Notes to the consolidated balance sheet

12 Intangible assets

Changes in the Group's intangible assets were as follows:

The balance as of Sept. 30, 2006, includes gross amounts of €82 million as well as accumulated amortization and impairment losses of €82 million resulting in net amounts of €0 million which relate to disposal groups.

Impairment of goodwill

Goodwill impairment losses are in included in other operating expenses.

In 2005/2006 a goodwill impairment loss of €34 million was recognized in the Body business unit of the former Automotive segment as a result of a weakening economic situation. Due to the fact that effective as of October 01, 2006, the operations of the Automotive segment remaining after the disposals in North America were for the most part combined with the Technologies segment, the expenses are allocated to Technologies with the prior period adjusted accordingly.

In 2006/2007 the annual impairment test resulted in impairments for the Cash Generating Units (CGU) Construction Elements, Metal Forming and Assembly Plant as the recoverable amount was lower than the carrying amount. The CGU Construction Elements is an operating group of the Industry business unit within the Steel segment and offers building elements made of steel for walls and roofs. The impairment of goodwill in the amount of €9 million is the result of a worsened economic situation for this unit. The recoverable amount has been determined by the value in use, which has been calculated using a discount rate of 8.0% after 7.7% in the prior year. Furthermore, an impairment for the CGU Metal Forming was necessary. This CGU has been newly formed as a result of the dissolution of the Automotive segment and belongs as an operating group to the Auto business unit within the Steel segment. Metal Forming produces body and chassis components for the automotive industry. The impairment is a result both of reduced expected future economic benefits based on a changed strategic direction for this unit and of an increased discount rate from 7.5% to 8.0% as a consequence of the allocation of the unit to the Steel segment. As the required impairment amount for Metal Forming was higher than the carrying amount of goodwill of €50 million, the segment recorded additional impairments on fixed assets in the amount of €26 million. Based on a reduced expected future economic benefit, the CGU Assembly Plant impaired the carrying amount of its goodwill by €1 million.

Impairment of other intangible assets

Impairment losses of intangible assets other than goodwill are included in cost of sales.

In 2006/2007 the Elevator segment recorded an impairment on capitalized software in the amount of €23 million, as certain software modules will not be used in the future in their currently existing form. The amount has been determined based on the capitalized development costs for these modules.

Emission rights

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 in CO₂ (one third is allocated to 2005) during the compliance period 2005 to 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 available allowances, the Group records an obligation for the purchase of additional allowances.

Goodwill

Goodwill (excluding goodwill of equity method investments) has been allocated to cash generating units within all segments. The recoverable amount of each cash generating unit is determined based on a value in use calculation using after-tax cash flow projections based on bottom-up prepared financial budgets approved by ThyssenKrupp AG's management covering a five-year period. The cash flows beyond the four-year period are generally determined as the average of the four-year period. No growth rate is taken into account to extrapolate the four-year average. The weighted average cost of capital discount rate is based on a risk-free interest rate of 4.5% and risk premiums for equity and debt capital of 5.0 percentage-point and 0.75 percentage-point, respectively. Moreover for each CGU an individual beta derived from the relevant peer group, an individual tax rate and an individual capital structure is used. The following after-tax discount rate ranges have been applied to the cash flow projections by segment:

in %
	After tax discount rate ranges
	Year ended Sept. 30, 2006	Year ended Sept. 30, 2007
Steel	7.5 - 7.8	7.7 - 8.4
Stainless	6.9 - 8.9	7.1 - 9.2
Technologies	6.7 - 8.8	5.1 - 9.0
Elevator	5.6 - 6.2	6.2 - 7.2
Services	6.5 - 8.3	6.8 - 8.4
Corporate	7.9	7.5

The values in use for the CGUs are generally calculated on the basis of expected price inflation in the country in which the CGU is located and on the basis of estimated sales growth rates. These figures are determined based on both historical data and expected forecast market performance. The values assigned to the key assumptions are generally consistent with external information sources.

49 CGUs were identified in the ThyssenKrupp Group, of which 41 report goodwill. Total goodwill as of September 30, 2006, amounts to €3,937 million. 54% of this goodwill relates to the CGUs Metallurgy, Surface Vessel, Submarine and Americas, as shown in the following table:

Tabelle: Significant goodwill

In the case of the CGUs Construction Elements, Metal Forming and Assembly Plant a goodwill impairment had to be recognized because the recoverable amount was less than the respective carrying amount of the CGU. The recoverable amount of the CGU Tinplate exceeded the carrying amount of the CGU by less than 10%:

Tabelle: Critical goodwill

A 10% increase in the discount rate of the CGU Tinplate would result in an impairment of goodwill. However, the Management of ThyssenKrupp believes in the case of this CGU that no reasonably possible change in any of the key assumptions used in calculating the recoverable amount would cause the carrying amount of the CGU to exceed the respective recoverable amount.

The change in the carrying amount of goodwill (excluding goodwill of equity method investments) is as follows:

Tabelle: Goodwill

13 Property, plant and equipment

Changes in the Group's property, plant and equipment were as follows:

Tabelle: Property, plant and equipment

The balance as of Sept. 30, 2006, includes gross amounts of €516 million as well as accumulated depreciation and impairment losses of €393 million resulting in net amounts of €123 million which relate to the disposal groups.

Impairment losses of property, plant and equipment are included in cost of sales.

In 2005/2006, impairment losses of €35 million were recognized in the Stainless segment as a result of a fire, of which €12 million related to buildings and €23 million to technical machinery and equipment. The level of impairment was determined in cooperation with independent experts. In this context, the segment received insurance compensation of €45 million, calculated on the basis of replacement costs, which are reported in other operating income. In 2005/2006, impairment losses were recognized in the Body business unit of the former Automotive segment as a result of the weakening economic situation in the amount of €25 million for buildings, €13 million for technical machinery and equipment and €1 million for other equipment, factory and office equipment; the recoverable amounts used to calculate the impairment losses correspond in each case to the values in use. A discount rate of 8.7% was used to calculate values in use. Due to the fact that effective as of October 01, 2006, the operations of the Automotive segment remaining after the disposals in North America were for the most part combined with the Technologies segment, the expenses are allocated to Technologies with the prior period adjusted accordingly. In addition, asset impairment losses in the total amount of €98 million were recognized in the former Automotive segment in connection with the initiated disposal of the North American body and chassis business, relating mainly to technical machinery and equipment. The impairment losses were calculated by comparing the carrying amounts with the fair values less costs to sell. In this context, an impairment of €48 million had already been recognized on the assets of the Canadian Kitchener plant in the 2nd quarter 2005/2006, relating mainly to buildings (€9 million) and technical machinery and equipment (€34 million). The recoverable amount used to calculate the impairment loss is the value in use. Due to the fact that the expected future cash flows are solely negative, a value in use of zero was recognized. Due to the fact that effective as of October 01, 2006, ThyssenKrupp Budd was assigned to Corporate, the expenses are allocated to Corporate with the prior period adjusted accordingly.

In 2006/2007, as a result of a weakening economic situation, impairment losses of €8 million were recognized in the Auto business unit of the Steel segment of which €7 million related to land and buildings and €1 million to technical machinery and equipment.

The recoverable amounts used to calculate the impairment losses correspond in each case to the values in use. A discount rate of 12.1% was used to calculate values in use. Furthermore the Stainless segment recorded in the ThyssenKrupp Acciai Speciali Terni business unit an impairment in the amount of €14 million on technical equipment due to a lack of future technical use of parts of this equipment. The impairment amount has been determined on the basis of fair value less cost to sell. Also, the Technologies segment recorded impairments of €26 million as a result of a weakening economic situation in the Marine Systems, Mechanical Components and Automotive Solutions business units. €2 million of the total impairment refer to land and buildings, €22 million to technical machinery and equipment and €2 million to other equipment, factory and office equipment. The recoverable amounts used to calculate the impairment losses correspond in each case to the values in use. A discount rate of 11.5% was used to calculate values in use.

Property, plant and equipment include leased buildings, technical machinery and equipment and other equipment that have been capitalized, where the terms of the lease require the Group, as lessee, to assume substantially all of the benefits and risks of use of the leased asset ("finance lease").

million €
	Gross amounts		Accumulated depreciation and impairment losses		Net amounts
	Sept. 30, 2006	Sept. 30, 2007	Sept. 30, 2006	Sept. 30, 2007	Sept. 30, 2006	Sept. 30, 2007
Land, leasehold rights and buildings including buildings on third-party land	91	86	34	40	57	46
Technical machinery and equipment	125	157	47	71	78	86
Other equipment, factory and office equipment	45	44	29	28	16	16
Assets under finance lease	261	287	110	139	151	148

Property, plant and equipment has been pledged as security for financial payables of €216 million (2006: €277 million).

14 Investment property

Changes in the Group's investment property were as follows:

million €
	2006	2007
Gross amounts
Balance as of Sept. 30, 2005 and Sept. 30, 2006, respectively	830	754
Currency differences	(1)	(1)
Acquisitions/divestitures of businesses	0	0
Additions	4	5
Transfers	(11)	20
Disposals	(68)	(209)
Balance as of Sept. 30, 2006 and 2007, respectively	754	569

Accumulated depreciation and impairment losses
Balance as of Sept. 30, 2005 and Sept. 30, 2006, respectively	273	253
Currency differences	0	0
Acquisitions/divestitures of businesses	(3)	0
Depreciation expense	7	5
Impairment losses	6	9
Reversals of impairment losses	(1)	0
Transfers	(1)	7
Disposals	(28)	(94)
Balance as of Sept. 30, 2006 and 2007, respectively	253	180
Net amounts
as of Sept. 30, 2005	557	—
Balance as of Sep. 30, 2006 and 2007, respectively	501	389

The fair value of the Group's investment property is determined using various internationally accepted valuation methods such as the gross rental method, discounted cash flow method, asset value method and comparison to current market prices of similar real estate. Investment property located in Germany is primarily determined based on internally prepared valuations using the gross rental method which is regulated in Germany by the "Verordnung über Grundsätze für die Ermittlung der Verkehrswerte von Grundstücken – WertV". Investment property located outside Germany is determined by independent external appraisers.

As of September 30, 2007, the total fair value of the Group's investment property is €502 million (2006: €677 million) of which €23 million (2006: €27 million) are based on valuations of independent external appraisers.

Additions which are disclosed in the gross amounts include subsequent expenditure of €1 million (2006: €0 million).

The lease of investment property resulted in rental income of €43 million (2005/2006: €46 million) and direct operating expense of €27 million (2005/2006: €27 million). Direct operating expense of €16 million (2005/2006: €11 million) resulted from investment property that does not generate rental income.

15 Investments accounted for using the equity method

Investments in associates

As of September 30, 2007, the fair value of an investment in an associate accounted for using the equity method for which there is a published price quotation was €58 million (2006: €28 million).

Summarized financial information of associates accounted for using the equity method is presented in the table below. The information given represents 100% and not the Group's interest in the associates.

million €
	Sept. 30, 2006	Sept. 30, 2007
Total assets	982	701
Total liabilities	799	487

	Year ended Sept. 30, 2006	Year ended Sept. 30, 2007
Net sales	1,086	852
Net income	14	90

In 2006/2007, the unrecognized share of losses of an associate accounted for using the equity method amounts to €0.6 million (2005/2006: €0.6 million). The unrecognized losses cumulate to €1.4 million (2005/2006: €0.9 million).

ThyssenKrupp has a significant investment of 20.56% in RAG Aktiengesellschaft. The Group is not able to exert significant influence over the operating and financial policies of RAG because of the Group's inability to obtain timely reviewed IFRS financial information on a quarterly basis. With contract as of August, 07, 2007, the sale of the shares to the RAG foundation was agreed upon. The transfer of the shares is scheduled for end of November 2007.

Joint ventures

The following table shows the summarized financial information of the Group's joint ventures. The information given represents the Group's interest in the joint ventures.

million €
	Sept. 30, 2006	Sept. 30, 2007
Current assets	678	683
Non-current assets	385	422
Current liabilities	370	477
Non-current liabilities	212	304

	Year ended Sept. 30, 2006	Year ended Sept. 30, 2007
Net sales	1,457	1,366
Net income	41	25

The significant joint ventures are included in the list of the Group's subsidiaries and equity interests investments which is presented in Note 37.

16 Operating lease as lessor

The Group is the lessor of various commercial real estate under operating lease agreements.

As of September 30, 2007, the future minimum lease payments to be received on non-cancelable operating leases are as follows:

million €
Not later than one year		30
Between one and five years		39
Later than five years		33
Total		102

The amounts reflected as future minimum lease payments do not contain any contingent rentals. No contingent rentals have been recognized in the consolidated statements of income in 2006/2007 (2005/2006: 0).

17 Financial assets

million €
	Sept. 30, 2006	Sept. 30, 2007
Investments in non-consolidated subsidiaries	42	14
Loans to non-consolidated subsidiaries	4	2
Other investments	62	67
Loans to Associated Companies and other investees	2	1
Securities classified as financial assets	14	12
Other loans	54	37
Total	178	133

Impairment losses of €8 million (2005/2006: €3 million) are recognized in the income statement.

18 Inventories

million €
	Sept. 30, 2006	Sept. 30, 2007
Raw materials	1,606	1,987
Supplies	445	472
Work in process	1,990	2,184
Finished products, merchandise	3,498	4,221
Advance payments to suppliers	603	616
Total	8,142	9,480

Inventories of €1,953 million are carried at fair value less cost to sell. Inventories of €1 million (2006: €1 million) have a remaining term of more than 1 year. Inventories of €42,291 million (2006: €39,142 million) are recognized as an expense during the period. Included in cost of sales are write-downs of inventories of €157 million (2006: €7 million), while €0 million (2006: €5 million) of reversals of write-downs reduced cost of sales.

19 Trade accounts receivable

million €
	Sept. 30, 2006	Sept. 30, 2007
Receivables from sales of goods and services	6,077	6,349
Amounts due from customers for construction work	1,187	1,228
Total	7,264	7,577

Receivables from the sales of goods and services in the amount of €778 million (2006: €740 million) have a remaining term of more than 1 year. As of September 30, 2007 cumulative impairment losses of €300 million (2006: €327 million) are recognized for doubtful accounts.

Amounts due from customers for construction work are calculated as follows:

million €
	Sept. 30, 2006	Sept. 30, 2007
Contract costs incurred and recognized contract profits (less recognized losses)	2,488	2,840
Less advance payments received	(1,301)	(1,612)
Total	1,187	1,228

Contract costs incurred include collateralized assets of €16 million (2006: €89 million). Sales from construction contracts of €5,082 million were recognized in the period (2005/2006: €4,829 million).

The Group regularly primarily sells credit insured trade accounts receivable under asset backed securitization programs and other programs as well as under one-time transactions.

As of September 30, 2007, sales of receivables in the amount of €9 million (2006: €40 million) did not result in a derecognition from the balance sheet because the Group retained substantially all the risks and rewards of ownership. The corresponding liability is included in financial liabilities (see also Note 25). The sales resulted in net proceeds in the amount of €9 million (2005/2006: €40 million).

The amount of receivables sold and derecognized from the balance sheet as of September 30, 2007, was €929 million (2006: €989 million), resulting in net proceeds in the amount of €899 million (2005/2006: €959 million). In some cases, when the Group sells receivables it retains rights and immaterial obligations; these retained interests mainly consist of servicing as well as providing limited cash reserve accounts and dilution reserves. The recognized assets and provided guarantees which serve as a cash reserve account amounted to €70 million (2006: €68 million) as of September 30, 2007. Continuing involvement primarily resulting from the dilution reserve was €26 million (2006: €27 million) as of September 30, 2007.

20 Other receivables

million €
	Sept. 30, 2006	Sept. 30, 2007
Receivables due from non-consolidated subsidiaries	49	11
Receivables due from Associated Companies and other investees	114	84
Prepayments	124	147
Other assets	1,070	1,171
Current securities	104	202
Total	1,461	1,615

Other assets include tax refund claims in the amount of €67 million (2006: €94 million) as well as the positive fair values of foreign currency derivatives including embedded derivatives, interest rate and commodity derivatives in the amount of €254 million (2006: €205 million) (see also Note 29).

Other receivables in the amount of €91 million (2006: €70 million) have a remaining term of more than 1 year. As of September 30, 2007 cumulative impairments amount to €113 million (2006: €141 million).

21 Total equity

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

Table: Total equity

€(7) million, €(15) million and €(19) million of the balance of cumulative income and expense directly recognized in equity result from associates as of Sept. 30, 2005, Sept. 30, 2006 and Sept. 2007, respectively. €(4) million (2005/2006: €(8) million) of the changes of cumulative income and expense directly recognized in equity result from associates.

The following table shows the changes of the foreign currency translation adjustment which is part of cumulative income and expense directly recognized in equity:

million €
		Foreign currency translation adjustment
Balance as of Sept. 30, 2005		137
Change in unrealized gains/(losses), net		(84)
Net realized (gains)/losses		2
Balance as of Sept. 30, 2006		55
Change in unrealized gains/(losses), net		(247)
Net realized (gains)/losses		(10)
Balance as of Sept. 30, 2007		(202)

Capital stock

The capital stock of ThyssenKrupp AG consists of 514,489,044 no-par bearer shares of stock, all of which have been issued, with 488,764,592 outstanding as of September 30, 2006 and 2007, respectively. Each share of common stock has a stated value of €2.56.

All shares grant the same rights. The stockholders are entitled to receive dividends as declared and are entitled to one vote per share at the stockholders' meetings.

Additional paid in capital

Additional paid in capital include the effects of the business combination of Thyssen and Krupp as well as premiums resulting from capital increases at subsidiaries with minority interest.

Retained earnings

Retained earnings include prior years' undistributed consolidated income.

Treasury stock

On the basis of the authorization granted by the Annual Stockholders' Meeting on January 27, 2006, the Executive Board of ThyssenKrupp AG resolved on July 03, 2006, to acquire up to a total of 5% of the current capital stock issued. In the period from July 04, 2006 to August 21, 2006, ThyssenKrupp AG purchased a total of 25,724,452 treasury shares, representing almost 5% of the capital stock, at an average price of €27.09. This represents a total amount of €697 million.

As of November 21, 2005, 15,339,893 treasury shares were sold at the market price of €17.44 to the Alfried Krupp von Bohlen and Halbach Foundation. This disposal has to be classified as a related party transaction. As a result of this transaction and the sale of employee shares in the 2nd quarter of 2003/2004 and the 3rd quarter of 2004/2005, ThyssenKrupp AG has sold all the treasury shares purchased from the IFIC Holding AG in May 2003.

Authorizations

According to Art. 5 Para. 5 of the Articles of Association of ThyssenKrupp AG, the Executive Board is authorized, 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 shares in exchange for cash and/or contributions in kind (Authorized Capital).

By resolution of the Annual Stockholders' Meeting on January 23, 2004, the Executive Board is authorized, subject to the approval of the Supervisory Board, to issue bearer bonds with a total par value up to €500 million and to grant the bond holders the right to convert the bonds into bearer shares of the Company (convertible bonds). The authorization is valid until January 22, 2009. In addition, by resolution of the Annual Stockholders' Meeting on January 19, 2007, ThyssenKrupp is authorized through July 18, 2008, to purchase treasury stock for certain defined purposes up to a total of 10% of the current capital stock issued.

Dividend proposal

The Executive Board and Supervisory Board have agreed to propose to the stockholders' meeting a dividend in the amount of €1.30 per share entitled to dividend to be distributed from unappropriated net income of the stand-alone entity ThyssenKrupp AG for fiscal year 2006/2007 as determined in conformity with the principles of the German Commercial Code (HGB). This would result in a dividend payout of €635 million in total.

22 Share-based compensation programs

Management incentive plans

In 1999, ThyssenKrupp introduced a performance-based longterm management incentive plan (the "incentive plan") of which Executive Board members as well as selected managerial employees in Germany and foreign countries are eligible to participate. In accordance with the incentive plan, over a period of five years, beneficiaries were granted appreciation rights ("phantom stocks") annually with a performance period of approximately three years for each installment. These appreciation rights were remunerated in cash at the end of each performance period if certain performance hurdles are met. These performance hurdles required that either the market price of ThyssenKrupp stock must have increased at least 15% or that the market price of ThyssenKrupp stock has outperformed the DJ STOXX index during the performance period. If at least one of the two performance hurdles was met, then remuneration was calculated based on the difference between the current market price and the base price of stock. The current market price was calculated based on the average of the first five trading days after the regular stockholders' meeting with which the respective installment of the incentive plan occurs. The base price was derived from the current market price decreased by a market price/index performance deduction and a price change deduction. The market price/index performance deduction was determined by multiplying the percentage of over or underperformance of the ThyssenKrupp stock in relation to the DJ STOXX by the current stock price during the particular performance period. The price change deduction was equal to one-half of the absolute change in ThyssenKrupp stock price during a particular performance period. The two deductions were combined and then deducted from the current stock price to obtain the base price. The remuneration per appreciation right during any performance period was limited to €25. If the performance hurdles were not met at the end of the performance period, the stock appreciation rights expired and no payment or expense was recorded by the Group.

In the 2nd quarter of 2005/2006, the 2.4 million appreciation rights granted in the fifth installment of the incentive plan were settled with a payment of €40.8 million, as result of the performance hurdles being met at the end of the performance period. In total, in 2005/2006 the Group recorded compensation expense for the long-term management incentive plan in the amount of €11.5 million. Because of the completion of the long-term management incentive plan program in 2005/2006, there are no outstanding obligations from the plan as of September 30, 2006 and 2007, respectively. In 2003, ThyssenKrupp implemented a performance based midterm incentive plan which issues stock rights to eligible participants. All Executive Board members of ThyssenKrupp AG are eligible to participate. Starting with the second installment which was issued in 2004, the group of beneficiaries was expanded to include the segment lead companies as well as several other selected executive employees. As of September 30, 2007, 523,908 stock rights were issued in the 3rd installment, 544,179 stock rights in the 4th installment and 308,811 stock rights in the 5th installment.

The number of stock rights issued will be adjusted at the end of each performance period based on the average economic value added (EVA) over the three-year performance period, beginning October 01 of the year the stock rights were granted, compared to the average EVA over the previous three fiscal year period. At the end of the performance period the stock rights will be settled in cash based on the average price of ThyssenKrupp stock during the three month period immediately following the performance period.

To determine the fair value of the stock rights used to calculate the pro-rata liability as of the balance sheet date forward prices of the ThyssenKrupp stock are calculated taking into account partial caps in the 3rd, 4th and 5th installment. The forward calculation is carried out for predefined periods (averaging periods) taking into account the ThyssenKrupp stock price and the Euro interest rate curve as of the balance sheet date and the dividends assumed to be paid until the maturity of the stock rights. The following assumptions were used for the determination of the fair values as of September 30, 2006 and as of September 30, 2007:


	2nd installment	3rd installment	4th installment
Maturity	Dec. 31, 2006	Dec. 31, 2007	Dec. 31, 2008
Averaging period	Oct. 01 to Dec. 31, 2006	Oct. 01 to Dec. 31, 2007	Oct. 01 to Dec. 31, 2008
ThyssenKrupp stock price as of balance sheet date	€26.57	€26.57	€26.57
Assumed dividend payment(s) per stock until maturity	—	€1.00 on Jan. 22, 2007	€1.00 on Jan. 22, 2007 €1.00 on Jan. 21, 2008
Average dividend yield	—	3.47%	3.64%
Average interest rate (averaging period)	3.27%	3.78%	3.80%
Fair value as of Sept. 30, 2006	€26.45	€25.46	€24.52


	3rd installment	4th installment	5th installment
Maturity	Dec. 31, 2007	Dec. 31, 2008	Dec. 31, 2009
Averaging period	Oct. 01 to Dec. 31, 2007	Oct. 01 to Dec. 31, 2008	Oct. 01 to Dec. 31, 2009
ThyssenKrupp stock price as of balance sheet date	€44.66	€44.66	€44.66
Assumed dividend payment(s) per stock until maturity	—	€1.30 on Jan. 21, 2008	€1.30 on Jan. 21, 2008 €1.30 on Jan. 26, 2009
Average dividend yield	—	2.64%	2.76%
Average interest rate (averaging period)	4.44%	4.65%	4.53%
Fair value as of Sept. 30, 2007
- without caps	€44.38	€43.15	€41.93
- with caps	€24.71	€23.62	€36.20

In the 1st quarter of 2006/2007, the 2nd installment of the mid-term incentive plan was settled in cash with €29.90 per stock right resulting in a total payment of €27.6 million. In the 1st quarter of 2005/2006, the 1st installment of the mid-term incentive plan was settled in cash with €17.26 per stock right resulting in a total payment of €4.4 million. In total, in 2006/2007 the Group recorded compensation expense for the mid-term incentive plan in the amount of €69.6 million (2005/2006: €43.4 million). The liability arising from the mid-term incentive plan amounts to €101 million as of September 30, 2007 (2006: €58 million).

In February 2006, the Group implemented a Share Purchase Program for selected executive employees who are not beneficiaries of the mid-term incentive plan. Under the Program the beneficiaries are entitled to purchase up to a fixed amount ThyssenKrupp shares at a discount. In the 2nd quarter ended March 31, 2007, the Group's Share Purchase Program was settled with the purchase of 125,977 shares at a discount. This resulted in compensation expense of €4.5 million in 2006/2007, having already recognized compensation expense of €2.7 million in 2005/2006. 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 2006/2007 the Group recorded compensation expense from the new program of €8.1 million; €4.4 million were recognized in equity and the remaining amount as an obligation.

Employee share purchase program

In the 3rd quarter of 2005/2006 and in the 3rd quarter of 2006/2007, the Group primarily offered eligible members of its domestic and French workforce the right to purchase up to €270 in ThyssenKrupp shares at a 50% discount as part of an employee share purchase program. The program resulted in the Group recording compensation expense of €8.0 million and €6.6 million, respectively.

23 Accrued pension and similar obligations

million €
	Sept. 30, 2006	Sept. 30, 2007
Accrued pension liability	6,597	5,896
Accrued postretirement obligations other than pensions	1,137	915
Other accrued pension-related obligations	377	328
Total	8,111	7,139

Pensions and similar obligations in the amount of €6,504 million (2006: €7,374 million) have a remaining term of more than 1 year.

Pension plans

The Group maintains defined benefit pension plans and defined contribution plans that cover the majority of the employees in Germany, the USA, Canada and the United Kingdom. In some other countries, eligible employees receive benefits in accordance with the respective local requirements.

In Germany, benefits generally take the form of pension payments that are indexed to inflation. Benefits for some senior staff are based on years of service and salary during a reference period, which is generally three years prior to retirement. Other employees receive benefits based on years of service. In addition, ThyssenKrupp offers certain German employees the opportunity to participate in a defined benefit program which allows for the deferral of compensation which earns interest at a rate of 6.00% per year.

In the USA and Canada, hourly paid employees receive benefits based on years of service. Salaried employee benefits are typically based on years of service and salary history. In the United Kingdom, employee benefits are based on years of service and an employee's final salary before retirement.

Defined benefit obligations and funded status

The reconciliation of the changes in the defined benefit obligations and the fair value of plan assets are as follows:

million €
	Sept. 30, 2006		Sept. 30, 2007
	Germany	Outside Germany	Germany	Outside Germany
Change in defined benefit obligations (DBO):
DBO at beginning of fiscal year	6,494	2,715	6,114	2,541
Service cost	79	60	73	39
Interest cost	249	127	266	123
Participant contributions	0	8	0	8
Past service cost	5	3	0	1
Actuarial (gain)/loss	(224)	(95)	(258)	(149)
Acquisitions/(divestitures)	(74)	(60)	(1)	(99)
Curtailments and settlements	0	(7)	0	(24)
Termination benefits	0	10	0	0
Currency differences	0	(60)	0	(141)
Benefit payments	(415)	(162)	(420)	(148)
Others	0	2	(1)	7
DBO at end of fiscal year	6,114	2,541	5,773	2,158

Change in plan assets:
Fair value of plan assets at beginning of fiscal year	99	1,838	127	1,940
Expected return on plan assets	7	137	9	131
Actuarial gains/(losses)	0	(4)	0	69
Acquisitions/(divestitures)	0	(35)	0	(84)
Employer contributions	29	180	38	100
Participant contributions	0	8	0	8
Settlements	0	0	0	(2)
Currency differences	0	(42)	0	(124)
Benefit payments	(8)	(143)	(8)	(135)
Others	0	1	1	7
Fair value of plan assets at end of fiscal year	127	1,940	167	1,910

As of the balance sheet date, defined benefit obligations related to plans that are wholly unfunded amount to €5,696 million (2006: €6,088 million) and defined benefit obligations that relate to plans that are wholly or partly funded amount to €2,235 million (2006: €2,567 million).

Actual return which amounts to €209 million (2006: €140 million) is calculated as the total of expected return on plan assets and actuarial gains and losses, respectively.

The following represents the funded status of these plans:

million €
	Sept. 30, 2006		Sept. 30, 2007
	Germany	Outside Germany	Germany	Outside Germany
Funded status at end of fiscal year	(5,987)	(601)	(5,606)	(248)
Not recognized as an asset due to asset ceiling	0	(2)	0	(6)
Unrecognized past service cost	1	1	0	0
Net amount recognized	(5,986)	(602)	(5,606)	(254)

Amounts recognized in the consolidated balance sheets consist of:
Other receivables	0	9	0	36
Accrued pension liability	(5,986)	(611)	(5,606)	(290)
Net amount recognized	(5,986)	(602)	(5,606)	(254)

Net periodic pension cost

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

million €
	Sept. 30, 2006		Sept. 30, 2007
	Germany	Outside Germany	Germany	Outside Germany
Service cost	79	60	73	39
Interest cost	249	127	266	123
Expected return on plan assets	(7)	(137)	(9)	(131)
Past service cost	7	5	0	1
Settlement and curtailment loss/(gain)	0	(7)	0	(22)
Termination benefit expense	0	10	0	0
Net periodic pension cost	328	58	330	10

The interest cost and the expected return on plan assets components of net periodic pension cost are included in the line item "Interest expense" and "Interest income", respectively in the Group's consolidated statement of income.

Assumptions

The assumptions for discount rates and the rates of compensation increase on which the calculation of the obligations are based were derived in accordance with standard principles and established for each country as a function of their respective economic conditions. The expected return on plan assets is determined based on detailed studies conducted by the plans' third party investment and actuarial advisors. The studies take into consideration the long-term historical returns and the future estimates of long-term investment returns based on the target asset allocation.

The Group applied the following weighted average assumptions to determine benefit obligations:

in %
	Sept. 30, 2006		Sept. 30, 2007
	Germany	Outside Germany	Germany	Outside Germany
Weighted-average assumptions:
Discount rate	4.50	5.29	5.25	5.82
Expected return on plan assets	6.00	7.54	6.00	7.29
Rate of compensation increase	2.50	2.52	2.50	2.29

Plan assets

In the Group, the majority of reported plan assets associated with the funded pension plans are located in the USA, Canada, the United Kingdom and to a lesser extent in the Netherlands and Germany. The Group invests in diversified portfolios consisting of an array of asset classes that attempt to maximize returns while minimizing volatility. The asset classes include national and international stocks, fixed income government and non-government securities and real estate. Plan assets do not include any direct investments in ThyssenKrupp debt or equity securities.

The Group uses professional investment managers to invest plan assets based on specific investment guidelines developed by the plans' Investment Committees. The Investment Committees consist of senior financial management especially from treasury and other appropriate executives. The Investment Committees meet regularly to approve the target asset allocations, and review the risks and performance of the major pension funds and approve the selection and retention of external managers.

The Group's target portfolio structure has been developed based on asset-liability studies that were performed for the major pension funds within the Group.

The pension plan asset allocation and target allocation are as follows:


	Plan assets as of		Target allocation
	Sept. 30, 2006	Sept. 30, 2007	Sept. 30, 2008
Equity securities	62%	59%	50-65%
Debt securities	35%	37%	35-45%
Real estate/other	3%	4%	0-10%
Total	100%	100%

Pension plan funding

In general, the Group's funding policy is to contribute amounts to the plans sufficient to meet the minimum statutory funding requirements relevant in the country in which the plan is located. In the USA and Canada, certain plans require minimum funding based on collective bargaining agreements. The Group may from time to time make additional contributions at its own discretion. ThyssenKrupp's expected contribution in fiscal year 2007/2008 is €88 million related to its funded plans, all of which is expected to be as cash contributions.

Pension benefit payments

In fiscal year 2006/2007, pension benefit payments to the Group's German and Non-German plans were €420 million (2005/2006: €415 million) and €148 million (2005/2006: €162 million) respectively. The estimated future pension benefits to be paid by the Group's defined benefit pension plans are as follows:

million €
	Germany	Outside Germany
(for fiscal year)
2007/2008	432	166
2008/2009	430	130
2009/2010	432	131
2010/2011	432	134
2011/2012	429	136
2012/2013-2016/2017	2,070	704
Total	4,225	1,401

Amounts recognized for the current and the previous periods for defined benefit pension plans are as follows:

million €
	Sept. 30, 2005	Sept. 30, 2006	Sept. 30, 2007
Present value of defined benefit obligation	9,209	8,655	7,931
Fair value of plan assets	1,937	2,067	2,077
Surplus/(deficit) in the plan	(7,272)	(6,588)	(5,854)
Experience adjustments on plan liabilities	(43)	(52)	(89)
Experience adjustments on plan assets	112	13	44

Defined Contribution Plans

The Group also maintains domestic and foreign defined contribution plans. Amounts contributed by the Group under such plans are based upon percentage of the employees' salary or the amount of contributions made by the employees. The total cost of such contributions in the current fiscal year was €34 million (2005/2006: €34 million). In addition, contributions paid to public/state pension insurance institutions amounted to €332 million (2005/2006: €311 million).

Postretirement obligations other than pensions

The Group provides certain postretirement health care and life insurance benefits to retired employees in the USA and Canada who meet certain minimum requirements regarding age and length of service. The plans primarily relate to the retained assets and liabilities of ThyssenKrupp Budd.

In December 2003, the US government signed into law the Medicare Prescription Drug, Improvement and Modernization Act. This law provides for a federal subsidy to sponsors of retiree health care benefit plans that provide benefit that is at least actuarially equivalent to the benefit established by the law. The Group accounts for these federal subsidies as reimbursement rights in accordance with IAS 19.

The changes in accumulated postretirement benefit obligations and reimbursement rights are as follows:

million €
	Sept. 30, 2006 US, Canada	Sept. 30, 2007 US, Canada
Change in accumulated postretirement benefit obligation:
Accumulated postretirement benefit obligation at beginning of fiscal year	1,290	1,122
Service cost	22	12
Interest cost	65	54
Past service cost	(4)	(9)
Actuarial loss/(gain)	(70)	5
Acquisitions/(divestitures)	(67)	(79)
Curtailments and settlements	(39)	(43)
Termination benefits	37	0
Currency differences	(53)	(103)
Benefit payments	(56)	(66)
Others	(3)	0
Accumulated postretirement benefit obligation at end of fiscal year	1,122	893

Change in reimbursement rights relating to postretirement benefits:
Fair value of reimbursement rights at beginning of fiscal year	79	90
Expected return on reimbursement rights	6	5
Actuarial gains/(losses)	24	(9)
Acquisitions/(divestitures)	(12)	(4)
Settlements	0	(3)
Employer contributions	3	3
Currency differences	(4)	(9)
Benefit payments	(3)	(6)
Others	(3)	0
Fair value of reimbursement rights at end of fiscal year	90	67

The following represents the unfunded status of these plans:

million €
	Sept. 30, 2006 US, Canada	Sept. 30, 2007 US, Canada
Unfunded status at end of fiscal year	(1,122)	(893)
Unrecognized past service cost	(15)	(22)
Net amount recognized for postretirement obligations other than pensions	(1,137)	(915)

Assumptions

The determination of the accumulated postretirement benefit obligations is based on the following weighted average assumptions:

in %
	Sept. 30, 2006 US, Canada	Sept. 30, 2007 US, Canada
Weighted-average assumptions:
Discount rate	5.85	6.38
Health care cost trend rate for the following year	9.08	9.71
Ultimate health care cost trend rate (expected in 2015)	5.40	4.94

Net periodic postretirement benefit cost

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

million €
	Year ended Sept. 30, 2006 US, Canada	Year ended Sept. 30, 2007 US, Canada
Service cost	22	12
Interest cost	65	54
Expected return on reimbursement rights	(6)	(5)
Past service cost	(6)	(3)
Settlement and curtailment loss/(gain)	(39)	(40)
Termination benefit expense	37	0
Net periodic postretirement benefit cost	73	18

The interest cost component of net periodic postretirement benefit cost is included in the line item "Interest expense" in the Group's consolidated statement of income.

The effects of a one-percentage-point increase or decrease in the assumed health care cost trend rates are as follows:

million €
	one-percentage-point
	Increase	Decrease
Effect on service and interest cost components	10	(8)
Effect on postretirement benefit obligation	110	(93)

Amounts recognized for the current and the previous period for postretirement obligations other than pensions are as follows:

million €
	Sept. 30, 2005	Sept. 30, 2006	Sept. 30, 2007
Present value of defined benefit obligation	1,290	1,122	893
Fair value of reimbursement rights	79	90	67
Surplus/(deficit)	(1,290)	(1,122)	(893)
Experience adjustments on plan liabilities	(19)	(33)	13
Experience adjustments on reimbursement rights	1	31	0

Other pension related obligations

Some companies of the Steel segment grant termination benefits to employees on a contractual basis. The termination benefits comprise severance payments that vest based on a formula that considers years of service and certain allowances that are paid to older employees between termination of employment and retirement age. The measurement of the plans was determined on an actuarial basis. The liability reflects benefits earned by the employees from the inception of employment. Future service cost is allocated to the periods in which it is incurred. As of September 30, 2007, the liability was €0 million (2006: €4 million).

Some German companies have obligations resulting from partial retirement agreements. Under these agreements, employees work additional time prior to retirement, which is subsequently paid for in installments after retirement. For these obligations, accruals in the amount of €273 million (2006: €271 million) were recognized in accordance with IAS 19 "Employee Benefits".

24 Other provisions

Table: Other provisions

As of September 30, 2007, €1,559 million (2006: €1,604 million) of the total of other provisions are current, while €696 million (2006: €652 million) are non-current. Provisions of €349 million (2006: €548 million) have a remaining term of more than 1 year.

Product warranties and product defects represent the Group's responsibility for the proper functioning of the goods sold (product warranty) as well as the obligation that arise from the use of the products sold (product defect).

Provisions for other contractual costs represent pending losses from uncompleted contracts.

Provisions for employee compensation and benefit costs primarily represent employment anniversary bonuses and obligations for the management incentive plans, while social plan and related costs pertaining to personnel related structural measures are reflected in the provision for restructuring activities. Pension related obligations for partial retirement agreements and early retirement programs are part of the provision for pensions and similar obligations.

The provision for restructurings consists of provisions for employee termination benefits and exit costs which have been established by operating divisions for costs incurred in connection with activities which do not generate any future economic benefits for the Group. Restructurings are being carried out in all segments. The balance as of September 30, 2007, consists of €80 million within the Technologies segment, €21 million within the Services segment and €20 million within the Steel segment.

The provision for decommissioning obligations mainly consists of obligations associated with mining activities and recultivating landfills. Obligations associated with mining activities and recultivating landfills are generally handled over long periods of time, in some cases more than 30 years. The technical parameters are very complex. As a result, uncertainty exists with regard to the timing and concrete amount of the expenses.

Provisions for environmental obligations refer primarily to rehabilitating contaminated sites, redevelopment and water protection measures.

25 Financial liabilities

Carrying amounts million €
	Sept. 30, 2006	Sept. 30, 2007
Bonds	1,995	1,996
Notes payable	150	50
Liabilities to financial institutions	639	604
Acceptance payables	0	2
Finance lease obligations	146	136
Other loans	16	25
Non-current financial liabilities	2,946	2,813
Notes payable	150	100
Liabilities to financial institutions	584	629
Liabilities due to sales of receivables not derecognized from the balance sheet	40	9
Acceptance payables	22	25
Finance lease obligations	36	37
Other loans	26	25
Current financial liabilities	858	825
Financial liabilities	3,804	3,638

Current financial liabilities include financial liabilities with a remaining term up to one year, while the non-current financial liabilities have a remaining term of more than one year.

Financial liabilities in the amount of €216 million (2006: €277 million) are collateralized by real estate.

As of September 30, 2007, the financial liabilities reflect a total discount in the amount of €4 million (2006: €5 million) and did not contain any premiums (2006: €0 million). Amortization of discounts of financial liabilities is included in "Financial income/(expense), net".

Bonds, Notes payable
	Carrying amount in million € Sept. 30, 2006	Carrying amount in million € Sept. 30, 2007	Notional amount in million € Sept. 30, 2007	Interest rate in %	Fair value in million € Sept. 30, 2007	Maturity Date
ThyssenKrupp Finance Nederland B.V. bond (€500 million) 02/09	499	499	500	7.000	515	03/19/2009
ThyssenKrupp AG bond (€750 million) 04/11	747	748	750	5.000	752	03/29/2011
ThyssenKrupp AG bond (€750 million) 05/15	749	749	750	4.375	705	03/18/2015
ThyssenKrupp AG note loan (€100 million) 00/07	100	—	—	6.000	—	02/21/2007
ThyssenKrupp AG note loan (€50 million) 00/07	50	—	—	5.800	—	03/16/2007
ThyssenKrupp AG note loan (€100 million) 01/07	100	100	100	5.450	105	10/25/2007
ThyssenKrupp AG note loan (€50 million) 04/09	50	50	50	4.500	51	01/19/2009
Total	2,295	2,146	2,150		2,128

ThyssenKrupp AG has assumed the unconditional and irrevocable guarantee for the payments pursuant to the terms and conditions of the bond of ThyssenKrupp Finance Nederland B.V..

All bonds and note loans are interest only with principle due at maturity.

As of September 30, 2007, the financing structure of liabilites to financial institutions and other loans comprise the following:

Table: Payables to financial institutions, other loans

As of September 30, 2007, ThyssenKrupp has available a €2.5 billion syndicated joint credit multi-currency-facility agreement.

The agreement was fixed in July 2005 and had an original term of 5 years with two extension options of one year each at the end of the first and second year. In May 2007 the facility was extended in accordance with the participating banks to July 01, 2014. The facility agreement was not utilized as of the balance sheet date.

Another component of financial liabilities are revolving credit agreements with banking institutions whereby ThyssenKrupp AG, ThyssenKrupp Finance USA, Inc. or ThyssenKrupp Finance Nederland B.V. can borrow in Euros, u.s. dollars or in British pounds Sterling up to approximately €2.2 million. Of these facilities, 82% have a remaining term of more than 5 years and 18% a remaining term of up to 5 years. As of September 30, 2007, there were no cash loans outstanding.

In total the Group has available unused, committed credit lines amounting to €4.6 billion.

The Group's Commercial Paper Program also provides up to €1.5 billion in additional financing. As of September 30, 2007, the program was not used.

As of September 30, 2007, the future minimum lease payments reconcile to their present value
(= finance lease obligation) as follows:

million €
	Sept. 30, 2007			Sept. 30, 2006
	Future minimum lease payments	Interest	Present value (finance lease obligation)	Present value (finance lease obligation)
Not later than one year	40	3	37	36
Between one and five years	145	31	114	80
Later than five years	29	7	22	66
Total	214	41	173	182

Maturities of financial liabilities are as follows:

million €
	Total financial liabilites	thereof: Liabilities to financial institutions
(for fiscal year)
2007/2008	825	629
2008/2009	846	244
2009/2010	94	68
2010/2011	789	25
2011/2012	67	22
thereafter	1,017	245
Total	3,638	1,233

26 Trade accounts payable

Trade accounts payable in the amount of €11 million (2006: €23 million) have a remaining term of more than 1 year.

27 Other liabilities

million €
	Sept. 30, 2006	Sept. 30, 2007
Liabilities to non-consolidated subsidiaries	21	7
Liabilities to Associated Companies and other investees	158	277
Amounts due to customers for construction work	3,050	3,301
Advance payments received for inventories	732	844
Selling and buying market related liabilities	906	694
Liabilities from derivative financial instruments	242	333
Accrued interest liabilities	90	82
Liabilities due to put options	228	340
Liabilities to the employees	822	904
Liabilities for social security	109	107
Deferred income	180	189
Tax liabilities (without income taxes)	311	404
Miscellaneous liabilities	406	615
Other liabilities	7,255	8,097
thereof:
non-current	50	147
current	7,205	7,950

Other liabilities amounting to €1,539 million (2006: €1,238 million) have a remaining term of more than 1 year.

The liabilities to non-consolidated subsidiaries originated mainly from intercompany financing and from profit and tax sharing agreements.

Amounts due to customers for construction work are calculated as follows:

million €
		Sept. 30, 2006		Sept. 30, 2007
Contract costs incurred and recognized contract profits (less recognized losses)		4,597		4,328
Less advance payments received		(7,647)		(7,629)