-south lateral.

The mechanical seals for the pumping stations along the mega-pipeline were designed by Freudenberg’s Eagle Burgmann Business Group. The company supplied more than 100 customized seals to the pump manufacturers commissioned under the project. Exhaustive tests proved that EagleBurgmann was equal to the task: The company has considerable experience in handling crude, which is difficult to transport, and in coping with very different operating conditions and fluctuating pressures as well as dealing with the long sections spanning several hundred kilometers between the pumping stations.

Mechanical seals for mega-pipeline

45

Our customers personally attended test runs at our main plant in Wolfratshausen to gain a first-hand

impression of our know-how and the quality of our products. Our performance convinced them.

Franz Schäfer, Sales Manager, EagleBurgmann.

46

Under the motto “Your Idea – powered by Freudenberg”, over 190 ideas were collected from associates all over the Group; these were then assessed and passed on to the Business Groups and the New Business Development Division for specific use.

The third Global Innovation Forum with the theme of “Advanced Materials and Technologies” was held in 2010. With over 300 participants in Weinheim and local events in Brazil, USA, China and Japan which were linked by live broadcast, this event has evolved into the most important element for innovation net-working in the Freudenberg Group. The presentations by internal and external experts were accompanied by a fair where all the Business Groups and the part-ner companies NOK Corporation and Japan Vilene Company Ltd. presented key innovations.

The Freudenberg Group makes use of public fund-ing to develop new materials, products and pro-cesses with key partners from research and along the value chain. A total of 40 research and develop-ment projects supported by the German government and the EU were ongoing at Freudenberg in 2010. Approximately €1.8 million of funding was renewed or granted for the first time for five of these projects in 2010. Public research and development funding at Freudenberg has therefore reached its highest levels to date.

Key areas of research in the Group in 2010 included reducing CO2 emissions, the use of renewable resources, surface technology and mobility concepts for the future such as electric and hybrid powertrains. With regard to alternative powertrain technologies, Freudenberg with its battery separators, sealing and filter solutions is a sought-after development partner for the automotive industry. Alternative powertrain concepts will remain a focal issue for research and development activities in the 2011 financial year.

ReSeARCh And develoPMent

In 2010, the Freudenberg Group expensed a total of €181.3 million (previous year: €170.9 million) for research and development, with more than half of this sum accounted for by the Freudenberg Seals and Vibration Control Technology Europe, Vibra-coustic and Freudenberg Chemical Specialities Busi-ness Groups. During the year under review, 1,960 associates (previous year: 1,873 associates) were employed in research and development throughout the Group, with the regional focus in Germany, where 1,318 associates were employed in research and development.

In the Freudenberg Group, the targeted, customer-oriented innovation activities of the Business Groups are complemented by various strategic research and development elements. The common goal is to lift sales significantly through new products.

Spearheaded by the New Business Development Division of Freudenberg New Technologies, the Idea Pool, an initiative for new business ideas, was further extended in the 2010 financial year.

47Management Report – Research and Development / Human Resources

clauses under collective agreements were harnessed in close cooperation with the social partners in order to safeguard jobs. The headcount in the South/Central America region rose to 1,614 (previous year: 1,434) and in Africa/Australia to 453 (previous year: 413). The headcount in Asia rose further to 5,868 (previous year: 5,285) on the back of regional growth.

In 2010, 163 young people began their training at Freudenberg’s German companies. In total, 518 people were training at Freudenberg in Germany as at December 31, 2010. The spectrum ranges from a two-year commercial or technical apprenticeship to dual studies at a university of cooperative education. Freudenberg has acquired a reputation for the high standard of its training, as is confirmed by the fact that companies located in the vicinity of Freudenberg operations send their young people to Freudenberg for training.

huMAn ReSouRCeS

On December 31, 2010, the Freudenberg Group employed 34,319 associates, 2,177 more than in the previous year. Personnel expenses increased by 8.4 percent to €1,605.7 million (previous year: €1,481.1 million). Of these personnel expenses, social security contributions and costs of pensions and assistance and related benefits amounted to €328.5 million, representing an increase of €14.4 million compared with the previous year.

The headcount increased, given the swift recovery in key sales markets in all regions, particularly in North America, where the number of associates rose to 6,404 (previous year: 5,678), the European Union (excluding Germany), where the number of associates increased to 8,537 (previous year: 8,123) and in the Other European countries region, where the number of associates went up to 639 (previous year: 567). In Germany, the headcount rose slightly by 162 or 1.5 percent to 10,804. Particularly during the first half of the year, the openings provided by short-time work, plant-specific arrangements and flexibility

Workforce by regions[as at Dec. 31, 2010]

Germany 10,804

Africa/Australia 453

Asia 5,868South/CentralAmerica 1,614

North America 6,404

EU (excludingGermany) 8,537

Other European countries 639

48

ReSPonSIBle ConduCt

environmental protection, occupational health and safety

In the year under review, €13.2 million was invested in occupational health and safety, €4.1 million more than in the previous year (€9.1 million). Investments in environmental protection amounted to €7.5 million (previous year: €3.3 million). The share of investments in environmental protection and occupational safety in total investments in property, plant and equipment decreased to 7.7 percent (previous year: 9.5 per-cent). Many projects focused on sustainable resource management. Freudenberg Politex Nonwovens, which obtains a large share of its raw material from recycled PET bottles, commissioned life cycle assessments for its key product lines. The Freudenberg Household Products and Freudenberg Nonwovens Business Groups have also launched product lines based on sustainable or recycled raw materials with the vileda® Naturals, respectively Lutradur® ECO ranges. Fur-thermore, the new Freudenberg Household Products building in Aurora, Illinois, USA, was recognized for its particularly sustainable building concept.

The second Group-wide energy audit was conducted in 2010, and established that Freudenberg used a total of 1.77 million megawatt hours (previous year: 1.52 million megawatt hours), a rise of 17 percent over the previous year and attributable to high capac-ity utilization at plants worldwide due to generally positive economic developments in 2010 and the rise in production. The break-down by sources of energy is as follows:

Outsourced energy supplies (power, steam and district heat generated outside the Freudenberg Group; 1.09 million megawatt hours)

Fuel oil (0.06 million megawatt hours) Natural gas (0.61 million megawatt hours)

This energy consumption of 1.77 million megawatt hours translates into costs totaling approximately €127.6 million. Energy costs accounted for 2.3 percent of total sales in 2010, compared with 2.7 percent in 2009.

Many site projects and Business Group initiatives focused on sustainable energy use. Freudenberg Seals and Vibration Control Technology Europe established a multi-site energy-saving cycle, thereby ensuring the swift dissemination of energy-saving measures and ideas. Success is documented by a new energy reporting system. Energy managers have begun their work in many Business Groups. Four production loca-tions of Freudenberg Household Products established an energy management system pursuant to DIN EN 16001; further sites are planning similar action for 2011. Freudenberg Real Estate Management has an ongoing program for energy efficiency modernization measures at existing properties. In 2010, for example, the heating system in a building complex in Weinheim Industrial Park was modernized. Apart from the heat-ing system itself, over-door air curtains improved the heating shields between warehouse and production, thereby also helping to improve the indoor climate. The Business Groups have set concrete targets for reducing their specific energy consumption.

There were three events with a significant environ-mental impact in 2010 (previous year: No events): 3,000 square meters of production area including machines were severely damaged during a major fire at the plant in Pyungtaek, South Korea, operated by the Korea Vilene Co., Ltd. joint venture. No one was injured during the fire. The chemical oxygen demand threshold values at the wastewater treatment plant in the Weinheim Industrial Park were exceeded on several occasions. There was no danger to the neigh-boring river nor was there any threat of any lasting environmental impact. Due to an error, a water-glycol mixture was released and entered the river that runs

Investments in occupational safety

Investments in environmental protection

9.1

13.2

3.37.5

40

20

Investments in environmental protection and occupational safety Expenses including integrated technology and non-capitalized expenditure (E million)

2006 2007 2008 2009 2010

31.3

8.7

20.3

8.5

26.6

9.4

49

adjacent to the Freudenberg Household Products plant in Norrköping, Sweden. Due to the process used in Norrköping, the mixture was extremely diluted and there was no danger to the river at any time. The HSE processes underwent a stringent review in all three cases and corrective measures were implemented. The issue of fire protection was addressed in all Business Groups.

As a consequence of numerous activities under the “We all take care” environmental protection and occu-pational health and safety initiative and other meas-ures at all levels of the Freudenberg Group, the total number of accidents resulting in more than one day’s absence in 2010 remained almost unchanged at 142 (previous year: 141) with a 6.8 percent increase in headcount. The corresponding LDI rate (accidents ≥ 1 day’s absence per 1,000 associates) improved to 4.0 (previous year: 4.2). Referred to one million working hours, the rate at Freudenberg therefore improved from 2.6 to 2.3. The already low accident rate was thus improved further. As a result, the number of hours lost through accidents fell by 4.4 percent to 16,899. Contrary to the trend, the number of serious accidents rose from four to ten. None of these serious accidents was fatal (last fatal accident in 2006).

The introduction of management systems relating to occupational health and safety (OHSAS 18001) and environmental protection (ISO 14001 or EMAS) continued in the 2010 financial year. 153 of the Freudenberg Group’s 181 production facilities now operate an occupational health and safety manage-ment system pursuant to OHSAS 18001, while 146 Freudenberg Group sites operate an environmental protection management system pursuant to ISO 14001 or EMAS.

Social responsibility

The Freudenberg Group sees its social responsibility as an integral part of its corporate citizenship. The Group’s “Responsibility” Guiding Principle states: “Our company and its family shareholders together are committed to protecting the environment and being responsible corporate citizens in all countries and communities in which we do business …”

In the 2010 financial year, many companies, sites and associates around the world again engaged in local projects and initiatives providing concrete aid with the support of the Freudenberg Group in the spirit of responsible corporate citizenship. Some examples are described below:

In 2010, the first young people completed their training at the non-profit training center in Nagapat-tinam in the Indian province of Tamil Nadu south of Chennai which was opened in 2009 and found employment. 80 young people began training in the same year. The Nagapattinam region, with a population chiefly comprising low-income agricul-tural workers and fishermen, was hardest hit by the tsunami in 2004. To give the young people in the area a sustainable basis for a better future and to meet the above-average need for high-quality training, the training center gives a maximum of 130 young people the opportunity to complete dual study courses that are unique in India to train as welders, plumbers, engine mechanics and machine fitters. Once they have completed their training, the young people stand a good chance of earning their own living while helping to improve the region’s infrastructure.

An elementary school was rebuilt and opened in 2009 in Haijin, a town in Sichuan province, China, almost completely destroyed by an earthquake in May 2008. The new building provides some 300 students with the right setting for a successful start to

Management Report – Responsible Conduct

Accident rate [LDI rate]

2006 2007 2008 2009 2010

8.77.2

5.44.04.2

15

10

5

50

their education. One highlight of 2010 was a one-week summer school project. Over 40 Freudenberg associates were involved in the project and taught the children English, Chinese culture and sport.

Improving education opportunities for young peo-ple from low-income families is also the focus of a project by Freudenberg-NOK General Partnership in Diadema, Brazil. Under the motto “Learn to Trans-form”, 36 associates supported a training program that demonstrably raises the chances of starting out in working life for its participants.

The Berlin based associates of Freudenberg Spezial-dichtungsprodukte GmbH & Co. KG are active at the Rütli secondary school in Berlin and set up a work-shop together with the students and the “One Square Kilometer of Education” project whose sponsors include the Freudenberg Foundation.

The aim of the project is to encourage children to take responsibility and to open the door on career prospects.

In the 2010 financial year, 49 young people gath-ered valuable experience in a foreign country under Freudenberg’s TANNER youth exchange program. Since the program was launched, over 600 children of associates have spent time with host families at Freudenberg locations all over the world and gained a first-hand insight into a different culture.

The Freudenberg Foundation (www.freudenberg-stiftung.de) is the largest Partner of the Freudenberg Group. In keeping with its statues, earnings from the Foundation are used to promote science and education, and to strengthen peaceful coexistence in society. The work of the Foundation focuses on children and young people. All projects seek to integrate these groups in society. The projects are always motivated by a specific need for action which is either drawn to the direct attention of the Foundation or stimulated by scientific research: Young people from immigrant families who cannot find a vocational training opportunity, children who find school difficult because of their lack of German language skills, right-wing extremist youth groups, small business entrepreneurs who cannot find advice or support from existing institutions, or schools wish-ing to open their doors to extra-curricular activities but lacking the necessary resources.

51

PoSt-RePoRtInG dAte eventS

The sale of the cylinder head and exhaust system gasket business to ElringKlinger AG prepared in 2010 was completed effective January 1, 2011.

Also effective January 1, 2011, Freudenberg acquired 50 percent of the shares of NOK (Wuxi) Seal Products Co., Ltd., Wuxi, China, with a view to further strength-ening NOK-Freudenberg Group China.

The reorganization of seals and vibration control technology operations commenced in 2010 came into effect at the beginning of 2011. Freudenberg Seals and Vibration Control Technology Europe and Freudenberg-NOK General Partnership, formerly separate Business Groups, were brought together under the umbrella of the new Freudenberg Sealing Technologies Business Group.

Furthermore, stand-alone Business Groups were set up in defined growth areas: Freudenberg Oil & Gas for the oil and gas sector, Helix Medical for medi-cal technology and Freudenberg Schwab for the rail sector. These Business Groups were developed further in 2010 by means of carve-outs and acquisitions.

In addition, Freudenberg and Trelleborg AB signed a letter of intent on January 17, 2011 concerning a pos-sible 50:50 joint venture involving Vibracoustic and the automotive antivibration business of Trelleborg AB.

The events reported above did not exercise any material effect on the net assets, financial position or results of operations of the Freudenberg Group.

At the time this Annual Report went to press, various plants operated by Freudenberg’s Japanese partner companies NOK Corporation, Japan Vilene Company

Ltd. and Eagle Industry Co., Ltd were not producing due to supply interruptions and restricted infrastructure availability as a result of the earthquake.

RISK RePoRt

Freudenberg is exposed to many risks inseparably associated with entrepreneurial action. A standard-ized risk management system for the timely identifi-cation and control of risks and the prompt initiation of countermeasures to safeguard the company is in place across the Freudenberg Group. The system classifies risks by risk category, likelihood and the scale of damage. Risk identification is decentralized. To ensure an efficient decentralized risk identifica-tion and assessment, the business units are allocated to monitoring sections largely identical with their business responsibilities. Group companies supply information on the current status of major risks under a regular reporting procedure. Risk prevention or risk reduction measures are listed for each risk; early warning indicators are updated on a regular basis. This risk management system is appropriate for the timely identification of developments that could threaten the continued existence of the company.

It is not the objective of the risk management system to avoid all potential risks, but rather to create the leeway for taking a deliberate decision to enter into a risk backed by a comprehensive knowledge of the content and causes. The term “risk” is thus not only defined as a negative hazard, but also describes a positive potential that cannot be realized or opportu-nities that are not harnessed.

As a supplier, Freudenberg is exposed in particu-lar to the business- and product-related risks and opportunities associated with developments in the sectors the company serves. Freudenberg responds to the fluctuating order behavior of customers with

Management Report – Responsible Conduct / Post-Reporting Date Events / Risk Report

52

increased capacity flexibility, inter alia by further developing working capital management.

Many countries continue to battle with significant structural problems. Some European countries are having to cope with high unemployment and national debt and the US economy has not yet recovered. On the other hand, the economies in Asia are powering the global economy. Freudenberg has engaged in Asia for many years and further extended its activi-ties in potential growth markets in 2010. The Group expects these regions to develop significantly better than markets in Europe, USA and Japan. Freudenberg continues to invest in technically challenging market segments such as medical technology, the oil and gas industry, electroplating, industrial filtration and rail vehicles with a view to handling cyclical fluctuations more effectively going forward.

On the procurement market, Freudenberg faces risks relating to the availability and price of raw materials, particularly steel, crude oil and rubber. Operating units respond to these risks with global purchasing activities and by reviewing the utilization of substitute raw materials and alternative production processes. Long-term contracts are concluded where feasible and meaningful.

Freudenberg responded in 2009 to the effects of the economic and financial crisis by swiftly add-ing systematic cash management to the corporate management process and introducing cash reporting in order to respond promptly to possible national or banking risks. The Freudenberg Group hedges this with its solid banking and Partners’ financing and its high liquid reserves. The company has an above-average equity ratio, a stable level of Partners’ reserves and compre-hensive credit lines.

Its international business activities mean the Freudenberg Group is exposed to currency and interest rate risks. Monitoring of these risks is imple-mented in the risk management process. Because the currency risks of the various companies have a par-tially offsetting effect, the effective foreign exchange risk for the Freudenberg Group is determined as part of the foreign exchange management process.

Interest rate risks arise from possible changes in the market rate and can lead to changes in the market value of fixed interest investments. To reduce interest rate risks, Freudenberg & Co. makes funds available to the subsidiaries in the form of loans or via cash pools. Vice versa, Group companies channel surplus liquidity to the central finance department. Currency and interest rate risks are hedged to a meaningful extent.

Internal guidelines for Group companies clearly specify that derivative financial instruments may not be used for speculative purposes, but only for hedg-ing risks in connection with underlying transactions and associated financing operations.

In view of the general economic situation, Freudenberg constantly reviews and extends the present proven risk guidelines in order to respond even more effectively to future challenges.

In its rating published in early September 2010, the rating agency Moody’s continued to clas-sify Freudenberg’s creditworthiness as Baa1 and improved the outlook to “stable”. The Baa1 rating gives Freudenberg very good creditworthiness at investment grade level. Companies with this rat-ing standard have comparatively low interest costs because the likelihood of loan default is significantly lower. For that reason, banks and other credit institu-tions charge a lower risk premium.

53

The Freudenberg Group attaches considerable importance to its research and development activi-ties. By continually expanding these activities, the Group not only combats possible risks arising from rapid technological change, but also safeguards its future competitive edge through its technology lead-ership and harnesses new opportunities in growth markets. Research and development activities were maintained at a high level even during the crisis. Central topics are electro-mobility, fuel cells and the further development of the strategic growth fields of medical technology and the oil and gas industry as well as resource- and energy-saving manufacturing processes.

The business activities of the companies in the Freudenberg Group are subject to legal provisions and the risk of litigation. In its capacity as a sup-plier, the focus in this context is on product liability risks. Freudenberg seeks to avoid these risks through extensive quality assurance and control measures. Specific quality management strategies such as “Six Sigma” (zero defects) are deployed to handle quality risks.

The Freudenberg Group depends on data and information that is chiefly stored electronically and communicated by electronic means. This applies both with reference to internal business processes and to business processes with customers and suppli-ers. The Freudenberg Group responds to IT security risks by operating an IT security management system oriented to the ISO/IEC 27001:2005(E) interna-tional standard. The aim of the IT security guidelines issued by the Management Board is to preserve the confidentiality, availability and integrity of informa-tion, prescribing the procedures to this end. The Business Groups conduct an ongoing comprehensive risk assessment and implement appropriate meas-ures catering for the risks in the various business

areas and factoring in the economic situation. An assessment of IT security in the Group forms part of the annual reporting procedure. Numerous internal communication measures encourage a heightened awareness on the part of employees with regard to the correct handling of information and information processing systems.

In its capacity as a provider of IT outsourcing services, Freudenberg offers its customers the stand-ard guarantees regarding the availability and per-formance of the hardware made available to them. Failure to comply with these guarantees could result in claims for damages. Technical risks are prima-rily covered by redundant data centers in different geographical locations.

The raw materials and processes used for the manufacture of products have a varying impact on the environment and the workplace. Freudenberg is committed to protecting associates and the environ-ment in the selection and further development of raw materials, processes and methods. This applies both to storage and to the disposal of production residue. Freudenberg’s “We all take care” initiative launched in 2002 calls on every associate to proac-tively engage in improving environmental protection and occupational health and safety. The Health, Safety and Environment (HSE) Corporate Committee which is responsible for these activities meets twice a year to discuss these issues at top management level with the HSE representatives of the Business Groups. The objective is the further development of environmental protection and occupational health and safety policy throughout the Freudenberg Group.

The analysis of present risks concludes there are no risks which could pose a threat to the continued existence of the Freudenberg Group.

Management Report – Risk Report

54

Freudenberg largely implements the rules of the German Corporate Governance Code on a vol-untary basis. Restrictions relate in particular to the publication of individual executive compensation for the Management Board and the Board of Partners.

outlooK

The positive economic development of the last financial year has continued in the first few months of 2011. The high level of orders on hand and incom-ing orders at the beginning of the year coupled with high capacity utilization at our plants is indicative of a continued positive trend in the first half of 2011. However, we expect the pace of growth to decelerate in the second half of the year for several reasons.

Growth on the Chinese market, where high growth rates played an important role in recovery at Freudenberg as elsewhere, is expected to slow down. Analysts are forecasting lower growth rates for the Chinese automotive market because government incentives expired at the end of 2010. Momentum will also be curbed by tighter fiscal and monetary policy in China as a result of the sharp rise in inflation.

The trend on raw material markets also calls for caution. Massive price increases as well as increas-ing bottlenecks in supplies of some raw materials will have a negative effect on earnings develop-ment. Despite the Group’s continued efforts to further improve cost structures, Freudenberg will be forced to pass on a share of the rise in raw material prices to customers in many sectors. Moreover, the rise in the price of many goods and services which is generally anticipated could already impact the pace of growth in the second half of the year.

Unsolved structural problems in many mature econo-mies also bring uncertainty as regards future eco-nomic developments. High national debt and high unemployment in many nations coupled with continu-ing problems on financial markets continue to bring significant risks for economic development.

Freudenberg is responding to these risks on the earn-ings side with systematic continued cost control, while at the same time preserving the flexibility built up dur-ing the years of crisis. In addition, intensified commit-ment in defined growth areas will generate new sales potential for the Group. This applies for the three new Business Groups of Helix Medical (medical tech-nology), Freudenberg Oil & Gas and Freudenberg Schwab (rail vehicles) as well as for the integration of SurTec as the “fourth pillar” in the Freudenberg Chemical Specialities Business Group.

We are cautiously optimistic about further develop-ments. However, on March 11, 2011, just a few days before this Annual Report went to press, the news of the severe earthquake and tsunami in Japan reached us. It is not possible at the present time to assess the concrete economic effects of this natural catastro-phe and the subsequent incidents at the Fukushima nuclear power station on our partner companies and joint ventures.

Weinheim, April 1, 2011

The Management Board

55Management Report – Risk Report / Outlook

56

To music lovers, the name of the concert hall has a unique ring about it. Its outstanding acoustics and its much-acclaimed ensemble make the Leipzig Gewandhaus one of Europe’s leading concert halls. Each year, almost half a million visitors enjoy this exceptional musical experience. Having changed locations a few times, the Gewandhaus finally settled at Leipzig’s Augustusplatz in 1981. The building is also closely associated with German reunification. Its famous Kapellmeister Kurt Masur opened the Gewandhaus as a discussion forum in the fall of 1989, turning the place of music into a platform for dialog on the future of the GDR.

With German reunification, things began to move behind the scenes at the concert hall, too. The old air filtration system had come to the end of its service life and was replaced by Freudenberg’s high-performance Viledon® filters. For more than 20 years, these filters have been bringing a breath of fresh air to the Gewandhaus. The pocket filters do not con-tain any fiber glass, they are 100 % moisture resistant and, thanks to the high quality of the synthetic-organic nonwoven media, the filters do not provide a breeding ground for bacteria and fungi. And on top of that, they have a high dust storage capacity and make a significant contribution to lowering energy consumption thanks to the slow increase in the pressure drop.

A breath of fresh air in the concert hall

57

Our filters provide the best air quality at all kinds of locations. As a fan of

classical music, the Gewandhaus in Leipzig is a very special customer for me.

Dietmar Wojtech, Regional Sales Manager, Freudenberg Filtration Technologies.

59

Consolidated Financial Statements

60 Consolidated Statement of Financial Position 61 Consolidated Income Statement 62 Consolidated Statement of Comprehensive Income 63 Consolidated Statement of Cash Flows 64 Consolidated Statement of Changes in Equity 65 Notes to the Consolidated Financial Statements

59

60

Consolidated Statement of Financial Position

[€ million] Note Dec. 31, 2009 Dec. 31, 2010

ASSETSIntangible assets (1) 514.2 566.0Tangible assets (2) 1,566.1 1,579.3Investment properties (3) 18.4 23.0 Investments valued at equity (4) 517.1 656.4 Other financial assets 67.6 96.4Financial assets 584.7 752.8Other non-current assets (6) 43.1 54.2Deferred taxes (19) 69.2 79.0Non-current assets 2,795.7 3,054.3Inventories (5) 532.6 659.7 Trade receivables 706.7 838.4 Other current assets 133.3 129.9Current receivables (6) 840.0 968.3Current tax assets 13.8 16.7Securities and cash at bank and in hand (7) 503.1 647.6Current assets 1,889.5 2,292.3Non-current assets held for sale and disposal groups (8) 2.3 51.7 4,687.5 5,398.3EQUITY AND LIABILITIESPartners’ capital 450.0 450.0Retained earnings 1,381.6 1,830.6Partners’ equity 1,831.6 2,280.6Minority interests 255.1 279.5Equity (9) 2,086.7 2,560.1 Provisions for pensions (10) 397.8 409.1 Other long-term provisions (11) 104.3 105.0Long-term provisions 502.1 514.1 Financial debt 630.5 681.8 Other non-current liabilities 56.7 49.1Liabilities (12) 687.2 730.9Deferred taxes (19) 119.7 129.2Non-current liabilities 1,309.0 1,374.2Other current provisions (11) 327.6 362.3Current tax liabilities 46.0 78.7 Financial debt 303.8 267.6 Trade payables 405.6 515.9 Other current liabilities 208.8 226.2Liabilities (12) 918.2 1,009.7Current liabilities 1,291.8 1,450.7Liabilities in connection with non-current assets held for sale and disposal groups (8) 0.0 13.3 4,687.5 5,398.3

60

61

Consolidated Income Statement

[€ million] Note 2009 2010

Sales (13) 4,200.8 5,481.4Cost of sales (14) - 2,889.0 - 3,545.9Gross profit 1,311.8 1,935.5Selling expenses - 763.9 - 855.3Administrative expenses - 467.1 - 490.2Research and development expenses (15) -168.5 -177.9Other income (16) 69.6 74.5Other expenses (17) -143.5 - 56.0Profit or loss from operations -161.6 430.6Income or loss from investments in associated companies -19.3 45.3Other interest and similar income 10.2 9.6Interest and similar expenses (18) - 55.8 - 48.2Other investment result 0.2 4.4Financial result - 64.7 11.1Profit or loss before income taxes - 226.3 441.7Income taxes (19) -23.3 -120.0Consolidated profit or loss - 249.6 321.7 Profit or loss attributable to Freudenberg - 242.1 286.5Profit or loss attributable to minority interests (20) - 7.5 35.2

Financial Report – Consolidated Financial Statements

62

Consolidated Statement of Comprehensive Income

[€ million] 2009 2010

Consolidated profit or loss - 249.6 321.7 Other comprehensive income: Exchange rate differences - 6.1 238.6Changes in value of securities 4.7 17.3Changes in value of derivative financial instruments - 4.7 0.5Share in other comprehensive income of associated companies consolidated by the equity method - 21.9 -11.8Miscellaneous comprehensive income 6.8 - 5.0Income tax relating to components of other comprehensive income 2.1 - 0.5Other comprehensive income for the year -19.1 239.1 Total comprehensive income for the year - 268.7 560.8of which attributable to Freudenberg - 270.4 499.5of which attributable to minority interests 1.7 61.3

63Financial Report – Consolidated Financial Statements

Consolidated Statement of Cash Flows

[€ million] Note 2009 2010

Profit or loss before income taxes - 226.3 441.7Current income taxes - 44.5 -126.0Depreciation, amortization and impairment losses on non-current assets less write ups 302.4 254.5Profit or loss on disposal of intangible, tangible and financial assets 17.5 - 4.0Other expenditure and income not affecting payments 24.8 - 36.9Changes in inventories, trade receivables and other assets 278.9 - 204.7Changes in trade payables and other liabilities - 4.8 117.5Changes in provisions 108.1 26.0Cash flow from operating activities (21) 456.1 468.1

Cash inflow from disposals of tangible and intangible assets 41.4 25.8Cash outflow from acquisitions of tangible and intangible assets -194.2 - 240.1Cash inflow/outflow from investment properties 0.0 -1.1Cash inflow from disposals of financial assets 0.5 10.3Cash outflow from acquisitions of financial assets -10.3 - 24.5Cash inflow/outflow from disposal/acquisition of consolidated companies - 32.6 - 40.2Cash flow from investing activities -195.2 - 269.8

Payments to Partners/minority interests - 49.3 - 73.3Cash inflow from the take-up/cash outflow from the repayment of financial debts -103.9 1.1Cash inflow from disposals of loans and securities held as non-current assets 4.5 2.0Cash outflow from acquisitions of loans and securities held as non-current assets -1.3 - 3.3Cash flow from financing activities -150.0 - 73.5

Changes in cash and cash equivalents with effect on payments 110.9 124.8Changes in cash and cash equivalents from changes in consolidated group 20.1 4.5Changes in cash and cash equivalents from exchange rate differences 1.6 15.2Cash and cash equivalents at beginning of year 370.5 503.1Cash and cash equivalents at end of year 503.1 647.6

Securities and cash at bank and in hand 503.1 647.6

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Consolidated Statement of Changes in Equity

[€ million] Part

ners

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l

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ear

ning

s

Part

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’ eq

uity

Min

orit

y in

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Equi

ty

Status Jan. 1, 2009 450.0 1,674.8 2,124.8 152.7 2,277.5Consolidated profit or loss - 242.1 - 242.1 - 7.5 - 249.6Appropriation of profit -12.5 -12.5 - 3.5 -16.0Other changes in equity -10.3 -10.3 104.2 93.9Other comprehensive income - 28.3 - 28.3 9.2 -19.1Status Dec. 31, 2009 450.0 1,381.6 1,831.6 255.1 2,086.7 Consolidated profit or loss 286.5 286.5 35.2 321.7Appropriation of profit - 50.5 - 50.5 - 36.9 - 87.4Other comprehensive income 213.0 213.0 26.1 239.1Status Dec. 31, 2010 450.0 1,830.6 2,280.6 279.5 2,560.1

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Notes to the Consolidated Financial Statements


General

The Freudenberg Group is an international industrial group active as a supplier to the automotive, mechanical engineering, textile and clothing industries throughout the world. The Group’s portfolio also includes mechanical household cleaning and laundry care products.

The consolidated financial statements of Freudenberg & Co. Kommanditgesellschaft (hereafter Freudenberg & Co.), Weinheim, for 2010 have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as they are to be applied in the European Union (EU) as of the date of the statement of financial position (December 31, 2010). Comparative figures for the previous financial year were based on the same principles.

Freudenberg & Co. has availed itself of the right as laid down in Sec. 315a (3) HGB (Handelsgesetzbuch, “German Commercial Code”) to set up its consolidated financial statements in accordance with IFRS.

The application of the following new and amended standards and interpretations (IFRIC) was binding for the first time for the 2010 financial year:

– IFRS 1: IFRS 1 (revised) – First-time Adoption of IFRS– IFRS 1: Amendment to IFRS 1 – Additional Exemptions for First-time Adopters– IFRS 2: Amendment to IFRS 2 – Group Cash-settled Share-based Payment Transactions– IFRS 3: IFRS 3 (revised) – Business Combinations– IAS 27: Amendment to IAS 27 – Consolidated and Separate Financial Statements– IAS 39: Amendment to IAS 39 – Financial Instruments: Recognition and Measurement: Eligible Hedged Items– IFRIC 12: Service Concession Arrangements– IFRIC 15: Agreements for the Construction of Real Estate– IFRIC 16: Hedges of a Net Investment in a Foreign Operation– IFRIC 17: Distribution of Non-cash Assets to Owners– IFRIC 18: Transfer of Assets from Customers– Various standards: Improvements to IFRSs (issued May 2008)– Various standards: Improvements to IFRSs (issued April 2009)

The application for the first time of the following standards and interpretations had an impact on the consoli-dated financial statements of the Freudenberg Group.

– IFRS 3 (revised) – Business CombinationsThe revised IFRS 3 contains changed provisions concerning the balance sheet recognition of companies acquired on or after January 1, 2010. The changes concern the capitalization of transaction costs, the initial and subsequent measurement of contingent purchase price payments or other contingent consideration and acquisition in stages. The changes affect the measurement of goodwill, consolidated profit or loss in the year of acquisition and consoli-dated profit and loss in subsequent financial years.

66

The Group currency is the euro. All amounts are indicated in million euros.

Standards/interpretations Application binding from *

Endorsed by EU

Probable impact

IFRS 1 Amendment to IFRS 1 – Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

July 1, 2010 Yes None

IFRS 7 Amendment to IFRS 7 – Disclosures: Transfers of Financial Assets

July 1, 2011 No None

IFRS 9 Financial Instruments: Classification and Measurement January 1, 2013 No Changes in the classification and measurement of financial assets, especially equity instruments; it is not yet possible to assess the scope of the effects

IAS 24 IAS 24 (revised) – Related Party Disclosures January 1, 2011 Yes No significant impactIAS 32 Amendment to IAS 32 – Financial Instruments:

Presentation: Classification of Rights IssuesFebruary 1, 2010 Yes None

IFRIC 14 Amendment to IFRIC 14 – Prepayments of a Minimum Funding Requirement

January 1, 2011 Yes None

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments July 1, 2010 Yes NoneVarious standards

Improvements to IFRSs (issued May 2010) July 1, 2010/ January 1, 2011

Yes No significant impact

* From this date or for reporting periods beginning after this date

– Amendment to IAS 27 – Consolidated and Separate Financial StatementsTransactions on or after January 1, 2010 by means of which a parent company changes its stake in a subsidiary without losing control of that subsidiary are recognized in equity without effect on net income.

The application for the first time of the remaining amended standards and interpretations had no significant impact on the presentation in the consolidated financial statements.

The IASB and the IFRIC have published additional standards, interpretations and amendments the application of which was not yet binding for the 2010 financial year. The application of these standards, interpretations and amendments is subject to endorsement by the EU which, in some cases, is still pending.

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Consolidated group

Apart from Freudenberg & Co., 86 (previous year: 90) German and 296 (previous year: 289) foreign companies in which Freudenberg & Co. directly or indirectly holds a majority of the voting rights or the financial and business policy of which Freudenberg & Co. has the right to determine in accordance with articles of association, statutes or contracts are fully consolidated in the consolidated financial statements.

In addition, one German and 29 foreign companies have been consolidated by the pro-rata method as in the previous year. Their overall effect on the consolidated financial statements is not significant.

In accordance with the stipulations concerning associated companies, two (previous year: two) German and seven (previous year: ten) foreign companies are shown in the consolidated financial statements.

All Group companies, joint venture companies and interests in associated companies are listed under “Shareholdings of the Freudenberg Group“.

In the year under review, 15 companies were included in the consolidated financial statements as fully consoli-dated affiliates for the first time. 12 companies which had previously been fully consolidated were no longer included as fully consolidated affiliates due to sale, liquidation or merger. The timing of the initial consolidation was determined on the basis of the date when the Freudenberg Group started to exercise financial control.

As of July 1, 2010 Freudenberg acquired the remaining shares in Schwab Schwingungstechnik AG, Adliswil, Switzerland, and Freudenberg Schwab GmbH, Hennigsdorf. In addition, the remaining shares in Vibracoustic do Brasil Ltda., Taubaté-SP, Brazil, were acquired as of January 1, 2010. Freudenberg Filtration Technologies expanded its presence in Australia by acquiring a majority holding in Micro Fresh Filters (Aust.) Pty. Ltd., Brae-side, Australia. This company now trades under the name of Freudenberg Filtration Technologies (Aust) Pty. Ltd.

One company consolidated by the pro-rata method was included in the consolidated financial statements for the first time in 2010. One company formerly consolidated by the pro-rata method was fully consolidated.

The medical technology sector was reinforced by acquiring 50 percent of the shares in VistaMed Ltd., Carrick-on-Shannon, Ireland, as of April 1, 2010.

In 2010, the total amount expended on acquisition and disinvestment activities was €40.2 million (previous year: €32.6 million).


68

The changes in the consolidated group had the following effects on the net assets, financial position and results of operations.

[€ million] Dec. 31, 2009 Dec. 31, 2010Non-current assets 113.7 47.1Current assets 72.7 18.1Non-current liabilities 39.2 5.0Current liabilities 43.0 61.8Sales 2.2 292.4

The changes in sales in 2010 mainly concern the inclusion of additional companies of the EagleBurgmann Group in the consolidated financial statements. As at December 31, 2009, only the assets and liabilities of these companies had been included.

Consolidation methods

The acquisition costs of the shareholdings concerned are set off against the pro-rata share in the fair value of the equity capital of the companies concerned as of the date of acquisition according to the purchase method. Assets and liabilities are also included in the consolidated statement of financial position at their fair values as of the acquisition date. Any remaining differences are shown as goodwill.

Intercompany profits and losses, sales, expenses and income and all receivables and payables between consol-idated companies are eliminated. Deferred taxes are set up on consolidation transactions affecting net income.

Joint venture companies are consolidated on a pro-rata basis using the same principles.

The equity values calculated for associated companies are based on the purchase method. In such cases, adjustments have generally been made to individual accounts to reflect material differences from the valuation methods used in the consolidated financial statements.

The differences arising from the acquisition of shareholdings in associated companies form part of the book value of the shareholding in the associated company concerned. Amortization is not recognized on goodwill in subsequent periods. An impairment test is carried out on the book value of the shareholding as a whole.

Accounting and measurement principles

The consolidated financial statements are based on the annual accounts of Freudenberg & Co. and the consolidated companies. All the annual accounts concerned were drawn up as of December 31, 2010.

In accordance with IAS 27, the accounts of the individual companies to be included in the consolidated financial statements have been drawn up applying uniform accounting and measurement methods.

69

Acquired intangible assets are capitalized at acquisition cost and amortized on a systematic basis.

Amortization is based on the following useful lives:

Software 3 to 8 yearsPatents and licenses depending on contract term

An impairment test is carried out on goodwill at least once per year and an impairment loss is shown if the value of such assets is found to have been impaired.

For the impairment test, the value in use of the cash-generating unit to which the goodwill is allocated is determined in accordance with IAS 36 on the basis of a five-year plan, applying the discounted cash flow method. In line with internal management reporting, the cash-generating units are determined on the basis of the Business Groups of the Freudenberg Group. The discount rates used are based on the WACC (“weighted average cost of capital”) determined separately for each cash-generating unit. An impairment loss is recognized if the carrying amount of the cash-generating unit is in excess of discounted future cash flows.

Impairments of capitalized goodwill are shown under other expenses in the consolidated income statement.

Provided that such assets meet the requirements of IAS 38, internally generated intangible assets are carried as assets at production cost and are amortized on a systematic basis over their useful lives, if their useful lives are finite.

If the useful life of intangible assets is not considered to be finite, no amortization is effected. An intangible asset may be regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash flows for the Group.

Tangible assets are capitalized at acquisition or production cost. In the case of assets produced by Group companies, production cost also includes directly attributable cost as well as pro-rata overheads and depreciation.

Borrowing costs are capitalized as part of acquisition or production cost in the case of eligible assets.

Expenditure for repairs and maintenance is generally shown as expenses. Such expenditure is only capitalized if future economic benefits in connection with such expenditure are probable and the acquisition or production cost can be reliably measured.

Movable non-current assets and industrial buildings are depreciated over their useful lives. This approach normally corresponds to straight-line depreciation.


70

Systematic depreciation is determined on the basis of the following useful lives:

Buildings max. 50 yearsMachinery and equipment 5 to 25 yearsOther fixtures, fittings and office equipment 4 to 20 years

In addition, an impairment loss is recognized if the net selling price or value in use of an asset falls below the book value. If the impairment of an asset reflected by a write-down in the past is reduced or eliminated, the impairment loss is reversed. The updated acquisition or production cost represents the upper limit of measure-ment in such cases.

Taxable grants and tax-free investment subsidies, normally paid by public bodies, are set off against acquisition or production cost.

In accordance with IAS 17, tangible assets leased under finance leases are recognized as assets and written off over their economic useful life if substantially all the risks and rewards associated with the ownership of the leased asset lie with the lessee. Such assets are carried at the fair value of the leased asset at the inception of the lease or, if lower, at the present value of the minimum lease payments. A liability of the same amount is also shown on the statement of financial position.

In the case of operating leases, lease payments are recognized as expenses.

Land and buildings held to earn rentals from third parties are dealt with as investment properties. Such proper-ties are measured at acquisition cost. Financial investments which consist of movable assets and buildings are depreciated over their useful lives. This approach normally corresponds to straight-line depreciation. As a general principle, systematic depreciation is calculated on the basis of a maximum useful life of 50 years and effected on a straight-line basis. The fair value is determined by the discounted cash flow method.

Participations are shown at acquisition cost or, if lower, at fair value.

Shares in associated companies are stated at their updated pro-rata equity plus goodwill if applicable.

Long-term loans are discounted if the amount of such discount is significant.

Inventories are shown at acquisition or production cost or at net realizable value, where this is lower. Inventories of raw materials and consumables and merchandise are measured by the weighted average cost method. Production cost includes directly attributable costs as well as production and material overheads and depreciation.

Receivables and other assets are recognized at amortized cost. Impairments are recognized for individual risks identified on the basis of analyses which are not covered by credit insurance. Impairments are effected using a separate account if circumstances become apparent as a result of which certain receivables are subject to risks in excess of the general credit risk. The amortized cost is approximately equivalent to the fair value of the assets concerned. Long-term receivables are discounted if the amount of such discount is significant.


In principle, securities carried as non-current or current assets are available for sale. Such securities are there-fore recorded at the market value as of the statement of financial position date. Value changes are shown under equity without an effect on net income.

Cash at bank or in hand is shown at its nominal value. Cash held in foreign currencies is converted using the exchange rate as of the statement of financial position date.

Non-current assets and groups of assets held for sale are shown separately in the statement of financial position if they are available for immediate sale in their present condition and the sale of such assets is highly probable within the next 12 months. Such assets are shown at the lower of fair value less costs to sell and book value. Systematic depreciation is not recognized on such assets from the date of reclassification. Liabilities included in a disposal group are shown separately under liabilities.

The requirement for the reversal of the impairment of assets has been complied with both for non-current and for current assets. Unless individual standards call for a different measurement, the updated acquisition or produc-tion cost represents the upper limit of measurement in such cases.

The criteria for the distinction between equity instruments and financial liabilities are stated in IAS 32. Accord-ing to IAS 32.16 and 17, a financial instrument cannot be considered to be an equity instrument if the financial assets received by the reporting entity place it under a potential obligation to make payments. If the reporting entity does not have an unconditional right to refuse making payments, the financial instrument must be classed as a financial liability under IAS 32.19. In view of the special nature of the provisions in its Partnership Agree-ment and the structure of the Partners in the Freudenberg Group, it can be stated that Freudenberg & Co. has an unconditional right to refuse payment in the event of termination or withdrawal by a Partner. An obligation of Freudenberg & Co. to make payments which could be detrimental to the classification of its capital as equity instruments could only arise in a highly improbable extreme case and therefore need not be considered in accordance with IAS 32.25. The statement of financial position of Freudenberg & Co. as at December 31 in accordance with IFRS therefore shows the Partners’ capital and non-distributable Partners’ reserves as equity.

Provisions for pensions and similar obligations are determined by the projected unit credit method using actuarial principles, taking into account future income and pension trends.

Deferred taxes are calculated on temporary differences between the statements of financial position of indi-vidual companies for tax purposes and the consolidated statement of financial position, taking into account the applicable national income tax rates valid on the date of realization and already in force on the statement of financial position date. In addition, deferred tax assets are recognized for tax losses carried forward if it is likely that such losses will be usable by the company. Deferred tax assets and liabilities are only set off against each other in cases where the income taxes concerned are levied by the same tax authority and concern the same period.

Other provisions allow for all recognizable risks and uncertain obligations towards third parties which will probably result in an outflow of resources which can be reliably estimated. Such provisions are recognized at their most probable settlement value and discounted if the amount of such discount is significant. Reimbursement rights in this connection are shown separately under other assets.

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Liabilities are shown at their face value or at the repayment or settlement value, where this is higher. Non-current liabilities are discounted if the amount of such discount is significant.

Sales and other income are recognized at the fair value of the consideration received or receivable when the services are performed or the goods or products concerned are delivered.

The consolidated statement of cash flows is broken down into cash flows from operating, investing and financing activities. Effects arising from changes in the consolidated group and the effects of exchange rate differences have been eliminated from the consolidated statement of cash flows. The influence of these effects on cash and cash equivalents is indicated separately.

In connection with the drawing-up of the consolidated financial statements, it has been necessary to make assumptions and estimates concerning certain assets and liabilities (for example, as regards the useful life of assets with a finite useful life or the parameters for determining pension liabilities). Actual future figures may deviate from these estimates.

Currency translations

The financial statements of all companies included in the consolidated financial statements which are not located in the eurozone are drawn up in the national currencies concerned. This is the currency of the primary economic environment in which the companies concerned operate (concept of functional currency).

In the accounts of individual companies, foreign-currency receivables and liabilities are translated at the exchange rates as of the date of the statement of financial position.

Goodwill created as a result of acquisitions on or after March 31, 2004, is carried as an asset of the economi-cally independent foreign companies concerned in their respective functional currencies.

The financial statements of companies located in hyperinflationary economies are restated in accordance with IAS 29.

In the consolidated financial statements, the financial statements of all companies not located in the eurozone are translated in accordance with the following principles:

Statement of financial position items are translated at the middle rate as of the date of the statement of financial position.

Income statement items are translated at average annual exchange rates.

Differences arising from the use of different exchange rates are recognized in equity without an effect on net income.

The same principles are used in the case of associated companies consolidated by the equity method.


The exchange rates of major currencies used for currency conversion developed as follows:

Country Currency Closing rate Average rate Dec. 31, 2009 Dec. 31, 2010 2009 2010 Brazil BRL 2.4994 2.2102 2.7626 2.3237China CNY 9.7660 8.7697 9.5279 8.9329India INR 66.8570 59.6528 67.4647 60.4041Japan JPY 132.5913 108.5936 130.4780 115.2190Taiwan TWD 46.1570 38.9163 45.9743 41.6194USA USD 1.4303 1.3282 1.3955 1.3213

Differences arising from the use of different exchange rates compared with the previous year are shown in the statement of changes in intangible and tangible assets with respect to non-current assets and in the consolidated statement of changes in equity with respect to equity.

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(1) Intangible assets

Changes in intangible assets from January 1 to December 31, 2009

[€ million] Conc

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ons

and

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Goo

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Paym

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mad

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acc

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Tota

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ACQUISITION/PRODUCTION COST Status Jan. 1, 2009 316.4 339.8 2.9 659.1Changes in consolidated group 55.8 7.9 0.0 63.7Exchange rate differences 0.4 0.4 0.0 0.8Additions 11.5 0.0 7.4 18.9Write-ups/revaluations 0.4 0.0 0.0 0.4Disposals - 4.2 - 0.4 0.0 - 4.6Reclassifications 3.9 - 0.5 - 2.3 1.1Status Dec. 31, 2009 384.2 347.2 8.0 739.4

AMORTIZATION

Status Jan. 1, 2009 169.6 11.3 0.0 180.9Changes in consolidated group 0.5 - 3.0 0.0 - 2.5Exchange rate differences - 0.2 0.0 0.0 - 0.2Additions – systematic 29.7 0.0 0.0 29.7Impairment losses 4.8 18.9 0.0 23.7Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 3.8 0.0 0.0 - 3.8Reclassifications - 2.1 - 0.5 0.0 - 2.6Status Dec. 31, 2009 198.5 26.7 0.0 225.2

Book value Dec. 31, 2009 185.7 320.5 8.0 514.2Book value Dec. 31, 2008 146.8 328.5 2.9 478.2

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Changes in intangible assets from January 1 to December 31, 2010

[€ million] Conc

essi

ons

and

licen

ses

Goo

dwill

Paym

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mad

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acc

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Tota

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ACQUISITION/PRODUCTION COST Status Jan. 1, 2010 384.2 347.2 8.0 739.4Changes in consolidated group 21.7 10.2 0.0 31.9Exchange rate differences 22.9 15.9 0.0 38.8Additions 17.9 0.0 3.2 21.1Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 5.8 0.0 - 0.3 - 6.1Reclassifications 6.1 - 0.3 - 6.7 - 0.9Status Dec. 31, 2010 447.0 373.0 4.2 824.2

AMORTIZATION

Status Jan. 1, 2010 198.5 26.7 0.0 225.2Changes in consolidated group -1.9 - 0.1 0.0 - 2.0Exchange rate differences 5.4 - 0.3 0.0 5.1Additions – systematic 35.4 0.0 0.0 35.4Impairment losses 0.0 0.0 0.0 0.0Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 5.0 0.0 0.0 - 5.0Reclassifications - 0.5 0.0 0.0 - 0.5Status Dec. 31, 2010 231.9 26.3 0.0 258.2

Book value Dec. 31, 2010 215.1 346.7 4.2 566.0Book value Dec. 31, 2009 185.7 320.5 8.0 514.2


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(2) Tangible assets

Changes in tangible assets from January 1 to December 31, 2009

[€ million] Land

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ACQUISITION/PRODUCTION COST

Status Jan. 1, 2009 858.0 2,211.9 714.4 21.1 105.3 3,910.7Changes in consolidated group 42.0 38.0 5.9 1.4 0.0 87.3Exchange rate differences -1.9 10.3 3.0 0.0 0.3 11.7Additions 24.3 59.2 54.8 10.2 20.8 169.3Write-ups/revaluations 0.1 0.0 0.0 0.0 0.0 0.1Disposals - 33.4 -148.9 - 35.7 - 0.5 - 4.3 - 222.8Reclassifications 30.2 63.0 32.2 - 26.2 - 89.6 9.6Status Dec. 31, 2009 919.3 2,233.5 774.6 6.0 32.5 3,965.9 DEPRECIATION Status Jan. 1, 2009 379.0 1,393.0 489.8 0.0 0.5 2,262.3Changes in consolidated group 18.5 25.3 3.6 0.0 0.2 47.6Exchange rate differences -1.0 3.1 2.4 0.0 0.0 4.6Additions – systematic 24.8 116.9 68.6 0.0 0.0 210.3Impairment losses 8.0 31.4 0.2 0.0 0.1 39.7Write-ups/revaluations - 2.3 0.0 0.0 0.0 0.0 - 2.3Disposals -18.8 -126.3 - 31.7 0.0 - 0.1 -176.9Reclassifications - 0.7 0.3 15.0 0.0 0.0 14.5Status Dec. 31, 2009 407.5 1,443.7 547.9 0.0 0.7 2,399.8 Book value Dec. 31, 2009 511.8 789.8 226.7 6.0 31.8 1,566.1Book value Dec. 31, 2008 479.0 818.9 224.6 21.1 104.8 1,648.4

77

Changes in tangible assets from January 1 to December 31, 2010

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Status Jan. 1, 2010 919.3 2,233.5 774.6 6.0 32.5 3,965.9Changes in consolidated group 0.9 6.4 - 2.6 0.3 2.3 7.3Exchange rate differences 33.5 81.5 15.3 0.4 1.3 132.0Additions 41.7 56.9 59.9 15.6 45.0 219.1Write-ups/revaluations 0.0 0.0 0.0 0.0 0.0 0.0Disposals -11.4 - 85.7 - 28.2 - 0.4 -1.4 -127.1Reclassifications -19.8 - 8.6 3.6 - 6.9 - 24.6 - 56.3Status Dec. 31, 2010 964.2 2,284.0 822.6 15.0 55.1 4,140.9 DEPRECIATION Status Jan. 1, 2010 407.5 1,443.7 547.9 0.0 0.7 2,399.8Changes in consolidated group - 4.5 3.0 - 4.0 0.0 0.0 - 5.5Exchange rate differences 13.0 50.8 10.9 0.0 0.0 74.7Additions – systematic 28.9 117.7 70.5 0.0 0.0 217.1Impairment losses 0.0 1.0 0.1 0.0 0.0 1.1Write-ups/revaluations - 0.1 - 0.6 0.0 0.0 0.0 - 0.7Disposals - 7.9 - 74.9 - 23.9 0.0 0.0 -106.7Reclassifications - 5.6 - 8.4 - 3.7 0.0 - 0.5 -18.2Status Dec. 31, 2010 431.3 1,532.3 597.8 0.0 0.2 2,561.6 Book value Dec. 31, 2010 532.9 751.7 224.8 15.0 54.9 1,579.3Book value Dec. 31, 2009 511.8 789.8 226.7 6.0 31.8 1,566.1

Government grants totaling €1.2 million (previous year: €2.6 million) for tangible assets, which mainly concern investment promotion, are netted against acquisition costs.


78

Leased assets

Leased assets are recognized under non-current assets at the following book values:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Land and buildings 10.7 9.4Machinery and equipment 1.0 0.6Other fixtures, fittings and office equipment 0.2 0.4Book value of leased assets recognized 11.9 10.4

The finance lease contracts were concluded at arm’s-length business conditions. Such leases normally include favorable purchase options. The lease contracts do not provide for any contingent rent payments or significant restrictions.

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Finance leases Minimum lease payments 1.8 4.1 0.5 6.4 1.3 3.4 0.0 4.7Discount 0.1 0.5 0.1 0.7 0.1 0.2 0.0 0.3Present value 1.7 3.6 0.4 5.7 1.2 3.2 0.0 4.4 Operating leases Minimum lease payments 50.0 85.0 27.4 162.4 49.3 85.0 21.7 156.0

Lease payments totaling €76.8 million (previous year: €71.9 million) under operating leases were recognized with an effect on net income.

79

(3) Investment properties

Details of land and buildings held by the Freudenberg Group as investment properties are shown in the table below:

Third-party use Rent income Direct operating [€ million] expenses 2009 100 % 3.3 0.42010 100 % 3.6 0.6

There are no restrictions on the saleability of investment properties. Freudenberg is not under any contractual obligations to purchase, build or develop investment properties. Furthermore, Freudenberg is not under any contractural obligations to repair or maintain such properties going beyond its statutory obligations.


80

Changes in investment properties from January 1 to December 31, 2009

[€ million]

ACQUISITION/PRODUCTION COST Status Jan. 1, 2009 40.9Changes in consolidated group 0.0Exchange rate differences - 0.1Additions – acquisitions 0.0Additions – subsequent acquisition cost 0.0Disposals 0.0Reclassifications - 0.6Status Dec. 31, 2009 40.2

DEPRECIATION

Status Jan. 1, 2009 20.4Changes in consolidated group 0.0Exchange rate differences 0.0Additions – systematic 1.3Impairment losses 0.0Write-ups/revaluations 0.0Disposals 0.0Reclassifications 0.1Status Dec. 31, 2009 21.8

Book value Dec. 31, 2009 18.4Book value Dec. 31, 2008 20.5

81

Changes in investment properties from January 1 to December 31, 2010

[€ million]

ACQUISITION/PRODUCTION COST Status Jan. 1, 2010 40.2Changes in consolidated group 0.0Exchange rate differences 0.0Additions – acquisitions 1.1Additions – subsequent acquisition cost 0.0Disposals 0.0Reclassifications 6.0Status Dec. 31, 2010 47.3

DEPRECIATION

Status Jan. 1, 2010 21.8Changes in consolidated group 0.0Exchange rate differences 0.0Additions – systematic 1.6Impairment losses 0.0Write-ups/revaluations 0.0Disposals 0.0Reclassifications 0.9Status Dec. 31, 2010 24.3

Book value Dec. 31, 2010 23.0Book value Dec. 31, 2009 18.4

The fair value of investment properties is €31.1 million (previous year: €23.8 million).


82

(4) Investments valued at equity

The book value of investments valued at equity is as follows:

[€ million] 2009 2010

Status Jan. 1 605.9 517.1Pro-rata share of profit or loss -19.3 45.3Dividends - 5.7 - 8.4Other changes - 63.8 102.4Status Dec. 31 517.1 656.4

The other changes primarily include exchange rate effects and changes in the value of securities without an effect on net income.

The figures last published by the two most significant associated companies in their consolidated annual reports, as at March 31, 2009 and March 31, 2010, were as follows:

March 31, 2009 Sales Net Assets Liabilities [¥ million] income NOK Corporation, Tokyo, Japan 466,694 652 509,772 263,641Japan Vilene Company Ltd., Tokyo, Japan 50,240 672 52,620 18,796

March 31, 2010 Sales Net Assets Liabilities [¥ million] income NOK Corporation, Tokyo, Japan 414,753 1,279 547,255 290,752Japan Vilene Company Ltd., Tokyo, Japan 45,837 1,266 50,549 23,048

These associated companies were consolidated on the basis of their interim financial statements as at December 31, 2010.

As at December 31, 2010, the market values of the shareholdings were €677.3 million (¥73,545.3 million) (previous year: €419.3 million; ¥55,593.7 million) for NOK Corporation and €64.2 million (¥6,975.3 million) (previous year: €53.6 million; ¥7,111.1 million) for Japan Vilene Company Ltd.


(5) Inventories

Inventories break down as follows:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Raw materials and consumables 161.8 201.6Work in progress 73.5 94.9Finished goods and merchandise 294.6 360.0Payments made on account 2.7 3.2 532.6 659.7

Inventories rose as a result of the need to ensure delivery capabilities in connection with higher levels of orders received and material stocking in the context of impending shortages and price increases.

Write-downs of inventories totaling €32.9 million (previous year: €40.0 million) were recognized as expenses in the reporting year.

Write-ups totaling €7.1 million (previous year: €9.2 million) were effected on inventories as the reason for the impairment losses concerned no longer existed.

The inventories shown are not subject to any significant restrictions on title or disposal.

84

(6) Receivables

[€ million] Resi

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Trade receivables 706.7 0.0 706.7 838.4 0.0 838.4Other assets 133.3 43.1 176.4 129.9 54.2 184.1 840.0 43.1 883.1 968.3 54.2 1,022.5

The increase in trade receivables was chiefly the result of sales.

The other assets include pension plan assets in excess of the corresponding pension obligations in the amount of €34.2 million (previous year: €24.8 million).

The other assets also include emission rights received at no charge with an amount of €1.1 million (previous year: €0.9 million). These emission rights were issued on the basis of the Greenhouse Gas Emissions Trading Act and the Allocation Act.

Furthermore, the other assets include other tax receivables in the amount of €36.9 million (previous year: €35.1 million) and liability insurance claims totaling €6.8 million (previous year: €7.2 million).

The claims for reimbursement in connection with recognized provisions, which are included in other assets, are shown in the statement of changes in provisions.


(7) Securities and cash at bank and in hand

[€ million] Dec. 31, 2009 Dec. 31, 2010

Securities 129.0 72.2Checks and cash in hand 2.9 3.4Cash at banks 371.2 572.0 503.1 647.6

The securities mainly concern commercial paper issued by industrial companies.

(8) Non-current assets held for sale and disposal groups

In 2010, this item chiefly includes assets and liabilities in connection with the disposal of the cylinder head and exhaust gasket business for OEMs and the vendor-specific aftermarket.

The book values of the assets and liabilities included in the disposal group break down as follows:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Intangible and tangible assets 2.3 32.7Inventories 0.0 7.8Trade receivables 0.0 9.9Other assets 0.0 1.3Non-current assets held for sale 2.3 51.7

Provisions for pensions 0.0 1.5Other provisions 0.0 3.7Trade payables 0.0 5.0Other liabilities 0.0 3.1Liabilities in connection with non-current assets held for sale 0.0 13.3

86

(9) Equity

Partners’ capital consists of:

[€ million] Dec. 31, 2009 Dec. 31, 2010

General Partners’ capital 0.0 0.0Limited Partners’ capital 450.0 450.0 450.0 450.0

Retained earnings consist of:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Non-distributable Partners‘ reserves 46.2 135.7Group reserves 1,335.4 1,694.9 1,381.6 1,830.6

Non-distributable Partners’ reserves are intended to secure the continued existence of the Group and are used especially for capital increases or, should the need arise, to absorb losses.

Group reserves include the reserves and retained earnings of companies included in the consolidated financial statements.

In the year under review, no changes in the value of securities which had been recorded without an effect on net income were recognized on the income statement (previous year: €0.1 million). Changes in the value of deriva-tive financial instruments which had been recorded without an effect on net income in the amount of €0.1 million (previous year: €0.8 million) were recognized on the income statement.

In 2010, there were no income tax effects in connection with income and expenses recorded without an effect on net income. In 2009, negative income tax effects of €0.5 million in connection with securities and positive effects of €1.2 million in connection with derivative financial instruments were recorded.

Minority interests

Minority interests include the shares of third parties outside the Freudenberg Group in the equity capital of consolidated subsidiaries.

The rise in minority interests from €255.1 million in 2009 to €279.5 million in 2010 is mainly the result of the allocation of profit and loss for the year and exchange rate changes. These effects were offset by dividend payments.

87

(10) Provisions for pensions

The provisions for pensions mainly concern German companies. This item includes obligations arising from current pensions and future pension entitlements.

The Freudenberg Group pension scheme consists of both defined contribution and defined benefit pension plans. Defined benefit plans include both fixed salary and final salary plans. In the case of the defined contribu-tion plans, there are no additional obligations apart from the payment of contributions. Contributions paid are expensed under personnel expenses and amounted to €61.9 million in 2010 (previous year: €57.1 million). Contributions paid mainly include employers’ contributions to the statutory pension scheme.

The value of provisions for defined benefit plans was calculated on actuarial principles by the projected unit credit method. For the German companies, the calculation was based on the following actuarial assumptions:

Dec. 31, 2009 Dec. 31, 2010

Discount rate 5.75 % 5.10 %Pension trend 2.00 % 2.00 %

As a result of the pension plan regulations, the assumed trend in salaries and wages only had an effect on the value of pension obligations in exceptional cases.

In the case of the foreign companies, the actuarial assumptions used for the calculations were within the following ranges:

Dec. 31, 2009 Dec. 31, 2010

Discount rate 4.5 % – 6.0 % 4.5 % – 6.0 %Salary increases 2.0 % – 4.1 % 2.0 % – 4.0 %Pension trend 1.5 % – 3.6 % 1.5 % – 3.5 %Expected return on plan assets 5.3 % – 7.5 % 5.0 % – 7.5 %

Actuarial gains and losses are recognized as expenses if they exceed 10 percent of the greater of the present value of pension obligations and the fair value of the pension plan assets (the “corridor approach”). The amount in excess of this figure is expensed over the average remaining working lives of the employees participating in the plan.


88

Net pension obligations are shown in the following items of the statement of financial position:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Provisions for pensions 397.8 409.1Other assets - 24.8 - 34.2Net pension obligations 373.0 374.9

Net pension obligations are calculated as follows:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Present value of funded defined benefit obligations 225.0 252.5Fair value of plan assets -191.3 - 228.3Deficit 33.7 24.2Present value of unfunded defined benefit obligations 399.8 440.9Unrecognized actuarial gains/losses - 60.5 - 90.8Unrecognized past service cost 0.0 0.6Net pension obligations 373.0 374.9

Pension expenses consist of the following components:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Current service cost 7.3 7.0Interest cost 33.0 35.5Expected return on plan assets -10.8 -13.7Net actuarial gains/losses recognized 3.7 4.0Past service cost 27.8 0.5Gain/loss on curtailment and settlement - 2.3 0.0Effect on expenses of IAS 19.58 - 0.2 0.0Total pension expenses 58.5 33.3

Pension expenses are included in the personnel expenses allocated to the appropriate functional areas of the income statement.

The actual return on pension plan assets was €21.8 million (previous year: €26.8 million).


In the year under review, defined benefit obligations developed as follows:

[€ million] 2009 2010

Present value of defined benefit obligations, Jan. 1 553.1 624.8Current service cost 7.3 7.0Interest cost 33.0 35.5Actuarial gains (-) and losses (+) 44.0 40.1Gains (-) and losses (+) on curtailment and settlement - 2.7 0.1Past service cost 27.8 - 0.1Contributions by plan participants 0.5 0.6Liabilities extinguished on settlements - 4.7 - 0.8Benefits paid - 39.6 - 32.4Reclassifications/other changes 2.0 5.4Exchange rate differences 4.1 13.2Present value of defined benefit obligations, Dec. 31 624.8 693.4

In the year under review, plan assets developed as follows:

[€ million] 2009 2010

Fair value of plan assets, Jan. 1 173.1 191.3Expected return on plan assets 10.8 13.7Actuarial gains (+) and losses (-) 16.0 8.1Contributions by employer 6.5 13.4Contributions by plan participants 0.5 0.6Liabilities extinguished on settlements - 3.9 - 2.4Benefits paid -16.7 - 8.8Reclassifications/other changes 0.1 2.3Exchange rate differences 4.9 10.1Fair value of plan assets, Dec. 31 191.3 228.3

90

The fair value of plan assets is distributed as follows:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Equity instruments 90.5 110.0Interest-bearing securities 87.7 105.1Other assets 13.1 13.2 191.3 228.3

The expected return on plan assets is calculated on the basis of the market prices of plan assets as of the re-spective date.

Over the past five years, the present value of defined benefit obligations, the fair value of plan assets and funded status have changed as follows:

[€ million] 2006 2007 2008 2009 2010

Present value of defined benefit obligations 713.6 619.7 553.1 624.8 693.4Fair value of plan assets - 240.7 - 220.0 -173.1 -191.3 - 228.3Funded status 472.9 399.7 380.0 433.5 465.1

In 2011, contributions in the amount of €8.2 million (2010: €8.0 million) will probably be made to the pension fund.

Experience adjustments to the present value of defined benefit obligations have been as follows:

[€ million] 2006 2007 2008 2009 2010

Gain (+) / loss (-) 4.0 - 4.6 2.6 - 4.4 6.9

The deviation between actual return and expected return on plan assets was €8.1 million in 2010 (previous year: €16.0 million).

91

(11) Other provisions

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Status Jan. 1, 2010 233.0 30.5 12.9 155.5 431.9Increases 152.7 25.9 17.4 92.5 288.5Accumulation of interest 0.6 0.0 0.0 0.0 0.6Amounts used -121.6 -11.8 - 9.9 - 70.9 - 214.2Reversal -15.9 - 4.3 -1.7 -17.1 - 39.0Exchange rate differences 5.8 0.6 0.9 3.5 10.8Other changes - 4.0 0.0 - 2.0 - 5.3 -11.3Status Dec. 31, 2010 250.6 40.9 17.6 158.2 467.3 Of which long-term 71.8 2.6 0.5 30.1 105.0Of which short-term 178.8 38.3 17.1 128.1 362.3 Reimbursement claims connected with provisions and shown in the statement of financial position under other assets 0.5 0.0 0.1 0.7 1.3

The provisions for personnel obligations mainly include other long- and short-term employee benefits, especially for vacation not taken, partial retirement and social security contributions.

The miscellaneous provisions include, inter alia, provisions for restructuring, litigation risks, advertising and environmental protection.


92

(12) Liabilities

[€ million] Resi

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Liabilities to banks (= financial debt) 116.3 289.3 0.6 406.2 65.7 292.1 20.7 378.5Other financial debt, incl. leasing 3.4 10.0 0.4 13.8 4.4 3.3 0.0 7.7Partners’ accounts * 184.1 330.2 0.0 514.3 197.5 365.7 0.0 563.2Financial debt 303.8 629.5 1.0 934.3 267.6 661.1 20.7 949.4Trade payables 405.6 0.0 0.0 405.6 515.9 0.0 0.0 515.9Advance payments received on orders 4.8 0.0 0.0 4.8 10.5 0.0 0.0 10.5Miscellaneous liabilities 204.0 54.9 1.8 260.7 215.7 48.0 1.1 264.8Other liabilities 208.8 54.9 1.8 265.5 226.2 48.0 1.1 275.3 918.2 684.4 2.8 1,605.4 1,009.7 709.1 21.8 1,740.6* following appropriation of profit for reporting year

Liabilities to banks with a total amount of €1.5 million (previous year: €2.5 million) were secured by charges on real estate or other security. In 2010, inventories were chiefly used as security.

The average interest rate on long-term liabilities to banks was 2.90 percent (previous year: 2.55 percent).


The interest payable on the certificates of indebtedness (“Schuldscheindarlehen”) included in the liabilities to banks is based on variable and fixed components. Cash flows for variable and fixed interest and repayment of principal are distributed as follows between the years 2011 to 2013:

[€ million] Book value Cash flows Dec. 31, 2009 2010 2011 2012 – 2013Certificates of indebtedness 302.5 43.0 9.1 290.4

Dec. 31, 2010 2011 2012 2013Certificates of indebtedness 267.5 7.6 8.8 277.8

Other financial debt also includes short-term bills of exchange and liabilities in connection with finance leases. The average interest rate on these liabilities is 2.49 percent (previous year: 4.38 percent).

Mainly the liabilities under leasing contracts included in other financial debt are discounted. Further details are given in information on finance leases under note (2).

The interest rates applicable to Partners’ accounts vary between 5.5 percent and 7.0 percent (previous year: between 5.5 percent and 7.0 percent) and between 1.0 percent and 2.5 percent, (previous year: between 1.0 percent and 4.5 percent) depending on the agreements concerned.

Miscellaneous liabilities include liabilities for other taxes, outstanding wages and salaries, holiday pay and special bonuses.

94

Contingent liabilities and other financial commitments

[€ million] Dec. 31, 2009 Dec. 31, 2010

Contingent liabilities Liabilities in connection with notes 0.6 2.0Liabilities in connection with guarantees 17.2 15.3Liabilities in connection with warranty agreements 0.4 0.1Collateral for third-party liabilities 0.1 0.1Miscellaneous contingent liabilities 1.1 2.9 19.4 20.4

Other financial commitments Commitments arising from leasing contracts * 162.4 156.0Purchase commitments connected with intangible assets 0.3 0.0Purchase commitments connected with tangible assets 9.2 10.1Purchase commitments connected with the delivery of goods or services 40.6 60.7Miscellaneous commitments 5.3 5.5 217.8 232.3* see also note (2) “Tangible assets” as regards leased assets

Additional information on financial instruments

The term “financial instrument” is used to refer to any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A distinction is made between primary and derivative financial instruments. Primary financial instruments in the case of the purchase or sale of assets are recognized at the settlement date, i.e. the delivery of the asset concerned. Derivative financial instru-ments are recognized as of the trade date. In the event of loss of control over the contractually agreed rights to a financial asset, the asset concerned is derecognized. Financial liabilities are derecognized on the statement of financial position when the commitment is discharged or cancelled, or expires.

Under IAS 39, financial instruments are divided into the following categories:

Loans and receivables This category includes financial assets with fixed or determinable payments that are not quoted in an active market.

Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.

95

Available-for-sale financial assets This category includes all the other financial assets which cannot be allocated to any of the categories mentioned above.

Financial assets or financial liabilities at fair value through profit or loss These include: – financial assets or financial liabilities held for trading and – financial assets or financial liabilities designated by the entity as at fair value through profit or loss upon

initial recognition.

The Freudenberg Group does not hold any financial assets or financial liabilities for trading purposes.

Freudenberg did not avail itself of the fair value option under IAS 39 under which it is possible to measure any financial asset or financial liability at fair value through profit or loss.


96

Primary financial instruments

Primary financial instruments are assigned to categories on the basis of the relevant items in the statement of financial position. The allocation to the categories defines the accounting and measurement of the instruments.

Loans, receivables and liabilities are recognized at amortized cost. Available-for-sale financial assets are recog-nized at fair value without effect on net income except where the fair value of such assets cannot be reliably determined. In such cases, these assets are recognized at acquisition costs. Any impairments are shown in the income statement with an effect on profit or loss.

[€ million] Loan

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ASSETSOther financial assets 6.5 11.0 50.1 67.6Trade receivables 706.7 706.7Other assets 90.5 90.5Securities and cash at bank and in hand 503.1 503.1Total 1,306.8 11.0 50.1 1,367.9 LIABILITIESFinancial debts 934.3 934.3Trade payables 405.6 405.6Other liabilities 125.0 125.0Total 1,464.9 1,464.9


[€ million] Loan

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ASSETSOther financial assets 6.3 13.7 76.4 96.4Trade receivables 838.4 838.4Other assets 86.7 86.7Securities and cash at bank and in hand 647.6 647.6Total 1,579.0 13.7 76.4 1,669.1 LIABILITIESFinancial debts 949.4 949.4Trade payables 515.9 515.9Other liabilities 131.5 131.5Total 1,596.8 1,596.8

The Freudenberg Group currently does not hold any held-to-maturity investments.

Freudenberg acquired all the shares in SurTec International GmbH, Zwingenberg, at the end of 2010.

The fair values of financial assets and liabilities recognized at amortized cost are approximately equal to their book values.

The fair values of financial instruments held by the Freudenberg Group and measured at fair value in the amount of €13.7 million (previous year: €11.0 million) were determined on the basis of active markets for identical assets.

98

Credit risks

[€ million] Book

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Trade receivables 706.7 564.8 93.1 25.5 4.2 3.6 1.8Other assets 90.5 84.6 3.0 1.2 0.2 0.3 0.6

[€ million] Book

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Trade receivables 838.4 683.9 100.6 20.7 3.9 5.8 2.6Other assets 86.7 84.2 0.2 0.1 0.0 0.2 0.8

In the case of trade and other receivables for which no impairments have been recognized and which are not past due, no defaults are expected. The major part of trade receivables (normally between 70 and 90 percent of each receivable) is covered by credit insurance. Otherwise, the book value represents the maximum credit risk associated with each receivable. The trade receivables and other assets which are neither impaired nor past due only include to a minor extent financial assets which have been renegotiated as they would otherwise have been past due or impaired.

Thereof: not impaired as at Dec. 31, 2009 anddue and payable within the following time from the statement of financial position date

Thereof: not impaired as at Dec. 31, 2010 anddue and payable within the following time from the statement of financial position date

99

Impairment losses to trade receivables developed as follows:

[€ million] 2009 2010

Impairment losses as of Jan. 1 29.5 27.1Exchange rate differences - 0.1 0.9Additions (expenses for impairments) 12.5 5.2Amounts used -11.4 - 5.3Reversals (write-ups) - 3.4 - 4.1Impairment losses as of Dec. 31 27.1 23.8

Impairment losses to other assets developed as follows:

[€ million] 2009 2010

Impairment losses as of Jan. 1 2.7 1.6Exchange rate differences 0.0 0.0Additions (expenses for impairments) 0.0 0.3Amounts used -1.1 - 0.1Reversals (write-ups) 0.0 0.0Impairment losses as of Dec. 31 1.6 1.8

In the year under review, impairment losses to receivables totaling €4.1 million (previous year: €3.4 million) were reversed as the reason for the impairment no longer applied and impairment losses in the amount of €5.5 million (previous year: €12.5 million) were set up. These impairment losses were recognized where payments were no longer expected or no longer expected in full.


100

Derivative financial instruments

The parent company Freudenberg & Co. is responsible for all the financing activities of the Freudenberg Group and also operates the cash management system for the entire Group. The Group companies obtain the financ-ing they require via cash pools or loans provided by internal financing companies or, in some countries, in the form of bank loans guaranteed by Freudenberg financing companies.

The limits of action, responsibilities and control procedures in connection with derivative financial instruments are laid down in a binding form in internal directives for Group companies. Freudenberg & Co. does not expose itself to additional financial risks through speculation with derivative financial instruments but uses such instruments only for hedging, and therefore reducing, risks in connection with underlying transactions. Future transactions are only hedged if there is a high probability of occurrence.

Freudenberg & Co. uses derivative financial instruments for hedging interest rate and foreign exchange risks.

Fair values are determined on the basis of quoted prices, accepted market information systems or discounted cash flows.

Derivative financial instruments for hedging recognized assets or liabilities (fair value hedges) are shown in the statement of financial position at fair value. Changes in the fair value are recorded in the income statement. Financial instruments for hedging future cash flows (cash flow hedges) are also included in the statement of financial position at fair value, but changes in the fair value of such instruments are recognized without effect on net income under retained earnings, taking into consideration the applicable income taxes. Such changes are recognized in the income statement when the underlying transactions concerned are effected. Ineffective portions of hedge transactions are always recognized in the income statement.

The face value of derivatives entered into for interest rate hedging (long-term interest rate swaps) was €191.7 million (previous year: €217.3 million and a cap with a volume of €30.0 million). As at December 31, 2010, the negative net fair value of the interest rate swaps was €12.4 million (previous year: €12.6 million). These derivatives were used for hedging rising interest rates and the cash flow risk of variable interest payables.

As of December 31, 2010, the face value of currency futures concluded for hedging foreign exchange risks and still open was €4.7 million (previous year: €8.9 million). All these transactions were conventional currency futures. The fair value of these instruments as of December 31, 2010 was balanced (previous year: negative net fair value of €0.4 million).

Of the total volume of derivatives, 98.9 percent (previous year: 77.9 percent) had a term of more than one year.

101

The following fair values of derivative financial instruments are included in the other assets and other liabilities respectively:

[€ million] Dec. 31, 2009 Dec. 31, 2010

Other assetsCurrency futures 0.1 0.1

Other liabilities Currency futures 0.5 0.1Interest rate swaps 12.6 12.3

The value changes (gains) in the case of interest rate swaps and currency futures (cash flow hedges), amounting to €0.5 million (previous year: losses of €4.7 million), are recognized in equity.

The interest rate swaps are mainly intended to hedge risks of interest changes with respect to variable-interest loans on a long-term basis. The transactions are expected to occur in the period up to 2013.

The fair values of derivative financial instruments were determined on the basis of recognized market information systems or discounted cash flows, in the amount of € -12.3 million (previous year: € -13.0 million), for identical assets and liabilities.

Risks in connection with financial instruments

Freudenberg is exposed to risks resulting from changes in exchange rates and interest rates and uses conven-tional derivative instruments such as interest rate swaps, caps and currency futures to hedge risks in connection with business operations and financing to a limited extent. The use of these instruments is governed by Group directives within the risk management system which lay down limits on the basis of the value of the underlying transactions, define approval procedures, exclude the use of derivative instruments for speculative purposes, minimize credit risks and govern internal reporting and the separation of functions. Compliance with these directives and the proper handling and measurement of transactions are regularly verified by both the Finance and Projects, and Group Accounting and Controlling functions, observing the principle of separation of functions. Furthermore, risk management for financial instruments is integrated in the Freudenberg Group risk management system.

The risks which are hedged are chiefly as follows:

Interest rate risk:

In the case of fixed-interest loans or investments, there is a risk that changes in the market interest rate will affect the market value of the item concerned (market-value risk contingent on interest rates). In contrast, variable interest loans and investments are not subject to this risk as the interest rate is adjusted to reflect changes in the market situation with a very short delay. However, there is a risk with respect to future interest payments as a result of short-term fluctuations in market interest rates (cash flow risk contingent on interest rates).


102

To hedge risks resulting from interest rate changes, Freudenberg primarily concludes long-term interest rate swaps and caps.

Risks associated with interest rate changes mainly affect long-term items. A fall in long-term interest rates results in a decrease in the fair value shown on the statement of financial position for derivative financial instruments concluded for interest rate hedging.

If the average market interest rate had been one percentage point higher as of December 31, 2010, equity would have been €4.7 million (previous year: €6.5 million) higher. If the average market interest rate had been one percentage point lower as of December 31, 2010, equity would have been €4.9 million (previous year: €6.8 million) lower. There would have been no effect on net income.

As a general principle, external borrowings are repaid when due. The only interest rate risk related to these borrowings is therefore associated with variable-interest borrowings.

Currency risk:

The primary financial instruments are chiefly held in the functional currency.

Exchange rate differences caused by the conversion of financial statements into the Group currency are not taken into consideration.

If the value of the euro against major currencies (USD and JPY) had been 10.0 percent higher as of December 31, 2010, the profit before income taxes would have been €12.4 million higher (previous year: loss before income taxes €13.5 million lower). If the value of the euro against major currencies (USD and JPY) had been 10.0 percent lower as of December 31, 2010, the profit before income taxes would have been €7.5 million lower (previous year: loss before income taxes €11.0 million higher).

Liquidity risk:

Risks connected with cash flow fluctuations are identified at an early stage by the cash flow planning system already in place. As a result of the Group‘s good rating (Baa1) and the credit lines granted by banks on a binding basis, Freudenberg can access ample sources of funds at all times.

Credit risk:

Specific provisions and individualized generic provisions are recognized to take account of identifiable risks not covered by credit insurance. Otherwise, the book value represents the maximum credit risk.

Freudenberg & Co. only concludes derivative financial instruments with national and international banks of at least investment grade rating. Credit risks are minimized by distributing hedges between several banks.


Notes to the Consolidated Income Statement

(13) Sales

Sales include revenue from the sale of goods amounting to €5,353.0 million (previous year: €4,098.8 million), services in the amount of €80.2 million (previous year: €58.7 million ) and licenses in the amount of €24.8 million (previous year: €21.4 million). Other sales totaled €23.4 million (previous year: €21.9 million).

(14) Cost of sales

Cost of sales indicates the cost of goods and services sold. Apart from individual directly attributable costs, such as personnel expenses and material expenses, overheads, including depreciation/amortization, are also shown under cost of sales.

(15) Research and development expenses

Apart from personnel and material expenses, research and development expenses chiefly include the cost of licenses and patents created in the course of development projects.

(16) Other income

Other income mainly includes income from other secondary business and income from disposals of non-current assets. Following the offsetting of exchange rate losses, exchange rate gains amounted to €2.6 million (previous year: €1.4 million).

(17) Other expenses

Among other items, other expenses include losses on disposals of non-current assets and financial assets. Exchange rate losses were set off against exchange rate gains.

(18) Interest and similar expenses

Interest expenses include interest on Partners’ accounts totaling €26.2 million (previous year: €23.8 million).

104

(19) Income taxes

This item shows German corporation tax (plus solidarity surcharge) and municipal trade taxes and similar taxes on income payable in other countries.

The figure also includes deferred taxes on temporary differences between the tax balance sheets and commer-cial balance sheets of individual companies, on adjustments to uniform measurement within the Group and on consolidation transactions.

Deferred taxes are calculated at the tax rates applicable in the countries concerned.

Income taxes break down as follows (expense (-) / income (+)):

[€ million] 2009 2010

Current taxes related to the reporting period - 44.0 -125.3Current taxes related to prior periods - 0.5 - 0.7Deferred taxes 21.2 6.0 - 23.3 -120.0

The amount of deferred tax expenses relating to changes in tax rates was €0.4 million (previous year: €0.4 million).

In the reporting year, deferred taxes relating to transactions recognized directly under equity resulted in a reduction in equity of €0.1 million (previous year: increase of €1.2 million).

As of December 31, 2010, tax losses carried forward amounted to €387.2 million (previous year: €474.4 million). Deferred tax assets were recognized in respect of tax losses carried forward totaling €68.7 million (previous year: €79.9 million). Deferred tax assets were not recognized in respect of tax losses carried forward with a total amount of €318.5 million (previous year: €394.5 million) as it is not expected that these losses will be usable.

In the reporting year, tax losses carried forward totaling €37.0 million (previous year: €16.3 million) for which no deferred tax assets had been recognized were used.


Deferred taxes concern temporary differences and tax losses carried forward with the following amounts:

[€ million] Def

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Intangible assets 4.9 44.1 5.3 53.0Tangible assets 4.5 90.6 7.3 88.3Financial assets 1.0 0.6 0.3 0.7Inventories 18.5 0.4 19.5 0.9Receivables 6.4 8.8 6.9 11.5Other current assets 3.0 0.0 1.9 0.0Provisions for pensions 10.7 0.0 10.5 0.0Other provisions 25.0 3.5 28.6 3.3Liabilities 13.0 1.6 17.8 3.9Other liabilities 0.4 1.2 0.7 0.6Tax losses carried forward 12.9 0.0 13.2 0.0 100.3 150.8 112.0 162.2 Offsetting - 31.1 - 31.1 - 33.0 - 33.0

Recognized in statement of financial position 69.2 119.7 79.0 129.2

No deferred tax items were set up on temporary differences arising from shareholdings totaling €25.9 million (previous year: €19.7 million) as short-term dividend payments are not expected.

Reconciliation of expected income taxes with actual income taxes

Freudenberg & Co. and its German subsidiaries are subject to the municipal trade tax on income. In addition, many German subsidiaries registered as corporations are subject to corporation tax (plus solidarity surcharge). Income realized in other countries is taxed at the rates applicable in the countries concerned. The tax rate of 35 percent (previous year: 10 percent) used for calculating the expected tax expense is based on the structure of the Freudenberg Group relevant for taxation. It is calculated as the weighted average of the tax rates for the regions in which the Group realized its main income.

106

[€ million] 2009 2010

Profit or loss before income taxes - 226.3 441.7Expected income tax expense (-) / income(+) 22.6 -154.6Different tax rates: in Germany 7.7 8.3 in other countries - 9.3 16.7Tax portion of: non-taxable income 9.7 26.6 non-deductible expenses - 27.2 - 24.6Current taxes related to prior periods - 0.5 - 0.7Tax portion of new tax losses carried forward for which no deferred tax assets were recognized - 32.5 - 6.5Tax portion of tax losses carried forward and used for which no deferred tax assets were recognized 4.1 8.3Other taxation effects 2.1 6.5Actual income tax expense - 23.3 -120.0Effective tax rate (percent) 10.3 27.2

(20) Profit or loss attributable to minority interests

[€ million] 2009 2010

Profit 10.6 37.2Loss -18.1 - 2.0 - 7.5 35.2

(21) Notes to the Consolidated Statement of Cash Flows

Freudenberg recognizes checks, cash in hand, cash at bank and short-term securities with an original term of up to three months as cash and cash equivalents.

The cash flow from operating activities takes into account payments for taxes amounting to €82.5 million (previous year: €26.0 million), dividends received in the amount of €12.8 million (previous year: €5.8 million) – including dividends received from associated companies totaling €8.4 million (previous year: €5.7 million) – as well as interest paid of €48.2 million (previous year: €55.8 million) and interest received of €9.2 million (previous year: €9.8 million).

Payments to Partners and minority interests include withdrawals by Partners in Freudenberg & Co. and dividends paid to minority interests in Group companies. Payments made in connection with Partners’ taxes are also included.


Further Notes

Application of Sec. 264 (3), HGB (Handelsgesetzbuch, “German Commercial Code”), Sec. 264b, HGB and Sec. 5 (6), PublG (Publizitätsgesetz, “German Disclosures Act”) in connection with Sec. 264 (3), HGB

The following German companies of the Group took advantage of the exemption provisions of Sec. 264 (3), HGB, Sec. 264b, HGB and Sec. 5 (6), PublG in connection with Sec. 264 (3), HGB:

Actuator Components GmbH & Co. KG, WeinheimBurgmann Automotive GmbH, EurasburgChem-Trend (Deutschland) GmbH, Maisach/GernlindenCorteco GmbH, WeinheimDichtomatik Vertriebsgesellschaft für technische Dichtungen mbH, HamburgDS Holding-GmbH, WeinheimEagleBurgmann Germany GmbH & Co. KG, WolfratshausenExterna Handels- und Beteiligungsgesellschaft mit beschränkter Haftung, HeddesheimFHP Export GmbH, WeinheimFHP Holding GmbH, Weinheim Freudenberg Dichtungs- und Schwingungstechnik GmbH & Co. KG, WeinheimFreudenberg Dichtungs- und Schwingungstechnik GmbH, BerlinFreudenberg DS Tooling Center GmbH & Co. KG, WeinheimFreudenberg Finance GmbH, WeinheimFreudenberg Immobilien Management GmbH, WeinheimFreudenberg Mechatronics GmbH & Co. KG, WeinheimFreudenberg O-Ring GmbH & Co. KG, WeinheimFreudenberg Process Seals GmbH & Co. KG, WeinheimFreudenberg Process Consulting GmbH, WeinheimFreudenberg Schwingungstechnik Industrie GmbH & Co. KG, VeltenFreudenberg Simmerringe GmbH & Co. KG, WeinheimFreudenberg Simrit GmbH & Co. KG, WeinheimFreudenberg Spezialdichtungsprodukte GmbH & Co. KG, WeinheimFreudenberg Stanz- und Umformtechnik GmbH & Co. KG, WeinheimFreudenberg Venture Capital GmbH, WeinheimFreudenberg Versicherungsservice GmbH, WeinheimFreudenberg Vliesstoffe KG, WeinheimFV Holding GmbH, WeinheimIntegral Accumulator GmbH & Co. KG, WeinheimKlüber Lubrication München Kommanditgesellschaft, MunichLederer GmbH, ÖhringenMerkel Freudenberg Fluidtechnic GmbH, HamburgOKS Spezialschmierstoffe GmbH, MunichVibracoustic GmbH & Co. KG, WeinheimVileda Gesellschaft mit beschränkter Haftung, Weinheim

108

Material expenses

[€ million] 2009 2010

Raw materials, consumables and merchandise purchased 1,479.4 2,071.7Services purchased 168.0 198.9 1,647.4 2,270.6

Personnel expenses

[€ million] 2009 2010

Wages and salaries 1,167.0 1,277.2Social security contributions and costs of pensions and assistance 314.1 328.5 1,481.1 1,605.7

Workforce

In the year under review, an average of 34,200 (previous year: 31,616) persons were employed in the following functions:

2010 Germany Other countries TotalProduction 6,385 15,509 21,894Sales 1,668 4,541 6,209Research and development 1,318 642 1,960Administration 1,319 2,818 4,137 10,690 23,510 34,200

The above figures include a pro-rata share of the employees of companies consolidated on a pro-rata basis totaling 2,496 (previous year: 2,257).


Research and development

In the year under review, expenses for research and development activities amounted to €181.3 million (previ-ous year: €170.9 million). Of this amount, €26.2 million (previous year: €22.5 million) were charged to third parties. The figure includes government grants for research and development projects totaling €4.3 million (previous year: €4.4 million).

Related party disclosure

Relations with other participations and associated companies within the scope of normal business activities were as follows:

2009 [€ million] Sa

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Other participations 20.9 23.3 1.5 24.8 7.1 0.0 7.1Associated companies 21.4 2.9 0.5 3.4 13.3 0.0 13.3 42.3 26.2 2.0 28.2 20.4 0.0 20.4

2010 [€ million] Sa

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Other participations 30.4 28.9 1.6 30.5 10.2 0.0 10.2Associated companies 20.6 2.5 0.5 3.0 22.6 0.0 22.6 51.0 31.4 2.1 33.5 32.8 0.0 32.8

The total remuneration of members of the Board of Partners amounted to €0.4 million (previous year: €0.4 million).

The total remuneration of members of the Management Board amounted to €4.9 million (previous year: €1.7 million). Provisions for pensions for members of the Management Board amounted to €14.0 million (previ-ous year: €17.6 million).

The remuneration paid to former members of the Management Board or their surviving dependants totaled €7.2 million (previous year: €5.0 million). Provisions for pensions for former members of the Management Board and their surviving dependants amounted to €64.4 million (previous year: €60.0 million).

Receivables Payables

Receivables Payables

110

The members of the Board of Partners and Management Board of Freudenberg & Co. are listed under “Company Boards”.

Dr. Dr. Peter Bettermann, Speaker of the Management Board of Freudenberg & Co., and Dr. Wolfram Freudenberg, Chairman of the Board of Partners, are also shareholders of Freudenberg Stiftung GmbH, Weinheim (hereafter “Freudenberg Stiftung”).

Freudenberg Stiftung is a foundation established with the object of holding a donated participation of €12.7 million (previous year: €12.7 million) in Freudenberg & Co. and using the income from this partici-pation for benevolent and charitable purposes. Any surplus liquid funds held by the foundation are invested in Freudenberg & Co. The interest income from these funds at normal market conditions amounting to €0.8 million (previous year: €0.8 million) is used for the purposes of the foundation.

Fees of the Auditor

The auditor, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, performed the following services in the 2010 financial year.

[€ million] 2009 2010

Auditing services 1.3 1.4Other assurance services 0.1 0.1Tax advisory services 0.1 0.1Other services 0.1 0.8Fees of the Auditor 1.6 2.4

Major events after the date of the statement of financial position

There were no major events between the date of the statement of financial position and April 1, 2011 (the date when the annual report was approved for publication by the Board of Partners).

Weinheim, April 1, 2011

FREUDENBERG & CO.KOMMANDITGESELLSCHAFTThe Management Board

111Shareholdings

Shareholdings of the Freudenberg Groupas at December 31, 2010

No. Company Country Share of capital [in %]

I. Affiliated companies 1 Freudenberg & Co. Kommanditgesellschaft, Weinheim Germany -

Production companies, Germany 2 Burgmann Automotive GmbH, Eurasburg Germany 100.00 3 Chem-Trend (Deutschland) GmbH, Maisach/Gernlinden Germany 100.00 4 EagleBurgmann Germany GmbH & Co. KG, Wolfratshausen Germany 75.00 5 Espey Burgmann GmbH, Moers Germany 75.00 6 Freudenberg Anlagen- und Werkzeugtechnik GmbH, Laudenbach Germany 100.00 7 Freudenberg Dichtungs- und Schwingungstechnik GmbH & Co. KG, Weinheim Germany 100.00 8 Freudenberg DS Tooling Center GmbH & Co. KG, Weinheim Germany 100.00 9 Freudenberg Filtration Technologies KG, Weinheim Germany 100.00 10 Freudenberg Haushaltsprodukte Augsburg KG, Augsburg Germany 100.00 11 Freudenberg O-Ring GmbH & Co. KG, Weinheim Germany 100.00 12 Freudenberg Schwingungstechnik Industrie GmbH & Co. KG, Velten Germany 100.00 13 Freudenberg Simmerringe GmbH & Co. KG, Weinheim Germany 100.00 14 Freudenberg Spezialdichtungsprodukte GmbH & Co. KG, Weinheim Germany 100.00 15 Freudenberg Stanz- und Umformtechnik GmbH & Co. KG, Weinheim Germany 100.00 16 Freudenberg Vliesstoffe KG, Weinheim Germany 100.00 17 Helix Medical Europe KG, Kaiserslautern Germany 100.00 18 Integral Accumulator GmbH & Co. KG, Weinheim Germany 75.00 19 Klüber Lubrication München Kommanditgesellschaft, Munich Germany 100.00 20 Lederer GmbH, Öhringen Germany 100.00 21 Merkel Freudenberg Fluidtechnic GmbH, Hamburg Germany 100.00 22 OKS Spezialschmierstoffe GmbH, Munich Germany 100.00 23 Simrax GmbH Gleitringdichtungen, Weinheim Germany 60.00 24 SurTec Deutschland GmbH, Zwingenberg Germany 100.00 25 Vibracoustic GmbH & Co. KG, Weinheim Germany 100.00

Production companies, other countries 26 Freudenberg S.A. Telas sin Tejer, Villa Zagala Argentina 100.00 27 Klüber Lubrication Argentina S.A., Buenos Aires Argentina 100.00 28 EagleBurgmann Australia Pty. Ltd., Ingleburn Australia 25.00 29 Freudenberg Filtration Technologies (Aust) Pty. Ltd., Braeside Australia 55.00 30 Klüber Lubrication Benelux S.A./N.V., Dottignies Belgium 100.00 31 Chem-Trend Industria e Comercio de Produtos Quimicos Ltda., Valinhos Brazil 100.00 32 EagleBurgmann do Brasil Vedacoes Ltda., Campinas, São Paulo Brazil 75.00 33 Freudenberg Nao-Tecidos Ltda., Jacarei Brazil 100.00 34 Freudenberg-NOK-Componentes Brasil Ltda., São Paulo Brazil 75.00

112

No. Company Country Share of capital [in %] 35 Klüber Lubrication Lubrificantes Especiais Ltda. , Barueri Brazil 100.00 36 SurTec do Brasil Ltda., São Bernardo do Campo, São Paulo Brazil 51.00 37 Vibracoustic do Brasil Ltda., Taubaté-SP. Brazil 100.00 38 Burgmann Dalian Co. Ltd., Dalian China 40.00 39 Burgmann Shanghai Ltd., Shanghai China 25.50 40 Chem-Trend Chemicals (Shanghai) Co., Ltd., Qingpu China 100.00 41 EagleBurgmann (Wuxi) Co., Ltd., Wuxi China 50.00 42 Klüber Lubrication Industries (Shanghai) Co., Ltd., Qingpu China 100.00 43 SurTec Metal Surface Treatment Technology Co. Ltd., Hangzhou China 75.00 44 Vibracoustic (Yantai) Co., Ltd., Yantai China 100.00 45 Helix Medical LATR srl., San José Costa Rica 100.00 46 KE-Burgmann A/S, Vejen Denmark 75.00 47 KE-Burgmann Bredan A/S, Ringkøbing Denmark 75.00 48 Freudenberg Evolon s.a.r.l., Colmar France 100.00 49 Freudenberg Joints Elastomères SAS, Langres France 100.00 50 Freudenberg Politex S.A., Colmar France 100.00 51 Freudenberg PSPE S.A.S., Andrezieux-Bouthéon France 100.00 52 Freudenberg S.A.S., Langres France 100.00 53 Freudenberg-Meillor SAS, Nantiat France 100.00 54 SurTec France S.A.S., Cugnaux France 100.00 55 Freudenberg Nonwovens LP, Littleborough United Kingdom 100.00 56 Freudenberg Technical Products LP, North Shields United Kingdom 75.00 57 APEC (Asia) Limited, Hong Kong Hong Kong 100.00 58 EagleBurgmann India Pvt. Ltd., Pune India 50.00 59 Freudenberg Nonwovens India Pvt. Ltd., Mumbai India 100.00 60 KE-Burgmann Flexibles India Pvt. Ltd., Chennai India 75.00 61 Klüber Lubrication India Pvt. Ltd., Bangalore India 90.00 62 SurTec Chemicals India plc., Pune India 100.00 63 BT-Tenute Meccaniche Rotanti S.p.A., Arcugnano Italy 75.50 64 Corcos Industriale S.a.s. di Externa Italia S.r.l., Pinerolo Italy 100.00 65 Fapam S.a.s. di Externa Italia S.r.l., Luserna San Giovanni Italy 100.00 66 FHP di R. Freudenberg S.A.S., Milan Italy 100.00 67 Freudenberg Tecnologie di Filtrazione S.a.s. di Externa Holding S.r.l., Milan Italy 100.00 68 M.B. Preform S.a.s. di Externa Holding S.r.l., Colonella Italy 100.00 69 Marelli & Berta S.a.s. di Freudenberg S.p.A., Sant’ Omero Italy 100.00 70 OIGRA-Meillor s.r.l., Settimo Torinese Italy 100.00 71 Politex S.a.s. di Freudenberg Politex s.r.l., Novedrate Italy 100.00 72 Trasfotex s.r.l., Quaregna Italy 70.00 73 EagleBurgmann Japan Co., Ltd., Tokyo Japan 25.00

113Shareholdings

No. Company Country Share of capital [in %] 74 Freudenberg Vileda Jordan Ltd., Amman Jordan 51.00 75 Freudenberg Oil & Gas Canada Inc., Nisku Canada 100.00 76 Freudenberg-NOK Inc., Tillsonburg Canada 75.00 77 S. Marino Manufacturing Ltd., Concord Canada 100.00 78 EagleBurgmann Manufacturing Malaysia SDN. BHD., Petaling Jaya Malaysia 25.00 79 EagleBurgmann Mexico S.A. de C.V., Cuautitlán Mexico 75.00 80 EagleBurgmann Production Center S.A. de C.V., Santiago de Querétaro Mexico 75.00 81 Freudenberg Telas sin Tejer S.A. de C.V., León Mexico 100.00 82 Freudenberg-NOK de Mexico S.A. de C.V., Cuautla Mexico 75.00 83 Freudenberg-NOK de Queretaro, S.A. de C.V., Querétaro Mexico 75.00 84 Klüber Lubricacion Mexicana S.A. de C.V., Querétaro Mexico 100.00 85 Vibracoustic de Mexico S.A. de C.V., Lerma Mexico 100.00 86 EagleBurgmann New Zealand Ltd., Auckland New Zealand 25.00 87 Freudenberg Household Products B.V., Arnhem Netherlands 100.00 88 EagleBurgmann Production Center Judenburg GmbH, Judenburg Austria 75.00 89 Freudenberg Spezialdichtungsprodukte Austria GmbH & Co. KG, Kufstein Austria 100.00 90 Klüber Lubrication Austria Ges.m.b.H., Salzburg Austria 100.00 91 Vibracoustic Polska Sp. z o.o., Sroda Slaska Poland 100.00 92 Freudenberg Politex OOO, Nizhniy Novgorod Russia 100.00 93 Freudenberg Household Products A.B., Norrköping Sweden 100.00 94 Schwab Schwingungstechnik AG, Adliswil Switzerland 100.00 95 SurTec Cacak d.o.o., Cacak Serbia 70.00 96 Freudenberg Filtration Technologies Slovensko, s.r.o., Potvorice Slovakia 90.00 97 Freudenberg Espana S.A., Componentes, S.en C. i.L., Barcelona Spain 100.00 98 Freudenberg Espana S.A., Telas sin Tejer, S.en C., Barcelona Spain 100.00 99 Freudenberg Iberica S.A., S.en C., Parets del Vallés Spain 100.00 100 Klüber Lubrication GmbH Ibérica S.en C., Barcelona Spain 100.00 101 EagleBurgmann Seals S.A. (Pty) Ltd., Edenvale South Africa 75.00 102 Freudenberg Nonwovens (Pty.) Ltd., Cape Town South Africa 100.00 103 SurTec South Africa Pty. Ltd., Pretoria South Africa 51.00 104 Chem-Trend Korea Ltd., Ansong-si South Korea 100.00 105 EagleBurgmann Taiwan Co., Ltd., Yenchao Taiwan 25.00 106 Freudenberg Far Eastern Spunweb Comp. Ltd., Tayuan, Taoyuan Taiwan 60.18 107 EagleBurgmann (Thailand) Co., Ltd., Rayong Thailand 25.00 108 ALUCON s.r.o., Lázne Belohrad Czech Republic 100.00 109 FAW s.r.o., i.L., Trebechovice Pod. O Czech Republic 100.00 110 Freudenberg Tesnící technika s.r.o., i.L., Ceperka Czech Republic 100.00 111 KE-Burgmann Czech s.r.o., Jilove u Prahy Czech Republic 75.00

114

No. Company Country Share of capital [in %] 112 Tésneni a pruzne elementy k.s., Opatovice nad Labem Czech Republic 100.00 113 Vibracoustic CZ s.r.o., Melnik Czech Republic 100.00 114 Freudenberg Coskunöz Kalip Sanayi ve Ticaret A.S., Bursa Turkey 75.00 115 Klüber Lubrication Yaglama Ürünleri Sanayi ve Ticaret A.S., Istanbul Turkey 100.00 116 Actuator Components Kft., Pécel Hungary 100.00 117 Freudenberg Simmerringe Kft., Kecskemet Hungary 100.00 118 Freudenberg Tömítés Ipari Kft., Lajosmizse Hungary 100.00 119 Vibracoustic Magyarország Légrugó Technológia Kft., Nyíregyháza Hungary 100.00 120 Chem-Trend Limited Partnership, Howell USA 100.00 121 CST-SurTec Inc., Middleburg Heights USA 51.00 122 FHP-Berner USA LP, Aurora USA 50.00 123 Freudenberg Filtration Technologies LP, Hopkinsville USA 100.00 124 Freudenberg Household Products LP, Aurora USA 100.00 125 Freudenberg Oil & Gas LLC, Houston USA 75.00 126 Freudenberg Spunweb Company, Durham USA 100.00 127 Freudenberg Texbond L.P., Macon USA 100.00 128 Freudenberg-NOK General Partnership, Plymouth USA 75.00 129 Helix Medical, LLC, Carpinteria USA 100.00 130 International Seal Company, Inc., Shakopee USA 75.00 131 KL Texas L.P. dba SUMMIT INDUSTRIAL PRODUCTS, Tyler USA 100.00 132 Klüber Lubrication North America LP, Londonderry USA 100.00 133 Lakes Region Manufacturing, L.L.C., Belmont USA 75.00 134 Merkel Freudenberg Inc., Spencer USA 75.00 135 Vibracoustic North America LP, Plymouth USA 100.00 136 Vibration Control Technologies, L.L.C., Ligonier USA 100.00

Sales companies, Germany 137 Access Textil Vertriebs GmbH, Weinheim Germany 100.00 138 Corteco GmbH, Weinheim Germany 100.00 139 Dichtomatik Vertriebsgesellschaft für technische Dichtungen mbH, Hamburg Germany 100.00 140 EagleBurgmann Gaskets GmbH, Wolfratshausen Germany 75.00 141 FHP Export GmbH, Weinheim Germany 100.00 142 Freudenberg Gygli GmbH, Weinheim Germany 100.00 143 Freudenberg Process Seals GmbH & Co. KG, Weinheim Germany 100.00 144 Freudenberg Schwab GmbH, Hennigsdorf Germany 100.00 145 Freudenberg Simrit GmbH & Co. KG, Weinheim Germany 100.00 146 Klüber Lubrication Germany KG, Munich Germany 100.00 147 Seal Trade Eurasburg GmbH, Eurasburg Germany 75.00 148 Technologiepark Weinheim KG, Weinheim Germany 100.00 149 Vileda Gesellschaft mit beschränkter Haftung, Weinheim Germany 100.00

115Shareholdings

No. Company Country Share of capital [in %] Sales companies, other countries 150 Chem-Trend Australia Pty Ltd, Victoria Australia 100.00 151 Freudenberg Household Products Pty. Ltd., Melbourne Australia 100.00 152 Freudenberg Pty. Ltd., Thomastown Australia 100.00 153 Klüber Lubrication Australia Pty. Ltd., Melbourne Australia 100.00 154 EagleBurgmann Belgium B.V.B.A., St.-Job-in’t-Goor Belgium 75.00 155 FHPVileda S.C.S., Verviers Belgium 100.00 156 Klüber Lubrication Belgium Netherlands S.A., Dottignies Belgium 100.00 157 Freudenberg Productos del Hogar Ltda., Santiago de Chile Chile 100.00 158 Klüber Lubrication Chile Ltda., Santiago de Chile Chile 100.00 159 Chem-Trend (Shanghai) Trading Co. Ltd., Shanghai China 100.00 160 EagleBurgmann Trading (Shanghai) Co. Ltd., Shanghai China 50.00 161 Freudenberg Household Products (Suzhou) Co., Ltd., Suzhou China 100.00 162 Freudenberg Politex Ltd., Shanghai China 100.00 163 Freudenberg Spunweb (Shanghai) Trading Co., Ltd., Shanghai China 60.18 164 Klüber Lubrication (Shanghai) Co., Ltd., Shanghai China 100.00 165 SurTec Chemical and Engineering (Hangzhou) Co. Ltd., Hangzhou China 75.00 166 Vibracoustic (Shanghai) Sales and Trading Co., Ltd., Shanghai China 100.00 167 Freudenberg Simrit A/S, i.L., Herlev Denmark 100.00 168 Klüber Lubrication Skandinavien A/S, Skovlunde Denmark 100.00 169 SurTec Scandinavia ApS, Fredericia Denmark 51.00 170 Freudenberg Filtration Technologies Finland Oy, Naantali Finland 100.00 171 Freudenberg Household Products Oy Ab, Helsinki Finland 100.00 172 Freudenberg Simrit Oy, Vantaa Finland 100.00 173 KE-Burgmann Finland Oy, Vantaa Finland 75.00 174 Chem-Trend France S.A.R.L., Illkirch-Graffenstaden France 100.00 175 Corteco SAS, Nantiat - La Couture France 100.00 176 Dichtomatik S.A.S, Mâcon Loche France 100.00 177 EagleBurgmann S.A.S. (France), Sartrouville France 75.00 178 FHP Vileda S.A., Gennevilliers France 100.00 179 Freudenberg Filtration Technologies SAS, Les Ulis/Courtaboeuf France 100.00 180 Freudenberg Simrit S.A.S, Mâcon France 100.00 181 Klüber Lubrication France S.A.S., Valence France 100.00 182 FHP Hellas S.A., Kifissia-Athens Greece 100.00 183 Chem-Trend (UK) LP, Halifax United Kingdom 100.00 184 Corteco Ltd., Lutterworth United Kingdom 100.00 185 Dichtomatik Ltd., Derby United Kingdom 66.00 186 EagleBurgmann Industries UK LP, Warwick United Kingdom 75.00 187 Filtration Engineering Ltd., Elland United Kingdom 100.00 188 Freudenberg Household Products LP, Rochdale United Kingdom 100.00 189 Freudenberg Oil & Gas UK Ltd., Aberdeen United Kingdom 80.00

116

No. Company Country Share of capital [in %] 190 Freudenberg Simrit LP, Lutterworth United Kingdom 75.00 191 KE-Burgmann UK Ltd., Congleton United Kingdom 75.00 192 Klüber Lubrication Great Britain Ltd., Halifax United Kingdom 100.00 193 SurTec Chemicals UK Ltd., Birmingham United Kingdom 51.00 194 VC UK LP, New York United Kingdom 100.00 195 Freudenberg Textile Technologies Sociedad Anonima, Guatemala City Guatemala 100.00 196 Freudenberg Vilene Telas sin tejer, sociedad anonima, Guatemala City Guatemala 100.00 197 Freudenberg Household Products Ltd., Hong Kong Hong Kong 100.00 198 Klüber Lubrication China Ltd., Hong Kong Hong Kong 100.00 199 Chem-Trend Chemicals Co. Pvt. Ltd., Bangalore India 100.00 200 Freudenberg Filtration Technologies India Private Limited, Pune India 100.00 201 Freudenberg Gala Household Product Pvt. Ltd., Mumbai India 60.00 202 PT EagleBurgmann Indonesia, Bekasi, West Java Province Indonesia 24.98 203 Burgmann Pars Sealing Systems Co., Teheran Iran 75.00 204 BT-Burgmann S.p.A., Arcugnano Italy 75.50 205 Chem-Trend Italy del Dr. Gian Franco Colori S.a.s., Milan Italy 100.00 206 Corcos Simrit S.a.s. di Externa Italia S.r.l., Pinerolo Italy 100.00 207 Corteco S.r.l. (a socio unico), Pinerolo Italy 100.00 208 Dichtomatik S.a.s. di Externa Italia S.r.l., Genoa-Voltri Italy 100.00 209 EagleBurgmann Italia S.r.l., Osnago Italy 75.00 210 Freudenberg S.p.A., Milan Italy 100.00 211 Klüber Lubrication Italia S.a.s. di G. Colori, Milan Italy 100.00 212 Chemlease Japan K.K., Kobe Japan 51.00 213 Chem-Trend Japan K.K., Osaka Japan 100.00 214 Freudenberg Spunweb Japan Company, Ltd., Osaka Japan 60.18 215 Dichtomatik Canada, Inc., Markham Canada 100.00 216 EagleBurgmann Canada Inc., Milton, Ontario Canada 75.00 217 Freudenberg Household Products Inc., Laval Canada 100.00 218 Freudenberg Nonwovens Inc., London, Ontario Canada 100.00 219 Nova Magnetics-Burgmann Ltd., Dartmouth Canada 75.00 220 TOO Freudenberg Oil & Gas, Atyrau Kazakhstan 100.00 221 Freudenberg Kucanski proizvodi d.o.o., Zagreb Croatia 100.00 222 EagleBurgmann (Malaysia) SDN. BHD., Petaling Jaya Malaysia 25.00 223 Klüber Lubrication (Malaysia) Sdn. Bhd., Kuala Lumpur Malaysia 100.00 224 Chem-Trend Comercial, S.A. de C.V., Querétaro Mexico 100.00 225 Dichtomatik de Mexico S.A. de C.V., Querétaro Mexico 95.50 226 Freudenberg Productos del Hogar, S.A. de C.V., Mexico-City Mexico 100.00 227 Dichtomatik B.V., Zwolle Netherlands 66.60 228 EagleBurgmann Netherlands B.V., Veenendaal Netherlands 75.00 229 SurTec Benelux B.V., Reuver Netherlands 55.00 230 EagleBurgmann Norway AS, Skedsmokorset Norway 75.00

117Shareholdings

No. Company Country Share of capital [in %] 231 Freudenberg Household Products AS, Skedsmokorset Norway 100.00 232 Vestpak AS, Sandnes Norway 100.00 233 Dichtomatik Handelsgesellschaft mbH, Vienna Austria 95.00 234 EagleBurgmann Austria GmbH, Salzburg Austria 75.00 235 SurTec Produkte und Systeme für die Oberflächenbehandlung GesmbH, Vienna Austria 65.50 236 EagleBurgmann Philippines, Inc., Cavite Philippines 22.58 237 Chem-Trend Polska sp. z o.o. spólka komandytowa, Janikowo Poland 100.00 238 FHP Vileda Sp. z o.o., Warsaw Poland 100.00 239 Freudenberg Politex Sp. z o.o., Lodz Poland 100.00 240 Freudenberg Simrit Polska Sp. z o.o., Warsaw Poland 95.00 241 Freudenberg Vilene Sp. z o.o., Lodz Poland 100.00 242 KE-Burgmann Poland Sp. z o.o., Warsaw Poland 75.00 243 Klüber Lubrication Polska Sp. z o.o., Poznan Poland 100.00 244 SurTec Polska Sp. z o.o., Wroclaw Poland 70.00 245 Freudenberg Trading Portuguesa Lda. i.L., Porto Portugal 100.00 246 EagleBurgmann RO S.R.L., Bucharest Romania 75.00 247 Freudenberg Household Products Vileda Societate in Comandita, Bucharest Romania 100.00 248 SurTec Romania s.r.l., Brasov Romania 55.00 249 EagleBurgmann OOO, Zavolzhye Russia 75.00 250 Freudenberg Household Products Eastern Europe OOO, St. Petersburg Russia 70.00 251 Freudenberg Vileda Eastern Europe OOO, Moscow Russia 100.00 252 Klüber Lubrication OOO, Moscow Russia 100.00 253 OOO Freudenberg Simrit, Moscow Russia 100.00 254 OOO SurTec, Moscow Russia 100.00 255 EagleBurgmann Saudi Arabia Ltd., Khobar Saudi Arabia 51.00 256 Dichtomatik A.B., Landskrona Sweden 85.00 257 EagleBurgmann Sweden AB, Norrköping Sweden 75.00 258 Freudenberg Simrit A.B., Stockholm Sweden 100.00 259 EagleBurgmann (Switzerland) AG, Höri Switzerland 75.00 260 Freudenberg Gygli AG, Zug Switzerland 100.00 261 Freudenberg Simrit AG, Zurich Switzerland 100.00 262 Klüber Lubrication AG (Switzerland), Zurich Switzerland 100.00 263 Freudenberg proizvodi za domacinstvo d.o.o., Belgrade Serbia 100.00 264 Chem-Trend Singapore Pte. Ltd., Singapore Singapore 100.00 265 EagleBurgmann Singapore Pte. Ltd., Singapore Singapore 25.00 266 KE-Burgmann Singapore Pte. Ltd., Singapore Singapore 75.00 267 Klüber Lubrication South East Asia Pte. Ltd., Singapore Singapore 100.00 268 Freudenberg Simrit spol. s.r.o., Velky Krtis Slovakia 100.00 269 Freudenberg Gospodinjski Proizvodi d.o.o., Maribor Slovenia 100.00

118


270 SurTec Adria d.o.o., Radovljica Slovenia 60.00 271 EagleBurgmann Ibérica S.A., Madrid Spain 75.00 272 Vileda Ibérica S.A., S.en C., Parets del Vallés Spain 100.00 273 Freudenberg Filtration Technologies (Pty) Ltd., Cape Town South Africa 100.00 274 Klüber Lubrication (Pty.) Ltd., Randhart South Africa 100.00 275 EagleBurgmann Korea Co., Ltd., Gyeonggi-Do South Korea 25.00 276 SurTec Korea Co. Ltd., GyeongNam South Korea 100.00 277 Chem-Trend Trading (Thailand) Co. Ltd., Bangkok Thailand 100.00 278 Klüber Lubrication (Thailand) Co., Ltd., Bangkok Thailand 100.00 279 SurTec Asia Pacific Co., Ltd., Bangkok Thailand 51.00 280 EagleBurgmann Czech s.r.o., Prague Czech Republic 75.00 281 Freudenberg Potreby pro domácnost, k.s., Prague Czech Republic 100.00 282 Freudenberg Simrit, spol. s.r.o., Prague Czech Republic 100.00 283 Freudenberg Vilene s.r.o., Prostejov Czech Republic 100.00 284 Klüber Lubrication CZ, s.r.o., Brno Czech Republic 100.00 285 SurTec CR s.r.o., Vrane n/Vltavou Czech Republic 50.00 286 EagleBurgmann Endüstriyel Sizdirmazlik Sanayi ve Ticaret Ltd., Istanbul Turkey 75.00 287 Freudenberg Household Products Evici Kullanim Araclari Sanayi ve Ticaret A.S., Istanbul Turkey 100.00 288 Freudenberg Vilene Tela Sanayi ve Ticaret A.S., Istanbul Turkey 100.00 289 Dichtomatik Kft., Budapest Hungary 80.00 290 EagleBurgmann Hungaria Kft., Budapest Hungary 75.00 291 Freudenberg Háztartási Cikkek Kereskedelmi BT, Budapest Hungary 100.00 292 Freudenberg Simrit Kft., Budapest Hungary 100.00 293 Burex Automotive America Inc., Houston USA 75.00 294 EagleBurgmann Industries LP, Houston USA 75.00 295 Freudenberg Nonwovens Limited Partnership, Durham USA 100.00 296 KE-Burgmann USA Inc., Hebron USA 75.00 297 EagleBurgmann Venezuela, C.A., Caracas Venezuela 41.25 298 EagleBurgmann Middle East FZE, Dubai United Arab Emirates 60.00 299 EagleBurgmann Vietnam Co. Ltd., Ho Chi Minh City Vietnam 25.00 300 SurTec Viet Nam Co., Ltd., Ho Chi Minh City Vietnam 51.00 Administration and other companies, Germany 301 2. Freudenberg Beteiligungs-GmbH, Weinheim Germany 100.00 302 Actuator Components GmbH & Co. KG, Weinheim Germany 100.00 303 Beteiligungsgesellschaft Carl Freudenberg mbH, Weinheim Germany 100.00 304 Burgmann Industries Holding GmbH, Wolfratshausen Germany 75.00 305 Burgmann International GmbH, Wolfratshausen Germany 100.00 306 Carl Freudenberg KG, Weinheim Germany 100.00

119Shareholdings


307 CT Beteiligungs-GmbH, Munich Germany 100.00 308 Dichtomatik Holding GmbH, Weinheim Germany 100.00 309 DS Beteiligungs-GmbH, Weinheim Germany 100.00 310 DS Holding-GmbH, Weinheim Germany 100.00 311 DS Verwaltungs-GmbH, Weinheim Germany 100.00 312 Eagle Euroseals GmbH, Weinheim Germany 100.00 313 EagleBurgmann Germany Verwaltungs-GmbH, Wolfratshausen Germany 75.00 314 Externa Handels- und Beteiligungsgesellschaft mit beschränkter Haftung, Heddesheim Germany 100.00 315 FCS-Munich GmbH, Weinheim Germany 100.00 316 FFT Beteiligungs-GmbH, Weinheim Germany 100.00 317 FHP Holding GmbH, Weinheim Germany 100.00 318 FIT Service GmbH, Weinheim Germany 100.00 319 Fremecs GmbH & Co. KG, Weinheim Germany 100.00 320 Fremecs Holding GmbH, Weinheim Germany 100.00 321 Freudenberg Beteiligungs-GmbH, Weinheim Germany 100.00 322 Freudenberg Chemical Specialities KG, Munich Germany 100.00 323 Freudenberg Dichtungs- und Schwingungstechnik GmbH, Berlin Germany 100.00 324 Freudenberg FCCT KG, Weinheim Germany 100.00 325 Freudenberg Finance GmbH, Weinheim Germany 100.00 326 Freudenberg Forschungsdienste KG, Weinheim Germany 100.00 327 Freudenberg Handels- und Beteiligungs-GmbH, Weinheim Germany 100.00 328 Freudenberg Haushaltsprodukte KG, Weinheim Germany 100.00 329 Freudenberg Haushaltsprodukte Verwaltungs-GmbH, Weinheim Germany 100.00 330 Freudenberg Immobilien Management GmbH, Weinheim Germany 100.00 331 Freudenberg IT Information Services KG, Weinheim Germany 100.00 332 Freudenberg IT KG, Weinheim Germany 100.00 333 Freudenberg IT Solution Consulting KG, Weinheim Germany 100.00 334 Freudenberg Kleve GmbH, Weinheim Germany 100.00 335 Freudenberg Mechatronics Beteiligungs-GmbH, Weinheim Germany 100.00 336 Freudenberg Mechatronics GmbH & Co. KG, Weinheim Germany 100.00 337 Freudenberg Mektec Beteiligungs-GmbH, Weinheim Germany 100.00 338 Freudenberg Messeservice KG, Weinheim Germany 100.00 339 Freudenberg New Technologies KG, Weinheim Germany 100.00 340 Freudenberg Oil & Gas GmbH, Weinheim Germany 100.00 341 Freudenberg Politex GmbH, Weinheim Germany 100.00 342 Freudenberg Process Consulting GmbH, Weinheim Germany 100.00 343 Freudenberg Rückversicherung AG, Weinheim Germany 100.00 344 Freudenberg Service KG, Weinheim Germany 100.00 345 Freudenberg Venture Capital GmbH, Weinheim Germany 100.00 346 Freudenberg Verpflegungsdienste KG, Weinheim Germany 100.00

120


347 Freudenberg Versicherungsservice GmbH, Weinheim Germany 100.00 348 Freudenberg Wohnbauhilfe GmbH, Weinheim Germany 100.00 349 FV Beteiligungs-GmbH, Weinheim Germany 100.00 350 FV Holding GmbH, Weinheim Germany 100.00 351 FV Logistik KG, Weinheim Germany 100.00 352 FV Service KG, Kaiserslautern Germany 100.00 353 FV Verwaltungs-KG, Weinheim Germany 100.00 354 Klüber Lubrication GmbH, Weinheim Germany 100.00 355 Schwingungstechnik Industrie Verwaltungs-GmbH, Velten Germany 100.00 356 SurTec International GmbH, Zwingenberg Germany 100.00 357 Vibracoustic Asia Holding GmbH, Weinheim Germany 100.00 358 Vibracoustic Holding GmbH, Weinheim Germany 100.00 359 WOR Pensionsgesellschaft GmbH, Wolfratshausen Germany 100.00

Administration and other companies, other countries 360 Jusele Pty. Ltd., Ingleburn Australia 25.00 361 Freudenberg Produtos do Lar Ltda., São Paulo Brazil 100.00 362 EagleBurgmann (Shanghai) Investment Management Co. Ltd., Shanghai China 50.00 363 Freudenberg IT (Suzhou) Co., Ltd., Suzhou China 100.00 364 Freudenberg Management (Shanghai) Co. Ltd., Shanghai China 100.00 365 Freudenberg Real Estate (Yantai) Co. Ltd., Yantai China 100.00 366 Chem-Trend A/S, Copenhagen Denmark 100.00 367 EBI AtlantikA/S, Vejen Denmark 75.00 368 EBI Middle-East A/S, Vejen Denmark 60.00 369 SPECI-TEX ApS, Vejen Denmark 75.00 370 Metallic Gaskets Nantiat SAS, Nantiat France 100.00 371 Chem-Trend (UK) Ltd., Halifax United Kingdom 100.00 372 Chem-Trend China Investments Ltd., Halifax United Kingdom 100.00 373 EagleBurgmann Industries UK Ltd., Warwick United Kingdom 75.00 374 FCS Interim UK Ltd., Halifax United Kingdom 100.00 375 Filtamark Ltd., Sandbach United Kingdom 100.00 376 Freudenberg Limited, Greetland United Kingdom 100.00 377 Freudenberg Technical Products Ltd., North Shields United Kingdom 75.00 378 Freudenberg Vileda Ltd., Rochdale United Kingdom 100.00 379 VC UK Ltd., New York United Kingdom 100.00 380 Freudenberg Trading (Hong Kong) Ltd., Hong Kong Hong Kong 100.00 381 Corfina Industriale S.a.s. di Externa Italia S.r.l., Pinerolo Italy 100.00 382 Externa Holding S.r.l., Milan Italy 100.00 383 Externa Italia S.r.l., Pinerolo Italy 100.00 384 Freudenberg Politex S.r.l., Novedrate Italy 100.00 385 Freudenberg Austria GmbH, Kufstein Austria 100.00

121Shareholdings


386 Freudenberg Schuh GmbH, Marchtrenk Austria 100.00 387 Chem-Trend Polska Sp. z o.o., Kobylnica Poland 100.00 388 FIM Polska Sp. z o.o., Sroda Slaska Poland 100.00 389 Freudenberg Household Products SRL, Bucharest Romania 100.00 390 Freudenberg Management Imobiliar SRL, Ploiesti Romania 100.00 391 Freudenberg Nonwovens Romania S.R.L., Brasov Romania 100.00 392 EBI Asia Pacific Pte. Ltd., Singapore Singapore 25.00 393 EBI Asia Pte. Ltd., Singapore Singapore 50.00 394 Freudenberg IT Singapore Pte. Ltd., Singapore Singapore 100.00 395 Freudenberg Immobilienmanagement Slovakia, s.r.o, Bratislava Slovakia 100.00 396 Freudenberg España S.A., Barcelona Spain 100.00 397 Freudenberg Ibérica S.A., Barcelona Spain 100.00 398 Vileda Ibérica S.A., Barcelona Spain 100.00 399 Arnot Burgmann (Pty) Ltd., Edenvale South Africa 75.00 400 TPE správni s.r.o., Opatovice nad Labem Czech Republic 100.00 401 Freudenberg IM Hungária Kft., Budapest Hungary 100.00 402 Freudenberg IT Hungary Kft., Budapest Hungary 100.00 403 Chem-Trend Holding LP, Wilmington USA 100.00 404 Dichtomatik Americas, LP, Shakopee USA 100.00 405 EagleBurgmann Industries Inc., Houston USA 75.00 406 FCS Holding Inc., Wilmington USA 100.00 407 FHP-Berner USA Inc., Wilmington USA 50.00 408 Freudenberg Household Products Inc., Aurora USA 100.00 409 Freudenberg IT LP, Durham USA 100.00 410 Freudenberg North America Limited Partnership, Manchester USA 100.00 411 Freudenberg Real Estate L.P., Wilmington USA 100.00 412 Freudenberg Texbond Inc., Delaware USA 100.00 413 Freudenberg U.S.A. Holdings, Inc., Manchester USA 100.00 414 Freudenberg-NOK Holdings, Inc., Manchester USA 75.00 415 Intpacor Inc., Manchester USA 100.00 416 Klüber Lubrication North America Inc., Londonderry USA 100.00 417 Lutrabond Company LP, Durham USA 100.00 418 Lutrabond Corporation, Wilmington USA 100.00 419 Lutradur Company LP, Durham USA 100.00 420 Lutradur Corporation, Wilmington USA 100.00 421 Pellon Corporation, Durham USA 100.00 422 Upper Bristol Ramp, LLC, Wilmington USA 75.00

II. Joint ventures consolidated on a pro-rata basis Germany 423 Freudenberg NOK Mechatronics GmbH & Co. KG, Weinheim Germany 50.00

122

1) Consolidated financial statements including Freudenberg & Vilene Filter (Changchun) Co., Ltd., Changchun, China2) Consolidated financial statements including Freudenberg & Vilene Interlinings (Nantong) Co. Ltd., Nantong, China Freudenberg & Vilene International (Shanghai) Trading Co., Ltd., Shanghai, China XETEX Trading Limited, Hong Kong Attrix Company Limited, Kowloon, Hong Kong Freudenberg & Vilene International Lanka (Private) Limited, Colombo, Sri Lanka

3) Consolidated financial statements including Changchun NOK-Freudenberg Oilseal Co., Ltd., Changchun, China Wuxi NOK-Freudenberg Oilseal Co., Ltd., Wuxi, China Sigma Freudenberg NOK PVT. Ltd., New Delhi, India NOK-Freudenberg Hong Kong Ltd., Kowloon, Hong Kong Merkel NOK-Freudenberg Co. Ltd., Taicang, China NOK-Freudenberg Group Sales (China) Co., Ltd., Shanghai, China NOK-Freudenberg Group Trading (China) Co., Ltd., Shanghai, China Corteco China Co. Ltd., Guangzhou, China


Other countries 424 Freudenberg & Vilene Nonwovens (Suzhou) Co. Ltd., Suzhou1) China 50.00 425 Freudenberg & Vilene Int. Ltd., Hong Kong 2) Hong Kong 50.00 426 Sigma Vibracoustic (India) PVT. LTD., Mohali India 50.00 427 VistaMed Ltd., Carrick-on-Shannon Ireland 50.00 428 Corfina s.r.l., Pinerolo Italy 50.00 429 NOK-Freudenberg Asia Holding Co. Pte. Ltd., Singapore 3) Singapore 50.00 430 Korea Filtration Technologies Co., Ltd., Pyungtaek South Korea 50.00 431 Korea Vilene Co., Ltd., Pyungtaek South Korea 50.00 432 Freudenberg & Vilene Nonwovens (Taiwan) Co. Ltd., Yang-Mei, Tao-Yuan Taiwan 50.00 433 Freudenberg & Vilene Filter (Thailand) Co. Ltd., Chonburi Thailand 50.00 434 Beltan Vibracoustic Titresim Elemanlari Sanayi ve Ticaret A.S., Bursa Turkey 50.00 435 Freudenberg NOK Mechatronics Hungary Bt., Pécel Hungary 50.00 436 Freudenberg Vitech Inc., Hopkinsville USA 50.00 437 Freudenberg Vitech L.P., Hopkinsville USA 50.00 438 Ishino Gasket North America L.L.C., Plymouth USA 37.50

III. Associated companies (valued at equity) Germany 439 MF Chemitec Beteiligungs-GmbH, Weinheim Germany 20.00 440 Unimatec Chemicals Europe GmbH & Co. KG, Weinheim Germany 20.00 Other countries 441 Bicomfiber S.A., Buenos Aires Argentina 24.00 442 OÜ Merinvest, Kuressaare-Mullutu Estonia 20.00 443 Japan Vilene Company Ltd., Tokyo Japan 27.68 444 NOK Corporation, Tokyo Japan 25.11 445 NOK Klüber Co. Ltd., Tokyo Japan 49.00 446 Klüber Lubrication Korea Ltd., Seoul South Korea 48.00 447 Beta Seals Sizdirmazlik Elemanlari Sanayi ve Ticaret A.S., Bursa Turkey 50.00

123Independent Auditor’s Report

Independent Auditor’s Report

We have issued the following opinion on the Consolidated Financial Statements and the Group Management Report:

“We have audited the Consolidated Financial Statements prepared by the Freudenberg & Co. Kommandit-gesellschaft, Weinheim, comprising the Consolidated Statement of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, and the Notes to the Consolidated Financial Statements, together with the Group Management Report for the fiscal year from January 1 to December 31, 2010. The preparation of the Consolidated Financial Statements and the Group Management Report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB [“Handelsgesetzbuch”: “German Commercial Code”] are the responsibility of the parent company’s management. Our responsibility is to express an opinion on the Consolidated Financial Statements and on the Group Management Report based on our audit.

We conducted our audit of the Consolidated Financial Statements in accordance with Sec. 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschafts-prüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the Consolidated Financial Statements in accordance with the applicable financial reporting framework and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible mis-statements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the Consolidated Financial State-ments and the Group Management Report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements and the Group Management Report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the Consolidated Financial Statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The Group Management Report is consistent with the Consolidated Financial Statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.”

Mannheim, April 1, 2011

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Prof. Dr. Wollmert GrathwolWirtschaftsprüfer Wirtschaftsprüfer[German Public Auditor] [German Public Auditor]




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