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Notes to the interim condensed consolidated financial statements (unaudited)

Corporate Information

ThyssenKrupp Aktiengesellschaft ("ThyssenKrupp AG" or "Company") is a publicly traded corporation domiciled in Germany. The interim condensed consolidated financial statements of ThyssenKrupp AG and subsidiaries, collectively the "Group", for the three and six months ended March 31, 2007, were authorized for issue in accordance with a resolution of the Executive Board on May 07, 2007.

Basis of presentation

The accompanying unaudited Group's interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB) for interim financial information effective within the European Union. Accordingly, these financial statements do not include all of the information and footnotes required by IFRS for complete financial statements for year end reporting purposes.

In the opinion of Management, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal and recurring nature considered necessary for a fair presentation of results for interim periods. Results of the periods ended March 31, 2007, are not necessarily indicative for future results.

The preparation of interim financial statements in conformity with IAS 34 Interim Financial Reporting requires Management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The accounting principles and practices as applied in the interim condensed consolidated financial statements correspond to those pertaining to the most recent annual consolidated financial statements. A detailed description of the accounting policies is published in the notes to the annual consolidated financial statements of our annual report 2005/2006.

Recently issued accounting standards

In fiscal year 2006/2007, the IASB has issued the following Standards which still must be endorsed by the EU before they can be adopted:

In November 2006, the IASB issued IFRS 8 "Operating Segments" which replaces IAS 14 "Segment Reporting". Pursuant to IFRS 8, reporting on the financial performance of the segments has to be prepared according to the so called management approach. Accordingly, the identification of the segments and the disclosures for these segments are based on the information which is used internally by Management in evaluating segment performance and deciding how to allocate resources. The application of the Standard is compulsory for fiscal years beginning on or after January 01, 2009, while earlier application is permitted. Currently, Management does not expect the adoption of the Standard to have a material impact on the Group's consolidated financial statements.

In March 2007, the IASB issued a revised version of IAS 23 "Borrowing Costs". Accordingly, borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalized as part of the cost of the asset. The current option of immediately recognizing borrowing costs as an expense will be removed. The application of the revised Standard is compulsory for fiscal years beginning on or after January 01, 2009. The revision will have no impact on the Group's consolidated financial statements because already today borrowing costs directly attributable to a qualifying asset are capitalized as part of production costs.

1 EMISSIONS TRADING SCHEME

On January 01, 2005, the Group began to participate in the European Union Emissions Trading Scheme (ets). The Group received notification from the national emissions-trading agency that it is entitled to receive allowances to emit 56.0 million tons of CO₂ (one third is allocated to 2005) during the compliance period 2005 – 2007. The majority of the total allowances are allocated to the Steel segment. The rights are capitalized at cost as an intangible asset. If the emissions are expected to exceed the amount covered by the granted allowances, the Group records an obligation for the purchase of additional allowances.

2 DISPOSAL GROUPS AND SINGLE ASSETS HELD FOR SALE

As part of the portfolio optimization program, in December 2006, in the Technologies segment the disposals of the defence technology division of Blohm + Voss Industries GmbH and the ThyssenKrupp Bilstein Wagenheber GmbH have been initiated. The defence technology division develops and manufactures armoured castings for tracked vehicles. The ThyssenKrupp Bilstein Wagenheber GmbH focuses on the acquisition, development, construction and distribution of car jacks and similar products which are utilized serially by the Automotive industry. As of March 31, 2007, the disposal of the ThyssenKrupp Bilstein Wagenheber GmbH was consummated, while the disposal of the defence technology division of Blohm + Voss Industries GmbH was consummated after March 31, 2007.

Both disposals do not meet the requirements for discontinued operation reporting in accordance with IFRS 5. Therefore, revenues and expenses will continue to be presented as income from continuing operations until the date of the disposal.

The following table shows the assets and liabilities of the disposal group as of March 31, 2007:

In addition to the assets attributable to the disposal group the line item "assets held for sale" includes real property of €152 million in total which is held for sale in the context of the concentration of ThyssenKrupp's administrative office locations in Germany. Furthermore, property, plant and equipment of €10 million and an investment accounted for using the equity method of €23 million which are held for sale are included in the line item.

The above mentioned "assets held for sale" and "liabilities associated with assets held for sale" are included in the various tables within the notes to the financial statements.

3 EXPENSE FOR SHARE-BASED COMPENSATION

In January 2007, ThyssenKrupp granted 44,651 stock rights under the fifth installment of the mid-term incentive plan. In total, ThyssenKrupp recorded compensation expense of €9.3 million for the obligations of this plan in the 2nd quarter (2nd quarter ended March 31, 2006: €13.0 million).

In the 2nd quarter ended March 31, 2007, the Group's Share Purchase Program which was implemented in February 2006, was settled with the purchase of 125,977 shares at a discount. At the same time, in March 2007 it was decided to renew the Program for fiscal year 2006/2007. Under the Program, again selected executive employees are entitled to purchase up to a fixed amount ThyssenKrupp shares at a discount. In total, the Group's Share Purchase Program resulted in a compensation expense of €0.8 million in the 2nd quarter ended March 31, 2007 (2nd quarter ended March 31, 2006: €0.7 million).

4 OTHER OPERATING INCOME

Due to the abandonment of certain automotive activities in the USA, amounts resulting from the foreign currency translation previously recorded directly in equity were released through profit and loss in the 2nd quarter ended March 31, 2007. Accordingly, other operating income contains a gain of €28 million.

5 OTHER OPERATING EXPENSES

In the 2nd quarter ended March 31, 2007, other operating expenses include a fine of approximately €480 million from the EU Commission which was imposed for infringement of competition regulations by ThyssenKrupp in the elevator and escalator business.

6 COST FOR PENSIONS AND SIMILAR OBLIGATIONS

The net periodic pension cost for the defined benefit plans is as follows:

Due to the disposal of subsidiaries in the US in the 1st quarter ended December 31, 2006, the expected contribution in fiscal year 2006/2007 related to ThyssenKrupp's funded plans increased by €10 million.

The net periodic postretirement benefit cost for health care obligations is as follows:

7 TOTAL EQUITY

Total equity and the number of shares outstanding changed as follows:

Table: Total equity

By resolution of the Annual General Meeting on January 19, 2007, ThyssenKrupp AG is authorized through July 18, 2008, to purchase treasury stock for certain defined purposes up to a total of 10% of the capital stock issued. In addition, the Executive Board was authorized by the Annual General Meeting, with the approval of the Supervisory Board, to increase the capital stock on one or more occasions on or before January 18, 2012, by up to €500 million by issuing up to 195,312,500 new no-par bearer shares in exchange for cash and/or contributions in kind ("Authorized Capital").

8 CONTINGENCIES INCLUDING PENDING LAWSUITS AND CLAIMS FOR DAMAGES

Guarantees

ThyssenKrupp AG and its segment lead companies as well as, in individual cases, its subsidiaries have issued guarantees in favor of business partners or lenders. The following table shows obligations under guarantees where the principal debtor is not a consolidated Group company:

The terms of those guarantees depend on the type of guarantee and may range from three months to ten years (e.g. rental payment guarantees).

The basis for possible payments under the guarantees is the non-performance of the primary obligor under a contractual agreement, e.g. late delivery, delivery of non-conforming goods under a contract, non-performance with respect to the warranted quality or default under a loan agreement.

All guarantees issued by or issued by instruction of ThyssenKrupp AG or the segment lead companies upon request of principal debtor obligated by the underlying contractual relationship and are subject to recourse provisions in case of default. If such a principal debtor is a company owned fully or partially by a foreign third party, then such a third party is generally requested to provide additional collateral in a corresponding amount.

Special purpose entities

ThyssenKrupp has leased a facility used in the production of coke. The application of the rules of this Interpretation SIC 12 "Consolidation – Special Purpose Entities" to the company acting as operator of this facility resulted in considering this company to be a special purpose entity under the scope of the Interpretation which has to be consolidated. The consolidation of this company does not have a material effect on the results of operations or the financial position of the Group. In addition, upon review of the owner company, that is also considered to be a special purpose entity under the scope of the Interpretation, it was determined that the Group does not control this company and consequently will not include this entity in the consolidated financial statements. The obligations of the Group existing under the lease and purchasing agreement will continue to be considered future minimum lease payments from operating leases and amount to approximately €62 million in the current fiscal year. The Group's maximum exposure to loss from this facility amounts to approximately €45 million and results from the residual value guarantee for the asset at the end of the lease and purchasing agreement which is mainly covered by third parties.

Commitments and other contingencies

On January 26, 2006, ThyssenKrupp AG signed an agreement with Mittal Steel N.V. in which ThyssenKrupp has undertaken to acquire up to 100% of the shares in Dofasco if Mittal Steel takes over Arcelor. This could result in a purchase price obligation of up to €4 billion. The agreement was not consummated and therefore was terminated effective as of April 30, 2007.

In the 1st quarter ended December 31, 2006, in the Steel segment the commitment to enter into investment projects increased by €1.1 billion. In addition, a long term iron ore and iron ore pellets supply contract and a long term iron gas supply contract were fixed. Beginning in fiscal year 2008/2009, over a period of 15 and 20 years, respectively, these two contracts will result in purchasing commitments of €5.6 billion in total.

Pending lawsuits and claims for damages

The Group is involved in pending and threatened litigation in connection with the sale of certain companies, which may lead to partial repayment of purchase price or to the award of damages. In addition, damage claims may be payable to customers and subcontractors under performance contracts.

Certain of these claims have proven unfounded or have expired under the statute of limitations. The Group believes, based upon consultation with relevant legal counsel, that the ultimate outcome of these pending and threatened lawsuits will not result in a material impact on the Group's financial condition or results of operations.

Regarding the remaining contingencies, including pending litigations, there have been no significant changes since the previous year end.

9 DERIVATIVE FINANCIAL INSTRUMENTS

The notional amounts and carrying amounts of the Group's derivative financial instruments are as follows:

10 SEGMENT REPORTING

As of October 01, 2006, the operations of the Automotive segment remaining after the disposals in North America were combined with the Technologies segment so as to pool key capital goods capabilities in the new Technologies segment. The retained assets and liabilities and the held-for-sale operations of ThyssenKrupp Budd were assigned to Corporate as of October 01, 2006; the held-for-sale operations were deconsolidated in the course of the 1st quarter 2006/2007. Prior periods presentation have been adjusted accordingly. Furthermore, in the 2nd quarter ended March 31, 2007, Umformtechnik was regrouped from the Technologies segment to the Steel segment due to strategic reasons. The 1st quarter ended December 31, 2006 as well as prior period presentation have been adjusted accordingly.

Segment information for the 2nd quarter ended March 31, 2006 and March 31, 2007 as well as for the 1st half ended March 31, 2006 and March 31, 2007 is as follows:

11 EARNINGS PER SHARE

Basic earnings per share is computed as follows:

Table: earning per share

Relevant number of common shares for the determination of earnings per share

Earnings per share have been computed by dividing income attributable to common stockholders of ThyssenKrupp AG (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Shares issued during the period and shares reacquired during the period have been weighted for the portion of the period that they were outstanding.

The weighted average number of outstanding shares was reduced by the reacquisition of shares on May 06, 2003 and increased by the sale of those shares in the 2nd quarter ended March 31, 2004, the 3rd quarter ended June 30, 2005 and the 1st quarter ended December 31, 2005. In the 4th quarter ended September 30, 2006, the weighted average number of outstanding shares was reduced again by the reacquisition of shares.

There were no dilutive securities in the periods presented.

12 ADDITIONAL INFORMATION TO THE CONSOLIDATED CASH FLOW STATEMENT

Included in the Group's cash flows from operations were the following amounts of interest received and paid as well as income taxes received and paid:

Non-cash investing activities

In the 1st half ended March 31, 2007, the acquisition and firsttime consolidation of companies created an increase in intangible assets, property, plant and equipment and investment property of €8 million (March 31, 2006: €134 million).

The non-cash addition of assets under finance leases in the 1st half ended March 31, 2007 amounts to €8 million (March 31, 2006: €3 million).

Non-cash financing activities

In the 1st half ended March 31, 2007, the acquisition and firsttime consolidation of companies did not result in any increase in gross financial payables (March 31, 2006: €3 million).

13 SUBSEQUENT EVENTS

No reportable events occurred.