Financial Report as of September 30, 2010

Continental's Share Price Performance

Whereas the first quarter was still marked heavily by the debt crisis in Portugal, Ireland, Italy and Greece (PIIGs), the reports of a strong first business quarter and the increasingly optimistic early economic indicators in Europe, the U.S.A. and Asia dominated the mood on the stock exchanges. Ultimately, the rescue package agreed upon early in June 2010 by the EU finance ministers to stabilize the PIIG countries, and thus the euro as well, created the necessary reassurance for market participants. In contrast, the third quarter was caught on the one hand between the good economic and company figures from Europe and Asia, and the worsening economic indicators in the U.S.A. on the other. This development was accompanied by an ever more heated debate regarding the global currency imbalances. In addition to the ongoing discussion about the ratio of the renminbi (China) to the dollar (U.S.A.), the development of the Japanese Yen against the dollar caused the Bank of Japan to initiate massive currency intervention, slashing the Japanese key rate to nearly zero percent early in October. Throughout the period under review, the European Central Bank did not change its policy of low interest rates, with a key rate of 1%, whereas the U.S. Federal Reserve is again considering further quantitative measures to support economic growth, in view of the fact that it has exploited nearly all the possibilities for further interest measures. Against this backdrop, the euro continued to be characterized by a high degree of volatility. After the euro was quoted at \$1.50 at the end of 2009, it had fallen below \$1.20 by

early June 2010, returning to a level of \$1.40 by mid-October 2010. Trends on the raw material markets were equally unpredictable. While the price of oil has remained relatively stable since the beginning of the year (current \$82 per barrel), the prices for rubber in particular rose to new record highs of more than \$4 per kilogram. Prices for crude steel, aluminum, copper and nickel also increased substantially through the end of the third quarter compared to the average prices in 2009.

Against this background, the DAX fluctuated up to the end of the first nine months between 5,434 points (February 5) and 6,352 points (August 9), closing at 6,229 points on September 30 (+4.6% since the beginning of the year). The trend in the automotive sector was significantly better. Borne by very good quarterly figures, it was up 23% since the beginning of the year. The Continental share, which has once again achieved an attractive free float of nearly 25% since the capital increase in January, developed even better: At the end of the first six months, it had already outperformed the key comparable indexes by 17 percentage points (DAX) and 12 percentage points (DJ EURO STOXX Automobiles & Parts). After the first nine months of 2010, the Continental share closed at €57.01 on September 30, corresponding to an increase of 56% compared to its price at the end of 2009 and an outperformance of the DAX and DJ EURO STOXX Automobiles & Parts of nearly 52 and 34 percentage points respectively.

	March 31, 2010	% compared to Dec. 31, 2009	June 30, 2010	% compared to Dec. 31, 2009	Sept. 30, 2010	% compared to Dec. 31, 2009
DAX	6,153.55	3.3	5,965.52	0.1	6,229.02	4.6
MDAX	8,143.46	8.5	8,008.67	6.7	8,768.03	16.8
DJ EURO STOXX
Automobiles & Parts	222.46	-2.2	244.05	4.9	285.18	22.6
Continental	37.55	3.0	42.78	17.3	57.01	56.4

Thanks to its good price performance, the Continental share was able to meanwhile establish itself as one of the top five shares in the MDAX ranking (based upon market capitalization and traded volumes). The average daily trading volume in the first nine months of 2010 was approximately 597,000 shares.

The positive development of the share price was bolstered by the step-by-step implementation of the refinancing plan adopted at the end of 2009. After successfully placing 31 million shares at an average price of €35.93 on January 28, 2010, we were then able to successfully place four bonds totaling €3.0 billion on the high-yield bond market in the period from July to September. All notes were issued by Conti-Gummi Finance B.V., Amsterdam, the Netherlands, with Continental AG and certain of its subsidiaries as guarantors. The notes are listed on the Open Market of the stock exchanges in Frankfurt, Hanover and Hamburg. Net proceeds from the issues were used for early repayment of the forward start facility, which Continental had agreed upon with its lending banks in December 2009, as well as for partial repayment of the syndicated loan taken up by Continental to finance the acquisition of Siemens VDO in the summer of 2007. As it had announced, this enabled Continental to substantially reduce its dependency on bank loans and once again impressively demonstrate its suitability for the capital market. Key information about the bonds is summarized in the following table.

WKN/ISIN	Coupon p.a.	Maturity	Issue volume in € millions
A1AY2A
DE000A1AY2A0	8.5%	July 2015	750
A1A1P0
DE000A1A1P09	6.5%	January 2016	625
A1A0U3
DE000A1A0U37	7.5%	September 2017	1,000
A1A1P2
DE000A1A1P25	7.125%	October 2018	625
Total			3,000

After September 30, 2010, the kickoff of the third quarter reporting season made for a positive mood on the stock exchanges. On October 22, 2010, the DAX reached 6,606 points, striking a new high for the year. The Continental share benefited from this positive environment as well, also reaching a new high for the year of €63.21 on October 22, 2010.

Key Figures for the Continental Corporation

in € millions	January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	19,144.2	14,400.2	6,489.8	5,337.0
EBITDA	2,611.2	1,137.8	786.9	440.6
in % of sales	13.6	7.9	12.1	8.3
EBIT	1,376.2	-1,038.0	365.1	-911.8
in % of sales	7.2	-7.2	5.6	-17.1
Net income attributable to the shareholders of the parent	363.0	-1,495.6	14.1	-1,038.5
Earnings per share (in €)	1.82	-8.85	0.07	-6.14
Adjusted sales1	19,056.3	14,262.4	6,478.8	5,293.0
Adjusted operating result (adjusted EBIT)2	1,790.8	667.6	484.7	418.9
in % of adjusted sales	9.4	4.7	7.5	7.9
Free cash flow	-169.8	1,084.0	-125.9	394.2
Net indebtedness at September 30	8,092.1	9,464.8
Gearing ratio in %	137.9	225.9
Number of employees at September 303	146,190	134,216

1 Before changes in the scope of consolidation.

2 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation,

and special effects.

3 Excluding trainees.

Key Figures for the Core Business Areas

Automotive Group in € millions		January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	11,780.2	8,582.1	3,921.3	3,223.0
EBITDA	1,295.1	343.0	344.8	169.1
in % of sales	11.0	4.0	8.8	5.2
EBIT	393.4	-1,499.4	32.7	-1,058.7
in % of sales	3.3	-17.5	0.8	-32.8
Depreciation and amortization1	901.7	1,842.4	312.1	1,227.8
- thereof impairment2	18.9	914.5	18.5	914.9
Capital expenditure3	430.4	360.9	192.4	106.6
in % of sales	3.7	4.2	4.9	3.3
Operating assets (at September 30)	11,456.3	11,342.3
Number of employees at September 304	85,368	77,956
Adjusted sales5	11,763.2	8,462.1	3,921.3	3,185.7
Adjusted operating result (adjusted EBIT)6	764.1	-11.6	158.9	98.5
in % of adjusted sales	6.5	-0.1	4.1	3.1

Rubber Group in € millions Sales EBITDA in % of sales EBIT in % of sales Depreciation and amortization1 - thereof impairment2 Capital expenditure3		January 1 to September 30		Third Quarter
	2010	2009	2010	2009
	7,380.8	5,828.4	2,574.2	2,118.0
	1,355.5	920.9	442.6	374.4
	18.4	15.8	17.2	17.7
	1,024.3	588.8	333.6	250.5
	13.9	10.1	13.0	11.8
	331.2	332.1	109.0	123.9
	16.5	19.0	2.2	17.3
	351.3	226.4	159.6	67.1
in % of sales	4.8	3.9	6.2	3.2
Operating assets (at September 30)	4,311.6	4,097.8
Number of employees at September 304	60,588	56,044
Adjusted sales5	7,309.9	5,810.6	2,563.2	2,111.3

Adjusted operating result (adjusted EBIT)6	1,079.3	728.9	345.3	346.3
in % of adjusted sales	14.8	12.5	13.5	16.4

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Corporate Management Report as of Sept. 30, 2010

Company acquisition reinforces leading position in diesel exhaust technologies

Effective September 15, 2010, the associated company Emitec Gesellschaft für Emissionstechnologie mbH, a joint venture of the international automotive suppliers Continental and GKN Driveline, acquired the Danish company Grundfos NoNOx, one of the world's leading manufacturers of urea dosing units used in selective catalytic reduction (SCR) systems. SCR technology is employed in diesel engines to transform harmful nitrogen oxide into steam and nitrogen with the help of a urea solution. SCR is the most promising technique for reducing the proportion of nitrogen oxides in exhaust gases to comply with legislation while developing the most economical engines. Dosing systems are the central component of this exhaust gas aftertreatment technology and a decisive new technology for realizing further reductions in fuel consumption. Emitec's acquisition of Grundfos NoNOx complements the SCR components already available at Continental and underlines the company's leading position as a supplier of complete systems.

Hose lines for future vehicle generations

We have received our first series production order for the new SCR lines in the U.S.A. Approximately 25,000 complete modules will be supplied each year to the engine manufacturer Cummins and used in the 6.7 liter turbo diesel engine for the Ram Chassis Cab from Chrysler. Heating of the SCR lines prevents the urea solution from freezing in low temperatures. The new generation of lines already conforms to future Euro 6 and EPA 10 standards.

Radar sensor for trucks now also recognizes stationary obstacles

A new driver assistance system for commercial vehicles is made possible by a new radar sensor system from Continental. Based on the well-proven ARS300 radar sensor already used in other advanced driver assistance systems, Continental has designed an emergency brake assist that now allows commercial vehicles to detect stationary obstacles on the road and to give the driver early warning of a potential rear-end collision. The system can also automatically initiate an emergency stop if the driver fails to react appropriately. With this new technology, we are the world's first supplier to offer an emergency brake assist for trucks that responds to stationary objects via a sensor system only, thereby enabling substantial cost savings. The sensor, which is based on completely new software algorithms for detecting objects and analyzing signals, is being installed in a major German manufacturer's commercial vehicle range.

New sensor for the protection of pedestrians

A new type of air hose is connected to two pressure sensors and flexibly built into the vehicle's bumper to enhance pedestrian safety in traffic. The sensors can detect an impact with a pedestrian and communicate the appropriate information to the vehicle's safety system in order to trigger protective measures. Within 10 to 15 milliseconds of an impact, the active hood of the vehicle is triggered and raised by special actuators. This prevents the pedestrian who has been hit from being severely injured or killed by the impact with the hood and underlying engine block. The extra centimeters provided between the hood and engine create valuable space that can considerably mitigate the consequences of the accident.

Intelligent vehicle theft prevention with Novanto

Continental's intelligent theft prevention system called Novanto makes use of satellite technology to track vehicles. The pocketbook-sized inconspicuous telematics unit makes it possible to spot a vehicle, keep track of it electronically and to remotely disable it. With the help of the same satellite technology used by navigation systems to acquire position data, Novanto knows exactly where the vehicle is at the moment. If need be, the data is transmitted via a secure encrypted mobile communications system to a central office that is capable of locating the vehicle. The vehicle position report can be triggered automatically by the vehicle's alarm system, for example when the emergency button is pressed, or manually when the owner reports the theft to the service center. The central office is then capable of scanning the vehicle's current position and, if necessary, preventing ignition of the engine to enable fast recovery of the stolen vehicle.

Keyless start and entry for all vehicle segments

Continental's new generation of remote key systems makes it possible for drivers of all vehicle categories to open the car door without necessarily having to hold the key in their hand. The vehicle recognizes when someone with the right key touches the door handle and then allows entry into the vehicle. Starting the engine is just as convenient as getting into the vehicle. An ignition lock is no longer necessary, for the vehicle is started by pressing a starter button, which also releases the steering-wheel lock. This convenient feature, which has been available in high-class limousines since 1999, can now be integrated into small cars as well as the micro-car category that is gaining more and more importance in Asia. Two initial orders in China underline that the standardization of all required system components and its underlying design of being adaptable to many vehicle architectures, as driven forward by Continental, is the foundation to introducing keyless start & entry to all vehicle segments.

Booster module for PSA e-HDi start-stop systems

Using a newly developed booster module for the onboard electrical system, Continental has laid the groundwork for making vehicle start-stop systems even more convenient and efficient. Known as an Ebooster, the new module is doing duty in the microhybrid systems of the French PSA Peugeot Citroën Group, which plans to sell around one million vehicles equipped with the new e-HDi micro-hybrid technology over the next three years. It takes a lot of power to restart a diesel engine automatically once it has stopped, at a red light for instance. To supply that power, we have teamed up with the U.S. manufacturer Maxwell Technologies to produce super capacitors capable of providing enough charge for the scant 400 milliseconds required to restart the engine. Start-stop systems reduce fuel consumption by as much as 15%.

New VancoEco van tire saves fuel

Continental has added a tire with high fuel economy potential to its range, especially for vans like the Mercedes-Benz Sprinter, Ford Transit and Volkswagen T5. The new VancoEco has a 30% lower rolling resistance, which is calculated to create a 4% reduction in fuel consumption and emissions. At the same time, we have succeeded in keeping the wet and dry braking distances short, and in giving the VancoEco similar performance characteristics to those of passenger tires. Mercedes-Benz has already approved the tire for factory fitment to its new BlueEfficiency models of the Viano and Vito ranges.

Higher load index for Continental truck tire

Continental's new HSL2 2 ECO-PLUS XL longdistance tire can carry the increased loads on the front axles of future truck generations. The Euro 6 emissions standard that comes into force at the beginning of 2013 demands that vehicle manufacturers build new engines with more complex exhaust gas purification and aftertreatment technology. Catalytic converters, exhaust gas recirculation, particulate filters and considerably larger cooling systems greatly increase the load over the truck's front axle. The newly developed long-distance tire, which has 500 kilograms greater axle load-bearing capacity, already ensures a reduction in fuel consumption thanks to its optimized rolling resistance.

Insufficient air and the tire "reaches for the phone"

With a new application that reports the correct tire pressure directly via a smart phone, Continental is making driving safer and more economical for the future. The vehicle electronics are connected wirelessly with the driver's smart phone, making speedy data exchange possible. The Continental "Filling Assistant" specifies the exact inflation pressure of each of a car's tires. So when air is added, the optimum tire pressure can be achieved, even when inflation pumps at the filling station do not measure the pressure accurately. As an option, a brief honk and blink signal can be given to confirm when the tire has been inflated to the proper pressure level. Technical requirements for the system are a tire inflation information system with the corresponding sensors in the tire and factoryintegrated vehicle electronics with a wireless interface. First series production of the Filling Assistant in new vehicles is expected from 2013 onwards.

The world's first air spring system with integrated data storage

ContiTech is the first manufacturer to succeed in integrating an electronic data carrier into its air spring bellows. The transponder chip defies the high temperatures prevailing in the manufacturing process as well as the pressure and elongation occurring when the bellows are in service. The technology opens up whole new possibilities. It is now possible, for example, to monitor vital product information electronically. The information remains fully accessible even years later – despite contamination and wear in the intervening time. Every air spring system can be unmistakably identified at any time. The service information is stored and updated whenever the system is serviced. This allows for optimum replacement of air spring systems and also protects the manufacturer and operator from product counterfeits.

Economic Climate

Global economic recovery continued to strengthen during the period under review. World economic activity in the first six months of 2010 expanded by 5.25% on an annualized basis, growing 0.5 percentage points faster than the IMF (International Monetary Fund) had anticipated as recently as in July. This development is attributable primarily to the strong increases in worldwide industrial production and global trade, but also to inventory building, increased investing activities on the part of companies, and the moderate rise in employment levels in the advanced economies. In its recently published World Economic Outlook (October 2010), the IMF raised its expectations for global economic growth in 2010 for the fourth time in a row, increasing the forecast it made in July by 20 basis points. Global economic growth is expected to be at 4.8%.

The forecast for the year was revised chiefly due to the improved growth prospects for Germany (3.3%; +1.9 percentage points vs. July), Japan (2.8%; +0.4 percentage points vs. July), UK (1.7%; +0.5 percentage points vs. July) and what the IMF refers to as emerging and developing economies (7.1%; +0.3 percentage points vs. July), the latter being driven especially by the greatly improved outlook for the countries of Latin America (5.7%; +0.9 percentage points vs. July).

Owing to the significant increase in the forecast for Germany, the Eurozone is also expected to grow at a faster pace in 2010 (1.7%; +0.7 percentage points vs. July). The IMF sees the risk of a negative deviation from the present forecasts primarily in the renewed instabilities of the financial system, which worsened during the second quarter of 2010 as a result of mushrooming national debt and weak economic development in Portugal, Italy, Ireland and Greece (PIIGs), as well as the need for consolidation of the advanced economies' national budgets following the ultraexpansive fiscal policy in 2009 coupled with a strengthening of private demand.

For the year 2011, the IMF has decreased its forecast for global economic growth slightly by 0.1 percentage points to a current 4.2%.

Thanks to this positive economic development, the number of new light vehicle registrations was able to continue at the good level of the first half-year in the third quarter as well. Based on preliminary figures, nearly 22.6 million new vehicles were registered in the triad markets of Europe, NAFTA and Japan (H1 2010: 15.4 million) in the first nine months of this year, representing an increase of more than 4% compared to the same period of 2009. This good development in the first nine months of 2010 is attributable mainly to the increase in new vehicle registrations in the U.S.A. (Q1–Q3 2010: +10%; H1 2010: +17%) and Japan (Q1–Q3 2010: +20%; H1 2010: +23%), while the number of new registrations on the European market dropped almost 4% in the first nine months following the expiration of incentive schemes (H1 2010: +1%). New registrations were up in the BRIC countries (Brazil, Russia, India, China), reaching more than 15 million vehicles (Q1–Q3 2010: +27%, H1 2010: +35%) as of the end of September 2010. In addition to the stable trend in new vehicle registrations in Brazil (Q1–Q3 2010: +7%; H1 2010: +7%) and India (Q1–Q3 2010: +28%; H1 2010: +29%), growth in the Chinese market still remains at a high level, with new registrations rising 34% to almost 10 million units in the first nine months of 2010. On the Russian market, new vehicle registrations continue to experience a substantial revival thanks to the incentive program which has been running since March. Here, new registrations jumped 55% in the third quarter alone (H1 2010: 7.5%), resulting in a year-on-year increase of 22%. The number of new vehicle registrations worldwide rose about 15% to more than 52.5 million vehicles in the first three quarters of 2010, after the market had declined by nearly 11% in the same period of 2009.

In response to the strong development in new registrations, global light vehicle output also rose again substantially in the first nine months compared to the same period of 2009 (41.8 million units) to about 52.3 million units (H1 2010: 35.9 million), corresponding to an increase of more than 25%. Production was also up about 25% to approximately 22.5 million units in the North American and European markets where Continental's Automotive Group generated some 77% of its sales in 2009, after sales had plummeted by as much as 33% to below 18 million units in the same period of 2009. In Japan, about 7 million light vehicles were produced in the first nine months of 2010. This is equivalent to a 27% (H1 2010: 40%) increase compared to the same period of 2009.

There is no sign at present of a decrease in production volumes in the fourth quarter, except for the normal seasonal fluctuations. For that reason, we continue to view our full-year forecast of 17.7 million vehicles (+6% vs. 2009) for Europe and 11.5 million units (+34% vs. 2009) for NAFTA as being realistic.

Heavy vehicle production is picking up again. Due to the low basis of the previous year (Q1–Q3 2009 vs. Q1–Q3 2008: Europe -64% and NAFTA -46%), commercial vehicle output increased in the first nine months of 2010 in Europe and North America by 43% and 21% respectively. In line with current forecasts, we expect substantially higher growth for the year on the whole, albeit from a low level. Accordingly at present, a 43% rise (381,000 units) in truck production in Europe and a 23% rise (258,000 units) in NAFTA are anticipated.

Trends on the replacement tire markets continued to grow during the first nine months of 2010. Demand rose for replacement passenger tires by 10% in Europe and by 5% in North America compared to the same period of 2009. This rise was due mainly to the comparably low levels of the previous year since the tire replacement markets in Europe and North America had nosedived by 9% and 6% respectively between January and September 2009. In view of this gratifying development, we are expecting growth in the tire replacement market in Europe to be at the upper end of our market projection of between +4% and +6% for 2010, whereas growth in North America will be at the lower end of our projection.

Demand for replacement truck tires also developed positively in the first nine months of 2010, rising 22% in Europe and 23% in North America. This substantial increase was due in particular also to the low level of the previous year. For the year as a whole, we are raising our forecast for the European truck tire replacement market to 16% (July: 9%), and for the North American market to 20% (July: 16%).

Earnings, Financial and Net Assets Position of the Continental Corporation

Earnings Position

Sales up 32.9%; Sales up 28.8% before changes in the scope of consolidation and exchange rate effects

Consolidated sales for the first nine months of 2010 jumped 32.9% year-on-year to €19,144.2 million (PY: €14,400.2 million). Before changes in the scope of consolidation and exchange rate effects, sales were up by 28.8%. This increase was due primarily to the recovery of our markets.

Adjusted EBIT up €1,123.2 million

The adjusted EBIT for the corporation was up in the first nine months of 2010 compared with the same period of 2009 by €1,123.2 million, or 168.2%, to €1,790.8 million (PY: €667.6 million), equivalent to 9.4% (PY: 4.7%) of adjusted sales.

EBIT up €2,414.2 million

In the first nine months of 2010, consolidated EBIT was up €2,414.2 million on the previous year to €1,376.2 million (PY: -€1,038.0 million), an increase of 232.6%. The return on sales increased to 7.2% (PY: -7.2%).

Special effects in the first nine months of 2010

In the first nine months of 2010, impairment losses totaling €13.4 million were incurred which were not in connection with restructuring measures.

In the Interior division, expenses of €5.2 million were recognized for further winding-up activities in conjunction with the disposal of a business operation.

There was a gain of €2.1 million in the Interior division and a tax expense of the same amount for the corporation resulting from the winding-up activities related to the disposal of an associated company.

Due to the withdrawal of a customer order for the development and production of diesel injection systems at the plant in Blythewood, South Carolina, U.S.A., restructuring measures had to be introduced in 2009, leading to further restructuring expenses of €7.0 million in the Powertrain division in the first nine months of 2010. This primarily relates to write-downs on production lines, which were partly compensated for by unutilized provisions for supplier claims.

In the Passenger and Light Truck Tires division, there were further restructuring expenses of €9.2 million for the closure of tire production in Clairoix, France, and of €3.3 million for the closure of the compounding and rubberization activities in Traiskirchen, Austria.

Due to plummeting demand for commercial vehicles in Europe as a result of the economic crisis, Continental had to reduce production capacities at all European commercial vehicle tire locations in 2009. A production cell that had been put on hold in Hanover-Stöcken, Germany, was ultimately not put back into operation on account of the weak market recovery. This led to further restructuring expenses totaling €32.0 million in the first nine months of 2010.

There were also expenses amounting to €20.8 million, primarily from restructuring measures and severance payments (Chassis & Safety €1.4 million, Powertrain €7.4 million, Interior €5.3 million, Passenger and Light Truck Tires €3.7 million, Commercial Vehicle Tires €1.5 million, ContiTech €0.9 million, Holding €0.6 million).

In the Commercial Vehicle Tires division, income of €3.3 million was realized as an aftereffect of the sale of our North American OTR activities to the Titan Tire Corporation in 2006.

The antitrust proceedings initiated in 2007 against Dunlop Oil & Marine Ltd., UK, a subsidiary of Conti-Tech AG, in the area of offshore hoses, resulted in further expenses of €3.1 million.

Due to the anticipated higher cash outflow for the VDO loan resulting from higher interest margins, the carrying amount for this loan was adjusted as expense in 2009, as well as in June 2010. This led to an expense of €27.4 million in the first nine months of 2010 for the carrying amount adjustment. These deferrals are being amortized over the term of the loan and reduce expenses accordingly. There was a positive effect from this amortization totaling €30.5 million in the first nine months of 2010. Partial repayment of the VDO loan using the nominal amount totaling €1,250.0 million from the net proceeds of the bonds placed at the end of September 2010 led to reversal of the carrying amount adjustments allocated proportionately to the open amount payable. This special effect resulted in a gain of €8.7 million.

Total consolidated net expense from special effects in the first nine months of 2010 amounted to €76.8 million.

Special effects in the first nine months of 2009

In the third quarter of 2009, the impairment test on goodwill led to an impairment requirement of €875.8 million. €367.0 million of this related to the Chassis & Safety division, €447.4 million to the Powertrain division and €61.4 million to the Interior division.

The product portfolio of the Interior division was reviewed in 2008 in conjunction with the acquisition of Siemens VDO, and business sections in the non-OE sector were identified that are not part of our core business. The sales process was initiated for one of these business sections already in 2008, leading to recognition of further impairment losses in the amount of €1.2 million in 2009.

The associate Hyundai Autonet Co. Ltd., Kyoungki-do, South Korea, of the Interior division was sold at a price of €126.6 million. The transaction resulted in recognition of impairment losses in the amount of €73.6 million.

Impairment losses in the amount of €44.0 million were recognized in the Interior division as a result of the disposal of an associated company.

The research and development location in Neubiberg, Germany, was closed. This led to restructuring expenses of €9.0 million in the Interior and Powertrain divisions.

The plant in Huntsville, Alabama, U.S.A., is to be closed at the end of 2010. In the first nine months of 2009, the Interior and Powertrain divisions incurred restructuring expenses of €82.7 million.

The closure of the compounding and rubberization activities in Traiskirchen, Austria, at the end of 2009 led to restructuring expenses of €12.6 million in the Passenger and Light Truck Tires division for the first nine months of 2009.

Measures introduced for the location in Hanover-Stöcken, Germany, led to restructuring expenses of €46.4 million in the Commercial Vehicle Tires division.

The closure and transfer of Western European locations of the Fluid Technology business unit in the ContiTech division led to restructuring expenses of €25.9 million for the first nine months of 2009.

The antitrust proceedings initiated in 2007 against Dunlop Oil & Marine Ltd., UK, a subsidiary of Conti-Tech AG, in the area of offshore hoses, resulted in further expenses of €1.9 million.

For the ContiTech division, the first consolidation of the conveyor belt company Kolubara Univerzal D.O.O., Serbia, led to a gain of €0.7 million from the negative balance.

In addition, the Automotive Group incurred expenses, chiefly from restructuring measures, totaling €17.6 million in the first nine months of 2009. The Rubber Group incurred further expenses totaling €19.4 million, primarily from restructuring measures.

In the first nine months of 2009, the cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments totaling €79.5 million (Interior €17.5 million, Chassis & Safety €13.0 million, Powertrain €11.9 million, Passenger and Light Truck Tires €9.4 million, Commercial Vehicle Tires €3.3 million, ContiTech €17.0 million, Holding €7.4 million).

The cash outflow for the syndicated loan taken out to finance the acquisition of Siemens VDO will be higher as a result of increasing interest margins. The carrying amount was thus adjusted by €70.3 million. This deferral will be amortized over the term of the VDO loan, and reduces expenses accordingly.

Total consolidated net expense from special effects in the first nine months of 2009 amounted to €1,359.2 million.

Research and development expenses

In the first nine months of 2010, research and development expenses rose by 4.7% compared with the same period of 2009 to €1,143.5 million (PY: €1,092.4 million), representing 6.0% (PY: 7.6%) of sales. Of that sum, €974.5 million (PY: €926.9 million) was attributable to the Automotive Group, corresponding to 8.3% (PY: 10.8%) of sales, and €169.0 million (PY: €165.5 million) to the Rubber Group, corresponding to 2.3% (PY: 2.8%) of sales.

Net interest expense

At -€531.4 million, net interest expense increased by €14.0 million in the first nine months of 2010 compared with the same period of the previous year (PY: -€517.4 million). This increase was due primarily to the special effect in conjunction with the partial repayment of the VDO loan as described below.

The net proceeds of the four bonds issued in the third quarter of 2010 by Conti-Gummi Finance B.V., Amsterdam, the Netherlands, with an aggregate volume of €3.0 billion were used for partial repayment of the amount drawn under the VDO loan, as well as for repayment of the forward start facility entered into to refinance tranche B due in August 2010 under the VDO loan.

The first two bonds already generated a cash inflow in the third quarter of 2010, thus enabling the debt facilities to be partially repaid. As a result, the agreed volume of the VDO loan was reduced from €9,916.9 million at the end of the first half-year to €7,809.0 million (including the forward start facility) at the end of the third quarter of 2010 (PY: €11,000.0 million). At the beginning of October 2010 with the settlement of the two bonds placed at the end of September 2010 at a total of €1,250.0 million, another portion of the VDO loan as well as the forward start facility were repaid.

The deferred financing expenses assigned to the amounts repaid were released to income and led to a special effect in the amount of -€33.8 million.

Taking this special effect into account, interest expense resulting from the VDO loan and the forward start facility amounted to -€486.3 million (PY: -€446.6 million) in the first nine months of 2010. The main reason for the interest expense (adjusted for the aforementioned special effect) for the VDO loan and the forward start facility being only slightly below the previous year's figure is the higher margins for these loan facilities compared to the previous year as a consequence of the deterioration in the credit ratings over the course of 2009 and in May 2010. This negative impact could be almost fully offset by the lower market interest rate and the substantial reduction in net indebtedness. The latter resulted primarily from the capital increase which was implemented successfully in January 2010, and from the very strong free cash flow at the end of 2009. The higher margins were mainly attributable to the renegotiation in December 2009 of the covenants contained in the VDO loan agreement, which also included the forward start facility granted to refinance tranche B due in August 2010 under the loan. In addition, net interest expense was also negatively impacted in the first nine months of 2010 by additional financing expenses created in connection with the aforementioned renegotiation of the loan covenants.

The bonds issued in the third quarter of 2010 resulted in interest expense totaling -€18.0 million. At €19.0 million, the mostly non-cash effects of exchange rate changes, as well as effects from changes in the fair value of derivative instruments, were €18.0 million up on the previous year's figure of €1.0 million. Interest income for the first nine months of 2010 was €17.1 million (PY: €22.0 million).

Income tax expense

Income tax expense in the first nine months of 2010 amounted to €431.7 million (PY: income of €85.3 million).

Tax expense in the period under review was influenced primarily by the €133.3 million valuation allowance of deferred tax assets resulting from interest carryforwards in Germany. The valuation allowance fully included both the interest carryforwards from 2009 measured at the relevant tax rate totaling €68.9 million as well as increases in the year under review amounting to €64.4 million. Utilization of the interest carryforwards does not appear to be sufficiently probable at this point in time, in view of the rating downgrade of Continental AG in May 2010 in particular, together with higher interest margins on existing loans, as well as the future increases in interest burden from the issuance of eurobonds with an aggregate volume of €3.0 billion in the third quarter of 2010.

Since 2008, a limit on the deductible interest that can be carried forward has applied in Germany; the amount deductible under the tax law is limited to 30% of the taxable income before write-downs and interest.

Tax expense in the first nine months of 2009 was influenced primarily by the valuation allowance of deferred tax assets on tax loss and interest carryforwards in an amount of €108.5 million in Germany. This was necessary because, according to the opinion of the German finance authorities, a harmful change of shareholder already occurred according to Section 8c of the Körperschaftsteuergesetz (German Corporate Tax Law) since, with the acquisition of shares by Schaeffler KG in 2008, the 25% threshold was exceeded. Continental does not agree with this interpretation of the law and has already appealed the decision in a test case.

Net income attributable to the shareholders of the parent

Net income attributable to the shareholders of the parent was up 124.3% to €363.0 million (PY: -€1,495.6 million), with earnings per share higher at €1.82 (PY: -€8.85).

Development of the Continental Corporation

in € millions		January 1 to September 30	Third Quarter
	2010	2009	2010	2009
Sales	19,144.2	14,400.2	6,489.8	5,337.0
EBITDA	2,611.2	1,137.8	786.9	440.6
in % of sales	13.6	7.9	12.1	8.3
EBIT	1,376.2	-1,038.0	365.1	-911.8
in % of sales	7.2	-7.2	5.6	-17.1
Net income attributable to the shareholders of the parent	363.0	-1,495.6	14.1	-1,038.5
Earnings per share (in €)	1.82	-8.85	0.07	-6.14
Research and development expenses	1,143.5	1,092.4	389.1	361.8
Depreciation and amortization1	1,235.0	2,175.8	421.8	1,352.4
- thereof impairment2	35.4	933.5	20.7	932.2
Capital expenditure3	782.3	587.5	352.2	173.8
in % of sales	4.1	4.1	5.4	3.3
Operating assets (at September 30)	15,698.9	15,492.9
Number of employees at September 304	146,190	134,216
Adjusted sales5	19,056.3	14,262.4	6,478.8	5,293.0
Adjusted operating result (adjusted EBIT)6	1,790.8	667.6	484.7	418.9
in % of adjusted sales	9.4	4.7	7.5	7.9
Net indebtedness at September 30	8,092.1	9,464.8
Gearing ratio in %	137.9	225.9

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Financial Position

Cash flow

At €574.7 million, net cash flow from operating activities as of September 30, 2010, was €1,038.1 million lower than on September 30, 2009 (€1,612.8 million).

Free cash flow for the first three quarters of 2010 stood at -€169.8 million (PY: €1,084.0 million), down €1,253.8 million on the same period of 2009.

For the first nine months of 2010, EBIT amounted to €1,376.2 million (PY: -€1,038.0 million), which corresponds to a year-on-year increase of €2,414.2 million. The increase in operating working capital due to the improved sales situation led to a cash outflow of €1,288.9 million measured against the same period of 2009. Changes in pension provisions resulted in a decrease of €672.8 million to €49.4 million (PY: €722.2 million). The reasons for this are the positive effects arising in the first nine months of 2009 amounting to €682.8 million from refunds effected from Contractual Trust Arrangements (CTAs), the acquisition of a 24.9% share of ContiTech AG by Continental Pension Trust e.V., as well as the discontinuation of the status of the CTAs' assets as qualifying plan assets performed in this connection, for which there were no comparably positive individual effects to offset in the first three quarters of 2010. Income tax payments, which rose compared with the same period of 2009 by €196.3 million to €329.3 million (PY: €133.0 million), also had a negative impact.

In the first nine months of 2010, total cash outflows amounting to €744.5 million (PY: €528.8 million) resulted from investing activities. In the period under review, there was no single positive effect comparable to the cash flow of €126.6 million provided by the sale of the associate Hyundai Autonet Co., Ltd. in June 2009. Before financial leasing and the capitalization of borrowing costs, capital expenditure on property, plant, and equipment was up €141.1 million to €728.6 million (PY: €587.5 million).

Financing

At €8,092.1 million, net indebtedness for the corporation on September 30, 2010, was €803.4 million lower than on December 31, 2009, and €1,372.7 million lower than on September 30, 2009 (PY: €9,464.8 million). This reduction in net indebtedness was attributable mainly to the very strong cash flow at the end of 2009, as well as to the capital increase which was implemented successfully in January 2010 and led to net proceeds of €1,056.0 million (before tax effects). It was partially offset, among other things, by the large increase in working capital during the first nine months of 2010, as already explained in the section on cash flow. Strengthening of the company's capital base as a result of the capital increase and good consolidated results, combined with the reduction of net indebtedness, produced a significant year-on-year improvement in the gearing ratio, which amounted to 137.9% on September 30, 2010 (PY: 225.9%).

With the aforementioned capital increase, the net proceeds of which were used in accordance with the agreement for the partial repayment of tranche B due in August 2010 under the VDO loan, Continental had fulfilled the condition for the provision of a forward start facility (FSF) with a maximum volume of €2,500.0 million for the refinancing of tranche B in August 2010. This condition was part of the refinancing package concluded successfully in December 2009 to improve the corporation's financial and capital structure.

In the third quarter of 2010, Continental used the high demand for its bonds and the positive market environment to achieve its goal of improving its debt maturity profile quickly and efficiently. Within twelve weeks Continental was able to successfully place via Conti-Gummi Finance B.V., Amsterdam, the Netherlands, four euro-denominated bonds guaranteed by Continental AG and certain of its subsidiaries, with investors in Germany and abroad: in July 2010, a €750.0 million 5-year bond with an interest rate of 8.5% p.a.; at the beginning of September 2010, a €1,000.0 million 7-year bond with an interest rate of 7.5% p.a.; and at the end of September 2010, two €625.0 million bonds with different maturities. The first bond matures in January 2016 and carries an interest rate of 6.5% p.a., the second matures in October 2018 and carries an interest rate of 7.125% p.a. Interest is payable semi-annually, in arrears.

The net proceeds of all bonds were used for the partial repayment of the amount drawn under the VDO loan, as well as for repayment of the FSF entered into to refinance tranche B due in August 2010 under the VDO loan. The first two bonds already generated a cash inflow in the third quarter of 2010, thus enabling the debt facilities to be partially repaid before the end of September 2010. At the beginning of October 2010 with the settlement of the two bonds placed at the end of September 2010 at €625.0 million each, the FSF was repaid along with a portion of tranche C of the VDO loan.

Following the aforementioned repayments, the total agreed volume of the VDO loan had been reduced to €7,809.0 million (PY: €11,000.0 million) by the end of the third quarter of 2010. As of September 30, 2010, the VDO loan had been drawn on by Continental AG, Germany, and Continental Rubber of America, Corp. (CRoA), U.S.A., in a nominal amount of €5,905.7 million (PY: €9,693.3 million). The aforementioned figures include the FSF with a volume of €309.0 million (PY: €0.0 million).

For tranche C with a nominal value of €5,000.0 million due in August 2012, interest hedging was unchanged at €3,125.0 million (PY: €3,125.0 million) on September 30, 2010. The resulting average fixed interest rate to be paid is 4.19% p.a. (PY: 4.19%) plus margin.

A further rating downgrade by a rating agency in May 2010 resulted in an increase in the interest margins. Due to the anticipated higher cash outflows for the VDO loan, the carrying amount was adjusted by a further €27.4 million in the second quarter of 2010. The deferral will be amortized over the term of the VDO loan, and reduces expenses accordingly. Partial repayment of tranche C under the VDO loan using the net proceeds of the bonds issued at the end of September 2010 led to reversal of the carrying amount adjustments allocated proportionately to the total amount payable, resulting in a gain of €8.7 million. On September 30, 2010, the value of the carrying amount

Change in net indebtedness

	January 1 to September 30		Third Quarter
in € millions	2010	2009	2010	2009
Cash provided by operating activities	574.7	1,612.8	191.7	615.2
Cash used for investing activities	-744.5	-528.8	-317.6	-221.0
Cash flow before financing activities (free cash flow)	-169.8	1,084.0	-125.9	394.2
Dividends paid and repayment of capital to non-controlling interests	-36.3	-27.3	-14.2	-19.9
Proceeds from the issuance of shares	1,056.0	—	0.0	—
Non-cash changes	-31.3	-80.7	22.9	-106.4
Investment agreement Schaeffler	—	20.0	—	20.0
Other	-28.3	13.8	-5.3	-15.6
Foreign exchange effects	13.1	8.9	47.3	9.5
Change in net indebtedness	803.4	1,018.7	-75.2	281.8

adjustments made in 2009 and 2010 totaled €52.7 million.

For the loan issued by the European Investment Bank (EIB) in an original amount of €600.0 million, early partial repayments totaling €300.0 million were undertaken in March 2009, August 2009 and January 2010. The nominal amount of the drawn loan amount thus decreased to €300.0 million.

As of September 30, 2010, Continental had at its disposal liquidity reserves totaling €3,355.5 million (PY: €3,290.5 million), consisting of cash and cash equivalents of €1,046.5 million (PY: €1,556.3 million), as well as unused credit lines totaling €2,309.0 million (PY: €1,734.2 million).

Capital expenditure (additions)

In the first three quarters of 2010, €782.3 million (PY: €587.5 million) was invested in property, plant, equipment and software, €53.1 million (PY: €0.0 million) of which resulted from financial leasing and €0.6 million (PY: €0.0 million) from the capitalization of borrowing costs. This corresponds to a capital expenditure ratio after nine months of 4.1% (PY: 4.1%).

€430.4 million (PY: €360.9 million) of the investments was attributable to the Automotive Group, corresponding to 3.7% (PY: 4.2%) of sales. The Automotive Group invested primarily in production equipment for the manufacture of new products and the implementation of new technologies such as electronic brake and safety systems, engine and transmission control units, and cockpit instruments, with investment being focused on manufacturing capacities at best-cost locations.

The Rubber Group invested €351.3 million (PY: €226.4 million), which is equivalent to 4.8% (PY: 3.9%) of sales. Key investment priorities were the plant set-up in China, capacity expansions for car tire production at our international plants, as well as quality assurance and cost-cutting measures. ContiTech invested in rationalizing production processes and in new products. Production capacities in China, Brazil, Hungary and Romania were expanded.

Net Assets Position

At €24,112.3 million, total assets on September 30, 2010, were €740.7 million higher than on the same date in 2009 (€23,371.6 million). This increase was due primarily to higher inventories and trade accounts receivable totaling €1,354.8 million as a result of the increasing business activities. Deferred tax assets were up by €91.9 million. This was offset by the €381.1 million decline in other intangible assets owing primarily to amortization from purchase price allocation (PPA). The decrease in cash and cash equivalents in the amount of €509.8 million was attributable, among other things, to debt repayment activities.

At €5,867.7 million, total equity including noncontrolling interests was up €1,677.0 million compared with September 30, 2009. This was due mainly to the proceeds from the capital increase in January 2010 of €1,073.3 million, taking into account the issuing costs and the corresponding tax effects, positive exchange rate effects totaling €343.9 million, and the €209.4 million in net income attributable to the shareholders of the parent. The gearing ratio improved from 225.9% to 137.9%.

Total assets were up €1,063.1 million from €23,049.2 million on December 31, 2009. This was due mainly to a €1,707.2 million rise in inventories and amounts receivable as a result of seasonal factors and the increasing business activities. The €666.3 million decrease in cash and cash equivalents, as well as the €273.2 million decline in other intangible assets, had the opposite effect.

Total equity including non-controlling interests was up €1,806.0 million compared with the end of 2009, due primarily to the proceeds from the capital increase, positive exchange rate effects of €337.0 million, and the €363.0 million in net income attributable to the shareholders of the parent. The gearing ratio improved from 219.0% to 137.9%.

Employees

At the end of the third quarter, the corporation's employees numbered 146,190, an increase of 11,756 compared with the end of 2009. Growth in volumes, above all in the Automotive Group and the ContiTech division, led to workforce increases of 7,338 and 3,379 respectively. The number of employees working for the Tire divisions rose by 1,026 as a result of capacity adjustments.

Compared with September 30, 2009, there were 11,974 more employees in the corporation.

Development of the Divisions

Chassis & Safety in € millions		January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	4,261.9	3,105.0	1,434.5	1,188.9
EBITDA	674.4	427.6	205.1	205.6
in % of sales	15.8	13.8	14.3	17.3
EBIT	431.6	-196.2	122.4	-252.6
in % of sales	10.1	-6.3	8.5	-21.2
Depreciation and amortization1	242.8	623.8	82.7	458.2
- thereof impairment2	3.0	368.1	3.2	368.1
Capital expenditure3	132.7	99.1	62.9	37.3
in % of sales	3.1	3.2	4.4	3.1
Operating assets (at September 30)	3,978.7	3,840.9
Number of employees at September 304	29,742	26,563
Adjusted sales5	4,261.9	3,100.5	1,434.5	1,187.4
Adjusted operating result (adjusted EBIT)6	476.1	222.6	138.4	134.5
in % of adjusted sales	11.2	7.2	9.6	11.3

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Chassis & Safety

Sales volumes

Sales volumes in the Electronic Brake Systems business unit jumped year-on-year by 39.3% to 12.3 million units in the first quarter of 2010.

In the Hydraulic Brake Systems business unit, sales of brake boosters were up 34.2% to 11.2 million units. Brake caliper sales rose to 24.2 million units, equivalent to an increase of 36.8%.

In the Passive Safety & Advanced Driver Assistance Systems business unit, sales of air bag control units increased by 11.2% to 9.3 million. Sales of driver assistance systems soared to 724,900 units, an increase of 73.4%.

Sales up 37.3%;

Sales up 32.3% before changes in the scope of consolidation and exchange rate effects

Sales of the Chassis & Safety division rose by 37.3% to €4,261.9 million in the first nine months of 2010 compared with the same period of 2009 (PY: €3,105.0 million). Before changes in the scope of consolidation and exchange rate effects, sales were up by 32.3%. The increase was due primarily to the recovery of all business units.

Adjusted EBIT up €253.5 million

The Chassis & Safety division's adjusted EBIT rose in the first nine months of 2010 compared with the same period of 2009 by €253.5 million, or 113.9%, to €476.1 million (PY: €222.6 million), equivalent to 11.2% (PY: 7.2%) of adjusted sales.

EBIT up €627.8 million

Compared with the same period of last year, the Chassis & Safety division reported an increase in EBIT of €627.8 million, or 320.0%, to €431.6 million (PY: -€196.2 million) in the first nine months of 2010. The return on sales increased to 10.1% (PY: -6.3%).

Special effects in the first nine months of 2010

In the Chassis & Safety division, total net expense from special effects amounted to €4.1 million for the first nine months of 2010.

Special effects in the first nine months of 2009

In the third quarter of 2009, the impairment test on goodwill led to an impairment requirement of €367.0 million in the Chassis & Safety division.

Unutilized provisions of €1.7 million were reversed in the Chassis & Safety division as part of the winding-up of restructuring activities at the plant in Dortmund, Germany, since parts of the production could be transferred to the Interior division.

Impairment losses of €1.0 million were recognized on property, plant, and equipment in the Chassis & Safety division.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments totaling €13.0 million in the first three quarters of 2009.

In the Chassis & Safety division, total net expense from special effects amounted to €379.3 million for the first nine months of 2009.

Powertrain in € millions		January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	3,477.8	2,394.9	1,167.5	907.4
EBITDA	199.9	-63.0	23.7	-31.1
in % of sales	5.7	-2.6	2.0	-3.4
EBIT	-145.4	-856.3	-101.7	-603.6
in % of sales	-4.2	-35.8	-8.7	-66.5
Depreciation and amortization1	345.3	793.3	125.4	572.5
- thereof impairment2	21.8	461.5	15.7	461.6
Capital expenditure3	173.6	167.5	76.1	39.6
in % of sales	5.0	7.0	6.5	4.4
Operating assets (at September 30)	3,087.5	3,050.2
Number of employees at September 304	26,455	23,955
Adjusted sales5	3,460.8	2,344.0	1,167.5	891.1
Adjusted operating result (adjusted EBIT)6	10.2	-217.0	-48.2	-70.7
in % of adjusted sales	0.3	-9.3	-4.1	-7.9

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Powertrain

Sales volumes

Following the economic crisis in 2009, sales volumes increased during the first nine months of 2010 by approximately 45% compared with the same period last year. Growth in Asia was disproportionately high, although the division also posted almost 40% year-onyear sales gains in Europe and NAFTA. All of the Powertrain division's business units were able to increase their sales volumes, with transmission control units, injection pumps, nitrogen oxide sensors and temperature sensors recording exceptionally high growth rates.

Sales up 45.2%;

Sales up 43.2% before changes in the scope of consolidation and exchange rate effects

Sales of the Powertrain division rose by 45.2% to €3,477.8 million in the first nine months of 2010 compared with the same period of 2009 (PY: €2,394.9 million). Before changes in the scope of consolidation and exchange rate effects, the increase was 43.2%, due primarily to the substantial recovery of the markets compared to the first nine months of 2009.

Adjusted EBIT up €227.2 million

The Powertrain division's adjusted EBIT was up in the first nine months of 2010 compared with the same period of 2009 by €227.2 million, or 104.7%, to €10.2 million (PY: -€217.0 million), equivalent to 0.3% (PY: -9.3%) of adjusted sales.

EBIT up €710.9 million

Compared with the same period of last year, the Powertrain division reported an increase in EBIT of €710.9 million, or 83.0%, to -€145.4 million (PY: -€856.3 million) in the first nine months of 2010. The return on sales improved to -4.2% (PY: -35.8%).

Special effects in the first nine months of 2010

In the Powertrain division there were further restructuring-related expenses and severance payments totaling €7.4 million in the first nine months of 2010, €3.0 million of which was attributable to the closure of the division's site in Asnière, France.

Impairment losses amounting to €8.5 million were recognized in the Powertrain division.

In the Powertrain division, total net expense from special effects amounted to €22.9 million for the first nine months of 2010.

Special effects in the first nine months of 2009

In the third quarter of 2009, the impairment test on goodwill led to an impairment requirement of €447.4 million in the Powertrain division.

The research and development location in Neubiberg, Germany, was closed. This led to restructuring expenses of €1.0 million in the Powertrain division.

The plant in Huntsville, Alabama, U.S.A., is to be closed at the end of 2010. In the first nine months of 2009, the Powertrain division incurred restructuring expenses of €24.9 million.

The Powertrain division incurred further expenses totaling €14.9 million, primarily from restructuring measures.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments of €11.9 million.

In the Powertrain division, total net expense from special effects amounted to €500.1 million for the first nine months of 2009.

Interior in € millions		January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	4,124.1	3,154.8	1,347.3	1,150.5
EBITDA	420.8	-21.5	116.0	-5.3
in % of sales	10.2	-0.7	8.6	-0.5
EBIT	107.2	-446.9	12.0	-202.5
in % of sales	2.6	-14.2	0.9	-17.6
Depreciation and amortization1	313.6	425.4	104.0	197.2
- thereof impairment2	-5.9	84.9	-0.4	85.2
Capital expenditure3	124.1	94.4	53.4	29.9
in % of sales	3.0	3.0	4.0	2.6
Operating assets (at September 30)	4,390.2	4,451.1
Number of employees at September 304	29,171	27,438
Adjusted sales5	4,124.1	3,090.2	1,347.3	1,131.0
Adjusted operating result (adjusted EBIT)6	277.8	-17.1	68.7	34.8
in % of adjusted sales	6.7	-0.6	5.1	3.1

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Interior

Sales volumes

Sales volumes in the Body & Security business unit in the first nine months of 2010 were more than 30% higher than in the same period of 2009, with all product groups reporting growth.

In the Infotainment & Connectivity business unit, sales volumes of audio components, connectivity systems and multimedia systems exceeded the previous year's volumes substantially, thanks in particular to the positive development in sales to our U.S. customers.

Volumes in the Aftermarket business increased by a good 10% compared with the first nine months of 2009. Quantities of digital tachographs rose significantly in the Commercial Vehicles & Aftermarket business unit.

In the Instrumentation & Driver HMI business unit, sales volumes of instrument clusters and displays were up 30%, a significant increase compared to the same period of 2009.

Sales up 30.7%;

Sales up 27.6% before changes in the scope of consolidation and exchange rate effects

Sales of the Interior division rose by 30.7% to €4,124.1 million in the first nine months of 2010 compared with the same period of 2009 (PY: €3,154.8 million). Before changes in the scope of consolidation and exchange rate effects, the increase was 27.6%, due primarily to the substantial recovery of the markets compared to the first nine months of 2009.

Adjusted EBIT up €294.9 million

The Interior division's adjusted EBIT was up in the first nine months of 2010 compared with the same period of 2009 by €294.9 million, or 1,724.6%, to €277.8 million (PY: -€17.1 million), equivalent to 6.7% (PY: -0.6%) of adjusted sales.

EBIT up €554.1 million

Compared with the same period of last year, the Interior division reported an increase in EBIT of €554.1 million, or 124.0%, to €107.2 million (PY: -€446.9 million) in the first nine months of 2010. The return on sales increased to 2.6% (PY: -14.2%).

Special effects in the first nine months of 2010

In the Interior division, expenses of €5.2 million were recognized in the first nine months for further windingup activities in conjunction with the disposal of a business operation.

There was a gain of €2.1 million and a tax expense of the same amount for the corporation resulting from the winding-up activities related to the disposal of an associated company.

In addition, there were further restructuring expenses and severance payments totaling €5.3 million.

In the Interior division, total net expense from special effects amounted to €8.4 million for the first nine months of 2010.

Special effects in the first nine months of 2009

In the third quarter of 2009, the impairment test on goodwill led to an impairment requirement of €61.4 million in the Interior division.

Impairment losses in the amount of €44.0 million were recognized in the Interior division as a result of the disposal of an associated company.

The research and development location in Neubiberg, Germany, was closed. This led to restructuring expenses of €8.0 million in the Interior division.

The plant in Huntsville, Alabama, U.S.A., is to be closed at the end of 2010. In the first nine months of 2009, the Interior division incurred restructuring expenses of €57.8 million.

The Interior division incurred further expenses totaling €3.4 million, primarily from restructuring measures.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments totaling €17.5 million in the first three quarters of 2009.

In the Interior division, total net expense from special effects amounted to €266.9 million for the first nine months of 2009.

Passenger and Light Truck Tires in € millions		January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	4,236.0	3,355.9	1,458.1	1,240.7
EBITDA	897.2	682.2	275.8	283.2
in % of sales	21.2	20.3	18.9	22.8
EBIT	715.0	504.2	213.7	221.4
in % of sales	16.9	15.0	14.7	17.8
Depreciation and amortization1	182.2	178.0	62.1	61.8
- thereof impairment2	0.5	2.3	0.0	2.3
Capital expenditure3	258.2	130.1	127.0	38.0
in % of sales	6.1	3.9	8.7	3.1
Operating assets (at September 30)	2,600.5	2,484.1
Number of employees at September 304	28,068	26,717
Adjusted sales5	4,191.9	3,358.0	1,454.8	1,241.3
Adjusted operating result (adjusted EBIT)6	730.0	540.4	220.2	243.6
in % of adjusted sales	17.4	16.1	15.1	19.6

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Passenger and Light Truck Tires Sales volumes

In the Passenger and Light Truck Tires division, yearon-year sales volumes in all regions and business units saw strong double-digit percentage growth in the first nine months of 2010, with the most significant increase being reported by the Original Equipment business unit.

Volume growth in the Replacement Business was strong across all regions, with sales figures reflecting the revival of the individual markets.

Sales up 26.2%;

Sales up 20.4% before changes in the scope of consolidation and exchange rate effects

Sales of the Passenger and Light Truck Tires division rose by 26.2% to €4,236.0 million in the first nine months of 2010 compared with the same period of 2009 (PY: €3,355.9 million). Before changes in the scope of consolidation and exchange rate effects, sales were up by 20.4%.

Adjusted EBIT up €189.6 million

The Passenger and Light Truck Tires division's adjusted EBIT rose in the first nine months of 2010 compared with the same period of 2009 by €189.6 million, or 35.1%, to €730.0 million (PY: €540.4 million), equivalent to 17.4% (PY: 16.1%) of adjusted sales.

EBIT up €210.8 million

Compared with the same period of last year, the Passenger and Light Truck Tires division reported an increase in EBIT of €210.8 million, or 41.8%, to €715.0 million (PY: €504.2 million) in the first nine months of 2010. The return on sales increased to 16.9% (PY: 15.0%).

Special effects in the first nine months of 2010

In the Passenger and Light Truck Tires division, there were restructuring-related expenses and severance payments totaling €16.2 million in the first nine months of 2010, €9.2 million of which was attributable to the closure of tire production in Clairoix, France, and €3.3 million to the closure of the compounding and rubberization activities in Traiskirchen, Austria.

Special effects in the first nine months of 2009

The division incurred further expenses totaling €10.7 million, primarily from restructuring measures.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments of €9.4 million.

In the Passenger and Light Truck Tires division, total net expense from special effects amounted to €32.7 million for the first nine months of 2009.

Commercial Vehicle Tires in € millions	January 1 to September 30		Third Quarter
	2010	2009	2010	2009
Sales	1,023.5	766.5	392.9	288.7
EBITDA	92.3	38.7	45.3	11.1
in % of sales	9.0	5.0	11.5	3.8
EBIT	17.6	-39.1	25.1	-25.1
in % of sales	1.7	-5.1	6.4	-8.7
Depreciation and amortization1	74.7	77.8	20.2	36.2
- thereof impairment2	13.8	14.8	0.0	14.8
Capital expenditure3	28.1	32.2	9.3	11.1
in % of sales	2.7	4.2	2.4	3.8
Operating assets (at September 30)	638.2	624.3
Number of employees at September 304	7,062	7,638
Adjusted sales5	1,011.8	764.4	392.9	288.1
Adjusted operating result (adjusted EBIT)6	50.0	18.8	25.8	32.0
in % of adjusted sales	4.9	2.5	6.6	11.1

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

Commercial Vehicle Tires

Sales volumes

Following a very weak 2009 characterized by plummeting demand, the first nine months of 2010 saw a substantial revival of the markets, causing sales figures to be higher than those for the same period last year, but still below the comparative values for 2008. All business units outperformed the previous year by double-digit percentages.

Sales up 33.5%;

Sales up 25.4% before changes in the scope of consolidation and exchange rate effects

Sales of the Commercial Vehicle Tires division rose by 33.5% to €1,023.5 million in the first nine months of 2010 compared with the same period of 2009 (PY: €766.5 million). Before changes in the scope of consolidation and exchange rate effects, sales were up by 25.4%.

Adjusted EBIT up €31.2 million

The Commercial Vehicle Tires division's adjusted EBIT rose in the first nine months of 2010 compared with the same period of 2009 by €31.2 million, or 166.0%, to €50.0 million (PY: €18.8 million), equivalent to 4.9% (PY: 2.5%) of adjusted sales.

EBIT up €56.7 million

Compared with the same period of last year, the Commercial Vehicle Tires division reported an increase in EBIT of €56.7 million, or 145.0%, to €17.6 million (PY: -€39.1 million) in the first nine months of 2010. The return on sales improved to 1.7% (PY: -5.1%).

Special effects in the first nine months of 2010

In the Commercial Vehicle Tires division, income of €3.3 million was realized as an aftereffect of the sale of our North American OTR activities to the Titan Tire Corporation in 2006.

The Commercial Vehicle Tires division incurred expenses for severance payments totaling €1.5 million.

In the Commercial Vehicle Tires division, total net expense from special effects amounted to €30.2 million in the first nine months of 2010.

Special effects in the first nine months of 2009

Measures introduced for the location in Stöcken, Germany, led to restructuring expenses of €46.4 million in the Commercial Vehicle Tires division for the first nine months of 2009.

Unutilized provisions of €0.2 million were reversed as part of the winding-up of restructuring activities at the plant in Alor Gajah, Malaysia.

The closure of the Conti Machinery location in Puchov, Slovakia, led to restructuring expenses of €8.6 million.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments of €3.3 million.

In the Commercial Vehicle Tires division, total net expense from special effects amounted to €58.1 million for the first nine months of 2009.

ContiTech in € millions Sales EBITDA in % of sales EBIT in % of sales		January 1 to September 30	Third Quarter
	2010	2009	2010	2009
	2,261.4	1,771.1	783.7	614.1
	365.9	199.9	121.5	80.0
	16.2	11.3	15.5	13.0
	291.7	123.7	94.8	54.2
	12.9	7.0	12.1	8.8
Depreciation and amortization1	74.2	76.2	26.7	25.8
- thereof impairment2	2.2	1.9	2.2	0.2
Capital expenditure3	65.0	64.1	23.2	18.0
in % of sales	2.9	3.6	3.0	2.9
Operating assets (at September 30)	1,072.9	989.5
Number of employees at September 304	25,458	21,689
Adjusted sales5	2,246.3	1,753.3	776.0	607.4
Adjusted operating result (adjusted EBIT)6	299.4	169.6	99.4	70.5
in % of adjusted sales	13.3	9.7	12.8	11.6

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

5 Before changes in the scope of consolidation.

6 Before amortization of intangible assets from PPA, changes in the scope of consolidation, and special effects.

ContiTech

Sales up 27.7%;

Sales up 25.8% before changes in the scope of consolidation and exchange rate effects

Sales of the ContiTech division rose by 27.7% to €2,261.4 million in the first nine months of 2010 compared with the same period of 2009 (PY: €1,771.1 million). Before changes in the scope of consolidation and exchange rate effects, sales were up by 25.8%. This increase occurred in all business units and resulted primarily from the recovery of the vehicle markets, but also from the division's non-automotive business. Automotive original equipment sales rose some 41%, automotive replacement sales roughly 17%, and non-automotive business sales by approximately 16%.

Adjusted EBIT up €129.8 million

The ContiTech division's adjusted EBIT was up in the first nine months of 2010 compared with the same period of 2009 by €129.8 million, or 76.5%, to €299.4 million (PY: €169.6 million), equivalent to 13.3% (PY: 9.7%) of adjusted sales.

EBIT up €168.0 million

Compared with the same period of 2009, the Conti-Tech division reported an increase in EBIT of €168.0 million, or 135.8%, to €291.7 million (PY: €123.7 million) in the first nine months of 2010. The return on sales increased to 12.9% (PY: 7.0%).

Special effects in the first nine months of 2010

The antitrust proceedings initiated in 2007 against Dunlop Oil & Marine Ltd., UK, a subsidiary of Conti-Tech AG, in the area of offshore hoses, resulted in further expenses of €3.1 million.

In the ContiTech division there were impairment losses on property, plant, and equipment totaling €2.2 million.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments totaling €0.8 million in the first nine months of 2010.

There were also special effects amounting to €0.1 million resulting from restructuring expenses and income from the sale of businesses.

In the ContiTech division, total net expense from special effects amounted to €6.2 million for the first nine months of 2010.

Special effects in the first nine months of 2009

The antitrust proceedings initiated in 2007 against Dunlop Oil & Marine Ltd., UK, a subsidiary of Conti-Tech AG, in the area of offshore hoses, resulted in further expenses of €1.9 million.

For the ContiTech division, the first consolidation of the conveyor belt company Kolubara Univerzal D.O.O., Serbia, led to a gain of €0.7 million from the negative balance.

There were minor impairment losses on property, plant, and equipment totaling €0.3 million for the ContiTech division.

The cost-cutting program initiated worldwide in response to the economic crisis led to expenses for severance payments totaling €17.0 million in the first three quarters of 2009.

In the ContiTech division, total net expense from special effects amounted to €44.4 million for the first nine months of 2009.

Report on Expected Developments and Outlook for the Corporation

The good development in vehicle output figures for the first nine months of 2010 confirms our full-year forecast, which we had already raised at the middle of the year, so we are keeping to our forecast of 68.0 million units for 2010 (+16% vs. 2009). Estimations for the individual regions also remain unchanged from our raised mid-year forecasts. Key growth drivers for vehicle production are still Asia and NAFTA. For these two markets, we continue to expect increases in output from 28.2 million to 33.0 million units (+17%) and from 8.5 million to 11.5 million units (+35%) respectively. For Europe, which is Continental's most important sales market, we anticipate a moderate increase in vehicle production from 16.8 million to 17.7 million units (+6%).

After the first nine months, the forecast we upped at the middle of the year for demand in the tire replacement markets also appears to be confirmed. We thus continue to expect that the demand for passenger and light-duty commercial vehicle tires in the replacement markets will increase 4% to 6% in both Europe and NAFTA, whereas given the market trends for the first nine months, demand in Europe is likely to be at the upper end of that range and in North America at the lower end.

Although the forecast for the key sales markets has remained unchanged, the good development in Continental AG's operating result after the first nine months requires that the forecast for the year be increased once again. Sales in the current fiscal year will rise to over €25 billion, with an adjusted EBIT margin of approximately 9% (previous forecast: 8.0%–8.5%). Expense from special effects, which amounted to €76.8 million in the first nine months of 2010, is still expected to total about €100 million for the whole year. The impact of higher raw material prices for the Rubber Group will exceed €450 million in 2010.

However, the net income attributable to the shareholders of the parent cannot match the improvement in the operating result. This is due to one-time reversals of non-cash deferrals reported under net interest expense. These reversals resulted from the full repayment of the forward start facility and the partial repayment of the syndicated VDO loan. The write-down of deferred tax assets on tax loss carryforwards and the interest carryforward (interest limit), which after the first nine months amounted to €222 million in the U.S.A. and Germany alone, had an even greater effect, however. For that reason, the corporate tax rate will be about 50% in the current year, thus deviating substantially from the rate of 28% as budgeted by the corporation. We therefore expect net income attributable to the shareholders of the parent to be only approximately €400 million in 2010.

Including investing activities, free cash flow of some €500 million is expected in the fourth quarter of 2010. It will thus be possible to reduce net indebtedness to well below €8 billion, despite an increase in capital expenditure of about €400 million, cash outflow for restructuring measures of approximately €300 million and the build-up of working capital.

Consolidated Financial Statements as of September 30, 2010

Consolidated Statements of Income and Comprehensive Income

in € millions		January 1 to September 30	Third Quarter
	2010	2009	2010	2009
Sales	19,144.2	14,400.2	6,489.8	5,337.0
Cost of sales	-14,916.8	-11,579.6	-5,131.7	-4,113.1
Gross margin on sales	4,227.4	2,820.6	1,358.1	1,223.9
Research and development expenses	-1,143.5	-1,092.4	-389.1	-361.8
Selling and logistics expenses	-965.5	-845.0	-324.9	-277.1
Administrative expenses	-467.4	-450.4	-160.8	-148.9
Other income and expenses	-332.8	-1,389.0	-135.8	-1,315.3
At-equity share in earnings of associates	54.8	-90.3	18.3	-33.5
Other income from investments	3.2	8.5	-0.7	0.9
Earnings before interest and taxes	1,376.2	-1,038.0	365.1	-911.8
Interest income	17.1	22.0	5.2	6.3
Interest expense1	-548.5	-539.4	-214.7	-194.5
Net interest expense	-531.4	-517.4	-209.5	-188.2
Earnings before taxes	844.8	-1,555.4	155.6	-1,100.0
Income tax expense	-431.7	85.3	-128.5	72.1
Net income	413.1	-1,470.1	27.1	-1,027.9
Non-controlling interests	-50.1	-25.5	-13.0	-10.6
Net income attributable to the shareholders of the parent	363.0	-1,495.6	14.1	-1,038.5
Undiluted earnings per share in €	1.82	-8.85	0.07	-6.14
Diluted earnings per share in €	1.82	-8.85	0.07	-6.14

1 Including gains/losses from foreign currency translation and gains/losses from the change in the fair value of derivative instruments.

in € millions		January 1 to September 30	Third Quarter
	2010	20091	2010	20091
Net income	413.1	-1,470.1	27.1	-1,027.9
Difference from currency translation2	361.5	132.1	-183.6	-11.5
Share of other comprehensive income of associates	0.4	—	0.4	—
Available-for-sale financial assets	3.1	1.2	1.6	1.2
Deferred taxes on available-for-sale financial assets	-0.9	-0.3	-0.4	-0.3
Cash flow hedges	4.5	-41.0	30.5	-13.4
Deferred taxes on cash flow hedges	-1.2	12.0	-9.4	4.2
Other comprehensive income	367.4	104.0	-160.9	-19.8
Total comprehensive income	780.5	-1,366.1	-133.8	-1,047.7
Non-controlling interests	75.0	26.1	3.5	14.6
Total comprehensive income attributable to the shareholders of the parent	705.5	-1,392.2	-137.3	-1,062.3

1 The comparative figures as of September 30, 2009, are shown adjusted accordingly.

2 Including non-controlling interests, without share of the other comprehensive income of associates.

Consolidated Balance Sheets

Assets in € millions	Sept. 30, 2010		Dec. 31, 2009 Sept. 30, 2009
Goodwill	5,630.9	5,536.6	5,563.6
Other intangible assets	1,795.5	2,068.7	2,176.6
Property, plant, and equipment	5,859.8	5,784.3	5,864.5
Investment properties	19.9	19.3	16.5
Investments in associates	418.7	398.0	415.0
Other investments	7.0	8.0	9.5
Deferred tax assets	673.5	728.9	581.6
Deferred pension charges	63.8	70.8	72.9
Long-term derivative instruments and interest-bearing investments	94.0	78.4	9.5
Other long-term financial assets	19.3	18.9	34.3
Other assets	12.7	12.7	13.0
Non-current assets	14,595.1	14,724.6	14,757.0
Inventories	2,632.3	2,076.0	2,254.6
Trade accounts receivable	4,799.0	3,648.1	3,821.9
Other short-term financial assets	213.0	184.9	148.8
Other assets	635.2	540.5	564.0
Income tax receivable	132.7	94.2	107.3
Short-term derivative instruments and interest-bearing investments	37.8	25.8	98.1
Cash and cash equivalents	1,046.5	1,712.8	1,556.3
Assets held for sale	20.7	42.3	63.6
Current assets	9,517.2	8,324.6	8,614.6
Total assets	24,112.3	23,049.2	23,371.6

Total equity and liabilities in € millions	Sept. 30, 2010		Dec. 31, 2009 Sept. 30, 2009
Common stock	512.0	432.6	432.6
Capital reserves	4,146.0	3,139.5	3,130.9
Retained earnings	999.4	636.4	790.0
Other comprehensive income	-103.5	-435.9	-445.4
Equity attributable to the shareholders of the parent	5,553.9	3,772.6	3,908.1
Non-controlling interests	313.8	289.1	282.6
Total equity	5,867.7	4,061.7	4,190.7
Provisions for pension liabilities and other post-employment benefits	1,399.4	1,345.0	1,355.3
Deferred tax liabilities	199.8	196.5	295.2
Long-term provisions for other risks	340.1	351.7	354.4
Long-term portion of indebtedness	6,645.7	5,967.7	5,995.9
Other long-term financial liabilities	0.8	—	—
Other non-current liabilities	37.9	36.2	39.9
Non-current liabilities	8,623.7	7,897.1	8,040.7
Trade accounts payable	3,138.3	2,819.5	2,642.3
Income tax payable	704.6	644.7	553.1
Short-term provisions for other risks	1,281.7	1,342.9	1,068.9
Indebtedness	2,624.7	4,744.8	5,132.8
Other short-term financial liabilities	1,050.5	880.3	896.1
Other liabilities	821.1	648.1	788.8
Liabilities held for sale	0.0	10.1	58.2
Current liabilities	9,620.9	11,090.4	11,140.2
Total equity and liabilities	24,112.3	23,049.2	23,371.6

Consolidated Cash Flow Statements

in € millions		January 1 to September 30	Third Quarter
	2010	2009	2010	2009
EBIT	1,376.2	-1,038.0	365.1	-911.8
Interest paid	-597.6	-590.6	-213.4	-199.0
Interest received	17.9	23.1	6.1	7.3
Income tax paid	-329.3	-133.0	-100.9	-86.5
Dividends received	46.4	67.3	9.3	16.5
Depreciation, amortization and impairments	1,235.0	2,175.8	421.8	1,352.4
At-equity share in earnings of associates and accrued dividend income from other investments, incl. impairments	-58.0	54.1	-17.6	5.0
Gains from the disposal of assets, subsidiaries and business units	-6.2	-6.3	-3.2	-0.8
Other non-cash items	-11.8	70.3	-18.7	70.3
Changes in
inventories	-471.6	357.3	-183.9	-15.4
trade accounts receivable	-1,016.3	-469.9	-158.8	-618.5
trade accounts payable	221.3	141.3	-39.1	185.9
pension and post-employment provisions	49.4	722.2	22.5	588.1
other assets and liabilities	119.3	239.2	102.5	221.7
Cash provided by operating activities	574.7	1,612.8	191.7	615.2
Proceeds on disposal of property, plant, equipment and intangible assets	22.4	44.3	7.9	9.7
Capital expenditure on property, plant, equipment and software	-728.6	-587.5	-298.6	-173.8
Capital expenditure on intangible assets from development projects and miscellaneous	-47.3	-35.0	-15.5	-11.7
Proceeds on disposal of subsidiaries and business units, including surrendered cash and cash equivalents	30.6	137.0	—	—
Acquisition of subsidiaries and business units, incl. acquired cash and cash equivalents, and additions of capital to non-fully consolidated companies	-21.6	-89.0	-11.4	-45.2
Interest bearing advances	—	1.4	—	—
Cash used for investing activities	-744.5	-528.8	-317.6	-221.0
Cash flow before financing activities	-169.8	1,084.0	-125.9	394.2
Change in indebtedness	-1,563.0	-1,093.6	4.8	-822.1
Successive purchases	-25.8	—	-4.7	—
Proceeds from the issuance of shares	1,056.0	—	—	—
Dividends paid and repayment of capital to non-controlling interests	-36.3	-27.3	-14.2	-19.9
Investment agreement Schaeffler	—	20.0	—	20.0
Cash used for financing activities	-569.1	-1,100.9	-14.1	-822.0
Change in cash and cash equivalents	-738.9	-16.9	-140.0	-427.8
Cash and cash equivalents at the beginning of the reporting period	1,712.8	1,569.4	1,239.4	2,000.5
Effect of exchange rate changes on cash and cash equivalents	72.6	3.8	-52.9	-16.4
Cash and cash equivalents at the end of the reporting period	1,046.5	1,556.3	1,046.5	1,556.3

Consolidated Statements of Changes in Total Equity

	Number of shares1	Common stock	Capital reserves	Retained earnings	Succes sive share purchases2	Other comprehen sive income		Subtotal	Non-con trolling interests	Total
						Difference from
in € millions	(thousands)					currency trans lation3	financial instru ments4
At Jan. 1, 2009	169,006	432.6	3,097.9	2,217.2	-33.4	-346.0	-102.9	5,265.4	264.5	5,529.9
Net income	—	—	—	-1,495.6	—	—	—	-1,495.6	25.5	-1,470.1
Comprehensive income5	—	—	—	—	—	131.5	-28.1	103.4	0.6	104.0
Net profit for the period	—	—	—	-1,495.6	—	131.5	-28.1	-1,392.2	26.1	-1,366.1
Dividends paid/declared	—	—	—	—	—	—	—	—	-27.9	-27.9
Issuance of shares6	—	—	13.0	—	—	—	—	13.0	—	13.0
Successive purchases5	—	—	—	—	1.9	—	—	1.9	-4.2	-2.3
Changes in non controlling interests7	—	—	—	—	—	—	—	—	24.1	24.1
Euro introduction in Slovakia	—	—	—	68.4	—	-68.4	—	—	—	—
Schaeffler investor agreement	—	—	20.0	—	—	—	—	20.0	—	20.0
At Sept. 30, 2009	169,006	432.6	3,130.9	790.0	-31.5	-282.9	-131.0	3,908.1	282.6	4,190.7
At Jan. 1, 2010	169,006	432.6	3,139.5	636.4	-34.4	-276.0	-125.5	3,772.6	289.1	4,061.7
Net income	—	—	—	363.0	—		—	363.0	50.1	413.1
Comprehensive income	—	—	—	—	—	337.0	5.5	342.5	24.9	367.4
Net profit for the period	—	—	—	363.0	—	337.0	5.5	705.5	75.0	780.5
Dividends paid/declared	—	—	—	—	—	—	—	—	-35.9	-35.9
Issuance of shares6	31,000	79.4	1,006.5	—	—	—	—	1,085.9	—	1,085.9
Successive purchases	—	—	—	—	-10.1	—	—	-10.1	-16.1	-26.2
Changes in non controlling interests7	—	—	—	—	—	—	—	—	1.7	1.7
At Sept. 30, 2010	200,006	512.0	4,146.0	999.4	-44.5	61.0	-120.0	5,553.9	313.8	5,867.7

1 Shares outstanding.

2 Successive acquisitions of shares of fully consolidated companies and companies consolidated according to the equity method. 3

Includes the shareholder's €0.4 million (PY: €0.0 million) portion of the foreign currency translation of companies consolidated according to the equity method.

4 The difference from financial instruments, including deferred taxes, is mainly due to the change in the market value of the cash flow hedges on interest and currency, as well as to the available-for-sale financial assets.

5 The comparative figures as of September 30, 2009, are shown adjusted accordingly. 6

Includes the expenditure resulting from stock option plans and the redemption offer for granted and not yet exercised stock options. The proceeds from the capital increase, net of tax effects, are also included in 2010. 7

Relates to changes in non-controlling interests from consolidation changes or capital increases.

Explanatory Notes to the Consolidated Financial Statements

Segment report by division for the period from January 1 to September 30, 2010

in € millions	Chassis & Safety	Powertrain	Interior	Passenger and Light Truck Tires
Sales	4,261.9	3,477.8	4,124.1	4,236.0
EBITDA	674.4	199.9	420.8	897.2
in % of sales	15.8	5.7	10.2	21.2
EBIT	431.6	-145.4	107.2	715.0
in % of sales	10.1	-4.2	2.6	16.9
Depreciation and amortization1	242.8	345.3	313.6	182.2
- thereof impairment2	3.0	21.8	-5.9	0.5
Capital expenditure3	132.7	173.6	124.1	258.2
in % of sales	3.1	5.0	3.0	6.1
Operating assets (at September 30)	3,978.7	3,087.5	4,390.2	2,600.5
Number of employees at September 304	29,742	26,455	29,171	28,068

	Commercial		Other/Con	Continental
in € millions	Vehicle Tires	ContiTech	solidation	Corporation
Sales	1,023.5	2,261.4	-240.5	19,144.2
EBITDA	92.3	365.9	-39.3	2,611.2
in % of sales	9.0	16.2	—	13.6
EBIT	17.6	291.7	-41.5	1,376.2
in % of sales	1.7	12.9	—	7.2
Depreciation and amortization1	74.7	74.2	2.2	1,235.0
- thereof impairment2	13.8	2.2	—	35.4
Capital expenditure3	28.1	65.0	0.6	782.3
in % of sales	2.7	2.9	—	4.1
Operating assets (at September 30)	638.2	1,072.9	-69.1	15,698.9
Number of employees at September 304	7,062	25,458	234	146,190

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

		Segment report by division for the period from January 1 to September 30, 2009
--	--	--------------------------------------------------------------------------------

				Passenger and
in € millions	Chassis & Safety	Powertrain	Interior	Light Truck Tires
Sales	3,105.0	2,394.9	3,154.8	3,355.9
EBITDA	427.6	-63.0	-21.5	682.2
in % of sales	13.8	-2.6	-0.7	20.3
EBIT	-196.2	-856.3	-446.9	504.2
in % of sales	-6.3	-35.8	-14.2	15.0
Depreciation and amortization1	623.8	793.3	425.4	178.0
- thereof impairment2	368.1	461.5	84.9	2.3
Capital expenditure3	99.1	167.5	94.4	130.1
in % of sales	3.2	7.0	3.0	3.9
Operating assets (at September 30)	3,840.9	3,050.2	4,451.1	2,484.1
Number of employees at September 304	26,563	23,955	27,438	26,717

	Commercial		Other/Con	Continental
in € millions	Vehicle Tires	ContiTech	solidation	Corporation
Sales	766.5	1,771.1	-148.0	14,400.2
EBITDA	38.7	199.9	-126.1	1,137.8
in % of sales	5.0	11.3	—	7.9
EBIT	-39.1	123.7	-127.4	-1,038.0
in % of sales	-5.1	7.0	—	-7.2
Depreciation and amortization1	77.8	76.2	1.3	2,175.8
- thereof impairment2	14.8	1.9	—	933.5
Capital expenditure3	32.2	64.1	0.1	587.5
in % of sales	4.2	3.6	—	4.1
Operating assets (at September 30)	624.3	989.5	52.8	15,492.9
Number of employees at September 304	7,638	21,689	216	134,216

1 Excluding write-downs of investments.

2 Impairment also includes necessary reversals of impairment losses.

3 Capital expenditure on property, plant, equipment and software. 4

Excluding trainees.

Reconciliation of EBIT to Net Income

in € millions		January 1 to September 30	Third Quarter
	2010	2009	2010	2009
Chassis & Safety	431,6	-196,2	122,4	-252,6
Powertrain	-145,4	-856,3	-101,7	-603,6
Interior	107,2	-446,9	12,0	-202,5
Passenger and Light Truck Tires	715,0	504,2	213,7	221,4
Commercial Vehicle Tires	17,6	-39,1	25,1	-25,1
ContiTech	291,7	123,7	94,8	54,2
Other/consolidation	-41,5	-127,4	-1,2	-103,6
EBIT	1.376,2	-1.038,0	365,1	-911,8
Net interest expense	-531,4	-517,4	-209,5	-188,2
Earnings before taxes	844,8	-1.555,4	155,6	-1.100,0
Income tax expense	-431,7	85,3	-128,5	72,1
Net income	413,1	-1.470,1	27,1	-1.027,9
Non-controlling interests	-50,1	-25,5	-13,0	-10,6
Net income attributable to the shareholders of the parent	363,0	-1.495,6	14,1	-1.038,5
Undiluted earnings per share in €	1,82	-8,85	0,07	-6,14
Diluted earnings per share in €	1,82	-8,85	0,07	-6,14

Accounting principles

This Interim Report, as presented, has been prepared in accordance with the International Financial Reporting Standards (IFRS) applicable on the closing date and endorsed by the European Union, as well as the interpretations of the International Financial Reporting Interpretation Committee (IFRIC). The Interim Report was drawn up in compliance with IAS 34, Interim Financial Reporting. The same accounting principles and basis of valuation are applied in the Interim Report as were used in the annual financial statements for 2009. These methods are disclosed in detail in the Annual Report 2009. In addition, the IFRS amendments and new IFRS regulations mandated as of September 30, 2010, are applied in the Interim Report. These mandatory amendments and new regulations were disclosed in detail in the Annual Report 2009. They had no material effect on the Continental Corporation.

Taxes are calculated based on the estimated, weighted-average annual tax rate expected for the year as a whole, taking into account the tax impact of specific significant items not expected to reoccur in the remainder of the year.

Although certain elements of the corporation's business are seasonal, the overall comparability of the interim consolidated financial statements is not compromised. All significant effects in the current period are shown in the financial summaries or in the accompanying explanations. Changes in the recognition or valuation of assets and liabilities within the scope of company acquisitions are applied retrospectively once the final purchase price allocation has been determined.

The consolidated financial statements have been prepared in euros. Unless otherwise stated, all amounts presented are in millions of euros. We point out that differences may arise as a result of the use of rounded amounts and percentages.

Pension obligations

Consolidated net pension expenses of the Continental Corporation can be summarized as follows:

in € millions		January 1 to September 30, 2010			January 1 to September 30, 2009
	Ger many	USA/ CAN	UK	Others	Total	Ger many	USA/ CAN	UK	Others	Total
Current service cost	37.9	6.8	2.2	8.2	55.1	38.5	5.9	2.0	7.4	53.8
Interest on defined benefit obligation	65.6	41.5	8.3	7.4	122.8	65.6	40.8	8.0	7.5	121.9
Expected return on plan assets	-22.0	-39.6	-8.8	-3.7	-74.1	-42.3	-34.7	-7.8	-3.0	-87.8
Amortization of actuarial gains and losses as well as other costs	0.0	15.8	1.2	0.9	17.9	3.3	19.6	0.6	0.1	23.6
Effects of asset limitation and changes	—	2.6	0.0	—	2.6	—	-0.1	0.0	0.0	-0.1
Curtailments or settlements	—	—	—	—	—	—	3.8	—	—	3.8
Net periodic pension cost	81.5	27.1	2.9	12.8	124.3	65.1	35.3	2.8	12.0	115.2

The refunds from the Contractual Trust Arrangements (CTAs) set up in Germany, the asset reclassification and restructuring within the CTAs, as well as the discontinuation of the status of the remaining assets of the respective CTAs as qualifying plan assets in the first nine months of 2009 had a negative impact of €25.6 million on EBIT and thus on the net pension expenses in the period under review compared to the same period of 2009.

Consolidated net expenses for retirement healthcare and life insurance obligations of the Continental Corporation in the U.S.A. and Canada are made up of the following:

in € millions		January 1 to September 30
	2010	2009
Current service cost	1.4	3.1
Interest cost on defined benefit obligation	8.7	8.9
Amortization of actuarial gains and losses as well as other costs	0.0	-3.7
Curtailments or settlements	—	-10.0
Net cost of other post-employment benefits	10.1	-1.7

Cash changes in post-employment obligations

Pension funds exist solely for pension obligations, particularly in Germany, the U.S.A., Canada, and the United Kingdom, and not for other benefit obligations. The companies of the Continental Corporation paid €41.0 million (PY: €10.8 million) into these pension funds for the period from January 1 to September 30, 2010. From the CTAs and from assets transferred to a trustee in this conjunction, there was a refund in the first nine months of 2009 totaling €112.1 million for pension payments that had arisen since the creation of the CTAs and been advanced by the Continental Corporation up to that date.

Also in the same period of the previous year, the status of the assets as qualifying plan assets was discontinued due to asset reclassification and restructuring within individual CTAs in Germany, combined with the sale of 24.9% of ContiTech AG's shares to the Continental Pension Trust e.V. at a purchase price of €475.6 million. In addition to this asset reclassification and restructuring, the other assets of the respective CTAs in an amount of €95.1 million were no longer netted against the related obligations.

In the period from January 1 to September 30, 2010, payments for retirement benefit obligations totaled €139.3 million (PY: €123.3 million). Payments for other post-employment benefits totaled €11.5 million (PY: €9.8 million).

Companies consolidated

In addition to the parent company, the consolidated financial statements include a total of 357 domestic and foreign companies in which Continental AG holds a direct or indirect interest of at least 20% of the voting rights. Of these companies, 313 are fully consolidated and 44 are carried at equity.

Since December 31, 2009, the total number of consolidated companies has increased by two. Five companies were founded, seven units were acquired, and one previously unconsolidated unit was consolidated for the first time. Three companies were merged, six units sold, and two companies deconsolidated.

Since September 30, 2009, the net number of consolidated companies has decreased by seven. Reductions in the scope of consolidated companies relate primarily to mergers and disposals in the Automotive Group and in the ContiTech division as well as deconsolidations in the ContiTech division. The additions pertain chiefly to acquisitions of the Rubber Group and the founding of new companies within the scope of the carve-out project.

Acquisition and sale of companies

In the period under review, the full purchase price of €6.2 million for the acquisition of 49% of the shares in Avtoelektronika-Elkar (Avtel), Kaluga, Russia, was paid.

The increase of shareholdings from 51% in each case to currently 60% in Continental Automotive Corporation, Yokohama, Japan, as well as in Continental Automotive Corp. Lian Yun Gang Co. Ltd., Lian Yun Gang, China, strengthens the corporation's position on the components and systems market, especially for brake systems, making it possible to market an expanded product portfolio. Continental AG, Hanover, Germany, increased its shareholding by unilateral capital increases as well as by purchasing stock from the present joint venture partner Nisshinbo Holdings Inc., Tokyo, Japan, through Continental Automotive Corporation, Yokohama, Japan, at a price of €16.7 million. The relevant agreements went into effect on April 1, 2010. The companies are assigned to the Chassis & Safety division. The difference between the purchase price, capital increases and the non-controlling interests totaled -€5.5 million and was recognized directly in equity.

To reinforce its position on the Chinese market for drive belts, ContiTech AG, Hanover, Germany, purchased the residual 40% of the shares in ContiTech-Jiebao Power Transmission Systems Co., Ltd., Ninghai, China, at a price of €4.4 million. The purchase agreement was signed on May 2, 2010. The difference between the purchase price and the non-controlling interests totaled -€3.3 million and was recognized directly in equity.

To strengthen its special-purpose conveyor belts business, ContiTech Transportbandsysteme GmbH, Northeim, Germany, took over the Moers plant of Metso Minerals (Deutschland) GmbH under an asset deal. First consolidation took place as of May 1, 2010. The purchase price amounted to €10.2 million.

To strengthen the ContiTech division's position on the East European market for conveyor belts, the former 30% holding under third-party ownership in Kolubara Univerzal D.O.O., Veliki Crljeni, Serbia, was acquired in two steps at a price of €4.8 million. The transaction was concluded on August 11, 2010. The difference between the purchase price and the non-controlling interests totaled €0.1 million and was recognized directly in equity.

Further acquisitions relate to the purchase of shares in a European tire sales group.

The effects of these transactions, including the corresponding preliminary purchase price allocations, on the net assets, earnings and financial position of the Continental Corporation as of September 30, 2010, are immaterial.

The effects of the final purchase price settlement from the sale of VDO Automotive Huizhou Co. Ltd, Huizhou, China, in February 2010, which resulted in proceeds of €25.3 million after withholding tax, are immaterial. The sale of two small business operations of ContiTech that had been held for sale also had no material effect on the net assets, earnings and financial position of Continental as of September 30, 2010.

Impairment

Continental immediately reviews intangible assets and property, plant, and equipment as well as investment property as soon as there is an indication of impairment. In the period under review, this resulted in expenses totaling €35.4 million, primarily for the Hanover-Stöcken location in Germany with €13.8 million, Blythewood, South Carolina, U.S.A., with €15.1 million, and Costa Rica with €7.7 million. These expenses were partially offset by reversals primarily for the location in Huntsville, Alabama, U.S.A., that resulted mainly from further possibilities of utilizing machinery within the corporation.

Testing for impairment of intangible assets, property, plant, equipment, and investment property resulted in impairment losses totaling €933.5 million in the first nine months of 2009, €875.8 million of which related to goodwill, €2.2 million to other intangible assets, and €55.5 million to property, plant, equipment, and investment property. The impairment test for goodwill was based on an adopted five-year plan as well as a pre-tax discount rate of 11.4%.

The disposal of the associate Hyundai Autonet Co. Ltd., Kyoungki-do, South Korea, led to the recognition of impairment losses in the amount of €73.6 million in the first nine months of 2009. Further impairment of €44.0 million was recognized in 2009 for the investment in another associated company.

Dividend payment

Due to Continental AG's net loss for the year, no dividend was distributed for fiscal 2009. Nor was a dividend distributed in the same period of 2009 for fiscal 2008, also due to Continental AG's net loss for the year.

Earnings per share

Undiluted earnings per share for the first nine months of 2010 amounted to €1.82 (PY: -€8.85) and €0.07 for the period July 1 to September 30, 2010 (PY: -€6.14), and corresponded to the diluted earnings per share.

Contingent liabilities and other financial obligations

As of September 30, 2010, there were no material changes in the non-recognized contingent liabilities and other financial obligations as described in the Annual Report 2009. The South African Competition Commission has requested the responsible Competition Tribunal to impose penalties on Continental Tyre South Africa (Pty.) Limited and other parties on account of alleged antitrust violations. In the future, an associated company could face significant obligations arising from preliminary investigations by the European Commission of alleged antitrust violations by automotive electronics suppliers, if antitrust violations are found.

Transactions with related parties

In the period under review, there were no material changes in the nature of transactions with related parties compared with December 31, 2009. In the same period of 2009, Continental AG and the Schaeffler Group agreed upon a global purchasing cooperation with the goal of minimizing the cost of materials and nonmanufacturing materials, and of achieving benefits.

Additionally in the third quarter of 2009, a claim arising in January 2009 in connection with the negative impact from losses carried forward in the U.S.A. in accordance with the investment agreement of Continental AG, was received cash effective in the capital reserves from Schaeffler KG totaling €20.0 million.

German Corporate Governance Code

The annual declaration in accordance with Section 161 of the Aktiengesetz (German Stock Corporation Act) regarding the German Corporate Governance Code from the Executive Board and Supervisory Board of Continental AG is made permanently available to shareholders on Continental's website. Earlier declarations in accordance with Section 161 of the Aktiengesetz also can be found on the website.

Segment reporting

Comments on the development of Continental AG's six divisions are provided in the Corporate Management Report as of September 30, 2010.

Indebtedness and net income from financial activities

Comments on indebtedness and the net income from financial activities are provided in the Corporate Management Report as of September 30, 2010.

As agreed in the renegotiation of the VDO loan and the loan agreement for the forward start facility, Continental AG and certain of its subsidiaries have granted the creditor banks a collateral package. This package consists of guarantees from certain subsidiaries, the pledge of holdings in the subsidiaries providing the guarantees, as well as certain bank account deposits and the cession of receivables within the corporation. Further collateral was not provided for the VDO loan or for the forward start facility.

Furthermore, receivables in connection with assetbacked securitization programs were also assigned as collateral for the liability under the loan from the European Investment Bank.

In the third quarter of 2010, the Continental Corporation placed several euro-denominated bonds with principal amounts totaling €3.0 billion and terms of up to eight years with qualified investors in Germany and abroad. All bonds were issued by Conti-Gummi Finance B.V., Amsterdam, the Netherlands, with Continental AG and certain of its subsidiaries as guarantors.

The first bond issued in July 2010 has an aggregate principal amount of €750.0 million and a term of five years. The coupon rate is 8.5% p.a. In addition, further bonds were placed in September 2010. The bond issued early in September has an aggregate principal amount of €1.0 billion, and features a seven-year term and a coupon rate of 7.5% p.a. At the end of September, another transaction was performed consisting of two bonds, each amounting to €625.0 million. The first bond matures in 2016 and the coupon rate is 6.5% p.a., the second has a term of eight years and a 7.125% p.a. coupon.

The net proceeds from the bonds received up to September 30, 2010, were used for partial repayment of the VDO loan and also for partial repayment of the forward start facility. With these issues, the Continental Corporation has significantly improved its debt maturity structure.

Income tax expense

Income tax expense in the first nine months of 2010 amounted to €431.7 million (PY: income of €85.3 million).

Capital increase

On January 6, 2010, the Executive Board of Continental AG resolved – with Supervisory Board approval – an increase in the share capital of €432,655,316.48 by a nominal amount of €79,360,000.00 to €512,015,316.48 by issuing 31,000,000 new shares from authorized capital (Authorized Capital 2007).

The capital increase was implemented by way of a rights offering to the shareholders of Continental AG. In an initial step, a bank consortium led by Deutsche Bank AG, Goldman Sachs International and J.P. Morgan Securities Ltd. placed 24.55 million shares with institutional investors in a private placement on January 6, 2010. An additional 6.45 million shares were placed with institutional investors at a price of €40.00 on January 12 as part of an accelerated bookbuilt offering. 3.4 million fewer shares were allotted as a result of the subscription rights exercised by the free float shareholders. The capital increase was accompanied by BNP Paribas, CALYON and HSBC Trinkaus, in addition to the institutes already mentioned.

Existing shareholders could exercise their subscription rights from January 12 to January 25, 2010, acquiring two shares for every eleven shares they possessed at the time. The rights trading of the subscription rights on the Frankfurt Stock Exchange took place from January 12, 2010, until (and including) January 21, 2010. The new shares have full dividend entitlement as of fiscal 2009.

On January 26, 2010, Continental announced that more than 99% of the free float shareholders had made use of their subscription rights. Net proceeds totaled €1,056.0 million before tax effects. The capital increase served to repay Continental AG's liabilities from the VDO loan.

The major shareholders of Continental AG, representing 88.9% of the share capital of the company before the capital increase (Schaeffler KG 49.9%, M.M.Warburg & CO KGaA 19.5%, B. Metzler seel. Sohn & Co. Holding AG 19.5%) had irrevocably undertaken vis-à-vis the bank consortium not to exercise their subscription rights and not to transfer such subscription rights to third parties. Upon the completion of the rights offering, these major shareholders were calculated to hold an aggregate of 75.1% of the increased share capital of Continental AG. The free float of the Continental share therefore increased to 24.9%.

The inclusion of the new shares in trading on the regulated market of the stock exchanges of Frankfurt, Hanover, Hamburg and Stuttgart began on January 14, 2010. The delivery and settlement of the new shares subscribed in the rights offering or otherwise not subscribed took place on January 28, 2010.

Shareholder structure

On June 29, 2010, Schaeffler GmbH notified Continental AG that the voting rights share of Schaeffler GmbH in the company had exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25% and 30% on June 28, 2010, and was 42.17% on that day. After the completion of the capital increase in January 2010, the further shareholder structure with regard to the 200,005,983 outstanding Continental shares was calculated as follows: 16.48% M.M.Warburg & CO KGaA, 16.48% B. Metzler seel. Sohn & Co. Holding AG. The free float rate is 24.87%.

Review by the German Financial Reporting Enforcement Panel (Deutsche Prüfstelle für Rechnungslegung e.V.) of the consolidated financial statements for fiscal 2008

In May 2009, the German Financial Reporting Enforcement Panel ("FREP") (Deutsche Prüfstelle für Rechnungslegung e.V.) initiated a review of the consolidated and statutory financial statements and the management report for Continental AG and for the corporation (Konzernlagebericht) for fiscal 2008 pursuant to Section 342b(2) Sentence 3 No. 3 of the German Commercial Code (HGB). The review was initiated as a random sampling examination (stichprobenartige Prüfung). Please refer to the details in the 2009 Annual Report. After completing its audit, the FREP informed us on July 26, 2010, of the following error finding:

"The value of the goodwill reported in the consolidated financial statements of Continental AG as of December 31, 2008, which was reported at €6.4 billion after recognition of an impairment of €1.2 billion, is not proven in its full amount in methodic terms and on the basis of the assumptions made using the impairment test performed. The following impairment test led to a further impairment totaling €876 million in the 2009 consolidated financial statements. The impairment test for goodwill as of December 31, 2008, is in breach of IAS 36.33."

The Executive Board of Continental AG has resolved to accept this error finding. The error finding regarding the impairment test is limited to the methodic terms. The amount of a further impairment could not be calculated by the FREP. As part of the review procedures, the impairment test carried out in fiscal 2009, which led to a further impairment of goodwill in the amount of €875.8 million in 2009, was also available to the FREP. With regard to this impairment test, the FREP saw no reason for initiating examinations with cause in response to the circumstances, i.e., the goodwill as of December 31, 2009, was reported at an appropriate amount.

In accordance with IAS 8.43 in conjunction with IAS 8.5, the Executive Board of Continental AG considers a retrospective restatement of the consolidated financial statements as of December 31, 2008, to be impracticable, as a retrospective restatement in particular would necessitate extensive estimates and it is impossible to differentiate objectively between information which was available at the time and developments which have actually occurred since then. There will also be no effects on the 2010 consolidated financial statements, since any errors had already been compensated for by the end of 2009. At the end of September 2010, Germany's Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) ordered that the FREP's error finding be disclosed in an announcement pursuant to Section 37q(2) Sentence 1 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG). That announcement has meanwhile been made.

Review by an independent auditor

The interim management report and the abbreviated interim financial statements have not been audited in accordance with Section 317 of the Handelsgesetzbuch (HGB – German Commercial Code) or reviewed by a qualified auditor.

Significant Events after September 30, 2010

Cash inflow provided by eurobonds

At the end of September 2010, the Continental Corporation placed two euro-denominated bonds with principal amounts totaling €1.25 billion with qualified investors in Germany and abroad. The first bond has a volume of €625.0 million, matures in 2016, and carries a coupon rate of 6.5% p.a.; the second bond also has a volume of €625.0 million, but a term of eight years and a coupon rate of 7.125% p.a. Interest is payable semi-annually, in arrears. At the beginning of October 2010 with the settlement of the two bonds placed at the end of September 2010, the forward start facility and a portion of the VDO loan were repaid.

Acquisition of Tianjin Xinbinhai Conveyor Belt Co., Ltd.

The ContiTech Conveyor Belt Group acquired the operations of Tianjin Xinbinhai Conveyor Belt Co., Ltd., Tianjin, China, in October. With a work force of around 200, Tianjin Xinbinhai Conveyor Belt Co., Ltd. produces mainly conveyor belts for various sectors of industry at its plant in North China's port city of Tianjin.

Hanover, October 20, 2010

Continental Aktiengesellschaft The Executive Board

Financial Calendar

2010
Annual Financial Press Conference	February 23
Analyst Teleconference	February 23
Annual Shareholders' Meeting	April 28
Financial Report as of March 31, 2010	May 4
Half-Year Report as of June 30, 2010	July 29
Financial Report as of September 30, 2010	November 3

2011
Annual Financial Press Conference	March 3
Analyst Teleconference	March 3
Annual Shareholders' Meeting	April 28
Financial Report as of March 31, 2011	May 3
Half-Year Report as of June 30, 2011	August 2
Financial Report as of September 30, 2011	November 3

Continental Aktiengesellschaft, P.O. Box 169, 30001 Hanover, Germany Vahrenwalder Straße 9, 30165 Hanover, Germany Phone +49 511 938 - 01, Fax +49 511 938 - 8 17 70, [email protected], www.continental-corporation.com

Continental AG is an Official Sponsor of the 2010 FIFA World Cup South Africa™.

AI Terminal

Continental AG

83_10-q_2010-11-03_372c852b-7954-4033-9d0b-d32dbe43762e.pdf

Continental's Share Price Performance

Key Figures for the Continental Corporation

Key Figures for the Core Business Areas

Corporate Management Report as of Sept. 30, 2010

Company acquisition reinforces leading position in diesel exhaust technologies

Hose lines for future vehicle generations

Radar sensor for trucks now also recognizes stationary obstacles

New sensor for the protection of pedestrians

Intelligent vehicle theft prevention with Novanto

Keyless start and entry for all vehicle segments

Booster module for PSA e-HDi start-stop systems

New VancoEco van tire saves fuel

Higher load index for Continental truck tire

Insufficient air and the tire "reaches for the phone"

The world's first air spring system with integrated data storage

Economic Climate

Earnings, Financial and Net Assets Position of the Continental Corporation

Earnings Position

Adjusted EBIT up €1,123.2 million

EBIT up €2,414.2 million

Special effects in the first nine months of 2010

Special effects in the first nine months of 2009

Research and development expenses

Net interest expense

Income tax expense

Net income attributable to the shareholders of the parent

Development of the Continental Corporation

Financial Position

Cash flow

Financing

Change in net indebtedness

Capital expenditure (additions)

Net Assets Position

Employees

Development of the Divisions

Chassis & Safety

Sales volumes

Sales up 37.3%;

Sales up 32.3% before changes in the scope of consolidation and exchange rate effects

Adjusted EBIT up €253.5 million

EBIT up €627.8 million

Special effects in the first nine months of 2010

Special effects in the first nine months of 2009

Powertrain

Sales volumes

Sales up 45.2%;

Sales up 43.2% before changes in the scope of consolidation and exchange rate effects

Adjusted EBIT up €227.2 million

EBIT up €710.9 million

Special effects in the first nine months of 2010

Special effects in the first nine months of 2009

Interior

Sales volumes

Sales up 30.7%;

Sales up 27.6% before changes in the scope of consolidation and exchange rate effects

Adjusted EBIT up €294.9 million

EBIT up €554.1 million

Special effects in the first nine months of 2010

Special effects in the first nine months of 2009

Passenger and Light Truck Tires Sales volumes

Sales up 26.2%;

Sales up 20.4% before changes in the scope of consolidation and exchange rate effects

Adjusted EBIT up €189.6 million

EBIT up €210.8 million

Special effects in the first nine months of 2010

Special effects in the first nine months of 2009

Commercial Vehicle Tires

Sales volumes

Sales up 33.5%;

Sales up 25.4% before changes in the scope of consolidation and exchange rate effects

Adjusted EBIT up €31.2 million

EBIT up €56.7 million

Special effects in the first nine months of 2010

Special effects in the first nine months of 2009

ContiTech

Sales up 25.8% before changes in the scope of consolidation and exchange rate effects

Adjusted EBIT up €129.8 million