Comfort & convenience Design & perceived quality · Frank Esser Jean-Louis Gérondeau Jean-Claude Hanus Gérard Hauser Thierry Peugeot Christian Streiff ... presentation in Paris

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Safety

Environment

Comfort & convenience

Design & perceived quality

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Technical perfection, automotive passionTechnical perfection, automotive passion

0705136_Faurecia_Ra2006GB_couv.QXD 30/05/07 10:50 Page 1

Executive Committeeas of February 16, 2007

Yann DelabrièreChairman and Chief Executive Officer

Arnaud de David-BeauregardEVP Group Development

Jean-Marc HannequinEVP Exhaust Systems Product Group

Max HodeauEVP Structures & Mechanisms Product Group

Frank ImbertChief Financial Officer

Patrick KollerEVP Automotive Seating Product Group

Thierry LemâneEVP Group Communications

Jacques Le MorvanEVP Group Purchasing

Jacques MaugeEVP Group Customer Development

Bruno MontmerleEVP Group Strategy

James C. OrchardEVP North America

Christophe SchmittEVP Interior Systems Product Group

Jean-Pierre SounillacEVP Group Human Resources

Guy TalbourdetEVP Modules & Systems Product Group

AuditorsMembers of the CompagnieRégionale de Versailles

PricewaterhouseCoopers AuditRepresented by Guy-Alain Sitbon63, rue de Villiers92220 Neuilly-sur-SeineFrance

Ernst & Young AuditRepresented by Laurent MiannayTour Ernst & Young11, allée de l’Arche92037 Paris La Défense cedexFrance

Board of Directorsas of February 16, 2007


Directors:

Louis DeflineDaniel DewavrinPatrick DuvergerFrank EsserJean-Louis GérondeauJean-Claude HanusGérard HauserThierry PeugeotChristian Streiff

Board of Directors, Executive Committee and Auditors

This registration document (document de référence) was filedwith the Autorité des marchésfinanciers (AMF) on April 24, 2007 pursuant to article 212-13 of AMF’s General Regulations. It may only be used in connectionwith a financial transaction if it isaccompanied by a memorandumapproved by the AMF.

Group Communications+33 (0)1 72 36 70 05Financial information available online at www.faurecia.com (“Finance & Shareholders” section)

Faurecia headquarters2, rue Hennape92735 Nanterre Cedex - France

2007 Financial agenda

FEBRUARY 5

Publication of full-year and second half 2006 results, presentation in Paris

APRIL 18

Publication of first quarter 2007 sales figures

MAY 29

Annual General Meeting, Nanterre

JULY 18

Publication of first half 2007 results, presentation in Paris

OCTOBER 24

Publication of third quarter 2007 sales figures

Photo credits: S. de Bourgies; A. Gonin; S. Muratet; Nick Parsons; Larry Peplin;

C. Peus; B. Schittny; Getty Images; Studio Rauzier – Rivière; Faurecia Photobank.

Edition: 146 & Compagnie

Design and publication:

Contacts


With world-class automotive industry expertise, Faurecia pursues a steadfastpolicy of continuous progress, improvement and innovation in all six of theautomotive modules it designs, develops, manufactures and delivers to allmajor automakers. Faurecia’s dedicated workforce of 60,000 people, at 180 sites in 28 countries, is constantly developing the seats, doors, cockpits, acousticpackages, front ends and exhaust systems that will be appearing in tomorrow’svehicles. All Faurecia teams worldwide take up this task with priority attention to environmental protection, safety (for drivers, passengers and pedestrians),comfort, perceived quality (in vehicle build and design), and the constant pursuitof operational excellence. When you consider all this together, Faureciarepresents a genuine force for automotive progress.

0705136_Faurecia_Ra2006GB_instit.qxd 30/05/07 10:55 Page 1

It was with great enthusiasm that I took up

my duties as Chairman and Chief Executive

Officer of Faurecia on February 16, 2007.

Following on from the initial phase, during

which Faurecia took shape, my mission will

now be to lead the Group into a second phase

marked by growth across all its businesses

and profitability among the highest

in the industry.

On an industrial timescale, Faurecia is still

a young company, just approaching maturity.

After gradually forming over the 1997 to 2001

period from a merger between Ecia and

Bertrand Faure, followed by acquisitions

of AP Automotive Systems and Sommer

Allibert, Faurecia has grown into a world-class

player with strong international coverage and

industry-leading technological expertise

in all six major automotive modules:

seats, instrument panels & cockpits,

door panels, front ends, acoustic packages

and exhaust systems.

Faurecia has equipped itself with

the capabilities to position itself as a worldwide

automotive equipment supplier, with a customer

portfolio that includes all the world’s major

automakers. Strong business development

is proceeding in Asia, America and Europe,

to provide a sound basis for long-term organic

growth. With its worldwide production system,

Faurecia is able to serve its customers

wherever the demand arises, with consistent

design, production and service quality.

Chairman’s message Yann Delabrière

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Faurecia teams must now build on this strong

position to achieve lasting profitable growth

across all businesses. The starting point for

profitable growth is the highest level of quality

in all the services Faurecia offers its customers.

The Breakthrough Quality Plan, launched in

late 2006, aims to achieve this by 2008.

Another prerequisite is operational excellence

in the design, development and launch of

new products, through the Faurecia Program

Acquisition & Management System. In addition,

Faurecia will be able to offer its customers

competitive prices, by optimizing its

production network and improving industrial

efficiency.

With motivated, highly skilled personnel,

Faurecia will be amplifying its product

innovation capacities to achieve greater

development latitude, especially outside

Europe, and to strengthen its position as a

strategic partner to the worldwide automotive

industry.

After a difficult year in 2006, when profitability

suffered serious erosion under the effects

of increased competition and rising raw

materials costs, 2007 should mark

the first signs of an upswing for quality,

products and operational efficiency across

all Faurecia’s businesses.

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In all six of the modules it designs, Faurecia factors in the high expectations of automakers and their end customersregarding safety (for vehicle occupants and pedestrians), onboard comfort and convenience, perceived quality, and respect for the environment, all of which must be achievedunder reasonable economic conditions.

Our rationale: becoming a force for automotive progress

Comfort & convenienceA vehicle’s market success is increasinglydetermined by the sense of well-being experiencedby its occupants. The vehicle interior must becapable of adapting to different needs at differenttimes. As an automotive seating and vehicle interiorarchitect, Faurecia factors in these shiftingexpectations to develop seats that are more modular,easier to fold down, and capable of producing a flatfloor surface at the rear of the vehicle. Other majorimprovements in 2006 concern enhanced trunkfunctionality and more ergonomic controls. Faurecia experts seek constant improvements to interior ergonomics through developments such as innovative glovebox design and ingenious newseat mechanisms, all governed by priority attentionto safety and comfort.

SafetyFaurecia develops integrated systems and materialsto provide the best possible protection for vehicleoccupants, pedestrians and cyclists. Two of themany safety-related patents filed by Faurecia in 2006exemplify the Group’s flair for innovation: the SBR(Seat Belt Reminder) system, and the active headrestthat automatically moves in closer to the neck undercollision conditions. Another very significant Faureciainnovation appears on today’s Citroën C6, the firstEuropean car to achieve four-star ranking in the EuroNCAP pedestrian impact test: a bumper-mounted radar that triggers a hood rise mechanism acouple of milliseconds before impact, to absorbcollision energy and prevent pedestrian contact withthe engine. These kinds of innovation have provedinstrumental in the wide-reaching take-up of Faureciasolutions by many automakers in 2006.

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EnvironmentFaurecia approaches environment issues from

a number of angles, including lightweight vehicle

design, the use of natural and recyclable materials,

emissions control, and the elimination of hazardous

substances. There were two major exhaust system

innovations in 2006, with a lightweight complete

exhaust line for the Peugeot 207 and an exhaust

heat recovery system that accelerates heating of

the vehicle interior without increasing pollutant

emissions. Indeed, emissions control is one of Faurecia’s

main R&D priorities, with specific focuses including

adaptation to biofuel and flex-fuel engines. In 2006,

Faurecia also made considerable headway in the use

of natural materials in its modules (door panels, in the

main). Wood and wood fibers are making a comeback

in vehicle interior applications, as a supplement or

replacement for oil-derived products. Progress was

also made in end-of-life vehicle disposal, with major

efforts in floor mat and rear shelf design.

EconomyTo support automakers’ development initiatives,Faurecia has set up a production system matched to today’s global cost structures. Around 40% of Faurecia’s production facilities are just-in-timeplants capable of meeting incoming demand in lessthan three hours. The other sites – components plants– are located to optimize an economic equationwhose terms include production cost, supplier’stransport modes, and capacities for carrying finishedproducts to the automakers’ assembly lines. Through this strategy, Faurecia significantly diversifiedits customer portfolio in 2006 and strengthened its positions in Central Europe, North America and Asia. Faurecia opened 15 new sites in 2006, and set up components platforms under a programto standardize products for application to differentvehicle models.

Design & perceived qualityAs consumers become increasingly demanding andcritical, design and perceived quality becomefundamentally important criteria. As well as designingvehicles to be spacious, automakers also need to makesure the vehicle interior gives an impression ofspaciousness. And this kind of overall impressioncovers a multitude of more specific perceptions. To address these issues, Faurecia has developed a fully-fledged methodology for analyzing perceivedquality, in instrument panels, door panels, and extendedfunctionalities such as storage space, decoration,control integration and modularity management. Othercurrent focuses for work along these lines include fit and finish, the use of special tactile materials (for a distinctive upmarket feel), indirect lighting, and transparency effects.

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An innovation-rich yearNo fewer than 800 new ideas, on processes and products, were evaluated under Faurecia’songoing innovation program in 2006. The R&D budget reached5.2% of Group sales, at €610.6 million.

Techdays –encounters of a new kindFaurecia’s marketing, sales andcommunications teams ran nineTechday product-focus events in 2006, spotlighting Faureciainnovations for the benefit ofcustomers’ engineering andpurchasing teams. The outcomewas customer take-up of more than 80 new products andprocesses.

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15new sites opened


28R&D and D&Dcenters worldwide

200new innovation projectsstarted in 2006

Faurecia took part in 15 major productlaunchesFaurecia started production on manymajor automaker programs in 2006,including: Audi Q7 and TT, Citroën C4 Picasso, Peugeot 207,Opel Corsa, BMW Mini, Ford Galaxy,Toyota Corolla, Skoda Roomster,Chrysler Sebring and Dodge Nitro,and Kia Carens.

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09_ History11_ Overview of Faurecia in 200612_ Key figures14_ Businesses22_ Financial report

114_ Shareholders information

Contents


An industrial history spanning two centuries

Faurecia’s present-day expertise reflects a long heritage, stretching back to the beginning of French industrialization. Though Faurecia’sfounding company Ecia (for Équipements et Composants pour l’Industrie Automobile) was formed in 1987 from the merger of CyclesPeugeot and Aciers & Outillages Peugeot, its industrial tradition dates far back to 1810. In its present configuration, Faurecia is formedfrom the three French companies Ecia, Bertrand Faure and Sommer Allibert. The first two merged in 1998, and the third joined the Groupin 2001. With net sales of €11 billion and a workforce of 60,000 in 28 countries, Faurecia stands as the second biggest automotiveequipment supplier in Europe and the ninth largest worldwide (1).

ROOTS

1810. Jacques Maillard-Salins and the Peugeot brothers Jean-Pierre and Frédéric set up a steel foundry to make saw blades at Hérimoncourt, a village in eastern France, a few kilometers from the Swiss border.1891. The first automobiles, in the modern sense, are made, powered by petrol engines. The first steel tubes follow, patented by Peugeotand made at sites including Audincourt, in the Doubs region of eastern France.1914. At Levallois-Perret to the west of Paris, Bertrand Faure opens his first workshop, making seats for Paris trams and underground trains.1929. Bertrand Faure licenses the Epéda process, to improve the seats he makes for the automotive industry and develop a newproduct that will make a lasting contribution to the comfort of millions of people: the spring mattress. Both businesses will take off ina big way after the Second World War. Bertrand Faure clients include Renault, Peugeot, Citroën, Talbot, Panhard-Levassor, Berlietand Simca.1950. Bernard Deconinck, son-in-law of hay merchant Joseph Allibert, who had founded the Allibert company in Isère (eastern France)in 1910, decides to invest in a huge injection press, imported from the USA, to mould large plastic parts in a single piece. He turns awayfrom refrigerator manufacturers and towards the automotive industry.1955. The Frères Peugeot company, one of whose subsidiaries is Peugeot et Cie, starts production of automotive equipment, diversifyingover time to make products such as seats, exhaust systems and steering columns. Operations extend outside France, and some productsare dropped to concentrate on new production lines.1972. François Sommer, grandson of Alfred Sommer, merges his automotive floor coverings company with that of Bernard Deconinck – Allibert – to found the Sommer Allibert Group, combining know-how in textiles and plastics. In the early 1980s, Sommer Allibert investsheavily to meet the needs of the automotive industry and becomes a leading specialist in interior vehicle fittings for all major automakers.International expansion follows, with acquisition of Spanish company Lignotock, and stronger coverage of Germany, from 1993.1987. Ecia (Équipements et Composants pour l’Industrie Automobile) is formed from the merger of Cycles Peugeot with Aciers& Outillages Peugeot and undergoes ten years of intense industrial and geographical development. The company Bertrand Faure stepsup international development at the same time, rounding out the acquisitions made in 1977 in Spain and Portugal, with, for example, theRentrop Group in Germany. This makes Bertrand Faure European number one in automotive seating techniques and components.Through the 1990 up to 1998, Bernard Faure concentrates on its automotive equipment business, selling off its other businesses inbedding (Epéda and Mérinos), aeronautics (Ratier-Figeac) and luggage (Delsey).1992. Ecia sells its bicycles business, followed by its tooling business in 1993, and makes significant acquisitions in exhaust systems – Tubauto and Eli Échappement in France, Leistritz Abgastechnik in Germany and Silenciadores PCG in Spain – to become European numberone in exhaust systems. Its Seats division joins forces with the Spanish automotive equipment supplier Irausa to form the first non-French subsidiary, Ardasa. Clients for exhaust systems, seats, interior fittings and front ends include Volkswagen, Renault, Daimler Chrysler, Opel, Honda and Mitsubishi.

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History

Faurecia – Registration document 2006

(1) Internal source

0705136_Faurecia_Ra2006GB_fi.qxd 30/05/07 10:59 Page 9

FORMATION

December 11, 1997. Ecia launches a friendly bid for Bertrand Faure, bringing its direct and indirect stake in the Group to 99%. The Faurecia Group, formed in 1998, focuses on the automotive equipment business. At the same time as Bertrand Faure sells itsluggage business (Delsey) and aeronautics business (Ratier Figeac), Ecia sells its motorcycles business (Peugeot Motocycles) to thePSA Peugeot Citroën Group in 1998.June 1999. Ecia and Bertrand Faure merge, resulting in the PSA Peugeot Citroën Group holding a 52.6% stake in Faurecia by the end of 1999. Faurecia reports sales above €4 billion, with a workforce of 32,000. As well as boosting size and leading to a worldwide positionin automotive seating, Bertrand Faure brings Ecia extended geographical and commercial coverage, especially in Germany, where thecompany has strong links with manufacturers like Volkswagen and BMW.Late 1999. The Faurecia Group extends its exhaust systems coverage in North America with acquisition of the US company AP Automotive Systems.October 2000. Faurecia purchases Sommer Allibert, with PSA Peugeot Citroën finance bringing its stake up to 71.5%. With good coverage of Germany and Spain, the Group commands high market shares for vehicle interior fittings in Europe, especially for door panels, instrumentpanels and acoustic packages.2001. The Sommer Allibert acquisition is finalized through a buyback bid addressing Sommer Allibert minority shareholders. The resultinggroup posts net sales of €9.6 billion. Faurecia then buys the remaining minority shares held by external shareholders in Sommer Allibert’sGerman subsidiary SAI Automotive AG.

INTERNATIONAL EXPANSION AND PRODUCTION SYSTEM DEVELOPMENT

2002. The Faurecia Group acquires a 49% stake in the South Korean catalytic converter maker Daeki Industrial, number two on its market. The same year, Faurecia forms a joint venture with the Taiwanese automotive equipment company GSK, with a view to making seats at Wuhan, in China.2003. Faurecia follows up these acquisitions by buying the South Korean exhaust systems company Chang Heung Precision, whichholds a 20% share of its market. This brings Faurecia’s Exhaust Systems division coverage of all continents. Faurecia is selected by theChrysler Group to supply complete seats, seat frames, instrument panels, central consoles, door panels and exhaust systems forvarious forthcoming models. In Europe, the Group finalizes an agreement with Siemens-VDO on strengthening and extending their jointventure (SAS) assembling cockpit interiors for BMW, DaimlerChrysler, the Ford group, Renault-Nissan and the Volkswagen Group.2004. Faurecia again achieves growth above the European average, with high performance owing much to a significant rise in industrialefficiency. Growth also arises from business development in North America and Asia. Across the Atlantic, Faurecia’s automotive seating andexhaust systems businesses benefit from startup and build-up of various production programs. Faurecia opens a site at Auburn Hills, Michigan,making complete seat units for General Motors’ Pontiac G6. At Wuxi in China, Faurecia starts making seat mechanisms and components forclients addressing the Chinese and other Asian markets. And a just-in-time site opens in Changchun, delivering seats to FAW-VW. In September, Faurecia opens a new development center at Shin-Yokohama in Japan, covering all Group businesses and demonstrating the Group’s intention to strengthen ties with Japanese carmakers. Faurecia pushes ahead with industrial redeployment, opening ten new sitesin 2004: two in Central Europe, two in Western Europe and six outside Europe (in the USA, China, Mexico and South Africa).2005. Faurecia adjusts its production system to match the shifting needs of the worldwide automotive industry more closely, and opensnine new sites, four in Central Europe, three in China, one in Germany and one in the USA. Innovation and R&D operations are steppedup at three French R&D centers, a world seat mechanisms center at Flers, a world complete seats center at Brières-les-Scellés and a center specializing in seat foams at Magny-en-Vernois. To step up Korean operations, Faurecia raises its stake in Daeki (specializing in exhaust systems for Hyundai) to 100%, and signs a co-enterprise agreement with South Korean company Kwang Jin Sang Gong,specializing in door modules for Hyundai Motor and Kia Motors.2006. With 15 new sites opened, 2006 is an exceptional year in Faurecia’s industrial development. Along with seven new sites openingin North America, four in Central Europe and two in Asia, there is a new UK site making seats for BMW’s Mini, and an Iranian sitesupplying Logan.Since 2001, the Faurecia Group has achieved organic growth averaging 4% per year, as well as making various acquisitions to bolsterits competitive positions. Over the last three years, the Faurecia production system has proved highly vigorous, with 34 new sitesopening, mainly in North America, Central Europe and Asia.Faurecia’s annual net sales today exceed €11 billion. Through a strategy focused on the design and production of six major vehiclemodules, with a strong emphasis on innovation and tight adjustment to the needs of automaker clients in Europe and the rest of theworld, the Faurecia Group today ranks among the world’s top ten automotive equipment suppliers.

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With a workforce of 60,000 at 180 sites in 28 countries, Faurecia is currently as a key partner to all major automakers, and holds leadingmarket positions for all six of the major vehicle modules it designs, develops, manufactures and delivers.

Automotive seatingN° 2 in Europe, N° 3 worldwide(1).

Cockpits and instrument panelsN° 1 in Europe, N° 1 worldwide(1).

Doors and door panelsN° 1 in Europe, N° 1 worldwide(1).

Acoustic packagesN° 2 in Europe(1).

Front endsN° 1 in Europe, N° 2 worldwide(1).

Exhaust systemsN° 1 in Europe, N° 2 worldwide(1).

Faurecia’s production system is specifically geared to supporting the development initiatives of its automaker clients. From the front lineof automotive industry innovation, Faurecia meets the requirements of today’s globalized cost structures while addressing strongdemand for distinctive vehicle features, as expressed by a large majority of motorists. At the same time, it pursues standardization, bothin response to automakers’ needs and as demanded to solve the increasingly tough economic equations facing equipment suppliers,who today bear the full weight of development costs. To take up these challenges, Faurecia fields a worldwide network of 28 R&Dcenters, located close to client sites and staffed by a highly skilled workforce of over 4,000 engineers and technicians. In 2006, Faureciaallocated an R&D budget of €610.6 million, amounting to 5.2% of sales.

Over one third of Faurecia production facilities are just-in-time plants capable of responding within three hours to demand coming in from client assembly lines. Then there are component sites, in Western Europe and low-cost countries, run for optimized purchasing,manufacturing and transport costs. In 2006, Faurecia opened 15 new production sites, in locations consistent with the Group’sexpansion plans for new geographical regions, namely Eastern Europe, North America and China.

Of Faurecia’s 189 production facilities worldwide, 103 are in Western Europe, 27 in Central Europe, 22 in North America, 11 in SouthAmerica and 19 in Asia. This distribution reflects the Group’s international coverage and industrial redeployment over the last few years.

In today’s global automotive sector, Faurecia is Europe’s second biggest equipment supplier, and the ninth largest worldwide. Buildingon top-class expertise, the Group has achieved rapid development outside Europe, especially in North America (19.7% growth in 2006)and Asia (27.2%), through cooperation with US and Asian manufacturers such as General Motors, DaimlerChrysler, Ford MotorCompany and Hyundai.

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Overview of Faurecia in 2006


(1) Internal source.


(in € millions) 2006 % 2005 % 2004 %

Sales

Vehicle Interior modules 8,270.8 71.0 8,277.1 75.4 8,285.6 77.3

Other modules 3,377.9 29.0 2,701.4 24.6 2,433.9 22.7

Total 11,648.7 100.0 10,978.5 100.0 10,719.5 100.0

Operating income 69.2 0,6 267.2 2.4 402.9 3.8

Amortization of contractual customers relationship – – (119.4) (1.1)

Impairment of assets (1) (233,5) (2,0) (180,0) (1,6) – –

Restructuring costs (169.2) (1.5) (137.6) (1.3) (58.6) (0,5)

Other operating income and (expenses), net 16.7 0,1 2.6 – 46.8 0,4

Consolidated net income (loss) (437.6) (3.7) (172.8) (1.6) 142.2 1.3

Net income (loss) attributable to equity holders

of the parent (447.9) (3.8) (182.5) (1.7) 130.7 1.2

EBITDA (2) 587.5 5.0 758.6 6.9 883.2 8.2

Cash flow 330.6 2.8 521.1 4.7 700.1 6.5

Capital expenditure 302.2 2.6 433.9 4.0 399.4 3.7

Capitalized development costs 208.3 1.8 215.8 2.0 209.0 2.0

Gross R&D expenditure 610.6 5.2 628.1 5.7 594.9 5.6

Employees (3) 65,682 61,722 62,507

Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Shareholders’ equity 1,026.4 1,475.9 1,640.0

Net financial debt 1,698.5 1,604.2 1,543.3

(1) Includes impairment losses on the Vehicule Interior business of €197.8 million in 2006 and € 180 million in 2005 and in 2006 relates to goodwill (€125.0 million) and non-current assets(€72.8 million).

(2) Operating income + depreciation, amortization and depreciation in value of property, plant and equipment and intangible assets.

(3) Including temporary staff.

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Key figures



2006 sales

(in € millions) 2006 2005 % change 20042006/2005

Automotive Seating 4,812.8 4,794.4 0,4 4,784.7at constant exchange rates (0,2)

Vehicle Interior 3,458.0 3,482.7 (0,7) 3,500.9at constant exchange rates (1.0)

Vehicle Interior modules 8,270.8 8,277.1 (0,1) 8,285.6at constant exchange rates (0,5)

Exhaust Systems 2,659.4 1,961.3 35.6 1,714.9excluding monoliths sales 1,278.6 1,111.2 15.1 1,020.0at constant exchange rates 14.4

Front-end modules 718.5 740.1 (2.9) 719.0at constant exchange rates (2.9)

Other modules 3,377.9 2,701.4 25.0 2,433.9Excluding monoliths 1,997.1 1,851.3 7.9 1,739.0at constant exchange rates

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Total 11,648.7 10,978.5 6.1 10,719.5

excluding monoliths sales 10,267.9 10,128.4 1.4 10,024.6at constant exchange rates 0,9

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2006 SALES BREAKDOWN BY CUSTOMER

2006 SALES BREAKDOWN BY BUSINESS

24.4%PSAPeugeot Citroën

22.6%VW Group

12.5%Renault-Nissan

10.9%Ford Group

9.1%DaimlerChrysler

7.4%GM Group

6.0%BMW

2.7% Others

2.0%Toyota

2.4%Hyundai-Kia

2006 SALES BREAKDOWN BY REGION(1)

(1) CA total. (1) Sales by destination country.

26.3%France

2.5%China

12.8%North America

12.4%Spain/Portugal

10.8%Other European

countries

2.4%Korea

2.6%United Kingdom

25.6%Germany

22.8%Exhaust systems

6.2%Front-end29.7%

Vehicle Interior

71%Vehicle Interior

Modules

29%Other modules

41.3%Automotive Seating

2.1%South America

2.6% Other countries


Businesses

15_ Business highlights• Vehicle interior modules

– Automotive seating– Vehicule interior

• Others modules– Exhaust systems– Front-end

20_ Research and Innovation


Faurecia posted net sales of €11.6 billion in 2006, with a workforce of 60,000 across 28 countries. It is one of the world’s leadingautomotive equipment suppliers, fielding expert know-how in the design, development, manufacture and delivery of six major vehiclemodules: seats, instrument panels, acoustic packages, door panels, front ends and exhaust systems. These product lines are dividedinto two main segments: Vehicle Interior Modules (seats, door panels, instrument panels, acoustic packages) and Other Modules(exhaust systems and front ends).

2006 was characterized by the launch of a wide range of programs by Faurecia, addressing all major automotive manufacturers. Sevenof the new models unveiled at the 2006 Paris Motor Show featured equipment from Faurecia, including the Citroën C4 Picasso, adver-tised under the “Visiospace” signature. Opel’s new Corsa, BMW’s new Mini and Audi’s new TT are also equipped by Faurecia, as areDaimlerChrysler’s Sebring sedan and new Dodge Nitro SUV. On a wider scale, Faurecia contributes to several vehicles from Ford,General Motors and Volkswagen. In 2006, Faurecia significantly increased its market share in Asia, primarily with Hyundai-Kia. And 2006was an exceptional year for worldwide development: consistent with its growth strategy, Faurecia opened 15 sites, most notably in NorthAmerica, Central Europe and Asia, whilst pushing ahead with improvements in industrial performance especially as regards quality,safety and productivity.

Throughout 2006, Faurecia maintained its strong emphasis on innovation, with 200 new projects emerging from the Group’s worldwidenetwork of 28 Research and Development and Design and Development centers. One of the new developments from the AutomotiveSeating unit (which posted net sales of €4.8 billion for 2006 and employs around 33,000 people at 76 plants) in 2006 was a ventilatedseat offering optimum temperature under all conditions, for enhanced driver and passenger comfort. Another was the high-performancefoam that enables designers to maximize vehicle interior space without penalizing seat performance. Then the Exhaust Systems division(net sales of €2.6 billion for 2006, with a workforce of 8,000 at 33 plants) made further advances in diesel particulate filter technology, anarea pioneered by Faurecia, as well as developing an innovative exhaust heat recovery system.

A new polyurethane skin developed by the Vehicle Fittings unit (net sales of €3.5 billion in 2006) was largely taken up by carmakers fortheir top-end models in 2006. The Door Panels business developed an advanced-integration door module that dispenses with the needfor a window lift rail. This innovative system has been selected for use on several vehicles. The Acoustic Packages business developednew soundproofing materials in 2006. The main innovation priorities for the Front Ends division in 2006 were cooling, structure, pedes-trian safety and perceived quality. In 2006, Faurecia’s R&D budget reached 5.2% of net sales, at €610.6 million.

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Business highlights



Vehicle Interior Modules

AUTOMOTIVE SEATING

Net sales Workforce Sites Countries R&D centers

€4.8 billion 32,200 76 17 7

Faurecia is number one in Europe and number three worldwide for automotive seats and seating mechanisms. Faurecia sales ofautomotive seating modules reached €4.8 billion in 2006, little change on 2005. Sales to French carmakers sagged, while business withGerman makers remained steady. The resulting downswing in Europe was balanced by a significant rise in sales in the rest of the world,with slight growth in North America and a more pronounced increase in China.For the Automotive Seating unit, 2006 saw successful launch of ten new programs: Peugeot 207 and Citroën C4 Picasso for the PSAPeugeot Citroën Group, the new Mini and the new BMW X5 for the BMW Group, Galaxy and S-Max for Ford, the Chrysler Sebring, theMitsubishi Colt CC, the Skoda Roomster, and the Logan in Brazil. In all, Faurecia ran 56 automotive seating programs in 2006, makingand delivering over 120 million assembled units (reclining mechanisms, rails, and frames for front and rear structures) to all majorcarmakers, along with 36 million seat elements in the form of full seats, covers, foam parts and headrests.To support the development initiatives of its automotive clients, Faurecia also opened four new plants (two in the USA, one in China andone in Iran), all operating to just-in-time principles. The Automotive Seating unit today has 76 plants (34 running on a just-in-time basis),in 17 countries. In 2006, cost structures were optimized by new location arrangements for components plants, and design capacitieswere stepped up in low-cost countries.Wide-reaching product and process standardization was undertaken to improve quality through optimized management of investmentsin product development and manufacture. At the same time, a number of improvements were made to the Faurecia purchasing policy,to reinforce commodities management, cut back the number of suppliers, and step up supplies from certain low-cost countries.

On the sales front, 2006 was rich in new programs, with the new Renault Mégane and Renault Scénic, the Nissan Teana in China, the Peugeot 206 in Brazil, and the BMW 5 and 7 Series. Results here were obtained through significant improvements in industrialperformance, backed by the Automotive Seating unit’s farsighted R&D policy. Innovation is driven by a quest to enhance perceivedvalue, meet automakers’ requirements and reduce production costs, an essential factor given the heavy downward price pressure fromclients in 2006. Faurecia’s Automotive Seating unit ranked close to the top of the industry charts for patent applications in 2006, with 160new innovations, including a passenger SeatBelt Reminder system (SBR), an active headrest that moves in closer to the neck underimpact conditions and a rear cushion concept featuring polyurethane foam instead of certain metallic parts, to help carmakers bringdown total vehicle weight.As well as designing new products, the Automotive Seating unit also develops new technologies, such as a laser welding technique for assembling metal parts without adding extra material to the join. This, again, contributes to lightweight vehicle design and makes it possible to use new steels, without penalizing quality or safety. Faurecia consistently meets new regulatory requirements by disconti-nuing the use of chrome and by complying with product recyclability standards. In 2006, Faurecia’s Automotive Seating divisionallocated 5.7% of sales to R&D.

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VEHICLE INTERIOR

Sales Workforce Sites Countries R&D centers Client platforms

€3.5 billion 22,300 67 15 5 20

Instrument Panels & Door PanelsThe vehicle interior fittings market in 2006 saw continued financial difficulties for several of Faurecia’s rivals, arising chiefly from the risingcosts of plastics raw materials, indexed to crude oil prices, and mounting pressure on sale prices. Against this backdrop, Faurecia keptits positions as European(1) and worldwide number one in instrument panels, and worldwide(1) number one in door panels. Other salientfeatures of 2006 were the appearance of a new high-growth door panels business, and sustained automotive industry demand forsupplier support on international development platforms. Sales by Faurecia’s Vehicle Fittings unit in 2006 totaled €3.2 billion, a slight riseon 2005. In Europe, sales to French manufacturers were significantly down, though demand was up from German makers on the Mercedes Class S, Audi Q7 and Volkswagen Passat programs. There were further changes to Faurecia’s business scope in France,Spain and Germany in 2006. A new site was opened at Písek in the Czech Republic, supplying door panels to several carmaker clients.Outside Europe, 2006 was a transitional year in North America, with the release of the new BMW X5 and the opening of four newFaurecia plants for the Chrysler program, at Fraser, Toledo, Puebla and Sterling Heights. On a buoyant Asian market, Faurecia madeconsiderable inroads, achieving strong growth in China and opening two plants for Ford.Overall, 2006 was a very eventful year, with the launch of 39 production programs. European launches included Peugeot 207, Citroën C4Picasso, Skoda Fabia, Skoda Roomster, Dacia Logan and Opel Corsa. In North America, in addition to the new BMW X5, Faurecia alsotook part in the Chrysler Sebring and Dodge Stratus programs. For the Sebring, DaimlerChrysler took up two recent Faurecia innova-tions, the new TPO instrument panel skin and new door panel system. The Dodge Nitro will be the first vehicle from a US maker tofeature the new HIM advanced-integration door module, which features a rail-free window lift. Main launches in Asia were the S40 fromVolvo and the Galaxy and Mondeo from Ford.The year was also rich in acquisitions, mainly addressing General Motors and Ford, a fact that confirms the strong ongoingdevelopment of Faurecia’s business with these manufacturers. Indeed, Faurecia won Ford’s Team Value Management (TVM) awardfor its “remarkable results and contribution” to productivity and cost control in Europe. For Ford’s TVM manager Alan Draper,Faurecia was “a champion of proactivity”, putting forward improvement ideas capable of generating annual savings estimated at over €15 million. New contracts were also signed with DaimlerChrysler, Volkswagen, PSA Peugeot Citroën, Renault and BMW.Very significant quality improvements were achieved in 2006, bringing tighter control over production, better compliance withprogram milestones, and closer involvement from suppliers. In 2006, Faurecia further narrowed its suppliers panel and stepped upthe shift of its suppliers base toward low-cost countries. With four worldwide R&D centers providing direct input to 55 plants,Faurecia’s Instrument Panels & Door Panels division pursued improvements in perceived quality and new features such as stowagespace, decoration and versatility. Progress was also made in environment and material recycling issues, through research into theuse of natural fibers (wood, in the main) with a view to replacing petrochemical-based products. Safety was another major researchfocus, and progress in this field included a specially reinforced airbag flap.

Acoustic Packages & Interior LiningsAs European number two(1) in vehicle acoustic packages and interior textile linings, with 12 production sites, this Faurecia divisionreported 2006 sales of €0.3 billion, on the rise from 2005. These good results, from business with most of the carmakers on theEuropean market, are explained by startup of many new programs, including trunk linings for the Ford S-Max, floor mats for the Audi A6Allroad, soundproofing and trunk mats for the Peugeot 207 in Slovakia, trunk linings for the new Citroën C4 Picasso, full interior liningsfor the new Dacia Logan estate, shelves for the Opel Corsa, and mats for the new Nissan Qashqai crossover. Outside Europe, thedivision formed new partnerships in India, Russia, Korea, Turkey and Japan, on supplies for forthcoming vehicles including new modelsfrom Renault and Nissan.

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(1) Internal source.


In 2006, Faurecia broadened the scope of its acoustic engineering operations by developing a vehicle acoustics analysis method that performs digital modeling to probe vehicle-wide acoustic phenomena and optimize performance to the three criteria of acoustics,weight and cost. The new system implements products patented by Faurecia Light Weight, and has met with a very positive receptionfrom manufacturers including Ford and Toyota.In 2006, the Faurecia Acoustic Packages&Interior Linings division also pushed ahead with reorganization, concentrating needle-punched carpet production at the Mouzon plant in France and closing the German plant at Hameln. All engineering teams in Germanyhave now been brought together at Cologne.

Other modules

EXHAUST SYSTEMS

Sales (including monoliths) Workforce Sites Countries R&D centers D&D centers

€2.7 billion 8,200 33 14 1 6

For Faurecia’s Exhaust Systems division, strong growth continued in 2006, with sales reaching €2.7 billion. Results confirm Faurecia’sposition as number one in Europe and number two worldwide for exhaust systems. The division’s 23 plants, plus 10 further just-in-timesites, supply components and full exhaust systems to all major automotive manufacturers, on four continents. In all, Faurecia equipsaround 13 million vehicles per year.The world exhaust systems market is growing, under the combined effect of rising precious metal prices, implementation of the Euro 4standard, and preparation for the Euro 5 standard, under which all new diesel engines will require particulate filters by September 2009.Other factors include sustained efforts by most automakers on acoustic comfort and optimized useful vehicle volume. With its advancedtechnologies and competitive performance, Faurecia significantly increased its share of the exhaust systems market in 2006, especiallyin the USA, with the launch of new models by Ford and DaimlerChrysler, and on the Korean and Chinese markets. Major Europeanlaunches in 2006 were with PSA Peugeot Citroën, on the Citroën C4 Picasso, and with Ford, on the S-Max and new Galaxy. In the USA,DaimlerChrysler selected full Faurecia exhaust lines for its Dodge Compass, Caliber and Patriot Jeep models, and Ford did likewise for its Fusion model. In Asia, the Hyundai-Kia Group chose Faurecia technology for its Kia Carens and Hyundai Terracan models.

New just-in-time sites were opened at Trnava in Slovakia, supplying full exhaust lines for the Peugeot 207, and at Vigo in Spain,supplying full exhaust lines for the diesel Citroën C4 Picasso. Outside Europe, two other sites were opened, at Wuhan in China andToledo in the USA. Faurecia Exhaust Systems also stepped up operations in China, with a new Shanghai development center addressingmanufacturers in Asia. In 2006, Faurecia introduced two major innovations in exhaust systems. The first, already featured as standard on the Peugeot 207, was a full exhaust line 30% lighter than its predecessor, making an active contribution to fuel economy. The second,used on the diesel Citroën C4 Picasso, as unveiled at the Paris Motor Show, was a heat recovery system that uses heat from the exhaustsystem to achieve a rapid rise in passenger compartment temperature under cold weather conditions, and thus enhance interiorcomfort. In anticipation of forthcoming US and European standards, Faurecia is also innovating in the treatment of nitrogen oxides in diesel exhaust fumes, with its SCR (Selective Catalyst Reduction) system. With sustained R&D investment at 5.5% of sales (excludingmonoliths) in 2006, Faurecia Exhaust Systems continued to develop fresh capabilities to take up emerging technological challenges andeffectively tap into growing value in the exhaust systems market.Pollution control continues to be one of Faurecia’s main research focuses, addressing intensifying demand from the automotive industry,legislators and consumers.

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FRONT ENDS

Sales Workforce Sites Countries R&D centers D&D centers

€0.7 billion 2,400 17 7 1 2

Sales for Faurecia’s Front Ends division reached €0.7 billion in 2006, driven by launch of several programs and by positive volumeeffects, especially in Germany. As European number one and worldwide number two in front ends, Faurecia achieved sustained growthin this sector in 2006, with new orders and startup of production in the USA, where potential is expected to run high. A number of innova-tions were introduced, building on the division’s prime know-how in function integration, production processes, energy absorption andsafety. A Faurecia-developed hybrid injection process combining plastic and aluminum materials made its first appearance on the newAudi TT program. And the Citroën C6, the first European car to achieve four-star rating in the EuroNCAP pedestrian impact test, featuresa bumper-mounted radar that triggers a bonnet rise mechanism a couple of seconds before impact, to absorb collision energy andprevent pedestrian contact with the engine.

Faurecia’s Front Ends division stepped up industrial development in 2006, to keep pace with its clients’ international expansionprograms and address new markets. In 2006, the division moved into three new countries: Iran, Romania and Russia. The Hlolovec plantin Slovakia, opened in late 2005, ran at full capacity, making front and rear bumpers and front ends for the Peugeot 207. In the USA,Faurecia opened a new front ends facility at Sterling Heights (Michigan), supplying DaimlerChrysler’s new Sebring. This is the firstDaimlerChrysler program involving full outsourcing of front ends to a supplier site.

The division also pushed ahead with its plan on ongoing improvement to production performance. An upgrade program to bring paintbooths at bumper production sites into compliance with new environmental standards on emissions of volatile organic compounds hadbegun 2005, and was completed in 2006. And quality targets set with clients were met.

Through orders obtained in 2006, the division will continue to win market shares for bumper products with the PSA Peugeot Citroën andRenault Groups, and for front ends with Audi. Industrial expansion through new plants and signature of production partnerships willenable the division to meet the growing market for front ends in markets such as the USA, and to satisfy service expectations for manufacturers worldwide.

In 2007, Faurecia’s front ends business will focus primarily on the startup of new programs and the integration of the bumper businessesacquired from Cadence Innovation in France, under an external growth initiative that reinforces operations at the four production sites in France (Audincourt, Bains-sur-Oust, Marles-les-Mines, Marines). B

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Faurecia places a fundamental emphasis on research and innovation, harnessing group-wide know-how through a determined strategythat draws appropriate investment and is geared to meeting the needs of automotive manufacturers, eager for innovation in design,performance, quality and cost. This strategy applies across all six of the vehicle product lines developed and manufactured by Faurecia.Research and innovation are recognized as key prerequisites to successful Company performance. In a highly fragmented market, withcustomer choice broadening and prices falling, automakers need innovative solutions capable of affording distinctive vehicle features.But, above all in areas not directly perceptible to the end user, they are also looking for standardized products to help them solve thetough economic equations imposed by market conditions. Standardization also means that production and delivery capacities can beconstantly adapted to client demand, with consistent reliability and quality regardless of plant location.

To address this need, Faurecia is stepping up its “component platform policy”, targeting maximum standardization for non-visiblevehicle parts. Product plans and market offerings are structured accordingly, and standards defined for both components and assemblyprocesses. One example of this approach is a seat frame for the worldwide General Motors platform, and a common cockpit structureacross different Ford Group models. In all, 200 new projects were started up in 2006, and 50 projects reached completion.Along with its component platforms policy, Faurecia has also built firmly on the strong reputation it enjoys within the automotive industryto develop closer cooperation at early stages in the vehicle development process, when the main vehicle design decisions are taken.This means vehicle integration for Faurecia modules can be optimized during parallel coordinated design phases. This is a very valuableopportunity for Faurecia, which is today able to cover all segments of the automotive market. Through this kind of arrangement, Faureciahas been able to develop a wide-reaching range of simulation and virtual reality tools, cutting out the need for costly successive wavesof physical prototypes. For Faurecia, these new techniques open the way to faster and more reliable product development at lower cost,without penalizing innovative capacity.The year 2006 brought opportunities for extensive communications on these new development processes. For example, Faurecia’smarketing, sales and communications teams worked together on the Techdays series of automotive industry product events throughoutthe year. One of the communications highlights of 2006 was the Expertise and Development event, at which Faurecia demonstrated its capacity to operate on a sound partnership basis, working with the manufacturer on joint innovation and development initiatives.Products and demonstrations provided client engineering and purchasing teams with insights into Faurecia’s developments in digitalsimulation, product validation and virtual reality. This kind of interface proved instrumental in take-up of over 80 new products andprocesses in client development programs.

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Research and innovation



On a broader scale, Faurecia’s strategic innovation approach, across all product lines, nurtures a wealth of ideas, which will thenundergo rigorous selection to feed specific innovation projects addressing all vehicle functions. Examples include new stowagesolutions, with high-functionality trunks, and enhanced seat modularity, with more accessible controls. By constantly fine-tuning thehuman-machine interface in this way, these kinds of developments help generate a positive state of mind from the driver.Another major research goal is perceived quality, of critical importance in determining purchase decisions. An increasingly importantfactor here is the impression of interior spaciousness, along with part fits, acoustics, colors, lighting and materials. Today’s consumersare becoming more educated and thus more critical with regard to visual and audible phenomena. Faurecia gives the greatest possibleattention to the quality of the materials it uses, and to environment issues. In 2006, the use of natural materials such as wood and woodfibers was stepped up. Forthcoming developments might well see the emergence of plastics derived from vegetable matter.Exhaust systems are naturally a major environment consideration, and Faurecia takes an instrumental role here, with its particulate filter.Future developments will concern adaptation to emerging bio-fuel and flex-fuel engines. Another major environment issue is recycling of scrap material, and substantial progress has been achieved here, primarily with floor mats and rear shelves.Faurecia innovations received a number of industry awards in 2006. In January 2006, Faurecia door panels for DaimlerChrysler’s newDodge Nitro (featuring the world’s first application of advanced-integration design with rail-free window lift) won an AutomotiveInnovation Award from the American Society of Plastic Engineers. The German Plastic Foam Industry Association awarded Faurecia firstprize in the industry category for its PUR Cast interior lining, using innovative polyurethane skin technology. Then in September 2006,Faurecia won the French Design Institute’s Janus 2006 award for its Happy Attitude showcar, demonstrating a new approach to vehicleinterior linings.

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Financial report

23_ Group Management Report

52_ Consolidated financial statements

91_ Parent company financial statements

In accordance with article 28 of European regulation no. 809/2004, the following information is included by reference in this registration document:

– the consolidated financial statements, the parent company financial statements, the corresponding Statutory Auditors’ reports, the comments on the consolidated financialstatements and the significant events of the year by business, set out respectively on pages 30 to 79, 87 to 103, 80, 104 and 6 to 11 in the 2005 Registration document filed with the AMF on April 24, 2006 under no. D.06-0312;

– the consolidated financial statements, the parent company financial statements, the corresponding Statutory Auditors’ reports, the comments on the consolidated financialstatements and the significant events of the year by business, set out respectively on pages 25 to 61, 85 to 101, 62, 102 and 6 to 11 in the 2004 Registration document filed with the AMF on April 26, 2005 under no. D.05-0552.

The sections not included in the 2005 and 2004 registration documents are either not applicable for the investor, or covered by another section in the registration document.


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23_ Group Management report

24_ Comments on the consolidated financial statements

27_ Outlook

28_ Risk factors

31_ Human resources and employee data

42_ Environmental data

46_ Environmental protection

51_ Subsequent events

52_ Consolidated financial statements

91_ Parent company financial statements

Financial report


Comments on the consolidated financial statements

OVERVIEW OF 2006

The year 2006 was marked by five key factors:1. sustained sales growth despite lower sales volumes in France;2. lower operating income due to declining sales volumes in Western Europe and persistent pressure on sales prices in a period of rising

raw material costs;3. the recording of non-recurring provisions for restructuring operations and a non-recurring impairment loss in relation to the Vehicle

Interior business;4. significant start-up costs in the United States;5. contained net debt.

SIGNIFICANT EVENTS OF THE YEAR

Faurecia’s operating climate was particularly difficult in 2006. There was a major contraction in sales volumes with French automakersand the price of raw materials remained high, notably for plastics. Despite this unfavorable backdrop, Faurecia’s sales rose year-on-year,powered by robust contributions from Asia and North America. In addition, the Group continued to enhance its manufacturing perfor-mance, which in turn enabled it to improve its quality indicators, and October 2006 saw the launch of the “Breakthrough Quality Plan”,aimed at raising the bar even higher.

In terms of results, however, operating income decreased considerably during the year and the Group had to record an additionalimpairment loss for the Vehicle Interiors business. At the same time, Faurecia’s restructuring plan led to a high level of related costs,primarily concerning the Seating Frame business in France and Germany and the adaptation of facilities to new workloads.These restructuring costs peaked in 2006, particularly in France in order to counteract a fall in sales with French automakers. In tandem,Faurecia speeded up the pace of shifting its manufacturing base to low-cost production areas. Since 2004, the Group’s headcount hasbeen reduced in “high cost” Western Europe by 19.0%, whereas in “low cost” Central Europe it has been increased by 94.0%.The year 2006 saw the launch of an exceptional number of new sites, with a total of 15 coming on stream during the year. These included:• one in Banbury in the United Kingdom for BMW, dedicated to manufacturing seats for the Mini;• two in Central Europe, in Písek and Trnava:– the Písek site, in the Czech Republic, comprises three multi-customer plants specialized in the production of seat structures,

instrument panels, door panels and exhaust lines,– the Trnava site, based in Slovakia, is dedicated to manufacturing complete seat units and exhaust lines for PSA Peugeot Citroën;• one in Russia, at Nijni -Novgorod, which will produce bumpers, instrument panels and door panels for Renault’s Logan;

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Group management report



• seven in North America, in addition to the ten facilities already operating in the region. Faurecia will now produce:– interior systems modules at new sites in Fraser and Sterling Heights, Michigan, and in Northwood, Ohio,– seats on a just-in-time basis in Sterling Heights, Michigan and Fountain Inn, South Carolina,– exhaust systems at a just-in-time facility at Toledo, Ohio and seating foam and head rests at another just-in-time plant at Shelby, Michigan,– one in China, in Chongqing, dedicated to manufacturing just-in-time seating and interior systems modules for Ford,– one in Tehran, Iran, which will house manufacturing facilities for the Logan.In addition, in early January 2007, the Group took over part of the bumper business operated by Cadence Innovation, a company thatwas placed in liquidation in late 2006. This involved Faurecia taking over Cadence Innovation’s operations at the Nœux-les-Mines site innorthern France, which supplies Renault and PSA Peugeot Citroën, and the Burnhaupt facility in the east of France, which supplies PSAPeugeot Citroën. This acquisition fits with the Group’s goal of ensuring a long-term future for its four bumper manufacturing plants inFrance. Also in 2007 Faurecia acquired the 50% interest held by the Portuguese automotive supplier Simoldes Plasticos in the Romania-based company Euro Auto Plastic Systems (Euro APS). Euro APS manufactures and delivers instrument panels, door panels, bumpers,trimmings, carpeting, and acoustic components for the Dacia plant in Pitesti, Romania, which works mainly on the Dacia Logan. Throughthis acquisition Faurecia has significantly expanded the scope of its business with the Renault Group.

BUSINESS REVIEW

Faurecia’s consolidated sales totaled €11,648.7 million in 2006, up 6.1% on 2005, or 5.6% at constant exchange rates. Excluding salesof catalytic converter monoliths and the currency effect, the increase was 0.9%.Automobile production was generally flat in Europe, although it declined in Western Europe. Against this backdrop, Faurecia’s Europeansales figure for the year (excluding catalytic converter monoliths) contracted by 2.8%. Sales with French automakers fell by 10.3%.Outside Europe the Group continued down the growth path, posting sales rises of 19.7% in North America and 27.2% in Asia (based on constant exchange rates and excluding catalytic converter monoliths).The sales pattern for 2006 reflects Faurecia’s continued drive to diversify its customer base and rebalance its international structure. For example, sales with the majority of the Group’s non-French customers were higher than the previous year – they increased withVolkswagen for the Automotive Seating business, with Ford for Automotive Seating and Exhaust Systems, with Daimler for InteriorModules, with BMW and Toyota for Automotive Seating, with Chrysler for all business lines, and with Hyundai for Exhaust Systems. The Group also pursued its strategy of moving to areas with lower production costs in 2006.

SALES BY BUSINESS SEGMENT

Sales for the Automotive Seating business edged up 0.4% year-on-year, to €4,812.8 million, while at constant exchange rates theydipped by 0.2%. The figure dropped 3.9% in the first half of the year but then rose 4.0% in the second half. This second-half perfor-mance was fueled by the ramp-up in Europe of the Peugeot 207, the Ford Galaxy, the Citroën C4 Picasso, the Audi Q7 and the ToyotaYaris, as well as by the launch of the BMW Mini.Sales to French automakers slipped 14.5% in the second half of 2006 and 16.5% over the full year. On the other hand, North American sales climbed 12.9%, spurred by business with Chrysler (Sebring) and General Motors (Malibu, Pontiac G6 and Saturn Aura), as well as the start-up in the second half of the year of sales for the BMW X5. Growth in Asia was10.3%, led by sales to the Volkswagen Group.Sales for Vehicle Interiors came in at €3,458.0 million, a decrease of 0.7%, or 1.0% at constant exchange rates. Currency adjusted salesrose 1.4% during the first six months of the year, but declined 3.4% in the second half.In Europe, following a decline in the first half of the year, sales to French automakers slipped by an even stronger 8.9% in the secondhalf. This impact could not be offset by the ramp-up of the Mercedes-Benz S-Class, Peugeot 207, Volkswagen Passat and Audi Q7.Sales grew 21.6% in North America, boosted by business with Chrysler thanks to the ramp-up of the PT Cruiser and the launch of the Chrysler Sebring and Dodge Nitro.Overall, the Interior Modules segment posted sales of €8,270.8 million in 2006, down 0.1% on 2005, or 1.0% excluding the currencyimpact.Sales for Exhaust Systems continued to climb steeply, increasing 35.6% to €2,659.4 million. This rise was partly due to a 61.9% jumpin sales of catalytic converter monoliths (at constant exchange rates), reflecting a hike in precious metal prices – especially during thefirst half of the year – with platinum, palladium and rhodium up 27%, 59%, and 122% respectively.

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Other contributors to sales of catalytic converter monoliths included (i) the impact of Faurecia’s market share gains, particularly for HotEnd assemblies in North America, China and South Korea, and (ii) as the requirement for all European vehicles to adopt the Euro IVstandard at the beginning of 2006, leading to an increased quantity of precious metals used in pollution abatement equipment.Excluding catalytic converter monoliths and the negative 0.7% impact of exchange rates, sales of Exhaust Systems advanced 14.4%.Excluding catalytic converter monoliths, sales for this business line climbed 21.8% in North America – boosted by an increase in business with Ford (Fusion, Explorer and Edge at the end of the year) – and rose 48.3% in Asia, spurred by higher sales of exhaustlines for various Hyundai-Kia vehicles in South Korea and for Ford, Mazda, PSA Peugeot Citroën and Volkswagen in China.In Europe, sales of Exhaust Systems rose 4.1% excluding catalytic converter monoliths, buoyed by the Audi A6 and Mercedes-Benz A-Class and B-Class.Over full-year 2006, Front End sales dipped 2.9% to €718.5 million at constant exchange rates. However, the second half saw growth of2.0% thanks to the start-up of operations with Chrysler in the United States and the ramp-up of the Peugeot 207 and Renault Clio.Altogether, the Other Modules segment reported sales of €3,377.9 million in 2006, up 25.0% on the previous year. Excluding sales ofcatalytic converter monoliths, overall growth totaled 7.5%.

RESULTS

Operating income for 2006 amounted to €69.2 million – compared with €267.2 million one year earlier – and represented 0.6% of sales,down 1.8 point on the 2.4% recorded in 2005. For the second half of the year the Group recorded an operating loss of €15.9 million.

The overall decrease in operating income was attributable to the following factors:• a drop in business with French automakers;• persistent pressure on sales prices in a period of rising raw material and energy costs;• start-up costs related to the opening of new sites, particularly in the United States.Interior Modules (Automotive Seating and Vehicle Interiors) bore the brunt of the decline in profitability.

However, commercial negotiations – which are often difficult – are progressing in line with objectives and manufacturing performance is showing signs of improvement.Further to impairment tests carried out during the year, the Group recorded a €233.5 million impairment loss for certain intangible assetsand property, plant and equipment. Of this total, €197.8 million concerned Vehicle Interiors, breaking down as €125.0 million relating to goodwill and €72.8 million for other assets. These impairment losses reflect i) the difficulties encountered by the Group in passing onto automakers rises in raw material costs, especially plastics, and ii) forecast business volumes in Europe. The remaining €35.7 millionin asset impairment losses primarily concerned assets allocated to a loss-making program of the Automotive Seating business in the United States and reflect manufacturing issues specific to that program.EBITDA came to €587.5 million, or 5.0% of sales, versus €758.6 million (6.9% of sales) in 2005.Operating margin for Interior Modules fell from 1.9% to a negative 0.5% during the year. The Automotive Seating business – which hasthe Group’s largest and oldest manufacturing base – was particularly hit by the decrease in sales volumes in Western Europe.Meanwhile, Vehicle Interiors margins were weighed down by the impact of start-ups in the United States, but this was partially offset by operational improvements in Europe.Operating margin for Other Modules fell back from 4.1% to 3.4%, mainly due to the dilutive impact of the strong growth in sales of catalytic converter monoliths.Gross research and development costs decreased 2.9% to €610.6 million, corresponding to 5.2% of sales, compared with €628.1 million(5.7% of sales) in 2005. Excluding amounts billable to customers, R&D costs totaled €285.1 million, or 2.4% of sales, against €259.5 million(2.4% of sales) one year earlier. The increase in net R&D costs was primarily due to the reduction in Vehicle Interiors sales.Selling and administrative expenses totaled €357.1 million, representing 3.1% of sales, versus €320.5 million (2.9% of sales) in 2005.Half of this increase stemmed from an unfavorable basis of comparison in 2006 due to the positive impact of non-recurring reductions inpension costs in 2005, while the other half reflects the costs incurred in connection with the Group’s expansion outside Europe.

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“Other operating income and expense” – which represented a net expense of €386.0 million – mainly comprised:• an impairment loss of €197.8 million recorded in relation to the Vehicle Interiors business (excluding Automotive Seating), breaking

down as follows:– €125.0 million in goodwill impairment, and– €72.8 million in impairment of other assets;• an additional charge of €35.7 million, primarily corresponding to impairment of assets relating to an Automotive Seating program

in the United States;• a €20.9 million gain on disposal of assets, principally generated by the sale of manufacturing buildings in Spain;• an expense of €169.2 million for restructuring measures compared with €137.5 million in 2005. This amount corresponds to the cost-

cutting and manufacturing reorganization plans previously announced, which mostly concern operations in France and Germany.Net finance costs stood at €86.6 million, or 0.7% of sales, versus €65.5 million in 2005. This increase essentially stems from the impactof higher interest rates, with the average interest rate on the Group’s borrowings rising to 3.9% from 3.2% one year earlier.“Other financial income and expense” represented a net expense of €3.4 million, compared with a net expense of €12.6 million in 2005.This line primarily includes:• the impact of discounting pension benefit obligations, representing an expense of €9.5 million in 2006 (on a par with the year-earlier figure);• income of €7.9 million arising from mark-to-market adjustments of currency and interest-rate hedging instruments whose value

increased due to the rise in interest rates.The tax charge for 2006 was €35.2 million, compared with €52.8 million for the previous year. This amount does not directly reflect the level of consolidated pre-tax income for the year as no deferred tax assets have been recognized for the majority of tax losses madeby Group subsidiaries. The tax charge is primarily based on the income of profit-making subsidiaries.Equity in net income of companies accounted for by the equity method came to €4.4 million, versus €5.9 million in 2005.The Group ended the year with a consolidated net loss of €437.6 million, or €447.9 million after deducting minority interests of €10.3 million.The loss per share came to €18.72.

FINANCIAL STRUCTURE AND NET DEBT

Despite the decrease in operating income there was no significant change in the Group’s debt, mainly thanks to well managed capitalexpenditure. After a €48.6 million climb in debt during the first half of the year, the rise in the second half was limited to €45.7 million,resulting in an overall increase of €94.3 million for the full twelve months.Cash flow from operations totaled €330.6 million (2.8% of sales), down €190.5 million on the prior-year figure of €521.1 million (4.7% ofsales). This decline is mainly attributable to the Group’s lower operating income.Working capital requirement decreased by €64.6 million.Capital expenditure for the year amounted to €302.2 million, or 2.6% of sales, €131.7 million lower than the 2005 figure of €433.9 million,or 4.0% of sales. This reduction reflects the Group’s highly selective capital expenditure strategy, which focuses on the least capitalintensive solutions.Capitalized development costs were also slightly lower in 2006, coming in at €208.3 million versus €215.8 million one year earlier.Overall, net debt as of December 31 stood at €1,698.5 million, compared with €1,604.2 million as of end-2005.Due to the significant net loss reported for the year, shareholders’ equity decreased to €1,026.4 million from €1,475.9 million as of December 31, and the gearing ratio was 1.65, compared with the 31 December figure of 1.09.

Outlook

In 2007, Faurecia expects sales to grow at the same pace as in 2006, and operating income to improve as from the second half of theyear. In addition, the Group is aiming to significantly reduce its restructuring costs and keep a tight control over debt.

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Risk factors

FINANCIAL RISKS

Faurecia is essentially exposed to financial risks relating to fluctuations in interest rates and the ensuing impact on financial expense.

Interest - and exchange-rate risksA 1% increase or decrease in average short-term interest rates would have an impact on net financial expense of approximately €19.5 millionbefore tax and the effect of any interest-rate hedging.As of December 31 2006, 86.4% of the Group’s long-term debt was at variable rates, compared with 86.1% at end-2005.The main component of the Group’s fixed-rate debt is the €300 million bond issue carried out in October 2005.The table below provides a schedule of maturities of financial assets and liabilities, according to the interest repricing date.

REPRICING DATE

(in € millions) Within 1 year 1 to 5 years Beyond 5 years TotalIntraday to 1 year Fixed rate

Borrowings 1,940.5 4.0 340.6 0.0 2,285.1Cash and cash equivalents 586.6 586.6

Net balance sheet position 1,353.9 4.0 340.6 0.0 1,698.5

Fixed rate/variable rate swaps 4.0 4.0 0.0

Net position after hedging 1,357.9 0.0 340.6 0.0 1,698.5

Interest rates are managed centrally at General Management level, with the aim of reducing the volatility of net interest expense.Caps, swaps and other options in euros and US dollars continued to be taken out in 2006 to hedge interest on debt payable. In addition,floors were purchased in order to benefit from any lowering of medium-term interest rates on fixed rate debt.This policy has enabled the Group to hedge the majority of flows of interest payable in 2007 and 2008 and boost its interest cover ratiofor 2009.

(in € millions) 2007 2008 2009

Caps and other options 2,940 1,508 795Variable rate/fixed rate swaps 132 76 263Floors 639 75 225

3,711 1,659 1,283

Faurecia is also exposed to fluctuations in the exchange rates of certain currencies, particularly due to the location of some of its production sites. Faurecia’s exchange-rate risk mainly arises from the translation of results recorded by consolidated companiesoutside the euro zone. These companies, which accounted for 32.2% of Group sales in 2006, generally purchase and manufacturecomponents in their own currency without being exposed to exchange-rate risks other than the translation impact at the level of theFaurecia Group. For example, based on 2006 results, a 1% change in the euro exchange rate against any other currency would have hadan impact of some €0.7 million on consolidated operating income.The Group has set up a centralized exchange-rate risk management system for companies that carry some degree of exposure throughthe purchasing of raw materials or other goods, or through the sale of their production in a currency other than their own. The Grouphedges these risks using futures or options, or loans in foreign currencies, applying strict internal control guidelines under the super-vision of General Management.In addition, subsidiaries outside the euro zone have been granted inter-company loans in their functional currencies, totaling €321.9 millionas of December 31, 2006. As such loans are refinanced in euros, exchange-rate risk is hedged through swaps. Details of net balance sheetpositions and currency hedges are provided in note 27.1 to the consolidated financial statements.The off-balance-sheet commitments described above or mentioned in the notes to the consolidated financial statements include all significant information required to assess the Group’s financial position.

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Liquidity risksFor its financing, Faurecia has access to a medium-term syndicated line of credit of up to €1.6 billion which can be drawn down for renewable periods of one to six months. This line of credit was set up in 2004 and will expire in November 2009. In addition, inOctober 2005, Faurecia issued €300 million-worth of bonds, maturing in October 2010. This bond issue enabled the Group to diversifyits sources of financing.The syndicated line of credit is also used to guarantee liquidity for Faurecia’s commercial paper program, which is capped at €850 million.As of December 31, 2006, Faurecia had issued commercial paper representing a total amount of €484.3 million with maturities rangingfrom one month to one year.The bond indenture and the contract relating to the syndicated line of credit contain covenants based on consolidated financial ratios.These ratios are disclosed each half-year. Their value as of December 31, 2006 is presented in the table below.

Value as ofType of ratio Contractual ceiling/floor Dec. 31, 2006 June 30, 2006 Dec. 31, 2005 Dec. 31, 2004

Ratio Amount Ratio Ratio Ratio

Adjusted net debt (1)/EBITDA 3.50 ceiling 2.97 1,743.6/587.4 2.44 2.19 2.19EBITDA/net interest 4.50 floor 6.78 587.5/86.6 9.27 11.58 9.51

(1) Adjusted net debt = consolidated net debt + adjustments for certain commitments given, based on definitions provided in the credit contract (e.g. mortgages or collateralized liabilities).

Failure to comply with the above-mentioned ceiling/floor at a given reference date would entitle the lenders or bondholders to demandthe repayment of the borrowings concerned in advance of term.Each lender participating in the syndicated line of credit may individually demand the early repayment of its share of any drawdowns and terminate its participation in the contract, which would remain in force for the other lenders. Concerning the bond issue,bondholders are entitled to redemption at par of all or some of their bonds plus the accrued interest outstanding at the date on which the application for early redemption is made.

COMMERCIAL, LEGAL AND TECHNICAL RISKS

As a manufacturer and assembler of parts and components for the automotive industry, Faurecia is exposed to the risk of technical or commercial disputes. Adequate provisions are set aside to cover the risks relating these operations based on known factors and infor-mation available at the balance sheet date. None of these risks are sufficiently material on an individual basis to warrant further specificdisclosures.Although the risks of environmental damage caused by the Group are low, Faurecia pays particular attention to environmental issueswhen carrying out its business. The information on environmental protection provided in this report demonstrates the Group’s pro-activepolicy of controlling the impact of its equipment and products, as well as its constant drive to implement an environmental monitoringsystem tailored to the requirements of each site.Priority is also given to personal ethical conduct as part of the Group’s overall risk management approach, and will be even more closelymonitored in light of the behavior of certain individuals in Germany during the year. The Group could not avoid the media backlash thatcame after prosecutors in Frankfurt and Munich launched proceedings against certain of its employees. Internal and external auditswere performed further to these events which confirmed that they were isolated non-material incidents and that they did not have asignificant effect on the financial statements of the Company or the Group. A provision of €3.9 million has been set aside in relation tothese proceedings. The case brought in Munich has been closed and all of the individuals involved have left the Group. Against thisbackdrop, Faurecia has overhauled its Code of Ethics which has been widely communicated throughout the Group. In addition,employees have been provided with specific personalized training courses, particularly in Germany.Lastly, the Group has not identified any risk of technological dependence in relation to its products, modules and systems. This reflectsFaurecia’s pro-active strategy – implemented at its 28 R&D centers – to create its own designs and control the patents that are essentialfor its operations.

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INSURANCE

Faurecia’s system for safeguarding its assets is based on the implementation and ongoing adaptation of its risk prevention policy as wellas its strategy of transferring high-level risks to the insurance market.

Industrial risk-prevention policyFaurecia’s industrial risk prevention policy is part of the Group’s Health, Safety and Environment strategy. The aim is to reduce accidentscaused by fire and encourage Group sites to achieve excellence in fire safety by obtaining the HPR (Highly Protected Risk) label fromFaurecia’s insurer. Since 2005, the insurance premiums for sites that have been HPR certified have been reduced by 20%.The HPR policy is based on the following priorities:• regular safety audits, carried out every two years on average by the Group’s insurer. Some 80 fire safety audits were performed

in 2006. Approximately half of the Group’s sites are classified as HPR or pre-HPR. Four new sites – Deeside, East London, Pulversheimand Sandouville IS – were HPR certified in 2006 and substantially all of the sites audited during the year had their ranking eitherrenewed or upgraded. Some 100 further audits are planned for 2007. 90% of Faurecia’s plants and technical centers have beenaudited since the HPR policy was launched. The audit process for the Group’s Chinese sites began in 2005 and continued into 2006;

• incorporating fire safety factors into the early stages of any plant design or major refurbishing of existing sites, through compartmen-talizing and ensuring that adequate fire safety equipment is available;

• experience feedback: incidents are systematically analyzed and the findings circulated throughout the HSE network;• an Intranet-based fire safety management system developed by Faurecia, through which the HPR policy is relayed to the entire Group.

This system provides online information including audit findings, technical specifications, feedback and best practices.Three averagely serious incidents occurred in 2006 – (i) a storage warehouse for bumpers was destroyed by arson in Audincourt, France,(ii) a site used by a sub-contractor for injecting plastic parts produced by the Ourense site in Spain was burned down, and (iii) a fire brokeout on an injection molding machine in Méru, France.The two fires at Audincourt and Ourense were caused by factors beyond Faurecia’s control but the Group intends to boost its preven-tative measures in order to better protect its assets due to events involving suppliers or external parties working at our sites.

Risk transfer policyFIRE, PROPERTY AND CASUALTY, AND BUSINESS INTERRUPTION INSURANCE

On July 1, 2006, Faurecia renewed its fire, property and casualty, and business interruption insurance policy for two years with a leadinginsurance company.The premium payable under the renewed policy was reduced by 7% and the coverage conditions were improved. These changes reflectboth a downward trend in the insurance market as well as recognition by the insurance company of Faurecia’s risk prevention andreduction policy.The coverage for buildings and equipment is based on replacement value. Coverage is organized around a “Master” policy, whichincludes direct coverage for the “freedom of services area”, with local policies for subsidiaries in countries located outside this area.Special coverage has been set up in certain countries for specific risks such as natural disasters or terrorism.

LIABILITY INSURANCE

Faurecia renewed its liability coverage on January 1, 2007. The premium has been raised under this renewed policy due to a significantnumber of product liability claims in 2006.The Group’s liability insurance breaks down as follows:• operational liability;• product liability;• liability for environmental damage.Liability insurance takes the form of a “Master” policy combined with local policies taken out in countries where Faurecia has subsidiaries.

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Human resources and employee data

SKILLS DEVELOPMENT

Reflecting the Group’s strategy of providing excellent customer service, human resource management is a considerable competitiveadvantage for Faurecia and one of the keys to its success. The Group’s strategy in this area is based on two pillars: employeeempowerment and developing the potential of engineers and managers.

Employee empowermentEmployee empowerment is a fundamental lever for Faurecia’s industrial performance. Forming the basis of the Faurecia ExcellenceSystem (FES), it underpins the whole approach by building on the role of management and the skills of the Group’s teams, as well asworking methods that ensure changes are embedded over the long term. It is structured around six priorities:

TRANSFERRING SKILLS TO OPERATORS

Enhancing efficiency requires a reactive organizational structure, which is essential to the Group’s competitiveness. This entails reducingthe size of the Group’s teams, enabling managers to closely monitor and encourage team performance. Priority is given to identifyingand resolving problems as rapidly as possible and in close proximity to where they occur. Faurecia trains its operators to be flexible and multi-skilled in order to increase responsiveness and the ability to adapt to changing customer needs. In line with this strategy, the Group has also concentrated on having smaller teams at the manufacturing sites – an organizational structure that continued to berolled out in 2006. By the year-end, 88% of the Group’s teams were structured along these lines.

PROMOTING TEAMWORK

This is a necessity for Faurecia as it determines the Group’s ability to satisfy its customers’ requirements. In order to optimize the contri-bution of each team member and enhance team efficiency, we have standardized tasks. Implementing tried and tested work methodssuch as QRQC (Quick Response Quality Control) and focusing on continuous improvement strengthens the bond between teammembers, thus helping to make them more efficient. Pilot projects were set up in Saint-Michel, Bains-sur-Oust (France) and Valencia(Spain) to encourage greater involvement from teams in designing and improving the sites’ standards. These projects were successful,both in terms of their impact on performance and input from the employees concerned.

ENCOURAGING OPERATING INFORMATION FLOWS

Operating efficiency hinges on the ability to communicate quickly. By communicating daily with each team, problems can be dealt withmore swiftly. Operators at each level are responsible for solving problems and for informing their line manager if they cannot reach a solution on their own. Regular daily communication with management is now firmly established at 88% of the Group’s sites and hasproved its worth in terms of problem solving.

ENSURING CONTINUOUS PROGRESS

Employee empowerment makes continuous improvement the responsibility of teams and individuals. At Faurecia, each team is respon-sible for defining its performance indicators (QCDP: Quality, Cost, Delivery, People), measuring them and improving them. Each manageris responsible for orchestrating this process. The Group’s pilot site at Auchel in France has already made significant progress in terms of setting and monitoring objectives through changes in its organizational structure.

ENHANCING EMPLOYABILITY

Faurecia hones the technical and behavioral skills of employees by making them responsible and providing them with methods forworking as a team. Faurecia is a group that promotes the development of its personnel and therefore helps to increase their employability.

TRAINING EMPLOYEES

Training at all of Faurecia’s sites focuses on improving its industrial performance through the following:1. prioritizing costs, quality, deadlines, and safety;2. deploying the Faurecia Excellence System (FES);3. increasing product/process technical expertise;4. developing skills throughout all functions;5. strengthening managerial skills;6. reinforcing skills for working in an international environment.

Employee training measures were stepped up in 2006, with the number of hours of training received per employee climbing to 28 comparedwith 22 in 2005.This focus on employee training is a key factor in constantly boosting the Group’s industrial performance and enhancing individualemployability.

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Developing the potential of engineers and managersIn order to succeed both now and in the future, Faurecia needs the best teams of managers and experts, driven by the pursuit of excellent customer service. Consequently, the Group is committed to continually building the skills and motivation of its teams and identifying future needs.

CHANGING IN LINE WITH GROUP DEVELOPMENTS

Faurecia is keenly aware of the importance of constantly adapting resources in line with both changes in customer requirements and developments in the Group’s organization. In order to ensure that we keep up our standards of excellence while implementing thesechanges, during the year we continued to roll out our network of career management specialists for both managers and technical experts.

TAILORING RESOURCES TO CHANGING NEEDSPatterns adopted in 2005 in terms of engineering and managerial employees continued into 2006. Out of a total of 9,550 engineers andmanagers employed by the Group, some 40% work outside Western Europe. 70% of engineering and managerial recruitments weremade in the Group’s growth regions of North America, Central Europe, Asia and South America. At the same time, we continued to implement our policy of strengthening skill-sets in Western Europe by recruiting 44 technical experts brought in to work in new areasor to bolster our know-how of specific technologies.Over 79% of vacancies in Western Europe were filled internally. Mobility between product lines represented 20% of the total 1,700 employee mobility programs carried out. Some 80% of program manager positions and 72% of plant manager vacancies werefilled through in-house promotions. In 2006, we also reaped the initial benefits of our policy of building up talent pools, with 75% of senior management vacancies filled internally. At the same time, 55% of junior management positions were taken up by internalcandidates and we maintained our policy of hiring young graduates. We signed 66 contracts under the “VIE” international voluntaryinternship system during the year and 90% of VIE interns were recruited at the end of their internship contracts. We also extended our targeted graduate recruitment scheme to Germany, Poland, the United States and China and during the second half of the year, 69% of our graduate hires came from our selected universities and colleges, compared with 33% in the first half.

PERSONALIZED AND PRO-ACTIVE CAREER MANAGEMENT

Faurecia first and foremost encourages its engineers and managers to deepen their skills in their core discipline in order to hone theirexpertise and enhance the value of their experience. Within the Group’s support functions such as Purchasing, Human Resources,Finance and IT, as well as in Research and Development, over 85% of career moves are made within the domain of expertise of theemployees concerned.The possibility of moving into a different domain subsequently allows them to learn new technical expertise and acquire managerialskills. Over 450 engineers and managers worldwide moved into a new technical area in 2006, representing almost a third of the Group’semployee mobility figure.The Group has made internal promotion a priority and has set very high standards with a stated objective of promoting the nextgeneration of top managers and experts from within. In line with this aim, our promotion rate rose to almost 10% in 2006 compared with8% the previous year.Opportunities for personal development are available to everybody within the Group based on demonstrated individual performance and potential. Consequently particular focus is placed on managing internal staff career moves to ensure that employees hold suitable positions bothin the short and medium-term. Almost 75% of people identified as ready to change posts were effectively given new positions in 2006.Faurecia considers its experts and managers to be of vital importance to the Company and strives to ensure that both categories receiveequal recognition and are offered the same opportunities.2006 marked the second year of our process of identifying and rewarding the expertise of our employees, as a result of which weappointed 57 new specialists during the year. We also appointed five new senior experts, demonstrating our ability to strengthen thebusiness-specific skills required for each product line. We now have 174 experts, including 63 industrial specialists.Our intranet-based careers communication tool, Career Path, was visited 21,000 times during the year and was particularly popular at thetime of annual appraisals and career interviews. This interactive site has enhanced the communication process between engineers andmanagers concerning the best way to build their professional skills either within their current business or by moving to another position.

MANAGEMENT – KEY MEASURES FOR STRENGTHENING OUR RESOURCES

All of Faurecia’s managers play a key role in the development of the Group’s teams.In 2006, 1,200 managers attended training courses on assessing individual performance with a view to deepening their understanding ofthe procedures and aims of this annual process which is intended to raise employees’ awareness of their strengths and weaknesses.At the same time, the Group implemented the 360° assessment procedure for its senior managers, which paved the way for furtherenhancing managerial practices and leadership skills.

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In addition, we have drawn up new skills appraisal scales for sales, manufacturing methods, production and program management to round out those that already exist within other areas such as purchasing, human resources and finance. The Human Resourcesdepartment is responsible for coordinating the overall career management process and over 4,500 engineers and managers met indivi-dually with their career manager during the year.We have also created a brochure entitled “Your career at Faurecia” for all managers, which was downloaded 5,500 times during its firstmonth of availability. This document provides the Group’s engineers and managers with a deeper understanding of the careermanagement objectives applicable to their category of personnel, and what Faurecia expects of them, as well as giving a clear descriptionor roles and responsibilities.

BUILDING FOR THE FUTURE TODAY

At the 2006 Staffing Review, 5% of the Group’s top 900 engineers and managers were identified as high-potential employees. The collectivenature of the review process, from the shop floor right up to the Chairman, ensures the consistency of the whole procedure.Consolidating the two assessments – performance and potential – enables the Group to define succession plans for its managementteams at each level of the organization. In 2006, we were able to identify 76% of the successors for our management employees (173 people), compared with 66% in 2005. Out of the 2006 figure, 45% are available within a one-year timeframe.

A SPECIFIC PROCESS FOR ANTICIPATING FUTURE NEEDS

In 2006, the Group’s medium-term plan included for the first time an analysis of the impact on human resources of changes in our opera-tions. This assessment was carried out for four key positions – plant manager, program manager, quality manager and sales manager –in the four countries undergoing the most rapid changes, namely the United States, Germany, Poland and China.This approach should enable us to better leverage the individual skills and experience acquired by our employees within the Group and,in parallel, effectively measure and forecast our requirements.

A CONSISTENT TRAINING APPROACH

As well as defining the Group’s leadership profile and seven key behavioral values, we have designed and implemented a training systemaimed at developing the career paths of our young talent, providing strategic training for senior managers, and building teammanagement skills. The system will be rounded out in 2007 through additional training modules concerning communication and teammanagement.

Faurecia UniversityTRAINING PROGRAMS SERVING GROUP NEEDS

In 2006, the Group continued to focus on personal skill development for its employees via the training courses provided by FaureciaUniversity. During the year 3,651 employees from 20 countries attended at least one of the 251 courses given by the University.In tandem, by working in close cooperation with the Group’s Industrial Management department, the University has taken measures to structure its training courses, particularly concentrating on providing internal trainers and on-site programs and workshops geared to the Group’s equipment and methodology. These programs, combined with those offered under in-house training courses as part of the Faurecia Excellence System (FES), have helped the FES to take root throughout the Group and at the same time have significantlycontributed to our operating performance. Faurecia University has also developed a sales team program in conjunction with the GroupCustomer Development department which will be delivered by sales and marketing managers. This new program will complement the existing Purchasing and Human Resources programs and will focus on the roles and responsibilities, processes and key objectivesof the sales function within the Group.During the year, we also pushed forward with our drive to enhance the skill-sets of employees identified as holding key positions. Buildingon existing programs for both current and future production and program managers, we set up a new program in 2006 for managers of Autonomous Production Units and production supervisors. These positions are considered essential for the Group as they concernmanagers who are responsible for constantly improving our production performance. In 2007, this new program will be simultaneouslylaunched in seven of the Group’s main host countries.Lastly, we continued to invest in our current and future leaders through the Global Leadership Program (GLP). In 2006, 181 employeesparticipated in GLP programs including 29 who followed the GLP III in partnership with the prestigious INSEAD Business School.

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NUMBER OF PARTICIPANTS

2006 2005 % change

Leadership development 181 111 63%Replacement of key positions 70 73 –4%Job-specific development 324 231 40%Foundational skills 2,268 3,691 –39%Manufacturing training 808 620 30%

Total 3,651 4,726 –23%

Talent sourcing within the Group

ATTRACTING AND RETAINING THE NECESSARY RESOURCES AND SKILLS

In 2006, the Group recruited a total of 1,650 managers on fixed-term and open-ended contracts throughout the world. As expected, the breakdown of these new hires reflects the Group’s expansion in Eastern Europe (which accounted for 16% of the new managerialrecruits), Asia (12%) and the Unites States (30%) as well as the restructuring measures in progress in Western Europe (38%).This shift in our hiring requirements led to increased recruitment difficulties but at the same time contributed to reducing employeeturnover. Candidates with the right skills are becoming rare in numerous countries where the Group operates – a trend that looks set to amplify in coming years.Recruiting the right talent is a major strategic issue for Faurecia and with this in mind the Group has decided to set up Talent Sourcingfunctions in its main host countries of China, France, Germany, Poland, Slovakia and the United States. The aim of this process is to significantly increase both the volume and quality of recruitment candidates through measures such as developing partnerships withtargeted universities and colleges, improving employee integration processes and using a selected panel of recruitment agencies andconsultancies. In addition, the Talent Sourcing function contributes to reducing HR costs.Through all these measures, the Talent Sourcing function – in conjunction with the Management Development network – plays a key rolein building up the Group’s talent pool and facilitates internal mobility. The Group’s priority in this area is to attract, promote and retain thebest talent, which it intends to achieve by initiatives such as recruiting graduates (34% of external recruitments in France) from selectedinstitutions (20% of graduate recruits in France), as well as keeping down the number of external hires and providing career opportunitiesto existing employees (61% of the internal mobility figure in 2006).

STRENGTHENING ECONOMIC AND SOCIAL DIALOG

A focus on contractual negotiationsIn 2006, the Group made further strides in applying its policy of consulting and negotiating with employee representatives, with some184 agreements signed during the year, versus 130 in 2005. 30% of these new agreements concerned salaries and benefits, comparedwith 53% in 2005; 30% related to work organization (23% in 2005); 13% dealt with the employee-related aspects of restructuringmeasures (6% in 2005); and 26% involved other issues (18% in 2005). France accounted for 99 of these agreements in 2006 andGermany 47. By negotiating and consulting with employee representatives in these two countries, we were able to maintain jobs andcontain employee-related expenses.Faced with a considerable drop in business from our customers in France, we negotiated changes in employee working hours and short-time working systems in order to limit the impact of this situation on our employees. In France we also entered into industrial disputeprevention agreements which provide that periods of social dialog and discussions with employee representatives must take placebefore any strikes or similar measures may be launched. The overriding aim of these agreements is to protect the combined interests of both our customers and our employees.

Relocating manufacturing facilities and employeesAfter opening ten new sites in 2004 and nine in 2005, the Group opened fifteen new sites in 2006 including seven in the United States,four in Eastern Europe, two in Asia, one in the United Kingdom and one in Iran.Faurecia continually adapts its structure and processes based on the life cycle of vehicles (launch, development and end-of-life)and the degree of their success. We also need to be present in certain areas to partner our customers in their internationalexpansion. All of these factors mean that the Group constantly has to relocate manufacturing facilities and employees. 2005 and2006 were particularly important years in terms of reorganization due to the difficulties encountered by global automakers and theirshift towards “low-cost” countries.In the United Kingdom, we ceased operations at our Coventry site due to the closure by PSA of its site at Ryton. As a result of Volkswagen’s announcement that it is stopping production of the Golf in Belgium, we will have to consider similar measures for ourBrussels site which specializes in Vehicle Interiors and makes parts exclusively for the Golf.We also had to significantly reorganize our plants in Spain (Madrid and Valladolid) and the United Kingdom (Deeside) in order to scaledown our production in line with capacity reductions made by our customers.Further to the €137.5 million spent in 2005 to finance the restructuring of manufacturing facilities, the Group incurred a total

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of €169.2 million in 2006, for measures affecting over 3,000 jobs, primarily in Western Europe (46% in France, 21% in Germany and 7% in Spain and Portugal). Each restructuring operation followed even greater in-depth discussions with employee representatives thanin previous years, with a view to i) restricting the number of redundancies by finding other positions within the Group; and ii) reducing theimpact of the redundancies that were necessary by providing employees with outplacement assistance and encouraging voluntarydepartures for employees who had found an alternative solution. In line with this aim, negotiations in France led to the signature of framework agreements for managing restructuring operations and the employee assistance measures provided.Framework agreements enable the Group to define and oversee the information, consultation and negotiation processes that go hand-in-hand with restructuring operations. They also provide employee representatives with a better understanding of the overall process.The Group also uses employment and skills forecasting and planning agreements (GPEC) to determine and organize the measures it needs to implement due to inevitable changes and developments in skill-sets and employment requirements. These agreements dealwith the quantative and qualitative aspects of forward-looking planning. For example, the GPEC agreement signed within FSA providedfor a 387 person reduction in the company’s workforce and more than 90% of that figure was achieved through voluntary redundancies.Other companies, such as FAI and FBA, have also reaped the benefits of GPEC agreements.Lastly, framework agreements were signed during the year in relation to employee assistance measures provided for as part of compulsory layoff plans including worker adjustment and retraining plans agreed with employee representatives at FI (for its Hénin-Beaumont and Audincourt sites), EAK in Valentigney, FSA (for its sites at Brières, Nogent-sur-Vernisson and Cercy-la-Tour), and Sotexo(for its Brebières site).Wherever possible, the Group carries out its relocation and restructuring measures in a way that is aimed at limiting the impacts on its employees. With this objective in mind it has set up multi-year adaptation plans, notably within FSA in France (GPEC 2005-2008),as well as at Stadthagen in Germany where a framework agreement was signed concerning 364 departures between 2006 and 2008.

Compensation and benefitsTotal payroll costs for the Group, including social security charges, climbed 7.6% in 2006, from €1,954.6 million to €2,104.3 million,while headcount rose 5.2%. The Group complies with minimum wage legislation in force in each country. In most countries, salaryincreases and changes in other components of compensation or benefits are determined on the basis of negotiations. Such negotiationsled to the signature of more than 74 agreements within the Group in 2006.The Group has set up a variable compensation system for personnel in key positions, which is applied in an identical manner in all countries where the Group operates. The applicable eligibility criteria were amended for managerial employees in 2006, and around2,000 managers out of a total of 8,500 were covered by the system during the year. Variable compensation – corresponding to a bonus –is calculated by reference to both collective and individual performance targets.In 2006, Faurecia clarified the eligibility rules for granting company cars in Central Europe and China and drew up a formal policyconcerning both company cars and national mobility.Amounts paid to employees in the form of incentive bonuses and profit-sharing came to approximately €12 million in France, on a par with2005, although the incentive bonus portion accounted for the bulk of the 2006 figure (66% of the total amount paid versus 23% in 2005). Voluntary payments into the profit-sharing scheme continued to rise, representing €0.7 million, of which €81,000 correspondedto top-up payments for investments in Faurecia shares.At the same time, the Group Employee Savings Plan set up in 2004 was once again highly successful, with some €3.8 million paid intoits various funds. Voluntary payments held firm in 2006, after increasing 30% in 2005.The available forms of investment under this plan were enhanced during the year to include a real-estate fund. Also in 2006, a newsupplementary pension scheme was set up for managers in France. Amounts paid into this scheme totaled almost €5 million during the year, mainly funded by the Company.Lastly, the Group continued with its project to harmonize employee benefits throughout its entities, notably concerning the simplificationof mobility conditions.

The European Works CommitteeIn 2006, the European Works Committee was provided with information concerning measures undertaken to relocate manufacturingfacilities, as well as the Group’s financial results and strategic objectives. Part of the work undertaken during the year was devoted to preparing the renewal of the agreement related to organizing the Committee’s procedures. This agreement was signed in 2003 for a four-year period and is scheduled to be reviewed during the course of 2007.

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EMPLOYEE DATA

YEAR-ON-YEAR CHANGES IN TOTAL HEADCOUNT

2006 2005 Year-on-year change

Faurecia Temporary Total Of which Faurecia Temporary Total Of which Faurecia Temporary Total Change in head- staff headcount % CDI* headcount staff headcount % CDI* headcount headcount headcount proportioncount of CDI* (%)

Western Europe 35,583 4,716 40,299 82.4% 37,306 5,199 42,505 82.4% –4.6% –9.3% –5.2% 0.1of which France 17,551 2,725 20,276 84.5% 18,797 3,351 22,148 83.2% –6.6% –18.7% –8.5% 1.3

Central Europe 8,563 1,371 9,934 71.0% 6,466 526 6,992 60.3% 32.4% 160.6% 42.1% 10.7North America 8,191 1,171 9,362 80.2% 6,379 579 6,958 85.5% 28.4% 102.2% 34.6% –5.2South America 1,935 99 2,034 88.9% 1,890 34 1,924 92.8% 2.4% 191.2% 5.7% –3.8Asia 2,343 431 2,774 61.7% 1,793 275 2,068 35.8% 30.7% 56.7% 34.1% 25.8Other 1,195 84 1,279 84.8% 1,122 153 1,275 70.1% 6.5% –45.1% 0.3% 14.7

Faurecia 57,810 7,872 65,682 79.8% 54,956 6,766 61,722 78.7% 5.2% 16.3% 6.4% 1.0

* Employees on an open-ended contract (contrat à durée indéterminée).

Total headcount grew by 3,690, or 6.4%, mainly due to an additional 2,854 people on Faurecia’s payroll. The number of staff employed on open-ended contracts increased in value terms but in proportional terms only rose from 78.7% in 2005 to 79.8% in 2006, as a result of higher numbers of temporary contracts during the year.

YEAR-ON-YEAR CHANGES IN FAURECIA HEADCOUNT

2006 2005

Operators TFA* Managers & Total Operators TFA* Managers & Total Year-on-& workers professionals & workers professionals year change

Western Europe 22,260 6,824 6,499 35,583 23,146 7,356 6,804 37,306 –4.6%of which France 10,489 3,339 3,723 17,551 11,402 3,504 3,891 18,797 –6.6%

Central Europe 6,337 1,409 817 8,563 4,690 1,134 642 6,466 32.4%North America 5,756 838 1,597 8,191 4,192 896 1,291 6,379 28.4%South America 1,228 442 265 1,935 1,313 347 230 1,890 2.4%Asia 1,228 447 668 2,343 1,048 351 394 1,793 30.7%Other 892 208 95 1,195 815 204 103 1,122 6.5%

Faurecia 37,701 10,168 9,941 57,810 35,204 10,288 9,464 54,956 5.2%

* Technicians, foremen and administrative staff.

Faurecia headcount rose 5.2% in 2006 compared with 1.0% the previous year. Year-on-year changes were mixed across geographicregions, however, reflecting trends in the global automotive market as well as in the industry of automotive equipment suppliers.• In Western, Europe Faurecia headcount decreased by 4.6% (down 6.6% in France).• In all of the other major geographic regions, headcount increased significantly, particularly in Central Europe, North America and Asia

(up 32.4%, 28.4% and 30.7% respectively).

YEAR-ON-YEAR CHANGES IN FAURECIA HEADCOUNT BY TYPE OF CONTRACT

2006 2005 Year-on-year change

CDI* CDD** Total CDI* CDD** Total CDI* CDD** Total

Western Europe 33,221 2,362 35,583 35,005 2,301 37,306 –5.1% 2.7% –4.6%of which France 17,128 423 17,551 18,431 366 18,797 –7.1% 15.6% –6.6%

Central Europe 7,052 1,511 8,563 4,217 2,249 6,466 67.2% –32.8% 32.4%North America 7,513 678 8,191 5,949 430 6,379 26.3% 57.7% 28.4%South America 1,809 126 1,935 1,785 105 1,890 1.3% 20.0% 2.4%Asia 1,711 632 2,343 741 1,052 1,793 130.9% –39.9% 30.7%Other 1,085 110 1,195 894 228 1,122 21.4% –51.8% 6.5%

Faurecia 52,391 5,419 57,810 48,591 6,365 54,956 7.8% –14.9 % 5.2 %

* Open-ended contracts (contrats à durée indéterminée).** Fixed-term contracts (contrats à durée déterminée).

The proportion of staff on fixed-term contracts fell 14.9% from 11.6% in 2006 to 9.4% in 2005.The form of a number of contracts was switched from fixed-term to open-ended in 2006, including 2,365 in Central Europe and 1,060 in Asia. These changes were due to amendments to the classification rules for such contracts in these regions, providing that fixed-termcontracts of more than two years must be treated as contracts with an indefinite term. The data for 2005 has been adjusted accordinglyto facilitate year-on-year comparisons. The increase in the number of fixed-term contracts in Western Europe is primarily attributable to the fact that an additional 82 apprentices were taken on in France compared with 2005.Meanwhile, the number of open-ended contracts was up 7.8%, with all regions except Western Europe contributing to the rise.

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AGE DISTRIBUTION BY GENDER IN 2006

Faurecia headcount < 20 20 – 29 30 – 39 40 – 49 > 50 Total

M F M F M F M F M F M F

Operators & workers 575 307 8,239 3,001 8,721 3,201 6,265 2,528 3,460 1,404 27,260 10,441TFA* 93 42 1,850 774 2,615 1,025 1,856 586 993 334 7,407 2,761Managers & professionals 1 2 1,413 554 3,479 920 2,143 314 998 117 8,034 1,907

Total 669 351 11,502 4,329 14,815 5,146 10,264 3,428 5,451 1,855 42,701 15,109


Women account for 26.1% of all Group employees, representing a year-on-year increase of 1 percentage point.The number of female workers rose 9.6% in 2006.Faurecia is a relatively youthful Group, with approximately 63% of staff under the age of 40 and 30% under 30. A total of 7,306employees are over 50, accounting for 12.6% of the overall headcount.For all age brackets the breakdown by staff category remained stable year-on-year, with 65% of headcount corresponding to manualworkers, 17% to technicians, foremen and administrative staff, and 17% to managers.

YEAR-ON-YEAR CHANGES IN EXTERNAL RECRUITMENT BY TYPE OF CONTRACT

Faurecia headcount 2006 2005 Year-on-year change

CDI* CDD** Total CDI* CDD** Total CDI* CDD** Total

Western Europe 1,005 2,268 3,273 1,554 1,886 3,440 –35.3% 20.3% –4.9%of which France 472 377 849 906 315 1,221 –47.9% 19.7% –30.5%

Central Europe 1,806 2,507 4,313 517 1,449 1,966 249.3% 73.0% 119.4%North America 2,885 2,077 4,962 2,140 1,890 4,030 34.8% 9.9% 23.1%South America 390 104 494 486 99 585 –19.8% 5.1% –15.6%Asia 332 583 915 116 702 818 186.2% –17.0% 11.9%Other 206 227 433 121 204 325 70.2% 11.3% 33.2%

Faurecia 6,624 7,766 14,390 4,934 6,230 11,164 34.3% 24.7% 28.9%

* Open-ended contracts (contrats à durée indéterminée).** Fixed-term contracts (contrats à durée déterminée).

The above table shows year-on-year changes in external recruitment, excluding the impact of switches from fixed-term to open-ended contracts.In 2006, the number of external hires rose 34.3% for open-ended contracts, 24.7% for fixed-term contracts, and 28.9% overall. There were significant contrasts across the geographic regions, however, with external recruitment in Western Europe and SouthAmerica down 4.9% and 15.6% respectively, while Central Europe, North America and Asia posted rises of 119.4%, 23.1% and 11.9%.

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M< 20 20 – 29 30 – 39 40 – 49 > 50

669

F

351

M

11,502

M

14,815

M

10,264

M

5,451

F

4,329

F

5,146

F

3,428

F

1,8552,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

AGE DISTRIBUTION BY GENDER IN 2006


YEAR-ON-YEAR CHANGES IN EXTERNAL RECRUITMENT BY STAFF CATEGORY

Faurecia headcount 2006 2005

Operators TFA* Managers & Total Operators TFA* Managers & Total& workers professionals & workers professionals

Western Europe 2,127 541 605 3,273 2,050 605 785 3,440of which France 202 219 428 849 468 207 546 1,221

Central Europe 3,516 540 257 4,313 1,420 359 187 1,966North America 4,097 362 503 4,962 3,132 394 504 4,030South America 249 184 61 494 326 188 71 585Asia 528 183 204 915 489 157 172 818Other 374 39 20 433 235 64 26 325

Faurecia 10,891 1,849 1,650 14,390 7,652 1,767 1,745 11,164


The total number of external hires climbed by 3,226 to 14,390 in 2006 from 11,164 one year earlier, mainly due to the recruitment of 3,239 additional manual workers. This category of staff accounted for 76% of the aggregate number of external hires in 2006 versus 68% the previous year. Technicians,foremen and administrative staff represented 13% and managers 11%, compared with 16% for both of these categories in 2005.Overall, the picture was extremely mixed between (i) Western Europe and South America, where external hires retreated by 6.4% forboth regions and (ii) Central Europe, North America and Asia, where recruitment levels were 49.5% higher than in 2005.

SWITCHES FROM FIXED-TERM TO OPEN-ENDED CONTRACTS – YEAR-ON-YEAR COMPARISON


Operators TFA* Managers & Total Operators TFA* Managers & Total& workers professionals & workers professionals

Western Europe 692 96 68 856 418 100 44 562of which France 15 10 30 55 41 16 19 76

Central Europe 1,952 339 74 2,365 407 77 62 546North America 711 55 24 790 555 55 22 632South America 0 16 0 16 6 1 0 7Asia 513 222 325 1,060 9 33 59 101Other 145 8 1 154 33 1 0 34

Faurecia 4,013 736 492 5,241 1,428 267 187 1,882

* Technicians, foremen and administrative staff

The number of transfers from fixed-term to open-ended contracts increased from 1,882 to 5,241 in 2006. The rises mainly occurred inCentral Europe and Asia, up by 1,919 and 959 respectively.

DEPARTURES (BROKEN DOWN BY REASON) – YEAR-ON-YEAR COMPARISON


Resignations Individual Collective Other Total Resignations Individual Collective Other Total(open-ended dismissals redundancies (open-ended dismissals redundancies

contracts) contracts)

Western Europe 1,077 1,118 945 1,689 4,829 1,059 1,452 859 1,968 5,338of which France 420 485 465 551 1,921 413 654 138 506 1,711

Central Europe 960 460 1 801 2,222 497 395 5 388 1,285North America 928 1,267 30 946 3,171 719 1,283 10 584 2,596South America 69 321 0 64 454 91 283 0 37 411Asia 148 80 69 235 532 84 88 31 212 415Other 113 40 0 207 360 111 31 94 352 588

Faurecia 3,295 3,286 1,045 3,942* 11,568 2,561 3,532 999 3,541 10,633

* Of which 3,446 on expiry of fixed-term contracts.

The number of employees who left the Group in 2006 totaled 11,568 against 10,633 the previous year, representing an increase of 8.8%. Of these departures, 30% corresponded to the expiry of fixed-term contracts while resignations and individual dismissals each represented almost 28%. There was a 10.0% rise in collective redundancies in Western Europe during the year.The number of resignations also increased significantly, especially in North America (up by 209) and Central Europe (up by 463).

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TRAINING HOURS – YEAR-ON-YEAR COMPARISON


Total Training hours Total Training hours training hours per employee training hours per employee

Western Europe 695,767 21 761,011 20of which France 292,227 18 367,259 20

Central Europe 392,359 54 152,114 24North America 197,429 28 162,024 25South America 56,136 33 48,108 25Asia 85,904 42 76,887 43Other 37,155 32 17,280 15

Faurecia 1,464,750 28 1,217,424 22

Group policy is to significantly increase training programs for all staff categories, especially for operators at its sites.Training hours per employee came to 28 in 2006, compared with 22 in 2005 and 20 in 2004.In Western Europe the number of hours remained more or less the same in 2006 as the previous year, apart from France whichexperienced a slight decline due to disruption of business during the year. This issue will be a priority in 2007, however.

EXPATRIATES BY DESTINATION – YEAR-ON-YEAR COMPARISON

2006 2005

Western Europe 81 84of which France 34 32

Central Europe 57 48North America 60 58South America 4 3Asia 52 58Other 12 11

Faurecia 266 262

The steady high levels of expatriate numbers and their widely diverse backgrounds reflect the Group’s international expansion policy.

DISABLED EMPLOYEES – YEAR-ON-YEAR COMPARISON

2006 2005

Western Europe 1,048 1,076of which France 712 761


Faurecia 1,094 1,129

Faurecia employs more than 1,100 disabled people in Western Europe.The criteria used to define disabled employees are those established in the legislation of each country. In Western Europe – particularlyFrance – such legislation tends to favor a more proactive approach than in other countries.The slight 2.6% decrease in disabled employees in France during 2006 was less than the 4.6% decline in overall headcount for the country. Year-on-year, the proportion of disabled workers in France increased from 4.1% to 4.2%.

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WORK SCHEDULE IN 2006

Faurecia headcount

Faurecia headcount Two 8-hr shifts (1) Three 8-hr shifts (2) Weekend (3) Other Total

Western Europe 11,785 8,719 187 14,892 35,583of which France 6,723 2,835 149 7,844 17,551

Central Europe 1,596 4,433 520 2,014 8,563North America 2,120 2,780 147 3,144 8,191South America 61 1,099 0 775 1,935Asia 803 339 169 1,032 2,343Other 381 371 9 434 1,195

Faurecia 16,746 17,741 1,032 22,291 57,810

(1) Work based on two teams.(2) Work based on three teams.(3) Reduced weekend hours.

The Group’s work schedule is aimed at meeting customer needs, based on production capacity at our sites. Shift working or weekendworking mainly concern the production sites and accounts for 61.4% of Faurecia’s headcount.

PART-TIME STAFF – YEAR-ON-YEAR COMPARISON

Part-time Part-time staff – 2006 staff – 2005

Western Europe 624 654of which France 395 427


Faurecia 626 662

Substantially all of the Group’s part-time employment contracts concern Western Europe, particularly France.Part-time staff accounted for 2.2% of all of the Group’s employment contracts in 2006, versus 2.3% in 2005.

OVERTIME – YEAR-ON-YEAR COMPARISON

2006 2005

Overtime % hours Overtime % hours(in hours) worked (in hours) worked

Western Europe 1,041,643 1.7% 1,160,358 1.8%of which France 288,237 1.0% 317,233 1.0%

Central Europe 1,011,732 7.0% 756,457 6.4%North America 1,672,647 11.1% 1,350,329 11.0%South America 206,096 6.6% 188,176 5.7%Asia 655,973 14.6% 310,471 9.4%Other 239,708 9.1% 229,372 8.3%

Faurecia 4,827,798 4.7% 3,995,163 4.0%

The criteria for overtime are established in accordance with the legislation of each country.The overall 0.7 percentage point rise between 2005 and 2006 mainly stems from high increases in Central Europe (0.6 point), SouthAmerica (0.9 point) and Asia (5.2 points). Overtime hours worked in the other regions remained stable.

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ABSENTEEISM – YEAR-ON-YEAR COMPARISON

Absenteeism Absenteeism rate 2006 rate 2005

Western Europe 3.4% 3.7%of which France 3.3% 3.8%

Central Europe 3.2% 3.2%North America 1.8% 2.0%South America 2.4% 2.6%Asia 0.7% 0.6%Other 3.4% 3.8%

Faurecia 3.0% 3.3%

Absenteeism reported in 2005 and 2006 was due to illness, workplace accidents and various unauthorized absences. The absenteeismrate fell by a sharp 9% year-on-year, reflecting an improvement in all geographic regions except for Asia, where the rate rose slightly butstill remains at a very low level.

SUBCONTRACTING IN 2006

One-off subcontracting projects Ongoing subcontracting Total

Western Europe 743 1,204 1,947of which France 314 518 832

Central Europe 127 353 480North America 357 136 493South America 165 222 387Asia 22 61 83Other 52 94 146

Faurecia 1,466 2,070 3,536

SOCIAL AND CULTURAL ACTIVITIES IN 2006

(in € thousands) Accommodation Transport Catering Medical Supplementary Subsidies Totalservices health

insuranceand personal

risk

Western Europe 7,767 5,489 5,976 2,890 11,626 4,762 38,510of which France 7,352 3,919 2,961 1,925 10,247 4,641 31,044

Central Europe 160 1,513 1,361 413 291 12 3,750North America 189 542 174 521 164 34 1,625South America 1,341 817 1,212 986 25 70 4,452Asia 1,829 996 337 985 112 79 4,338Other 1 209 255 78 28 0 571

Faurecia 11,287 9,567 9,315 5,873 12,247 4,956 53,245 FIN

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Environmental data

HEALTH AND SAFETY AND WORKING CONDITIONS

Health, Safety and Environment organization (HSE)The Faurecia Group’s policy in terms of health and safety and working conditions hinges on three main objectives – ensure the protectionof employees’ health and improve the safety of employees at their workstations; reduce the risk of fire; and minimize the environmentalimpact of its operations.In order to implement this policy, a Group Health, Safety and Environment (HSE) unit has been set up within the Group Quality Department.The roles of this unit are to (i) recommend HSE strategies and goals to Senior Management; (ii) monitor new legislation and regulations thatconcern the Group’s businesses; (iii) define and relay the applicable rules and procedures; (iv) provide self-assessment tools; (v) orches-trate, advise and help the HSE network; (vi) coordinate HSE site audits; and (vii) consolidate the HSE data of Group entities.An Eco-design team has been attached to this unit since the end of 2005, tasked with monitoring changes in regulations and customerrequirements, as well as with promoting new techniques focused on saving natural resources and protecting the environment. This teamis also responsible for detecting any obstacles to Faurecia’s eco-design strategy and putting forward appropriate solutions toManagement. Some 20 coordinators for the various business segments oversee the rollout of the adopted measures to each site, wherean HSE coordinator is appointed by site management. There must be one professional HSE coordinator per 500 employees at any givensite. An Intranet site provides a link between these various players ensuring that the HSE policy is consistently applied at all sites acrossall countries.This report presents the overall results of HSE measures taken during 2006. The information shown is collected from every site on atwice-yearly basis, and the response rate usually corresponds to over 90% of employees. The survey process was audited in early 2007by PricewaterhouseCoopers on behalf of Faurecia’s majority shareholder. The auditors concluded that the process provided a moderatelevel of assurance concerning the validity of the related data.

The Group’s HSE policyThe Group’s HSE policy is clearly outlined in two documents that define Faurecia’s core principles, namely the Mission Statement andthe Code of Ethics. These principles provide the basis for HSE policies in all Faurecia sites worldwide.

LEGAL COMPLIANCE (CODE OF ETHICS):

“Faurecia companies must comply with all applicable laws and regulations in the countries in which they conduct business. It is thepersonal responsibility of all our employees to be aware of these laws in the context of their job, location and environment.”The Faurecia Group is strongly committed to complying with the relevant laws and requires its employees to be aware of their legal duties.

ETHICAL TRADING STANDARDS (CODE OF ETHICS):

“Faurecia employees shall act with integrity and honesty in the conduct of business with suppliers. Faurecia shall submit a fair, externallyaudited presentation of its business operations and accounts in its annual financial statements.”The Faurecia Group does not work with any suppliers that practice social or environmental dumping.

ETHICAL STANDARDS WITHIN THE GROUP (CODE OF ETHICS):

“Faurecia companies are committed to implementing pro-active policies and measures to prevent health and safety risks in theworkplace, as well as to monitoring their correct application and measuring their effectiveness. In addition, all subcontractors working onany Faurecia Group company’s premises are required to adhere to the same health and safety policies and regulations.”

ETHICAL STANDARDS WITHIN THE COMMUNITY (CODE OF ETHICS):

“The following environmental protection principles must be respected by Faurecia personnel worldwide in the conduct of their dailybusiness:• We are committed to reducing waste and pollutants, conserving natural resources, and recycling materials at every stage of the

production cycle;• We will continue to actively pursue our policy to develop and implement technologies for minimizing pollutant emissions;• We will continually assess the impact of our products and operations on the environment and our host communities, with a goal of

constant improvement.”

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FAURECIA’S EXPERTISE (MISSION STATEMENT):

“We are experts in the development, design, manufacture and delivery of major modules for light vehicles.”In terms of recyclability and the materials used, the Faurecia Group is committed to designing and developing modules that minimizeenvironmental impacts, in accordance with applicable regulations and our customers’ needs.

ENVIRONMENTAL PROTECTION (MISSION STATEMENT):

“We are committed to environmental preservation and social responsibility.”

PROTECTING EMPLOYEE HEALTH AND ENSURING SAFE WORKING CONDITIONS (MISSION STATEMENT):

“We are committed to providing a motivating, healthy and safe working environment for all employees worldwide.”

SAFETY

Safety in the workplace is one of the building blocks of the Group’s search for excellence embodied in the Faurecia Excellence System(FES). It is an absolute requirement for the respect of employees, which every facility must satisfy. In order to achieve the new goal set in2005 of reducing the rate of accidents within the Group to three per million working hours by the end of 2008, Faurecia continued tostrengthen its commitment to safety and better working conditions throughout the year:• At Group level, the HSE Intranet site presents the Group’s HSE standards within the scope of the Faurecia Excellence System, thus

highlighting the strategic fit of HSE activities with other ongoing projects.• At business unit level, the enhancement of ergonomic know-how has resulted in the design and roll-out of additional innovative tools.• At Production Division level, the HSE network has been further strengthened through the creation of several HSE coordinator positions,

enabling new projects to be monitored from an HSE perspective.• At the industrial sites, training of management committees and line management on civil and criminal liability issues, and the

implementation of HSE core teams on the shop floor has already led to an increase in on-site risk prevention measures.

Workplace safety indicatorsThe results of initiatives in this area are measured using the frequency rate of workplace injuries.• The Group’s excellence indicator is the FR0t, which corresponds to the number of workplace accidents with lost time/hours worked

x 106. This represents the number of workplace accidents per million hours worked (e.g. a FROt of 5 corresponds to 5 workplaceaccidents per million hours worked).

• With a view to providing more comprehensive information, this indicator has been extended at operating level to take into accountaccidents with and without lost time, and is now referred to as FR1t.

• First aid processes are now monitored across the board at the level of “UAP” (Autonomous Production Units), with a view to furtherincreasing responsiveness and promoting production teams’ responsibility for post-accident reviews.

In order to guarantee the same level of workplace safety for all employees, temporary workers are included in calculations of theindicators in the same manner as permanent staff.The steady decline in the frequency of workplace accidents – down 25% during 2006 – for all Group activities, and a correspondingdecrease in the severity of injuries, are extremely encouraging.

Frequency rate December 2001 December 2002 December 2003 December 2004 December 2005 December 2006 2006-2005

Group 28.1 20.8 16.1 8.7 5.6 4.2 –25%

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2005

5.6

2006

4.2

2004

8.7

2003

16.1

2002

20.8

2001

28.1

0

5

10

15

20

25

30

FR0t

CHANGES IN FREQUENCY RATE


In 2006 the Group had 247 internal reporting units (a site can comprise one or more entities) and 150 of these units have alreadyachieved the goal set for 2008, meaning that they are below the threshold of three accidents with lost working time per million hoursworked (including temporary employees).A total of 39 production sites with over 100 employees achieved the goal of zero workplace accidents with lost working time. The factthat these sites are spread throughout the world proves that the objective is within reach for all plants, regardless of business segmentor whether the facility is based in a developed or developing country.

Site Business Country Number of employees

Puebla Vehicle Interiors Mexico 1,267Walbrzych Frames & Mechanisms Poland 889Talmaciu Automotive Seating Romania 817Fountain Inn Vehicle Interiors USA 740Geiselhöring Frames & Mechanisms Germany 578Vigo Automotive Seating Spain 541Stadthagen Frames & Mechanisms Germany 499Fradley Vehicle Interiors United Kingdom 494São João Da Madeira Automotive Seating Portugal 489Port Elizabeth Vehicle Interiors South Africa 374Troy East Exhaust Systems USA 367Leipzig Automotive Seating Germany 352Audincourt Vehicle Interiors France 338Wuhan Automotive Seating China 308Port Elizabeth Exhaust Systems South Africa 301Wuxi Slides Frames & Mechanisms China 296Camaçari Vehicle Interiors Brazil 285Chongqing Vehicle Interiors China 272Riverside Automotive Seating USA 272Kosice Vehicle Interiors Slovakia 255Porriño Vehicle Interiors Spain 244Vigo Exhaust Systems Spain 229Almussafes Vehicle Interiors Spain 205Bad Abbach Automotive Seating Germany 201Sittard Automotive Seating Netherlands 196Banbury Automotive Seating United Kingdom 195Jelcz Automotive Seating Poland 176Changchun Frames & Mechanisms China 164Sterling Heights Automotive Seating USA 157Audincourt Modules & Systems France 153Neuenstadt Automotive Seating Germany 142Stadthagen Frames & Mechanisms Germany 141Bains-sur-Oust Modules & Systems France 138Wuxi Frames & Mechanisms China 131Neutraubling Modules & Systems Germany 111Changchun Automotive Seating China 108Sterling Heights Vehicle Interiors USA 105Bruxelles Vehicle Interiors Belgium 102Fountain Inn Automotive Seating USA 100

Safety trainingHaving set the basic conditions for ongoing safety improvements, the Group has focused on providing different types of training andeducation programs to raise awareness and guarantee effective implementation of all aspects of safety management. In 2006, over89,059 hours of training were provided for 28,170 people within the Group, representing an investment of €1.74 million.

Safety certificationAs part of the drive to optimize its HSE organization on a long-term basis, Faurecia’s sites are gradually implementing workplace safetymanagement systems based on the OHSAS 18000 standard or local equivalents.

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Ergonomics and working conditionsIn 2006, 238 cases of occupational illness were reported throughout the Group, primarily corresponding to repetitive strain disorder. Tohelp combat this problem, Faurecia has taken steps over the past several years to more effectively take into account the strains causedby workstations and offset them to the greatest degree possible. The industrial sites declared total payments of €46 million to public orprivate insurance providers in 2006 in respect of employee healthcare.An ergonomic review of 77 sites was carried out within the Automotive Seating business in 2006, using the AGREPT method (Analysis ofHigh-Risk Movements and their Impact on Work-Related Strain Injuries).Solutions have been identified and implemented at manufacturing workstations. These solutions need to be rolled out throughoutproduction operations and will now be more systematically taken into account from the outset of the product and tool design phase. Inaddition, an increasing number of recommendations from professional ergonomists and HSE coordinators is being factored into the“Program Management System” (PMS).An “Ergonomics” memorandum is now available to all Group process engineers and managers in charge of efficiency in manufacturingsystems, to provide additional information on analyzing workloads and taking into consideration the ergonomic constraints of worksta-tions. This memorandum is aimed at providing basic training in this area for people such as members of health and safety committees,who are involved in organizing work schedules or designing workstations.

Fire preventionOver the past several years the Group has applied increasingly rigorous controls to ensure that fire prevention is a priority for sitemanagement and various training and awareness-raising programs have been put in place. In 2006, 20,434 training hours on managingfire risks were provided for 13,721 people within the Group, representing an investment of €305 thousand.The Group’s insurance companies continued to carry out fire safety audits and their findings showed that the overall protection ofmanufacturing processes is well on its way to achieving the level of excellence represented by the HPR (Highly Protected Risk) ranking. FI

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20,000

40,000

60,000

80,000

100,000

120,000

Training hours Number of persons concerned Cost in € thousand

Number of hours/persons

In € thousand

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2003

75,000

1,500

18 ,000

2004

110,000

1,550

27 ,000

2005 2006

1,750

95,000

29 ,000

1,750

90,000

28,000

WORK SAFETY TRAINING

5

10

15

20

25

30

2001

3

2002

8

2003

14

2004

22

2005

29

2006

41

35

40

Number of sites

SAFETY CERTIFICATION (OHSAS 18001)

5,000

10,000

15,000

20,000

25,000

Training hours Persons concerned Cost in € thousand

Number of hours/persons

150

200

250

300

350

400

100

2005

22,000

335

16,000

2006

305

20,000

14,000

In € thousand

FIRE PREVENTION TRAINING

Not audited

22

16

26

18

Insufficient

22

3539

26

Requiring improvement

25

36

42 42

Pre-HPR

24

30

44

59

HPR

610 10

1518

22

44

62

20

Response rate 2002 (78%) 2003 (94%) 2004 (92%) 2005 (91%)

10

20

30

40

50

60

2006 (98%)

Number of sites

ANNUAL RESULTS OF FIRE SAFETY AUDITS


Environmental protection

The Faurecia Group takes environmental issues into account at every stage in the product life cycle, from the design phase to the end-of-life stage.

PRODUCT DESIGN

Regulations concerning environmental issues and automotive products have been gradually consolidated during recent years. AlthoughEurope has been the frontrunner in drawing up such regulations, other industrialized regions have not lagged far behind. For example,following in the footsteps of Japan in 2005, in 2006 China passed a law similar to the recycling section of the European Directive on end-of-life vehicles, and South Korea is expected to follow suit in 2007. To date, the United States has not followed this trend at federal level,although regulations are increasingly being put in place on an individual state basis.Having worked towards eradicating four heavy metals in previous years (cadmium, hexavalent chromium, mercury and lead), the Group’spurchasing quality processes were consolidated in 2006.Faurecia has invested heavily in areas relating to end-of-life products and recycling, as well as in using recycled plastic materials duringthe design phase. The recycling quotas set in the 2000/53/EC directive on end-of-life vehicles and reiterated in European directive2005/64/EC on the type-approval of motor vehicles are set out below.

Date Rate of reuse and recovery Rate of reuse and recycling

January 1, 2006 > 85%/vehicles/year > 80%/vehicles/yearJanuary 1, 2015 > 95%/vehicles/year > 85%/vehicles/year

Lastly, in order to encourage lower fuel consumption, Faurecia continued to work on vehicle weight savings by reducing the weight of itsproducts.

Strengthening purchasing quality processesIn 2006, Faurecia’s Purchasing department posted online all of its contractual documents setting out the requirements that all of the Group’s suppliers must meet in order to comply with environmental regulations concerning products and the supply of materials and components containing no heavy metals. Compliance with these requirements is now an essential part of the supplier selection process.In addition, a new unit has been set up within the Purchasing department in order to identify, showcase and relay best practices across the Group in the area of recycling and reusing waste products and scrap plastic materials from the production process. By combining both external and internal best practices, a systematic process for recycling plastics has been put in place underpinnedby an ambitious action plan and with the ultimate aim of rolling out the process to all of the Group’s plastic processing sites.

Anticipating the end-of-life phaseIn line with regulations and with a view to contributing to the automotive industry’s efforts to recycle end-of life vehicle components, in2006 Faurecia undertook specific measures relating to components containing a high proportion of plastics. The underlying objective ofthis plan is to prepare for the future reuse of these components in the manufacture of automotive parts.An economic and technical study is under way in the Vehicle Interiors business in order to determine whether currently availableprocesses and infrastructures are suited to processing end-of-life instrument panels.In the French market, instrument panels are primarily composed of a sandwich material comprising a load-bearing polypropylene frame,a vinyl polychoride cladding and a polyurethane foam spacer which is intricately connected with the two other materials. Processingsuch components at the end-of-life phase is a complex process involving the following stages:• extracting the instrument panel from the vehicle;• dismantling the components;• collecting and grouping the panels (i.e. logistical issues);• delaminating the sandwich structures by separating the three materials;• recycling the materials after the delamination process.Faurecia’s research in this area is based on two trial campaigns (initially using production scrap components and subsequently components from end-of-life vehicles). It entails assessing each of the above stages in conjunction with recyclers and players in the end-of-life vehicles sector. Until now, these components were crushed at the same time as the frame of the vehicle and the plastics could not be recycled. The objective, therefore, is to determine the feasibility of current processes and analyze by the end of first-half 2007 the points that need to be improved in order introduce a specific end-of-life processing procedure.The same type of approach was adopted at the end of 2006 for the Front-End business, as bumpers are identified in the European Directive as key components for boosting the recycling/reuse rate for end-of-life vehicles. This will be a priority area for Faurecia as it does not have a unit dedicated to recycling bumpers. The aim of the process is to extend the use of the materials concerned for as long as possible, and to reach the point where ISO-function bumpers can be recycled from one generation

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of vehicles to another, without any need for using new components. The outcome of the Group’s research should enable its teams to draw up an economic and technical model that is the most suited to Faurecia for recycling end-of-life bumpers.

Using recycled plasticsIn addition to the studies carried out on developing appropriate solutions for end-of-life products, in 2006 Faurecia undertook a policy toinitiate widespread use of recycled plastic grades. At present, such recycling mainly concerns polypropylene (either talc-filled or nontalc-filled).Depending on the type and category of the vehicle, various automotive seating components are now made of recycled polypropylene.For all components combined, it is now possible to use almost three kilograms of recycled plastics in seating activities alone. Tests arein progress in order to develop new applications, particularly for vehicle interior parts that are not highly visible.At the same time, research into the use of recycled polyolefin grades is currently being conducted within the Vehicle Interiors business.In the long-term, the tests and validations resulting from this research should enable the Group to incorporate these materials into thedesign of several non-visible components of instrument panels.

Reducing the weight of productsReducing the weight of products has long been an important concern for Faurecia, as this can help to cut down on fuel consumption andin turn lower atmospheric emissions.An exemplary step forward in this area was the design in 2006 of a 100% stainless steel exhaust line, which has led to a 25% weightsaving compared with the previous generation model, by significantly reducing the thickness of the materials used.The Group has also taken measures to bring down the weight of its products in other business lines. For example, Fiber-molded Processtechnology is used in the Acoustics division, resulting in an almost 30% weight saving, by making felt acoustic components with adjus-table proportions of thickness in the fibers used.Lastly, the products manufactured by the Vehicle Interiors business have been redesigned in order to incorporate the full potential ofthese new materials, resulting in weight savings varying between 10% and 50% in the design of intermediate parts.

MANUFACTURING PROCESSES

When products have been designed with the aim of minimizing environmental damage, the manufacturing processes used to make themshould also be geared towards preserving natural resources and protecting the environment.

Supplier managementThe components purchasing policy was rounded out in 2006 to factor in environmental protection at every step in the product supplychain. Faurecia now requires that the facilities of its 400 largest suppliers in terms of sales volume be ISO 14001 certified; 30% of thesesites had such certification at the end of 2006, and the aim is to reach 100% in 2007.

Environmental management and training as part of the production processIn line with the Group’s drive to achieve the best possible environmental management structure, Faurecia’s sites are gradually imple-menting environmental management systems based on the ISO 14001 standard within the overall framework of the Faurecia ExcellenceSystem (FES). As of December 31, 2006, 82 sites out of 175 had implemented environmental management systems that are ISO 14001-compliant.Two major environmental audit firms have worked in partnership with Faurecia on this issue since 2005, with a view to enhancing theorganization of environmental management assessments and the way in which they are carried out – SGS, which is responsible for ISO 14001 certification at all of the Group’s sites, and Bureau Veritas, which is in charge of performing internal HSE audits alongsideFaurecia’s internal audit team. The partnership program is being gradually rolled out to all of the Group’s sites to ensure the consistencyand relevance of its performance measurement tools.As well as implementing ISO 14001 management systems, in 2006 Faurecia organized environmental training and awareness-raisingsessions targeted at all employees. During the year, 14,071 people within the Group received 17,249 hours of training, representing aninvestment of €224,000.

Environmental protection expensesThe Group’s sites invested a total of €2.6 million in environmental protection measures in 2006. These investments included pollutionabatement equipment for use at the end of the manufacturing process, as well as steps taken to enhance manufacturing processes inorder to reduce the quantity and harmful effects of waste emissions.

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Environmental penalties and disputesFaurecia’s 175 sites received a total of 47 informal complaints in 2006 concerning noise and odor emissions, as well as miscellaneousissues such as vehicles entering sites.The Group was served with two official complaints from the French authorities: one concerning noise at the Mouzon site, and the otherrelating to odor pollution from the Méru site.Several notices of violation were received in 2006 by the following sites.

Site Description of notice / required action

Audincourt Formal notice served following a fire.Granger Carry out a groundwater pollution diagnostic.Hlohovec Change the solvent base used for gluing operations.Hordain Comply with the site operations permit.Jelcz File an application for an emissions permit.Mlada Bodeslav Compliance with regulations on atmospheric emissions.Mouzon Formal notice served by the local authorities for noise.Olmédo Take back waste collected by an unlicensed service provider.Palmela Carry out a study on volatile organic compound emissions.Shelby File an application for an atmospheric emissions permit.Tabor Adopt action plans following site visits from the authorities.Vipond Rehabilitate the site further to a pollutant spillage.

The Group was ordered to pay one fine in 2006.

Site Amount

Abrera €200

Total €200

14 disputes or proceedings are still in progress against Faurecia worldwide for environmental issues.

Site Cause

Abrera Failure to renew a permit for wastewater emissions.Fountain Inn Lack of reporting on air-borne emissions.Granger Requirement to monitor groundwater pollution.Hénin-Beaumont Failure to comply with site operations permit.Hermosillo Requirement to monitor environmental issues following a visit from the local inspection authorities.Hlohovec Requirement to change the solvent used for gluing operations.Hordain Failure to comply with site operations permit.Jelcz Failure to measure emissions.Kosice Failure to measure atmospheric emissions.Mouzon Excessive noise from operations.Nompatelize Spillage of a polymer in the water supply network.Palmela No official site operation permit.São João Da Madeira Compliance with Seveso rules and atmospheric emission caps.Scheuerfeld Failure to comply with VOC emission limits.

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1998

59

17

27

37

50

73

82 82

1999 2000 2001 2002 2003 2004 2005 2006

Number of sites

20

40

60

80

ENVIRONMENTAL CERTIFICATION (ISO 14001)

Training hours Persons concerned Cost in € thousand

Number of hours/persons In € thousand

2003

15,500

2004

19,000

184

234

18,000

2005 2006

168

18,000224

14,100

18,000

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

50

100

150

200

250

14,800

17,000

ENVIRONMENTAL PROTECTION TRAINING


ENVIRONMENTAL INDICATORS

Since the end of 2003, the Faurecia Group has assessed the environmental impact of its operations on a half-yearly basis through anextensive global survey of all its sites. The reliability of the results increases each year, which has led to greater in-depth awareness ofthe impacts caused by the Group’s operations.

Water consumption and discharges to waterThe Group’s total water consumption for 2006 is estimated at 3 million cubic meters. Of this total, 37% was drawn from rivers, 44% frommunicipal water networks and 19% from groundwater. This consumption mainly concerns cooling water: 62% of the water consumedcan be recycled internally or released directly into the natural environment, while the remainder is discharged to wastewater networks.Of the Group’s 175 sites, 70 are required to file self-monitoring data with the local authorities on the quality of their wastewaterdischarges.

Energy consumption and atmospheric emissionsThe Group’s total energy consumption for 2006 is estimated at 1.7 million MWh, broken down as follows: 34% natural gas, 59%electricity, 4% liquefied petroleum gas (LPG), 1% fuel oil and 2% steam. During the year, 97 sites reported that they had put in placeplans to manage energy consumption at a local level. At Group level, the Purchasing Department has appointed a manager responsiblefor energy cost control, who is tasked with optimizing the services delivered by energy suppliers from both a technical and a financialstandpoint, as well as with developing the use of performance diagnostics by external experts.Atmospheric emissions from energy consumption result mainly from natural gas, liquefied petroleum gas and fuel oils.

Sources of atmospheric emissions CO2 N2O CH4 SO2 NO2

Natural gas 116,419 5.2 8.2 1.1 123.5Liquefied petroleum gas 12,784 0.5 0.8 0.1 12.0Heavy fuel oil (sulfur content 4%) 1 0.0 0.0 0.0 0.0Low-sulfur industrial fuel oil (sulfur content 2%) 8 0.0 0.0 0.1 0.0Very low sulfur industrial fuel oil (sulfur content 1%) 301 0.0 0.0 1.9 0.7Light fuel oil (sulfur content 0.3%) 2,481 0.1 0.1 4.8 3.3

Total in metric tons 131,994 5.7 9.1 8.1 139.5

Of the Group’s 175 sites, 72 are required to file self-monitoring data with the local authorities on the quality of their atmosphericemissions.

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SOURCES OF WATER CONSUMED IN 2006

19%Groundwater

37%Rivers

44%Municipal network

TYPE OF EFFLUENT DISCHARGES IN 2006

5%Recycled internally

38%Wastewater network

57%Natural environment

BREAKDOWN OF ENERGY CONSUMPTION IN 2006

34%Natural gas

59%Electricity

2%Steam

4%LPG

1%Fuel oil


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Use of ground surfaces (watertight surfaces and total surfaces)The Group’s sites occupy a total surface area of 644 hectares worldwide, 68% of which is sealed against rainwater.

Waste generationThe Group generated 208,000 metric tons of waste in 2006, consisting mainly of metals (41%), which are released into the metalsrecycling circuit. As regards other waste, 16% was recycled externally, 10% was reused as an energy source, 27% was landfilled, 3% was destroyed and 3% was recycled internally.

BREAKDOWN OF SURFACES USED BY THE GROUP IN 2006

68%Watertight surfaces

32%Porous surfaces

WASTE GENERATION IN 2006, IN METRIC TONS

3%Recycled internally

16%Recycled externally

41%Metals

10%Reused as an energy source 27%

Landfilled

3%Destroyed


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Subsequent events

Since the 2006 year-end Faurecia has continued to carry out its activities for major automakers worldwide, with respect to all modulesanalyzed above. No material changes have occurred regarding the financial and commercial conditions governing these Group opera-tions centered on customer needs, as described in this registration document.Consolidated sales for the first quarter of 2007 came to €3,243.4 million, 11.5% up on the comparable prior-year period. This rise wasdriven by the start-up of new models in North America and Europe.Two acquisitions have taken place which had only a limited impact on the Group’s activities:● In January 2007, Faurecia acquired the 50% interest held by the Portuguese automotive equipment supplier Simoldes Plasticos in theRomania-based company Euro Auto Plastic Systems (Euro APS). Faurecia and the Croatian automotive equipment supplier AD Plastiknow each own 50% of the capital of Euro APS, and Faurecia has full responsibility for the operational management of the joint venture.Through this acquisition Faurecia has significantly expanded the scope of its business with the Renault Group, particularly concerningthe Dacia Logan. Euro APS manufactures and delivers instrument panels, door panels, bumpers, trimmings, carpeting, and acousticcomponents for the Dacia plant in Pitesti in Romania, which works mainly on the Dacia Logan. In 2006 Euro APS generated sales of €58 million and had 680 employees.● In early January 2007, the Group took over part of the bumper business operated by Cadence Innovation, a company that was placedin liquidation in late 2006. This involved Faurecia taking over certain of Cadence Innovation’s operations at the Nœux-les-Mines site innorthern France, which supplies Renault and PSA Peugeot Citroën, and the Burnhaupt facility in the east of France, which supplies PSAPeugeot Citroën. The businesses acquired represent annual sales in the region of €80 million and a workforce of approximately 150. Thisexternal growth transaction was supported by Cadence Innovation’s customers – PSA Peugeot Citroën and Renault – and was carriedout in line with the Group’s objective of developing and ensuring the long-term future of its bumper manufacturing business conductedat four sites in France.Lastly, on February 16, 2007 Yann Delabrière was appointed as Faurecia’s Chairman and Chief Executive Officer to take over fromGrégoire Olivier.



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53_ Consolidated income statements

54_ Consolidated balance sheets

56_ Consolidated cash flow statements

57_ Statement of changes in consolidated shareholders’ equity

58_ Notes to the consolidated financial statements

85_ Consolidated companies

88_ Simplified organizational chart

90_ Statutory Auditors’ report on the consolidatedfinancial statements

Consolidated financial statements


(in € millions) Notes 2006 2005 2004

Sales 4 11,648.7 10,978.5 10,719.5

Cost of sales 5 (10,937.3) (10,131.3) (9,740.5)

Research and development costs 5 (285.1) (259.5) (264.2)

Selling and administrative expenses 5 (357.1) (320.5) (311.9)

Operating income before amortization of contractual customer relationships 69.2 267.2 402.9

Amortization of contractual customer relationships (119.4)

Operating income after amortization of contractual customer relationships 69.2 267.2 283.5

Other operating income and (expense), net 6 (386.0) (315.0) (11.8)

Income from loans, cash investments and marketable securities 10.9 9.1 8.7

Finance costs (97.5) (74.6) (76.0)

Other financial income and expense 7 (3.4) (12.6) (22.6)

Income (loss) before tax of fully consolidated companies (406.8) (125.9) 181.8

Corporate income tax 8 (35.2) (52.8) (46.9)

Net income (loss) of fully consolidated companies (442.0) (178.7) 134.9

Equity in net income of companies accountedfor by the equity method 13 4.4 5.9 7.3

Consolidated net income (loss) (437.6) (172.8) 142.2

Net income (loss) attributable to equity holders of the parent company (447.9) (182.5) 130.7

Net income attributable to minority interests 10.3 9.7 11.5

Basic earnings (loss) per share (in €) 9 (18.72) (7.64) 5.48Diluted earnings (loss) per share (in €) 9 (18.72) (7.64) 5.45

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Consolidated income statements



Assets

(in € millions) Notes Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Goodwill 10 1,289.3 1,414.5 1,546.0

Intangible assets 11 575.7 600.3 536.6

Property, plant and equipment 12 1,452.9 1,620.8 1,534.4

Investments in companies accounted for by the equity method 13 40.1 34.8 33.1

Other equity interests 14 1.3 2.3 1.6

Other non-current financial assets 15 29.9 26.5 19.8

Other non-current assets 16 9.1 7.4 6.9

Deferred tax assets 54.8 111.6 147.3

Total non-current assets 3,453.1 3,818.2 3,825.7

Inventories, net 17 581.4 543.8 490.7

Trade accounts receivable 18 1,759.4 1,742.4 1,762.5

Other operating receivables 19 268.0 239.3 210.4

Other receivables and prepaid expenses 20 62.8 49.3 69.0

Currency and interest rate derivatives 27 28.7 18.1 11.6

Total current assets 2,700.3 2,592.9 2,544.2

Cash and cash equivalents 21 586.6 623.3 746.6

Total assets 6,740.0 7,034.4 7,116.5

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Consolidated balance sheets



Liabilities and shareholders’ equity

(in € millions) Notes Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Shareholders’ equity

Capital stock 22 169.8 169.6 169.5

Additional paid-in capital 359.6 723.2 722.5

Treasury stock (12.5) (13.6) (14.1)

Retained earnings 917.0 733.2 625.8

Translation adjustment 40.4 46.0 5.6

Net income (loss) (447.9) (182.5) 130.7

Total shareholders’ equity 22 1,026.4 1,475.9 1,640.0

Minority interests 23 64.2 64.4 60.9

Total equity 1,090.6 1,540.3 1,700.9

Provisions for pensions and other employee benefits 24 193.3 201.1 239.9

Other provisions 25 283.7 217.1 201.4

Long-term debt 26 1,065.6 599.0 521.0

Other non-current liabilities 2.8 3.2 3.6

Deferred tax liabilities 16.6 89.0 103.3

Total non-current liabilities 1,562.0 1,109.4 1,069.2

Short-term debt 26 1,234.3 1,622.4 1,762.0

Prepayments from customers 133.5 84.1 67.8

Trade payables 2,128.9 2,088.0 2,008.2

Accrued taxes and payroll costs 28 460.7 440.8 397.8

Other payables 29 118.3 130.6 99.3

Currency and interest rate derivatives 27 11.7 18.7 11.3

Total current liabilities 4,087.4 4,384.7 4,346.4

Total liabilities and shareholders’ equity 6,740.0 7,034.4 7,116.5

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(in € millions) 2006 2005 2004

I – Operating activitiesConsolidated net income (loss) (437.6) (172.8) 142.3Depreciation and amortization 754.9 682.6 609.9Deferred tax (benefits) charges (12.9) 21.2 3.2Increase (decrease) in provisions and other long-term liabilities 67.1 (15.5) (4.8)Equity in net income of companies accounted for by the equity method, net of dividends received (1.6) (1.8) (1.6)Capital (gains) losses on disposals of assets (20.9) (0.3) (47.6)Other (18.4) 7.7 (1.3)

Cash flow from operations 330.6 521.1 700.1

Change in inventories (31.5) 3.1 19.3Change in trade accounts receivable (24.8) 63.5 66.3Change in trade payables 42.0 18.7 130.2Change in other operating receivables and payables 38.3 28.8 73.7Change in other receivables and payables 40.6 29.6 (69.2)

(Increase) decrease in working capital requirement 64.6 143.7 220.3

Net cash provided by operating activities 395.2 664.8 920.4

II – Investing activitiesAdditions to property, plant and equipment (302.2) (433.9) (399.4)Capitalized development costs (208.3) (215.8) (209.0)Acquisitions of investments (1.6) (9.2) (29.0)Proceeds from disposals of property, plant and equipment 52.3 9.2 35.1Proceeds from disposals of financial assets 90.4Change in investment-related receivables and payables (42.4) 37.9 (13.7)Other movements (15.6) (19.9) (11.7)

Net cash used by investing activities (517.8) (631.7) (537.3)

Net cash (used) provided by operating and investing activities (I)+(II) (122.6) 33.1 383.1

III – Financing activitiesIssuance of shares by Faurecia and fully-consolidated companies 1.1 1.5 1.2Dividends paid by the parent company (26.3) (21.7)Dividends paid to minority interests in consolidated subsidiaries (6.2) (11.6) (3.5)Issuance of debt securities and increase in borrowings 552.0 316.1 370.1Repayments of debt and other financial liabilities (452.9) (452.4) (506.5)

Net cash provided (used) by financing activities 94.0 (172.7) (160.4)

IV – Other changes in cash and cash equivalentsImpact of exchange rate changes on cash and cash equivalents (8.0) 16.3 12.7

Net increase (decrease) in cash and cash equivalents (36.6) (123.3) 235.4

Cash and cash equivalents at beginning of year 623.3 746.6 511.2

Cash and cash equivalents at end of year 586.6 623.3 746.6

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Consolidated cash flow statements



(in € millions) Number Capital Additional Treasury Retained Translation Total Minority Total of shares stock paid-in stock earnings adjustment shareholders’ interests equity

(2) capital equity

Balance as of Jan. 1, 2004 before appropriation 24,206,751 169.4 722.4 (15.1) 645.1 1,521.8 62.1 1,583.9

Net income for the year 130.6 130.6 11.5 142.1Currency translation adjustments 5.6 5.6 (1.7) 3.9Total income and expense recognized directly in equity 130.6 5.6 136.2 9.8 146.0Issue of share capital (1) 5,300 0.1 0.1 0.2 0.22003 dividend (21.7) (21.7) (3.5) (25.2)Share-based payments 1.7 1.7 1.7Sales of treasury stock 1.0 0.8 1.8 1.8Changes in scope of consolidation (7.5) (7.5)

Balance as of Dec. 31, 2004before appropriation 24,212,051 169.5 722.5 (14.1) 756.5 5.6 1,640.0 60.9 1,700.9

Net loss for the year (182.5) (182.5) 9.7 (172.8)Currency translation adjustments 40.4 40.4 5.7 46.1Changes in fair value of currency hedging instruments (0.6) (0.6) (0.6)Total income and expense recognized directly in equity (183.1) 40.4 (142.7) 15.4 (127.3)Issue of share capital(1) 21,550 0.1 0.7 0.8 0.7 1.52004 dividend (26.3) (26.3) (11.6) (37.9)Share-based payments 2.4 2.4 2.4Sales of treasury stock 0.5 1.2 1.7 1.7Changes in scope of consolidation 0.0 (1.0) (1.0)

Balance as of Dec. 31, 2005 before appropriation 24,233,601 169.6 723.2 (13.6) 550.7 46.0 1,475.9 64.4 1,540.3

Net loss for the year (447.9) (447.9) 10.3 (437.6)Currency translation adjustments (5.6) (5.6) (4.3) (9.9)Changes in fair value of currency hedging instruments (0.8) (0.8) (0.8)Total income and expense recognized directly in equity (448.7) (5.6) (454.3) 6.0 (448.3)Issue of share capital(1) 25,635 0.2 0.9 1.1 1.12005 dividend 0.0 (6.2) (6.2)Share-based payments 2.3 2.3 2.3Sales of treasury stock 1.1 0.3 1.4 1.4Changes in scope of consolidation 0.0 0.0Recognition of 2005 losses of the parent company (364.5) 364.5 0.0 0.0

Balance as of Dec. 31, 2006 before appropriation 24,259,236 169.8 359.6 (12.5) 469.1 40.4 1,026.4 64.2 1,090.6

(1) Shares issued on exercise of stock options.

(2) Including 302,154 treasury shares as of December 31, 2006, compared with 335,804 as of December 31, 2005 and 380,089 as of December 31, 2004 (see note 22.3).

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Statement of changes in consolidated shareholders’ equity



Faurecia SA and its subsidiaries form one of the world’s leading suppliers of six major vehicle modules: seats, cockpits, doors, acousticsmodules, front ends and exhaust systems. The Group has operations in 28 countries, spanning 180 sites. Faurecia’s registered office islocated in Nanterre, in the Hauts-de-Seine region in France. The Company is quoted on the Eurolist market of Euronext Paris.The consolidated financial statements were approved by Faurecia’s Board of Directors on February 2, 2007.

NOTE [1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Faurecia Group have been prepared in accordance with International Financial ReportingStandards (IFRSs) as adopted by the European Union, including International Accounting Standards (IASs) and related interpretationsissued by the International Financial Reporting Interpretations Committee (IFRIC).The standards used to prepare the 2006 financial statements and comparative data for 2005 and 2004 are those published in the OfficialJournal of the European Union (OJEU) as of December 31, 2006, and whose application was mandatory at that date.In fiscal 2004 the Group opted for early adoption of the amendment to IAS 39 – Cash Flow hedge accounting of forecast intragroup transactions – issued by the International Accounting Standards Board (IASB) on April 14, 2005, and endorsed by the EuropeanCommission as of December 31, 2005. This amendment modifies IAS 39 to permit hedge accounting in consolidated financial statementsof the foreign currency risk of certain forecast intragroup transactions.The Group has not opted for early adoption of any other standards published in the OJEU.In accordance with IFRS 1, First-time adoption of International Financial Reporting Standards, Faurecia elected the following exemptions:• translation adjustments arising on consolidation were taken to consolidated retained earnings at January 1, 2004;• unrecognized actuarial gains and losses on employee benefit obligations as of January 1, 2004 were recorded under consolidated

retained earnings.The Group also used the possibility offered by IFRS 1 permitting companies to restate business combinations that occurred prior toJanuary 1, 2004.The accounting policies used for the 2006 financial statements are consistent with those applied by the Group for the prior fiscal year.The new standards, interpretations and amendments issued by the IASB whose application was mandatory as of January 1, 2006 havebeen applied where appropriate. However, as they did not have a material impact on the financial statements comparative prior-yeardata were not restated.The Group has not elected to apply the option available under IAS 19 permitting actuarial gains and losses on pension benefit obliga-tions to be recorded directly in equity. Consequently, such gains and losses are still recognized according to the corridor method overthe expected average remaining working lives of the employees participating in the plans concerned.

1.1 ] CONSOLIDATION PRINCIPLES

Companies which are at least 20%-owned are consolidated when one or more of the following criteria are met: annual sales of over €20 million, total assets of over €20 million, and/or debt of over €5 million.Non-consolidated companies are not material, either individually or in the aggregate.Subsidiaries controlled by the Group are fully consolidated. Control is presumed to exist where the Group holds over 50% of acompany’s voting rights, and may also arise as a result of shareholders’ agreements.Companies that are between 20% and 50%-owned are carried at equity when the Group exercises significant influence.The functional currency of foreign subsidiaries is generally their local currency. The assets and liabilities of these companies are trans-lated into euros at the year-end exchange rate and their income statement items are translated at the average exchange rate for the year.The resulting translation adjustments are recorded within equity.Certain companies located outside the euro zone which carry out the majority of their transactions in euros may, however, use euros astheir functional currency.For companies located in high-inflation countries, non-monetary assets and liabilities and the corresponding income statement itemsare translated at historical exchange rates, after restatement for the effects of hyperinflation. Translation gains and losses on other itemsare recognized in the income statement.

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Notes to the consolidated financial statements



1.2 ] GOODWILL

Goodwill represents the difference between the cost of shares in consolidated subsidiaries and the Group’s equity in the fair value of theidentifiable underlying net assets at the time of acquisition. In accordance with IFRS 3, goodwill is not amortized but is tested forimpairment at least once a year and more often if there is an indication that it may be impaired. For the purpose of impairment testing,goodwill is allocated to cash-generating units (CGUs). A CGU is defined as the smallest identifiable group of assets that generates cashinflows that are largely independent of the cash inflows from other assets or groups of assets.The CGU to which goodwill is allocated represents the lowest level within the business segment at which goodwill is monitored forinternal management purposes. The Group has identified the following CGUs:• Automotive Seating;• Vehicle Interiors;• Exhaust Systems;• Front End.The carrying amount of these assets is then compared with the higher of their value in use and their market value.

1.3 ] INTANGIBLE ASSETS

Research and development expenditure

The Faurecia Group incurs certain development costs in connection with producing and delivering modules for specific customer orderswhich are either a) not sold to the customer, or b) paid for by the customer on delivery of each part, without the customer guaranteeingfull financing of the costs incurred. In accordance with IAS 38, these development costs are recorded as an intangible asset where theCompany concerned can demonstrate:• its intention to complete the project as well as the availability of adequate technical, financial and other resources to complete thedevelopment;• how the customer contract will generate probable future economic benefits and the Company’s ability to measure these reliably;• its ability to measure reliably the expenditure attributable to the contracts concerned (costs to completion).These capitalized costs are amortized to match the quantities of parts delivered to the customer, over a period not to exceed five yearsexcept under exceptional circumstances. Research costs, and development costs that do not meet the above criteria are expensed asincurred.

Other intangible assets

Other intangible assets include development and purchase costs relating to software used within the Group – which are amortized on astraight-line basis over a period of between one and three years – as well as patents and licenses.

1.4 ] PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment are stated at acquisition cost or production cost in the case of assets produced by the Group for its ownuse. Maintenance and repair costs are expensed as incurred, except where they serve to increase productivity or to prolong the usefullife of an asset.Borrowing costs are not included in the cost of assets.Property, plant and equipment are depreciated by the straight-line method over their estimated useful lives, as follows:• Buildings 20 to 30 years• Leasehold improvements, fixtures and fittings 10 to 20 years• Machinery, tooling and furniture 3 to 10 yearsCertain tooling is produced or purchased for the purpose of manufacturing parts or modules for customer orders, which are either a) notsold to the customer, or b) paid for by the customer on delivery of each part, without the customer guaranteeing full financing of thecosts incurred. In accordance with IAS 16, this tooling is recognized as property, plant and equipment. It is depreciated to match thequantities of parts delivered to the customer, over a maximum of three years due to the rate at which models are replaced.Investment grants are recorded as a deduction from the assets that they were used to finance.Property, plant and equipment acquired under finance leases which transfer substantially all the risks and rewards of ownership of theasset to the lessee are recorded under assets at their purchase price at the inception of the lease and depreciated as described above.An obligation of the same amount is recorded as a liability.

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1.5 ] CASH GENERATING UNITS AND IMPAIRMENT TESTS

Impairment tests are carried out where there is an indication that the asset may be impaired. Goodwill is tested for impairment at leastonce a year. Impairment testing consists of comparing the carrying amount of an asset, or group of assets, with the higher of its marketvalue and value in use. Value in use is defined as the present value of the future cash flows expected to be derived from an asset orgroup of assets.The assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units, or CGUs). In linewith this principle, tests are performed on each group of intangible assets (development costs) and property, plant and equipment attri-butable to a customer contract to compare their aggregate carrying amount with the present value of the expected economic benefits tobe received under the contract, net of the expected expenses.

1.6 ] FINANCIAL ASSETS AND LIABILITIES EXCLUDING DERIVATIVES

Loans and receivables are stated at amortized cost calculated by the effective interest method and are regularly tested for impairment.Marketable securities consist mainly of units in mutual funds. They are stated in the balance sheet at fair value with changes in fair valuerecorded under “Other financial income and expense”.Cash and cash equivalents correspond to highly liquid investments with maturities of less than three months which are not exposed tosignificant risks of impairment in value in the event of a rise in interest rates.Financial liabilities include borrowings and other forms of financing. They are measured at amortized cost using the effective interestmethod. Borrowing costs may be expensed as incurred if the amounts concerned are not material.Financial assets and liabilities are broken down into current and non-current components for maturities of less than and more than oneyear, respectively, at the balance sheet date.

1.7 ] INVENTORIES AND WORK-IN-PROGRESS

Inventories of raw materials and supplies are stated at cost, determined by the FIFO method (First-In, First-Out). Finished and semi-finished products, as well as work-in-progress, are stated at production cost, determined by the FIFO method. Production cost includesthe cost of raw materials and supplies as well as direct and indirect production costs, excluding overheads not linked to production andborrowing costs.Work-in-progress includes the costs of internally-manufactured specific tooling or development work which is sold to customers, i.e.where the related risks and rewards are transferred. These costs are recognized in the income statement over the period in which thecorresponding sales are made, as each technical stage is validated by the customer.Provisions are booked for inventories for which the probable realizable value is lower than cost.

1.8 ] RECEIVABLES

Receivables are recorded at cost.Provisions are booked on a case-by-case basis where there is a risk of non-recovery.

1.9 ] FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are converted at the exchange rate prevailing on the transaction date. Receivables and payables arereconverted at the year-end exchange rate and the resulting gain or loss is recorded in the income statement as part of operating incomefor trade receivables and payables, and under “Other financial income and expense” for other receivables and payables.

1.10 ] DERIVATIVES

Faurecia uses derivative instruments traded on organized markets or purchased over-the-counter from first-rate counterparties to hedgecurrency and interest rate risks. They are recorded at fair value in the balance sheet.

Currency hedges:

The effective portion of changes in the fair value of instruments used to hedge future revenues is recorded in equity and taken to operatingincome when the hedged revenues are received. Changes in the fair value of instruments used to hedge trade receivables and payablesare recorded as operating income or expenses.The portion of the change in fair value of these hedges that is ineffective (time value of the hedges) is recorded under “Other financialincome and expense” together with changes in the fair value of instruments used to hedge other receivables and payables.

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Interest rate hedges:

Changes in the fair value of interest rate hedges are recorded directly in “Other financial income and expense” when a hedgingrelationship cannot be demonstrated under IAS 39, or where the Group has elected not to apply hedge accounting principles.

1.11 ] MINORITY INTERESTS

This item corresponds to minority shareholders’ interests in the net assets of consolidated subsidiaries. In the case of subsidiaries witha negative net worth, minority interests are deducted from consolidated shareholders’ equity except where an agreement has beensigned requiring minority shareholders to contribute to financing the Company pro rata to their stake in the capital.

1.12 ] PROVISIONS FOR PENSIONS AND OTHER EMPLOYEE BENEFITS

The Group’s liability for pensions and other employee benefits is determined on an actuarial basis using the projected unit credit method.The valuation takes into account the probability of employees staying with the Group up to retirement age and expected future salarylevels. Benefit obligations are partially funded by contributions to external funds. In cases where the funds are permanently allocated tothe benefit plan concerned, their value is deducted from the related liability.Actuarial gains and losses are recognized according to the corridor method over the expected average remaining working lives of theemployees participating in the plans. Periodic pension and other employee benefit costs are recognized as operating expenses over thebenefit vesting period, except for the interest cost, which is recorded under “Other financial income and expense” in accordance withthe alternative method under IAS 19. Changes in the present value of external funds are also recorded under this item.

1.13 ] STOCK OPTION PLANS

Stock options are granted to the management executives of Group companies and their over 50%-owned subsidiaries, allowing them tosubscribe to new Faurecia shares or to purchase existing shares. Options granted after November 7, 2002 that had not vested as ofJanuary 1, 2005 are measured at fair value as of the grant date using the Black & Scholes option pricing model.The fair value of stock options is recognized in payroll costs on a straight-line basis over the vesting period (the period between the grantdate and the vesting date), with a corresponding increase in equity.

1.14 ] RESTRUCTURING AND REORGANIZATION PROVISIONS

A provision for restructuring is booked when Group General Management has decided to rationalize the organization structure andannounced the program to the employees concerned or their representatives.

1.15 ] REVENUE RECOGNITION

Sales are recognized when the risks and rewards of the ownership of the modules or parts produced are transferred. This generallycorresponds to when the goods are shipped, or – in the case of development contracts or the sale of tooling – when the technical stagesare validated by the customer.

1.16 ] OPERATING INCOME

Operating income is the Faurecia Group’s principal performance indicator. It corresponds to net income of fully consolidated companiesbefore:• other operating income and expense which includes rationalization and early retirement costs, the impact of exceptional events suchas the discontinuation of a business, the closure or sale of an industrial site, disposals of non-operating buildings or shares in subsi-diaries, and goodwill impairment losses;• net finance costs;• other financial income and expense, which includes the impact of discounting the pension benefit liability and the return on relatedexternal funds, the ineffective portion of gains and losses on interest rate and currency hedges, as well as changes in value of interestrate and currency instruments for which a hedging relationship cannot be demonstrated under IAS 39;• corporate income tax.

1.17 ] CORPORATE INCOME TAX

Deferred taxes are recognized by the liability method for all temporary differences between the carrying amount of assets and liabilities andtheir tax base. Temporary differences arise mainly from consolidation adjustments to subsidiaries’ accounts and tax loss carryforwards.Deferred tax assets resulting from deductible temporary differences and tax loss carryforwards are not recorded when their recovery isdeemed uncertain.

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Where appropriate, an accrual is booked to cover taxes payable on the distribution of retained earnings of subsidiaries and affiliateswhich are not considered as having been permanently reinvested.

1.18 ] USE OF ESTIMATES

The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions when measuring certainassets, liabilities, income, expenses and commitments. These estimates and assumptions are primarily used when calculating theimpairment of intangible assets, goodwill and deferred tax assets, as well as for measuring pension and other post-employment benefitobligations. They are based on historical experience and other factors that are believed to be reasonable under the circumstances.Actual results may differ from these estimates and assumptions.

1.19 ] EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net income attributable to equity holders of the parent company by the weightedaverage number of shares outstanding during the year, excluding treasury stock.Diluted earnings per share are calculated by the treasury stock method. This method consists of multiplying the number of outstandingstock options by the ratio between the average exercise price of outstanding stock options and the average share price for the year.

NOTE [2] CHANGES IN SCOPE OF CONSOLIDATION

2.1 ] 2006

In first-half 2006, Faurecia purchased the US assets held by the Copo Ibérica Group which is 50%-owned by Faurecia and accountedfor by the equity method. Also during the year, Kwang Jin Faurecia was accounted for by the equity method for the first time. Formed in2005, this South Korea-based company is 50%-owned by Faurecia.

2.2 ] 2005

No significant acquisitions took place during 2005. Faurecia did, however, purchase for €3.5 million the 50% interest held by a thirdparty in Faurecia Riverside LLC, a US-based company. The Group also acquired for €4 million the 49.2% stake it did not already own inthe South Korean company Daeki Faurecia Corporation.Also in 2005, Faurecia bought out the minority interests in Faurecia Lecotex, based in the Czech Republic, for €0.5 million.These three transactions generated goodwill in the amount of €6.9 million, of which €6.2 million related to Daeki Faurecia Corporation.The companies concerned were already fully consolidated.

2.3 ] IMPACT ON CONSOLIDATED DATA OF CHANGES IN SCOPE OF CONSOLIDATION

Changes in scope of consolidation did not have a material impact on the Group’s consolidated data.

NOTE [3] EVENTS AFTER THE BALANCE SHEET DATE

No significant post-balance sheet events have occurred.

NOTE [4] INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHIC AREA

IAS 14 defines a business segment as a distinguishable component of an entity that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other businesssegments.Faurecia has distinguished two separate business segments: Interior modules and Other modules, which present different risk profiles.The segments defined reflect Faurecia’s organization and internal reporting structure.

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4.1 ] KEY FIGURES BY BUSINESS SEGMENT

2006 (in € millions) Interior modules Other modules Holding companies Total

Net sales 8,305.8 3,393.6 144.3 11,843.7Inter-segment eliminations (35.0) (15.7) (144.3) (195.0)Consolidated sales 8,270.8 3,377.9 0.0 11,648.7Operating income (loss) (44.5) 113.7 0.0 69.2Segment income (loss) (433.1) 87.9 25.0 (320.2)Net financial expense (86.6)Corporate income tax (35.2)Equity in net income of companies accounted for by the equity method 4.4

Net loss (437.6)

Segment assetsProperty, plant and equipment, net 1,146.6 296.3 10.0 1,452.9Other 3,464.3 1,021.5 23.4 4,509.2Total segment assets 4,610.9 1,317.8 33.4 5,962.1

Investments in companies accounted for by the equity method 40.1 40.1Other equity interests 1.3Short- and long-term financial assets 654.3Tax assets (current and deferred) 82.2

Total assets 6,740.0

Segment liabilities 2,503.6 767.5 (1.4) 3,269.7Borrowings 2,314.4Tax liabilities (current and deferred) 65.3Shareholders’ equity and minority interests 1,090.6

Total liabilities 6,740.0

Capital expenditure 234.3 69.2 2.7 306.2Depreciation of property, plant and equipment (262.9) (60.7) (2.8) (326.4)Impairment in value of property, plant and equipment (80.2) (3.9) (84.1)


Net sales 8,310.5 2,711.7 99.3 11,121.5Inter-segment eliminations (33.4) (10.3) (99.3) (143.0)Consolidated sales 8,277.1 2,701.4 0.0 10,978.5Operating income 157.7 109.6 267.3Segment income (loss) (171.3) 105.2 5.7 (60.4)Net financial expense (65.5)Corporate income tax (52.8)Equity in net income of companies accounted for by the equity method 5.9

Net loss (172.8)

Segment assetsProperty, plant and equipment, net 1,305.8 306.2 8.8 1,620.8Other 3,682.5 889.3 19.5 4,591.3Total segment assets 4,988.3 1,195.5 28.3 6,212.1

Investments in companies accounted for by the equity method 34.8Other equity interests 2.3Short- and long-term financial assets 662.4Tax assets (current and deferred) 122.8


Segment liabilities 2,491.1 627.3 25.3 3,143.7Borrowings 2,240.1Tax liabilities (current and deferred) 110.3Shareholders’ equity and minority interests 1,540.3



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Net sales 8,334.6 2,450.8 77.9 10,863.3Inter-segment eliminations (49.0) (16.9) (77.9) (143.8)Consolidated sales 8,285.6 2,433.9 0.0 10,719.5Operating income before amortization of contractual customer relationships 289.7 117.9 (4.7) 402.9Operating income after amortization of contractual customer relationships 170.3 117.9 (4.7) 283.5Segment income (loss) 97.2 158.1 (6.2) 249.1Net financial expense (67.3)Corporate income tax (46.9)Equity in net income of companies accounted for by the equity method 7.3

Net income 142.2

Segment assetsProperty, plant and equipment, net 1,268.4 256.7 9.4 1,534.5Other 3,637.2 842.7 134.4 4,614.3Total segment assets 4,905.6 1,099.4 143.8 6,148.8

Investments in companies accounted for by the equity method 33.1Other equity interests 1.6Short- and long-term financial assets 770.8Tax assets (current and deferred) 162.2


Segment liabilities 2,393.2 600.8 (1.1) 2,992.9Borrowings 2,294.3Tax liabilities (current and deferred) 128.4Shareholders’ equity and minority interests 1,700.9



Sales by business segment break down as follows:

(in € millions) 2006 % 2005 % 2004 %

Interior modules– Automotive Seating 4,812.8 41 4,794.4 44 4,784.7 44– Vehicle Interiors 3,458.0 30 3,482.7 32 3,500.9 33

8,270.8 71 8,277.1 75 8,285.6 77

Other modules– Exhaust Systems 2,659.4 23 1,961.3 18 1,714.9 16– Front End 718.5 6 740.1 7 719.0 7

3,377.9 29 2,701.4 25 2,433.9 23

Total 11,648.7 100 10,978.5 100 10,719.5 100

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4.2 ] KEY FIGURES BY GEOGRAPHIC AREA

Sales are analyzed by the country of sale; the other items are presented by location of the companies concerned.

2006 (in € millions) France Germany Other North South Asia Other TotalEuropean America America countriescountries

Sales 3,066.5 2,977.8 2,913.2 1,485.9 246.7 634.4 324.2 11,648.7Property, plant and equipment, net 449.6 189.6 492.7 172.1 71.4 61.9 15.7 1,452.9Capital expenditure 88 13.2 113.6 61.9 11.2 16.1 2.2 306.1Number of employees as of December 31 20,276 9,364 20,593 6,867 4,529 2,774 1,279 65,682

2005 (in € millions) France Germany Other North South Asia Other TotalEuropean America America countriescountries

Sales 3,382.6 2,892.0 2,583.1 1,234.7 221.6 404.2 260.2 10,978.5Property, plant and equipment, net 508.8 241.8 521.4 185.1 80.3 62.5 20.9 1,620.8Capital expenditure 139.2 68.6 125.9 51.2 19.6 31.8 4.5 440.8Number of employees as of December 31 22,148 10,050 17,299 5,072 3,810 2,067 1,275 61,721

2004 (in € million) France Germany Other North South Asia Other TotalEuropean America America countriescountries

Sales 3,610.9 2,715.2 2,769.0 1,028.4 162.9 307.7 125.4 10,719.5Property, plant and equipment, net 530.2 269.5 488.7 140.5 57.2 29.0 19.3 1,534.4Capital expenditure 143.3 83.4 94.0 32.6 25.1 19.3 6.0 403.7Number of employees as of December 31 24,504 10,304 17,503 5,386 1,770 1,529 1,511 62,507

NOTE [5] OPERATING EXPENSES

5.1 ] ANALYSIS BY FUNCTION

(in € millions) 2006 2005 2004

Cost of sales (10,937.3) (10,131.3) (9,740.5)Research and Development costs (285.1) (259.5) (264.2)Selling and administrative expenses (357.1) (320.5) (311.9)

Total (11,579.5) (10,711.3) (10,316.6)

5.2 ] ANALYSIS BY NATURE

(in € millions) 2006 2005 2004

Purchases used in production (7,808.4) (7,232.4) (6,664.5)External expenses (1,307.5) (1,236.9) (1,357.4)Payroll costs (2,104.3) (1,954.6) (1,944.5)Taxes other than on income (66.3) (60.5) (60.1)Other income and expense(1) 242.6 253.7 155.8Depreciation, amortization and provisions for impairment in value of non-current asset (518.3) (491.4) (480.3)Charges to and releases of other provisions (17.3) 10.8 34.4

Total (11,579.5) (10,711.3) (10,316.6)

(1) Including production taken into inventory or capitalized (development and tooling). 223.1 256.4 168.7

5.3 ] PAYROLL COSTS

(in € millions) 2006 2005 2004

Wages and salaries (1,622.6) (1,488.4) (1,496.4)Payroll taxes (481.7) (466.2) (448.1)

Total (2,104.3) (1,954.6) (1,944.5)

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5.4 ] RESEARCH AND DEVELOPMENT COSTS

(in € millions) 2006 2005 2004

Research and Development costs, gross (610.6) (628.1) (594.9)– amounts billed to customers and changes in inventories 296.3 303.9 257.1– capitalized development costs 208.3 215.8 209.0– amortization of capitalized development costs (161.5) (142.6) (145.6)– charges to and releases of provisions for impairment in value of capitalized

development costs (17.6) (8.5) 10.2

Net expense (285.1) (259.5) (264.2)

5.5 ] DEPRECIATION, AMORTIZATION AND PROVISIONS FOR IMPAIRMENT IN VALUE OF NON-CURRENT ASSETS

(in € millions) 2006 2005 2004

Amortization of development costs (161.5) (142.6) (145.6)Amortization of other intangible assets (12.8) (15.9) (11.4)Depreciation of specific tooling (13.8) (14.6) (13.7)Depreciation of other items of property, plant and equipment (312.6) (309.8) (319.8)Provisions for impairment in value of capitalized development costs (17.6) (8.5) 10.2

Total (518.3) (491.4) (480.3)

NOTE [6] OTHER OPERATING INCOME AND EXPENSE

(in € millions) 2006 2005 2004

Releases of (charges to) provisions for contingencies and charges and for impairment in value of non-current assets, net (0.1) 7.8 (3.2)Provisions for impairment in value of goodwill and other non-current assets – Vehicle Interior (1) (197.8) (180.0)Other provisions for impairment in value of non-current assets (35.7)Reorganization expenses(2) (168.7) (136.2) (55.5)Early-retirement costs (0.5) (1.4) (3.1)Gains (losses) on disposals of assets, net 20.9 0.3 48.4Other (4.1) (5.5) 1.6

Total (386.0) (315.0) (11.8)

(1) In 2006, these provisions concerned goodwill in the amount of €125.0 million and non-current assets in the amount of €72.8 million, compared with respective amounts of €138.4 million and €41.6 million in 2005.

(2) In 2006, this item included €165.5 million worth of restructuring costs, and €3.2 million in provisions for impairment in value of non-current assets (versus respective amounts of€123.8 million and €12.4 million in 2005 and €50.3 million and €5.2 million in 2004).

Restructuring operations

Total reorganization expenses came to €168.7 million in 2006 and early retirement costs totaled €0.5 million. These amounts concerned3,346 employees and break down as follows by country:

In € millions Number ofemployees

France (91.6) 1,607Germany (44.4) 799Spain (6.2) 209Other (27.0) 731

(169.2) 3,346

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NOTE [7] OTHER FINANCIAL INCOME AND EXPENSE

(in € millions) 2006 2005 2004

Impact of discounting pension benefit obligations (9.5) (10.0) (9.7)Changes in the ineffective portion of gains and losses on currency hedges (0.5) (1.1)Changes in fair value of currency hedges on debt 0.1 (3.9)Changes in fair value of interest rate instruments 7.9 (0.9) (8.3)Other (1.4) 3.3 (4.6)

Total (3.4) (12.6) (22.6)

NOTE [8] CORPORATE INCOME TAX

Corporate income tax can be analyzed as follows:

(in € millions) 2006 2005 2004

Current taxes– corporate income tax currently payable (37.0) (27.3) (41.9)– tax on intercompany dividends, tax reassessments (11.1) (4.8)

(48.1) (32.1) (41.9)

Deferred taxes– deferred taxes for the year 44.1 4.3 (5.0)– impairment of deferred tax assets recognized in prior periods (31.2) (25.0)

Deferred taxes 12.9 (20.7) (5.0)

Total (35.2) (52.8) (46.9)

8.1 ] ANALYSIS OF THE TAX CHARGE

The effective corporate income tax charge can be reconciled with the theoretical tax charge as follows:

(in € millions) 2006 2005 2004

Income (loss) before tax of fully consolidated companies (406.9) (125.9) 181.7

Tax at standard French tax rate (34.43% at end-2006, 34.93% at end-2005 and 35.43% at end-2004) 140.1 44.0 (64.4)

Impact of income taxable at a reduced rate in France and Spain 9.1 1.1 5.0Impact on deferred taxes of changes in tax rates 1.6 (0.5) (0.9)Impact of different tax rates applicable to foreign subsidiaries 19.1 11.8 14.6Tax credits 49.2 22.3 11.8Utilization of previously unrecognized tax loss carryforwards 8.1 7.5 6.0Tax loss carryforwards arising during the year for which no deferred tax asset was recognized (188.6) (50.4) (23.7)Impairment of previously recognized tax assets (31.2) (25.0)Permanent differences (42.6) (63.5) 4.7

Effective corporate income tax charge (35.2) (52.8) (46.9)

8.2 ] DEFERRED TAXES

(in € millions) Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Current taxes– Assets 26.0 11.2 15.0– Liabilities (47.3) (21.3) (25.1)

(21.3) (10.1) (10.1)

Deferred taxes– Deferred tax assets resulting from tax loss carryforwards 28.9 63.2 66.8– Deferred tax assets resulting from consolidation adjustments 25.9 48.4 80.5– Liabilities (16.6) (89.0) (103.3)

38.2 22.6 44.0

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Changes in deferred taxes recorded in the balance sheets can be analyzed as follows:

(in € millions) 2006 2005

Net as of January 1 22.6 44.0– Deferred taxes for the year recorded in the income statement (1) 44.1 4.3– Deferred taxes recognized directly in equity 0.0 (0.6)– Impact of exchange rate changes 2.7 (0.1)– Impairment of deferred tax assets recognized in prior periods (31.2) (25.0)

Net as of December 31 38.2 22.6

(1) Including subsidies in the form of tax credits. 20

8.3 ] UNRECOGNIZED DEFERRED TAX ASSETS


Y+1 13.0 2.3 1.8Y+2 3.0 1.9 1.7Y+3 2.6 2.3 2.9Y+4 3.1 3.1 1.7Y+5 and beyond 122.4 52.0 20.1Available indefinitely 350.3 239.1 162.8

Total 494.4 300.7 191.0

NOTE [9] EARNINGS (LOSS) PER SHARE

(in € millions) 2006 2005 2004

Number of shares outstanding at the year end(1) 24,259,236 24,233,601 24,212,051Adjustments:– Treasury stock (302,154) (335,804) (380,089)– Impact of share issues weighted based on the period between the date of the share issue and the year-end (24,968) (6,276) (3,092)

Basic weighted average number of shares 23,932,114 23,891,521 23,828,870

Weighted impact of dilutive instruments (stock options)(2) 90,358 184,537 166,729

Weighted average number of shares after dilution 24,022,472 24,076,058 23,995,599

(1) Changes in the number of shares outstanding during 2005 and 2006 can be analyzed as follows:

As of December 31, 2004: number of Faurecia shares outstanding 24,212,051• Faurecia stock options exercised in 2005 21,550

As of December 31, 2005: number of Faurecia shares outstanding 24,233,601• Faurecia stock options exercised in 2006 25,635

As of December 31, 2006: number of Faurecia shares outstanding 24,259,236

(2) As of December 31, 2006, a total of 1,265,715 stock subscription options were outstanding and exercisable, compared with 1,176,550 as of December 31, 2005 and 1,011,100 as ofDecember 31, 2004. In the above table, the weighted impact of dilutive instruments was calculated using the treasury stock method. This method consists of multiplying the number ofoutstanding stock options by the ratio between the average exercise price of outstanding stock options and the average share price for the year, i.e. €49.75 for 2006.

Basic earnings per share

Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding during the year,excluding treasury stock.

(in € millions) 2006 2005 2004

Basic earnings (loss) per share (18.72) (7.64) 5.48Diluted earnings (loss) per share (18.72) (7.64) 5.45

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NOTE [10] GOODWILL

(in € millions) Gross Impairment Net

Net goodwill as of January 1, 2004 1,530.2 0.0 1,530.2Acquisitions and minority interest buyouts 26.8 26.8Tax benefits related to unrecognized tax losses of acquired companies (1.8) (1.8)Translation adjustment and other movements (9.2) (9.2)Net goodwill as of December 31, 2004 1,546.0 0.0 1,546.0Acquisitions and minority interest buyouts 6.8 6.8Translation adjustment and other movements 0.1 0.1Impairment of goodwill (Vehicle Interiors) (138.4) (138.4)Net goodwill as of December 31, 2005 1,552.9 (138.4) 1,414.5Translation adjustment and other movements (0.2) (0.2)Impairment of goodwill (Vehicle Interiors) (125.0) (125.0)

Net goodwill as of December 31, 2006 1,552.7 (263.4) 1,289.3

Net goodwill breaks down as follows by business:


Automotive Seating 792.5 792.7 792.0Vehicle Interiors 239.3 364.3 502.7Front End 96.1 96.1 96.1Exhaust Systems 161.4 161.4 155.2

Total 1,289.3 1,414.5 1,546.0

In accordance with the accounting policy described in note 1.5, the carrying amount of each CGU – representing the lowest aggregationof assets that generate largely independent cash flows within the business segment – including goodwill allocated to that unit, has beencompared with its value in use, corresponding to the present value of future cash flows based on the most recent estimates of GroupManagement for each cash-generating unit concerned. The most recent estimate used was the business plan drawn up for 2007-2010.The calculation was performed by projecting to perpetuity projected cash flows for the last year of the business plan (i.e. 2010), applyinga growth rate of 1.5%. This rate, which was the same for 2006 as that for the previous year, was determined based on analysts’ forecasttrends for the automotive market.Faurecia called on an independent expert to calculate the weighted average cost of capital used to discount future cash flows. Themarket parameters used in the expert’s calculation were based on a sample of 12 companies operating in the automotive equipmentsector (six in Europe and six in the US). On the basis of these parameters and a market risk premium of 5%, the weighted average costof capital used to discount future cash flows was set at 7.9%, unchanged since 2004.As of December 31, 2005, the impairment test described above resulted in the recognition of a goodwill impairment loss in the amountof €138.4 million, relating to the Vehicle Interiors business. A further €41.6 million worth of impairment losses were recorded on otherassets of this CGU, not including impairment related to restructuring. The total asset impairment figure of €180 million for 2005 wasrecorded under “Other operating income and expense”.As of December 31, 2006, this same impairment test resulted in the recognition of an additional goodwill impairment loss of €125 million, relating to the Vehicle Interiors business. A further €72.8 million worth of impairment losses were recorded on other non-current assets of this business, not including impairment related to restructuring. The total €197.8 million asset impairment figurefor 2006 was recorded under “Other operating income and expense”.The impairment recorded reflects a decline in operating profitability in the Vehicle Interiors business since end-2005, as well as a time lagbefore effects of the profitability improvement plan begin to feed through, and the impact on forecast sales of a more selective marketingstrategy.The table below shows the sensitivity of the test results to changes in the assumptions used to determine the value in use of this CGU.

(in € millions) Sensitivity(1)

+1 pt –1 pt

Rate used to discount future cash flows (145.5) 199.8Growth rate used to project cash flows to perpetuity 165.6 (120.8)

(1) Impact on value in use of the impaired group of assets allocated to the Vehicle Interiors business.

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NOTE [11] INTANGIBLE ASSETS

Intangible assets can be analyzed as follows:

(in € millions) Development costs Software and other Total

Net as of January 1, 2004 426.6 139.2 565.8Additions 209.0 8.8 217.8Amortization (140.0) (125.7) (265.7)Provisions 4.6 0.0 4.6Translation adjustment and other movements 13.8 0.3 14.1

Net as of December 31, 2004 514.0 22.6 536.6Additions 215.8 7.3 223.1Amortization (142.6) (15.9) (158.5)Provisions (8.5) 0.0 (8.5)Translation adjustment and other movements (5.0) 12.6 7.6

Net as of December 31, 2005 573.7 26.6 600.3Additions 208.3 5.3 213.6Amortization (161.5) (12.8) (174.3)Provisions(1) (40.5) 0.0 (40.5)Translation adjustment and other movements (26.4) 3.0 (23.4)

Net as of December 31, 2006 553.6 22.1 575.7

(1) Including a non-recurring impairment loss of €22.9 million, of which €15.1 million related to Automotive Seating and €7.8 million to Vehicle Interiors.

NOTE [12] PROPERTY, PLANT AND EQUIPMENT

(in € millions) 2006 2005 2004

Net at beginning of year 1,620.8 1,534.4 1,516.3

Additions (including own work capitalized) 306.2 440.8 403.7Disposals (29.9) (9.2) (32.0)Depreciation and provisions for impairment in value (331.0) (335.3) (338.9)Non-recurring impairment losses(1) (84.0) (41.5)Translation adjustment (23.1) 58.9 8.9Other movements (6.1) (27.3) (23.6)

Net at end of year 1,452.9 1,620.8 1,534.4

(1) Including:

Vehicle Interiors (65.0) (41.5)Automotive Seating (15.1)Front End (3.9)


Gross Depreciation Net Gross Net Net

Land 66.3 (7.4) 58.9 79.5 74.9 70.5Buildings 840.6 (493.3) 347.3 820.5 389.8 361.0Plant and equipment 2,699.1 (1,936.8) 762.3 2,683.1 851.2 818.3Specific tooling 105.9 (78.1) 27.8 86.2 30.4 30.2Other and assets under construction 605.3 (348.7) 256.6 586.4 274.5 254.4

Total 4,317.2 (2,864.3) 1,452.9 4,255.7 1,620.8 1,534.4

Including assets held under finance leases 93.6 (51.0) 42.6 104.3 52.5 53.7

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NOTE [13] INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD

As of December 31, 2006, this item breaks down as follows:

(in € millions) % interest(1) Group Dividends Group Group shareshare of received by share of of total assets

equity the Group sales

Vanpro Assentos Lda 50 2.1 (1.0) 21.4 5.9Teknik Malzeme 50 7.2 (1.6) 68.8 21.9Copo Ibérica SA 50 1.9 20.4 15.9Componentes de Vehiculos de Galicia SA 50 3.7 (0.2) 15.1 12.2Faurecia Japon NHK Kyushi Co. Ltd 50 (7.6) 14.5 7.8Faurecia Japon NHK Co. Ltd 50 2.0 41.7 16.1Arsed d.o.o. 50 0.6 13.4 5.4Kwang Jin Faurecia Co Ltd 50 0.8 6.9 6.0SAS Group 50 29.4 1,704.4 372.7

Total – 40.1 (2.8) 1,906.6 463.9

(1) Percent interest held by the Company that owns the shares.

SAS is a joint venture with Siemens-VDO which manufactures full cockpit modules with electronics and circuitry built into the instrumentpanels.The accounts of the SAS Group used for the preparation of Faurecia’s consolidated financial statements were those for the periodending September 30, 2006.

13.1 ] CHANGE IN INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD

(in € millions) 2006 2005 2004

Group equity in the underlying net assets at beginning of year 34.8 33.1 48.3Dividends (2.8) (4.0) (5.7)Group equity in net income 4.4 5.9 7.3Changes in scope of consolidation 1.0 (17.3)Capital increase 1.5Translation adjustment 1.2 (0.2) 0.5

Group equity in the underlying net assets at end of year 40.1 34.8 33.1

13.2 ] GROUP EQUITY IN THE NET ASSETS OF COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD


Non-current assets 42.0 34.6 38.3Current assets 400.6 380.0 313.8Cash and cash equivalents 21.3 32.2 23.7

Total assets 463.9 446.8 375.8

Shareholders’ equity 40.5 34.8 33.1Borrowings 33.2 25.5 13.2Other non-current liabilities 14.9 48.5 58.4Non-financial current liabilities 375.3 338.0 271.1

Total liabilities and shareholders’ equity 463.9 446.8 375.8

NOTE [14] OTHER EQUITY INTERESTS

(in € millions) % interest Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Gross Net Net Net

SCI Messei 100 0.4 0.1 0.1 0.1Kwang Jin Faurecia Co Ltd (1) 50 1.0Taco-Faurecia 50 0.4 0.4 0.4 0.4Other – 1.4 0.8 0.8 1.1

Total 2.2 1.3 2.3 1.6

(1) A South-Korean company accounted for by the equity method for the first time in 2006

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NOTE [15] OTHER NON-CURRENT FINANCIAL ASSETS

This item includes:


Gross Provisions Net Net Net

Long-term loans 21.4 (3.9) 17.5 20.9 16.8Other 13.9 (1.5) 12.4 5.6 3.0

Total 35.3 (5.4) 29.9 26.5 19.8

NOTE [16] OTHER NON-CURRENT ASSETS

This item includes:


Pension plan surpluses 0.1 0.1Guarantee deposits and other 9.0 7.3 6.9

Total 9.1 7.4 6.9

NOTE [17] INVENTORIES



Raw materials and other supplies 262.5 (20.8) 241.7 206.4 223.6Work-in-progress 247.3 (35.4) 211.9 213.8 159.6Finished and semi-finished products 143.5 (15.7) 127.8 123.6 107.5

Total 653.3 (71.9) 581.4 543.8 490.7

Work-in-progress as of December 31, 2006 included €42.1 million in Research and Development costs billable to customers (December 31, 2005: €62.2 million; December 31, 2004:€33.8 million).

NOTE [18] TRADE ACCOUNTS RECEIVABLE

In 2000, Faurecia and certain of its French subsidiaries entered into a one-year agreement with a Group bank providing for the sale of receivables. Under this agreement, which was renewable through November 2005, the bank’s right of recourse was limited to theamount of the related subordinated deposit. The agreement was renegotiated in 2004 and replaced by a one-year factoring agreementrenewable through December 2007, providing for the no-recourse sale of receivables without a security deposit.In order to further diversify its financial resources, in December 2002 Faurecia entered into a second one-year agreement with anotherGroup bank, extending the receivables securitization program to other French and non-French subsidiaries in Europe. The agreement,which is renewable through December 2007, is based on the same subordinated deposit principle.In 2004, a Spanish subsidiary of the Group entered into a factoring agreement with one of its banks, and in 2006 certain of the Group’sFrench subsidiaries signed additional factoring agreements with their banks.The receivables sold under the initial and renewable factoring programs have been derecognized as follows:


Initial factoring program 120.0 90.5 20.8Renewable factoring program 126.5 122.0 152.4

Total 246.5 212.5 173.2

NOTE [19] OTHER OPERATING RECEIVABLES


Prepayments to suppliers 61.4 66.3 42.0Other receivables(1) 206.6 173.0 168.4

Total 268.0 239.3 210.4

(1) Including recoverable VAT and other taxes. 195.9 165.5 159.8

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NOTE [20] OTHER RECEIVABLES AND PREPAID EXPENSES


Current maturities of long-term loans 0.1 0.1 0.0Prepaid expenses 18.1 16.3 21.6Other receivables 44.6 32.9 47.4

Total 62.8 49.3 69.0

NOTE [21] CASH AND CASH EQUIVALENTS

As of December 31, 2006, cash and cash equivalents included current account balances of €530.1 million (December 31, 2005: €558.8 million; December 31, 2004: €393.0 million) and marketable securities of €56.5 million (December 31, 2005: €64.5 million;December 31, 2004: €353.6 million).The carrying amount of marketable securities is almost identical to market value as they are held on a very short term basis.

NOTE [22] SHAREHOLDERS’ EQUITY

22.1 ] CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL

As of December 31, 2006, the Company’s capital stock amounted to €169,814,652, divided into 24,259,236 fully paid-up commonshares with a par value of €7 each. Shares which have been registered in the name of the same holder for at least two years carry doublevoting rights.

22.2 ] EMPLOYEE STOCK OPTIONS

Stock subscription options

The Company has a policy of issuing stock options to the management of Group companies and their over 50%-owned subsidiaries,allowing them to subscribe for newly-issued Faurecia shares.As of December 31, 2006, a total of 1,265,715 stock subscription options were outstanding.Exercising these options would result in:• capital stock being increased by €8.9 million;• additional paid-in capital being increased by €57.2 million.Details of the stock subscription option plans as of December 31, 2006 are set out in the table below:

Date of Date of Exercise Number of Of which Start of Expiry date Options Options Number of Shareholders’ Board price options granted to exercise of exercise exercised forfeited optionsMeeting Meeting (in €) granted senior period period outstanding

executive as of management/ Dec. 31, 2006

ExecutiveCommittee

members

June 18, 1992 April 7, 1994 25.06 115,000 75,000 April 8, 1999 April 6, 2009 73,200 – 41,800

May 31, 1994 Oct. 20, 1994 23.84 125,000 30,000 Oct. 21, 1999 Oct. 19, 2009 110,000 – 15,000

May 31, 1994 May 3, 1995 26.07 71,000 15,000 May 4, 2000 May 2, 2010 63,000 1,000 7,000

May 3, 1995 Sept. 12, 1996 24.39 125,000 40,000 Sept. 13, 2001 Sept. 11, 2011 81,500 – 43,500

May 31, 1994 June 26, 1997 40.25 54,000 15,000 June 27, 2002 June 25, 2012 28,500 1,500 24,000

June 5, 1997 June 26, 1997 42.38 35,500 15,000 June 27, 2002 June 25, 2007 14,285 7,000 14,215

June 5, 1997 Feb. 22, 2002 55.00 351,700 69,500 Feb. 23, 2006 Feb. 22, 2012 5,600 75,400 270,700June 1, 2001

June 1, 2001 Nov. 28, 2002 41.71 269,500 101,000 Nov. 29, 2006 Nov. 27, 2012 23,000 88,500 158,000May 14, 2002

May 14, 2002 April 14, 2004 58.18 268,000 109,000 April 14, 2008 April 13, 2014 – 73,000 195,000



Total 1,265,715

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In accordance with IFRS 2, the four plans issued since November 7, 2002 have been measured at fair value as of the grant date. The measurement was performed using the Black & Scholes option pricing model, based on the following assumptions:

Plan of Nov. 28, 2002 Plan of April 14, 2004 Plan of April 19, 2005 Plan of April 13, 2006

Option exercise price (as of grant date) €41.71 €58.18 €63.70 €53.80Share price as of grant date €41.82 €58.45 €62.05 €53.15Vesting period 4 years 4 years 4 years 4 yearsExpected share dividend 2% 2% 2% 1,5%Zero coupon rate 3.57% 3.33% 2.93% 3.50%Expected share price volatility 40% 40% 40% 30%

Changes in fair value are recorded under payroll costs over the vesting period, with a corresponding adjustment to equity. The relatedexpense in 2006 totaled €2.3 million, compared with €2.4 million in 2005.

Stock purchase options

Between 1999 and 2001, the Company granted stock options to the management of Group companies and their over 50%-ownedsubsidiaries, allowing them to purchase existing Faurecia shares.As of December 31, 2006, a total of 293,570 stock purchase options were outstanding.Details of the stock purchase option plans as of December 31, 2006 are set out in the table below:

Date of Date of Exercise Number of Of which Start of Expiry date Options Options Number of Shareholders’ Board price options granted to exercise of exercise exercised forfeited options Meeting Meeting (in €) granted senior period period outstanding

executive as of management/ Dec. 31, 2006

Executive Committee

members

June 1, 1999 Sept. 6, 1999 52.0 200,000 53,100 Sept. 6, 2004 Sept. 5, 2009 37,250 17,250 145,500

June 1, 1999 Sept. 4, 2000 40.0 254,000 54,900 Sept. 4, 2005 Sept. 3, 2010 96,930 41,000 116,070May 22, 2000

May 22, 2000 April 26, 2001 54.5 43,500 40,000 April 26, 2005 April 25, 2011 6,500 5,000 32,000

Total 293,570

22.3 ] TREASURY STOCK

As of December 31, 2006, Faurecia held 302,154 shares in treasury stock, reflecting the following transactions:• 200,000 shares contributed by ECTRA in 1999;• 19,613 shares purchased in 2000 for €0.8 million;• 96,361 shares purchased in 2001 for €4.2 million;• 96,860 shares purchased in 2002 for €3.8 million;• 32,745 shares sold in 2004 for €1 million;• 74,285 shares sold in 2005 for €2.3 million;• 30,000 shares purchased in 2005 for €1.8 million;• 33,650 shares sold in 2006 for €1.3 million.The cost of the shares held in treasury stock as of December 31, 2006 totaled €12.5 million, representing an average cost of €41.31 per share.At the year-end, Faurecia’s share price was €49.08. A 10% fall in the share price would represent a decrease of €4.91 per share, corresponding to a share price of €44.17 – above the average cost per share.These shares are being held for allocation on the exercise of stock options granted to directors and managers of the Group further to decisions of the Board of Directors on September 6, 1999, September 4, 2000 and April 26, 2001. The options outstanding as ofDecember 31, 2006 are exercisable for 293,570 shares (see note 22.2 b)

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NOTE [23] MINORITY INTERESTS

Changes in minority interests were as follows:

(in € millions) 2006 2005 2004

Balance as of January 1 64.4 60.9 62.1Minority interests in share issues by subsidiaries 0.7Other changes in scope of consolidation(1) (1.0) (7.8)Minority interests in net income for the year 10.3 9.7 11.5Dividends paid to minority shareholders (6.2) (11.6) (3.7)Translation adjustments (4.3) 5.7 (1.2)

Balance as of December 31 64.2 64.4 60.9

(1) Including:2004: buyout of minority interests in Faurecia Automotive GmbH (11.0)Other minority interests in companies consolidated in 2004 3.22005: buyout of minority interests in Daeki, Faurecia Lecotex and Faurecia Riverside

NOTE [24] PROVISIONS FOR PENSIONS AND OTHER EMPLOYEE BENEFITS

24.1 ] PROJECTED BENEFIT OBLIGATION


Projected benefit obligation– Pension benefit obligations 291.1 328.0 305.5– Healthcare costs 34.9 30.4 24.2

326.0 358.4 329.7

Funded status:– Provisions booked in the accounts 193.3 201.1 239.9– External funds (market value) 97.2 106.5 89.9– Plan surpluses(1) (0.1) (0.1) 0– Actuarial gains and losses 35.6 50.9 (0.1)

Total 326.0 358.4 329.7

(1) Plan surpluses are included in “Other non-current assets”.

24.2 ] CHANGE IN THE PROVISION FOR PENSIONS AND EMPLOYEE BENEFITS

Movements in the provision in 2004, 2005 and 2006 were as follows:

(in € millions) 2006 2005 2004

Balance at beginning of year 201.1 239.9 242.1Effect of changes in Group structure (provision net of plan surpluses) (2.1)Allocations for the year 19.9 (21.3) 20.5Expenses charged to the provision (13.7) (14.7) (9.4)Payments to external funds (11.5) (10.4) (8.5)Other movements (2.5) 7.6 (2.6)

Balance at end of year 193.3 201.1 239.9

The overall provision includes:provision for pension benefit obligations 165.2 170.2 215.3provision for healthcare costs 28.1 30.8 24.6

193.3 201.0 239.9

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24.3 ] PENSION LIABILITY

Description of the plans

In addition to the pension benefits provided under local legislation in the various countries where Group companies are located, Group employees are entitled to supplementary pension benefits and retirement bonuses.

Assumptions used

The Group’s obligations under these plans are determined on an actuarial basis, using the following assumptions:• retirement age – generally between 60 and 65 for employees in France;• staff turnover assumptions, based on the economic conditions specific to each country and/or Group company;• mortality assumptions specific to each country;• estimated future salary levels, based on inflation assumptions and forecasts of individual salary increases for each country;• the expected return on external funds;• discount and inflation rates based on local conditions.The main actuarial assumptions used in the past three years to measure the pension liability are as follows:

(in %) Euro zone United Kingdom United States

Discount rate2006 4.50% 5.50% 5.75%2005 4.00% 5.00% 5.70%2004 4.50% 5.30% 6.00%

Inflation rate2006 2.00% 2.80% –2005 2.00% 2.50% 4.00%2004 2.00% 2.50% 4.00%

Expected return on external funds2006 4.00% 8.00% 8.25%2005 4.00% 8.00% 8.25%2004 4.00% 8.00% 9.00%

Information on external funds

External funds are invested as follows:

(in %) 2006 2005 2004

Equities Bonds Equities Bonds Equities Bonds

France 16% 84% 15% 85% 15% 85%United Kingdom 89% 11% 72% 28% 72% 28%United States 63% 37% 60% 40% 60% 40%

Provision for the pension liability recorded in the balance sheet

(in € millions) 2006 2005 2004

France Outside Total France Outside Total France Outside TotalFrance France France

Balance of provision at beginning of year 90.3 79.9 170.2 134.1 81.1 215.2 132.1 82.6 214.7Effect of changes in Group structure (provision net of plan surpluses) (4.2) 2.1 (2.1)Allocations for the year 10.4 5.3 15.7 (31.4) 7 (24.4) 12.3 6.5 18.8Expenses charged to the provision (7.7) (2.1) (9.8) (8.2) (2.1) (10.3) (3.5) (3.1) (6.6)Payments to external funds (6.6) (4.9) (11.5) (4.2) (6.3) (10.5) (2.6) (5.9) (8.5)Other movements 0.6 0.6 0.2 0.2 (1.0) (1.0)

Balance of provision at end of year 86.4 78.8 165.2 90.3 79.9 170.2 134.1 81.2 215.3

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Changes in the pension liability

(in € millions) 2006 2005 2004


Projected benefit obligationAt beginning of year 143.0 185.0 328.0 145.9 159.7 305.5 151.4 151.5 302.9Service cost 9.1 5.5 14.6 11.1 4.3 15.4 10.9 4.9 15.8Interest cost 6.1 7.8 13.9 6.0 9.2 15.2 7.4 6.9 14.2Benefits paid (15.6) (6.0) (21.6) (13.0) (2.3) (15.3) (8.3) (5.7) (14.0)Change in fair value of external funds (7.5) (7.1) (14.6)– amount 36.3 (2.9) 33.4 (1.4) 4.2 2.8– as a % of the projected benefit obligation 0.0 0.0Other movements (including translation adjustment) (7.5) (7.5) 17.0 17.0 (5.5) (2.1) (7.6)Curtailment - Settlement (7.6) (14.1) (21.7) (8.1) (8.1) (8.6) (8.6)Impact of plan closures and amendments 0.0 (35.1) (35.1) 0.0

At end of year 127.5 163.6 291.1 143.0 185.0 328.0 145.9 159.7 305.5

Funded statusAt beginning of year 15.7 90.8 106.5 15.9 74.0 89.9 19.3 68.4 87.6Expected return on external funds 0.6 5.6 6.2 0.6 6.3 6.9 0.7 5.2 5.9Change in fair value of external funds– amount (0.2) 1.8 1.6 (0.2) (9.5) (9.7) (0.8) (1.0) (1.8)– as a % of the projected benefit obligation 0.0 0.0Other movements (including translation adjustment) (7.3) (7.3) 13.9 13.9 (1.2) (1.8) (3.0)Employer contributions 6.6 4.9 11.5 4.2 6.3 10.4 (2.6) (5.9) (8.5)Benefits paid (7.9) (3.7) (11.6) (4.8) (0.2) (5.0) 0.5 9.2 9.7Curtailment - Settlement (9.7) (9.7)Impact of plan closures and amendments 0.0 0.0 0.0 0.0

At end of year 14.8 82.4 97.2 15.7 90.8 106.5 15.9 74.0 89.9

Deferred itemsAt beginning of year 37.0 14.2 51.2 (4.1) 4.4 0.3 0.0 0.6 0.6New deferred items (7.3) (9.1) (16.4) 36.5 6.6 43.1 (0.6) 5.2 4.6Amortization of deferred items (2.0) (0.3) (2.3) (1.1) 0.3 (0.8) 0.0 0.0 0.0Other movements (including translation adjustment) (0.8) (0.8) 2.9 2.9 (0.1) (1.3) (1.4)Curtailment - Settlement (1.4) (1.6) (3.0) 0.9 0.9 (3.5) 0 (3.5)Impact of plan closures and amendments 4.9 4.9 0.0 0.0 0.0

At end of year 26.3 2.4 28.7 37.0 14.2 51.2 (4.1) 4.5 0.4

Balance of provision at end of year 86.4 78.8 165.2 90.3 80.0 170.3 134.1 81.2 215.2

Periodic pension cost

Periodic pension cost is recognized:- in “Operating income” for the portion relating to service cost and amortization of deferred items;- in “Other financial income and expense” for the portion relating to the expected return on external funds and interest cost.Periodic pension cost can be analyzed as follows:

(in € millions) 2006 2005 2004


Service cost (9.1) (5.5) (14.6) (11.1) (4.3) (15.4) (7.3) (4.9) (12.3)Interest cost (6.1) (7.8) (13.9) (6.0) (9.2) (15.2) (7.4) (6.9) (14.2)Change in top-up scheme 0.0 39.9 0.0 39.9 0 . 0Actual return on external funds 0.6 5.6 6.2 0.6 6.3 6.9 0.7 5.2 5 . 9Curtailment - Settlement 6.2 2.7 8.9 9.0 9.0 5.1 5 . 1Amortization of deferred items (2.0) (0.3) (2.3) (1.1) 0.3 (0.8) (3.4) 0.0 (3.4)Other 0.0 0.0

Total (10.4) (5.3) (15.7) 31.3 (6.9) 24.4 (12.3) (6.6) (18.9)

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a) The defined benefit plan provided to certain employee categories in a number of Group companies in France was discontinued in 2005 and a new supplementary pension scheme was set up for all managerial employees in France. This scheme comprises:• a defined contribution plan relating to salary tranches A and B, whose contribution rate varies depending on the employee’s seniority

within Faurecia;• a defined benefit plan relating to salary tranche C.The benefits under the previous plan were maintained for managers aged over 53 with at least ten years’ seniority as of December 31, 2005.The above changes in 2005 led to a settlement and/or significant definitive curtailment of future entitlements. In accordance with IAS 19, the related impact – amounting to €39.9 million – was deducted from payroll costs. At the same time, actuarial losses in the amount of €22.8 million were recognized. The net impact on the total liability was therefore a decrease of €17.1 million.b) Under the French Social Security financing act for 2007, as from January 1, 2010 collective agreements may no longer provide thepossibility for employers to require an employee to retire before the age of 65 even if the employee is already entitled to a full-ratepension. Employees may still elect for voluntary retirement as from the age of 60 but they will receive a lower statutory retirement bonuswhich will be subject to tax and social security charges.The act does however provide that between January 1, 2010 and January 1, 2014 employees may retire before the age of 65 if thedecision is taken jointly with their employer. In such a case the employee will be entitled to a statutory retirement indemnity which is eligible for tax and social security exemptions.The assumption used to calculate the Group’s pension liability as of December 31, 2006 was based on voluntary retirement from the ageof 60 rather than compulsory retirement for employees covered by the collective bargaining agreement applicable in the metallurgicalindustry. The impact of this change will be a reduction in the projected benefit obligation of €5.3 million, or 7.4%. This amount will berecorded under actuarial gains and losses in 2007 and will have no impact on net income for the year.c) The defined benefit plan that existed within one of the Group’s US subsidiaries has been closed to new participants and the benefitsof existing participants have been frozen.

24.4 ] HEALTHCARE COSTS

In addition to pension plans, some Group companies – mainly in the United States – cover the healthcare costs of their employees.The related liability can be analyzed as follows:


Foreign companies 28.1 30.8 24.6

Total 28.1 30.8 24.6

Expenses recognized in connection with this liability break down as follows:


Service cost (2.3) (1.3) (0.1)Interest cost(1) (1.8) (1.7) (1.5)Amortization of deferred items (0.1) (0.1) 0.0

Total (4.2) (3.1) (1.6)

(1) Interest cost is recorded under “Other financial income and expense”.

The impact of a one percentage point increase in medical cost trend rates would be 10% rises in service cost, financial expenses and the projected benefit obligation.The impact of a one percentage point decrease in medical cost trend rates would be 9% reductions in service cost, financial expenses and the projected benefit obligation.

NOTE [25] OTHER PROVISIONS


Restructuring 161.6 89.0 61.6Early-retirement 6.2 6.4 9.2Employee profit-sharing 1.8 3.8 9.7Long-term contract losses and customer warranties 47.5 46.2 43.0Claims and litigation 20.9 16.9 16.7Long-service awards 21.2 21.6 18.7Other 24.5 33.2 42.5

Total 283.7 217.1 201.4

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Movements in these provisions in 2006 were as follows:

(in € millions) Balance as of Allocations Expenses Reversals(1) Effect of Balance as of Dec. 31, 2005 charged to changes in Dec. 31, 2006

provisions Group structure and other

movements

Restructuring 89.0 164.9 (87.8) (1.5) (3.0) 161.6Early-retirement 6.4 0.8 (3.8) 2.8 6.2Employee profit-sharing(2) 3.8 2.1 (0.5) (3.6) 1.8Long-term contract losses and customer warranties 46.1 22.4 (18.6) (2.4) 47.5Claims and litigation 17.0 8.7 (4.7) (0.1) 20.9Long-service awards 21.6 1.1 (1.5) 21.2Other 33.2 7.7 (14.4) (1.5) (0.5) 24.5

Total 217.1 207.7 (131.3) (3.0) (6.8) 283.7

(1) Surplus provisions.

(2) The provision for employee profit-sharing concerns French companies of the Group.

Claims and litigation

In the normal course of business, the Group may be involved in disputes with its customers, suppliers, tax authorities in France or abroad,or other third parties.To the best of the Group’s knowledge, no claims or litigation are in progress or pending that are likely to have a material impact on theGroup’s consolidated financial position.

Long-service awards

The Group calculates its liability for the payment of long-service awards using the same method and assumptions as for its pensionliability. A provision has been set aside for long-service awards, as follows:


French companies 10.7 11.2 9.5Foreign companies 10.5 10.4 9.2

Total 21.2 21.6 18.7

NOTE [26] NET DEBT

26.1 ] DETAILED BREAKDOWN


Perpetual notes (TDI) – – 5.3Bonds 300.0 300.0Bank borrowings 725.1 251.9 466.8Other borrowings 9.2 9.5 6.3Obligations under finance leases 31.3 37.6 42.6

Sub-total – long-term debt 1,065.6 599.0 521.0

Current portion of long-term debt 83.9 47.9 60.2Short-term debt 1,150.4 1,574.5 1,701.8Derivatives (net) (14.8) 6.1 6.9

Total 2,285.1 2,227.5 2,289.9

Cash and cash equivalents (586.6) (623.3) (746.6)

Net debt 1,698.5 1,604.2 1,543.3

26.2 ] MATURITIES OF LONG-TERM DEBT

(in € millions) 2008 2009 2010 2011 2012 Totaland beyond

Bonds 300.0 300.0Bank borrowings 15.3 703.8 2.4 1.7 1.9 725.1Other borrowings 0.3 1.6 4.8 2.0 0.5 9.2Obligations under finance leases 7.6 7.9 5.7 3.6 6.5 31.3

Total as of December 31, 2006 23.2 713.3 312.9 7.3 8.9 1,065.6

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26.3 ] PERPETUAL NOTES

On October 15, 1991, Faurecia (formerly Bertrand Faure) issued subordinated perpetual notes amounting to FRF900 million (€137.2 million) paying interest at the six-month Pibor plus 1.1% through October 15, 2006 and a symbolic rate of interest thereafter.The notes were repackaged in 1996 and the subordination clause was eliminated. In the pro forma balance sheet as of December 31,1997, the notes were stated at their estimated discounted present value on that date of €50 million, determined on the basis of the valueof future cash flows discounted at a rate of 4.21%, corresponding to the six-month Pibor at the end of 1997 plus a 0.4% margin.As from 1998, the residual value was amortized on the basis of the repayments that would have been due on a fixed-rate loan bearinginterest of 4.21% over the period remaining to October 15, 2006.

26.4 ] EUROBOND AND SYNDICATED LINE OF CREDIT

On October 5, 2005, Faurecia issued €300 million worth of bonds redeemable in October 2010.In addition, since November 2004, Faurecia has had access to a medium-term syndicated line of credit of up to €1,600 million which canbe drawn down for renewable periods of one, three or six months through November 2009. As of December 31, 2006, the undrawnportion of this credit line amounted to €900 million.The contracts relating to these two forms of borrowings include covenants, certain of which concern financial ratios.As of December 31, 2006, the Group complied with all of these ratios, as shown in the table below:

Type of ratio Contractual ceiling/floor Value as of Dec. 31, 2006

Ratio Amount

Adjusted net debt (1) EBITDA(2) 3,50 ceiling 2.97 1,743.6/587.4EBITDA (2) net interest 4,50 floor 6.78 587.4/86.6

(1) Adjusted net debt = consolidated net debt + adjustments for certain commitments given, based on definitions provided in the credit contract (e.g. mortgages or collateralized liabilities).(2) Earnings before interest, tax, depreciation and amortization = operating margin + depreciation, amortization and provisions for impairment in value of property, plant and equipment andintangible assets.

26.5 ] SECURITIZATION AND FACTORING PROGRAMS

Part of Faurecia’s financing requirements is met through receivables securitization and factoring programs (see note 18). As of December 31, 2006, financing under these programs totaled €628.9 million (€749 million as of December 31, 2005). Of this amount €248.9 million came from the sale of receivables with a subordinated deposit and €380 million from factoring programs.

26.5.1 Securitization program


Financing 248.9 370.0 370.0Subordinated deposit, deducted from the related liability 78.6 85.7 81.9

26.5.2 Factoring program

Only the receivables sold under the initial and renewable factoring programs have been derecognized.


Initial factoring program 120.0 90.5 20.8Renewable factoring program– Financing 260.0 288.5 299.0– Receivables sold and derecognized 126.5 122.0 152.4

26.6 ] ANALYSIS OF LONG- AND SHORT-TERM DEBT BY INTEREST RATE AND MATURITY

As of December 31, 2006, 86.4% of the Group’s borrowings were at variable rates, taking into account swap transactions.The Group has set up derivatives to hedge the interest rate risk on the interest payable on its borrowings between January 2007 andDecember 2009 (see note 27.2).

(in € millions) Before swaps After swaps

Variable rate borrowings 1,969.8 1,973.8Fixed rate borrowings 315.3 311.3

Total 2,285.1 2,285.1

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Borrowings (taking into account currency swaps) break down as follows by repayment currency:


Euro 1,902.5 83.3% 1,895.7 85.1% 2,114.2 92.3%US dollar 184.2 8.1% 230.5 10.4% 138.5 6.0%Other currencies 198.4 8.7% 101.3 4.5% 37.2 1.6%

Total 2,285.1 100% 2,227.5 100.0% 2,289.9 100.0%

As of December 31, 2006, the weighted average interest rate on outstanding borrowings was 3.85%.

NOTE [27] HEDGING OF CURRENCY AND INTEREST RATE RISKS

27.1 ] HEDGING OF CURRENCY RISKS

Currency risks relating to the commercial transactions of the Group’s subsidiaries are managed centrally by Faurecia, principally usingforward purchase and sale contracts and options, as well as foreign currency financing.Subsidiaries outside the euro zone are granted inter-company loans in their operating currencies. As such loans are refinanced in euros,exchange-rate risk is hedged through swaps.

(in € millions)Currency sold/ USD/ USD/ GBP/ CAD/ EUR/ EUR/ Other/ EUR EUR/ EUR/ EUR/ EUR/ Other/ Other/ TOTALcurrency purchased EUR CAD EUR EUR JPY CZK ZAR SEK PLN RON SKK TND BRL MXN

Trade receivables (net of payables) 7.5 6.9 6.9 0.2 3.1 20.8 19.2 (1.8) 64.4 (0.2) (3.0) 1.3 4.5 4.9 134.5Financial assets (net of liabilities) 0.0 2.5 (3.9) 0.0 0.0 0.2 1.7 3.5 (31.0) 0.6 0.0 (3.3) 0.0 (28.3) (58.0)Net position before hedging 7.5 9.4 2.9 0.2 3.1 20.9 20.9 1.7 33.5 0.4 (3.0) (2.0) 4.5 (23.4) 76.6Hedging (2.6) (9.1) 0.0 0.0 (3.2) 0.0 (15.7) 0.0 0.0 (0.3) 0.0 0.0 0.0 0.0 (31.0)Net balance sheet position after hedging 4.9 0.2 2.9 0.2 (0.1) 20.9 5.2 1.7 33.5 0.1 (3.0) (2.0) 4.5 (23.4) 45.5Hedging of future receivables and payables (6.5) (27.3) 0.0 0.0 (4.0) 0.0 (4.5) 0.0 (84.0) (2.7) 0.0 0.0 0.0 0.0 (129.0)

USD GBP CAD JPY CZK ZAR SEK PLN KRW Total

Inter-company loans in foreigncurrencies swapped for euros 160.0 48.8 19.6 8.2 28.7 4.4 (6.6) 76.4 (2.0) 337.4

Forward purchase and sale contracts (excluding swaps relating to the refinancing of inter-company loans) and call and put options are as follows:

(in € millions) USD/EUR USD/CAD EUR/ZAR EUR/PLN EUR/JPY EUR/RON TOTAL

Forward sales 0.2 12.1 16.5 5.2 3.0 37.0Forward purchases (8.3) (8.3)Call options 0Put options 9.0 24.3 12.0 84.0 2.0 131.3

160.0

Hedging instruments are recorded in the balance sheet at fair value. Calculations of fair value are based on measurements confirmed by banks.


Fair value of currency hedges of operating receivables and payables– Assets 2.1 5.5 7.2– Liabilities – – –Fair value of instruments used to hedge financial assets and liabilities– Assets 0.6 – 1.5– Liabilities – (2.3) –

Total 2.7 3.2 8.7

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Changes in fair value break down as follows:

2006 2005

Effective portion of gains and losses on hedges of commercial receivables and payables recorded under operating margin (1) (1.3) (1.9)Effective portion of gains and losses on hedges of forecast transactions recorded in equity (0.8) 0.3Ineffective portion of gains and losses on hedges, recorded under other financial income and expense (0.2) (1.1)Change in fair value of hedges of financial assets and liabilities (0.3) (3.9)

(2.6) (6.6)

(1) The impact corresponding to the effective portion of gains and losses on hedges of forecast transactions was recorded in equity as of December 31, 2005, for €4.1 million. This amount waswritten back to the income statement in 2006.

The impact of cash flow hedges on income and equity was as follows in 2006 and 2005:

(in € millions) 2006 2005

Fair value at beginning of year 4.1 3.8Effective portion of gains and losses recorded in equity 3.3 4.1Derecognition on exercise or disposal of instruments (4.1) (3.8)

Fair value at year-end 3.3 4.1

Ineffective portion of hedges recorded in the income statement (2.1) (2.7)Amounts taken to the income statement – hedge accounting no longer applied –

Pre-tax impact (2.1) (2.7)

Net impact on equity 3.3 4.1

27.2 ] INTEREST RATE HEDGES

Fixed rate borrowings of €4.0 million due in more than one year have been swapped for variable rate debt with the same maturity.The table below provides a schedule of maturities of financial assets and liabilities, according to the interest repricing date.

(in € millions) Repricing date

Within 1 year 1 to 5 years Beyond 5 years Total

Intraday to 1 year Fixed rate

Borrowings 1,940.5 4.0 340.6 0 2,285.1Cash and cash equivalents 586.6 586.6

Net balance sheet position 1,353.9 4.0 340.6 1,698.5

Fixed rate / variable rate swaps 4.0 (4.0) 0.0

Net position after hedging 1,357.9 0.0 340.6 0 1,698.5

Caps and other options in euros and US dollars have been taken out to hedge interest rate risk on the interest payable on the Group’sborrowings between January 2007 and December 2009. Variable rate / fixed rate swaps in euros and US dollars have also been set up as hedges in relation to interest payable over the same period. In addition, floors have been purchased in order to benefit from anylowering of medium-term interest rates on fixed rate debt.

(in € millions) 2007 2008 2009

Caps and other options 2,940 1,508 795Variable rate / fixed rate swaps 132 76 263Floors 639 75 225

3,711 1,659 1,283

Interest rate hedging instruments are recorded in the balance sheet at fair value. Calculations of fair value are based on measurementsconfirmed by banks. As of December 31, 2006 the fair value of hedging instruments amounted to €25.9 million. Premiums payable as of December 31, 2006 totaled €11.7 million, and will be paid in instalments between 2007 and 2009. As these hedges are notaccounted for in accordance with the hedge accounting principles set out in IAS 39, changes in their fair value are recorded directly in“Other financial income and expense”. In 2006, these changes represented a net gain of €7.9 million.

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The related instruments are recognized in the balance sheet as follows:


Fair value of interest rate instruments 25.9 12.6 2.9Premiums payable through 2010 (11.7) (16.4) (11.3)

Net value 14.2 (3.8) (8.4)

NOTE [28] ACCRUED TAXES AND PAYROLL COSTS


Accrued payroll costs 183.2 173.3 160.0Accrued payroll taxes 116.0 122.4 115.3Other 161.5 145.1 122.5

Total 460.7 440.8 397.8

NOTE [29] OTHER PAYABLES


Due to suppliers of non-current assets 50.3 90.9 53.9Deferred income 11.3 5.7 4.8Other 56.7 34.0 40.6

Total 118.3 130.6 99.3

NOTE [30] COMMITMENTS GIVEN AND CONTINGENT LIABILITIES

30.1 ] COMMITMENTS GIVEN


Future minimum lease payments under operating leases 81.1 108.5 91.9Debt collateral:– Pledged shares of Group companies– Mortgages 17.2 19.5 22.6Guarantees for the return of prepayments 22.0Other debt guarantees 27.9 16.1 17.0Firm orders for property, plant and equipment 120.5 118.3 95.0Other 0.5 6.6

Total 246.7 284.9 233.1

Future minimum lease payments under operating leases break down as follows:


Y+1 31.1 24.6 19.4Y+2 16.1 20.6 15.9Y+3 11.5 16.1 12.1Y+4 10.0 12.9 10.4Y+5 and beyond 12.4 34.3 34.1

81.1 108.5 91.9

Expiry dates of mortgages and guarantees:

(in € millions) Dec. 31, 2006

– Within 1 year 13.3– In 1 to 5 years 17.5– Beyond 5 years 14.3

45.1

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30.2 ] CONTINGENT LIABILITIES

Individual training entitlement

In accordance with the provisions of French Act no. 2004-391 dated May 4, 2004 relating to professional training, employees of theGroup’s French companies are entitled to at least twenty hours - training per calendar year, which may be carried forward for up to six years. If all or part of the entitlement is not used within six years, it is capped at 120 hours. In 2006, the average utilization rate of this entitlement was 2%.The number of unused accumulated training hours at the year-end totaled 923,000. No provision was recorded in the financial statements for these individual training entitlements.

NOTE [31] RELATED PARTY TRANSACTIONS

31.1 ] TRANSACTIONS WITH PSA PEUGEOT CITROËN

The Faurecia Group is managed independently and transactions with the PSA Peugeot Citroën Group are conducted on arm’s lengthterms.Related party transactions with the PSA Peugeot Citroën Group were as follows in 2006, 2005 and 2004:

(in € millions) 2006 2005 2004

Sales 2,701.2 2,721.9 2,847.0Purchases of products, services and materials 31.8 32.0 24.9Receivables 776.1 735.7 739.5Payables 55.4 21.2 31.1

31.2 MANAGEMENT COMPENSATION

Total compensation for 2006 awarded to the members of the Board of Directors and the Group Executive Committee amounted to €7,088,269 including directors’ fees of €188,574, compared with the year-earlier figures of €6,951,510 and €192,000, respectively.In addition to this compensation, 140,000 Faurecia stock subscription options were awarded to management during the year, and theamount recognized with respect to share-based payments to management was €980,000.

NOTE [32] EMPLOYEESThe number of employees of fully-consolidated companies as of December 31, 2006, 2005 and 2004 was as follows:

Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Europe– France 20,276 22,148 24,504– Germany 9,364 10,050 10,304– Other European countries 20,593 17,299 17,503

Sub-total Europe 50,233 49,497 52,311

Outside Europe 15,449 12,225 10,196

Total 65,682 61,722 62,507

The number of employees by business segment was as follows:

Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Interior modules 54,506 51,395 52,606Other modules 10,657 10,073 9,666Holding companies 519 254 235

Total 65,682 61,722 62,507

NOTE [33] INFORMATION ON THE CONSOLIDATING COMPANYThe consolidated accounts of the Group are included in the consolidated financial statements of the PSA Peugeot Citroën Group, 75 avenue de la Grande-Armée, 75116 Paris, France.As of December 31, 2006, Peugeot SA held 71.25% of the capital and 83.75% of the voting rights of Faurecia SA, the parent companyof the Faurecia Group.

NOTE [34] DIVIDENDSThe Board of Directors proposes that no dividend be paid with respect to the 2006 fiscal year.

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Country % interest % control(1)

I – FULLY-CONSOLIDATED COMPANIESFaurecia France Parent companyFinancière Faurecia ” 100.00 100.00SFEA – Société Foncière pour l’Équipement Automobile ” 100.00 100.00Faurecia Investments (merged with Sieloir) ” 100.00 100.00Faurecia Automotive Holdings (merged with Faurecia Automotive Intérieur France) ” 100.00 100.00Blériot Investissements ” 100.00 100.00Faurecia Services Groupe ” 100.00 100.00Faurecia Global Purchasing ” 100.00 100.00Faurecia Exhaust International ” 100.00 100.00Faurecia Werwaltungs GmbH Germany 100.00 100.00Société Internationale de Participations (SIP) Belgium 100.00 100.00Faurecia Netherlands Holding BV Netherlands 100.00 100.00United Parts Exhaust Systems AB Sweden 100.00 100.00Faurecia USA Holdings, Inc USA 100.00 100.00

AUTOMOTIVE SEATING AND VEHICLE INTERIORSFaurecia Sièges d’Automobile SAS France 100.00 100.00Faurecia Industries ” 100.00 100.00EAK Composants pour l’Automobile SAS ” 51.00 51.00EAK Composants pour l’Automobile SNC ” 51.00 51.00Trecia ” 100.00 100.00Siebret ” 100.00 100.00Siemar ” 100.00 100.00Sienor ” 100.00 100.00Sieto ” 100.00 100.00Sieval ” 100.00 100.00Sotexo ” 100.00 100.00Siedoubs ” 100.00 100.00Sielest ” 100.00 100.00ECSA-Études et Construction de Sièges pour l’Automobile ” 100.00 100.00Faurecia Intérieur Industrie SNC ” 100.00 100.00Faurecia Automotive Industrie SNC ” 100.00 100.00Automotive Sandouville ” 100.00 100.00Société Automobile du Cuir de Vesoul ” 100.00 100.00Faurecia Autositze GmbH & Co KG Germany 100.00 100.00Faurecia Deutschland Holding GmbH & Co-KG ” 100.00 100.00Faurecia Automotive GmbH ” 100.00 100.00Faurecia Innenraum Systeme GmbH ” 100.00 100.00Industriepark Sassenburg GmbH ” 100.00 100.00Faurecia Industrie NV Belgium 100.00 100.00Faurecia Asientos Para Automóvil Espana SA Spain 100.00 100.00Asientos de Castilla Leon SA ” 100.00 100.00Asientos del Norte SA ” 100.00 100.00

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Consolidated companies as of December 31, 2006

(1) Total interest of fully-consolidated companies.



Industrias Cousin Frères SL ” 50.01 50.01Tecnoconfort ” 50.00 50.00Faurecia Automotive España SL ” 100.00 100.00Faurecia Interior Systems España SA ” 100.00 100.00Faurecia Interior Systems SALC España SL ” 100.00 100.00Cartera e inversiones Enrich SA ” 100.00 100.00Asientos de Galicia SL ” 100.00 100.00Valencia Modulos de Puerta SL ” 100.00 100.00Faurecia AST Luxembourg SA Luxembourg 100.00 100.00Faurecia Automotive Seating BV Netherlands 100.00 100.00Faurecia Assentos de Automóvel, Lda Portugal 100.00 100.00Sasal ” 100.00 100.00Faurecia Sistemas de Interior de Portugal. Componentes para Automóvel SA(formerly SAI Automotive Portugal) ” 100.00 100.00EDA – Estofagem de Assentos Lda ” 100.00 100.00Faurecia Automotive Seating UK Ltd United Kingdom 100.00 100.00Faurecia Midlands Ltd ” 100.00 100.00SAI Automotive Telford Ltd ” 100.00 100.00SAI Automotive Fradley Ltd ” 100.00 100.00SAI Automotive Washington Ltd ” 100.00 100.00Faurecia Interior Systems Sweden AB Sweden 100.00 100.00Faurecia Fotele Samochodowe SpZoo Poland 100.00 100.00Faurecia Walbrzych SpZoo ” 100.00 100.00Faurecia Legnica SpZoo (formerly SAI Automotive Polska SpZoo) ” 100.00 100.00Faurecia Systemy Kierownicze SpZoo ” 100.00 100.00Faurecia Gorzow SpZoo ” 100.00 100.00Faurecia Lecotex AS Czech Republic 100.00 100.00Faurecia Interior Systems Bohemia (formerly SAI Automotive Bohemia Sro) ” 100.00 100.00Faurecia Components Písek Sro ” 100.00 100.00Faurecia Seating Talmaçiu Sro Romania 100.00 100.00Faurecia Leather Kosice Sro Slovakia 100.00 100.00Faurecia Slovakia Sro ” 100.00 100.00Faurecia Interior Systems Bratislava Sro ” 100.00 100.00Faurecia Polifleks Otomotiv Sanayi Ve Ticaret Anonim Sirketi Turkey 100.00 100.00Faurecia Interior Systems South Africa (Proprietary) Ltd South Africa 100.00 100.00Société Tunisienne d’Équipements Automobiles Tunisia 100.00 100.00Faurecia Automotive Seating Canada Ltd Canada 100.00 100.00Faurecia Canada Investment Company ” 100.00 100.00Faurecia Automotive Seating Inc. USA 100.00 100.00Faurecia Interior Systems Inc. ” 100.00 100.00Faurecia Automotive do Brasil Ltda Brazil 100.00 100.00Faurecia Duroplast México, SA de CV Mexico 50.00 50.00Servicios Corporativos de Personal Especializado, SA de CV ” 50.00 50.00Faurecia Interior Systems México, SA de CV ” 100.00 100.00CFXAS (Changchun Faurecia Xuyang Automotive Seating Co. Ltd) China 60.00 60.00Faurecia (Changchun) Automotive Systems Co. Ltd ” 100.00 100.00Faurecia-GSK (Wuhan) Automotive Seating Co. Ltd ” 51.00 51.00Faurecia (Wuxi) Seating Components Co. Ltd ” 100.00 100.00Faurecia (Shanghai) Management Cy, Ltd ” 100.00 100.00Faurecia Automotive Seating India Private Ltd India 100.00 100.00Faurecia Japon KK (merged with Faurecia Interior Systems KK) Japan 100.00 100.00

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EXHAUST SYSTEMS AND FRONT ENDSFaurecia Systèmes d’Échappement France 100.00 100.00Faurecia Bloc Avant ” 100.00 100.00Faurecia Cooling System France 100.00 100.00Faurecia Abgastechnik GmbH Germany 100.00 100.00Faurecia Kunststoffe Automobilsysteme GmbH ” 100.00 100.00Leistritz Abgastechnik Stollberg GmbH ” 100.00 100.00Faurecia Sistemas de Escape España, SA Spain 100.00 100.00Faurecia Sistemas de Escape Portugal Lda Portugal 100.00 100.00Faurecia Exhaust Systems AB Sweden 100.00 100.00Faurecia Magyarorszag Kipufogo-Rendszer Kft Hungary 100.00 100.00Faurecia Exhaust Systems Sro Czech Republic 100.00 100.00Faurecia Automotive Czech Republic Sro ” 100.00 100.00Faurecia Exhaust Systems South Africa (Proprietary), Ltd South Africa 100.00 100.00Faurecia Exhaust Systems, Inc. USA 100.00 100.00Faurecia Sistemas de Escape Argentina SA Argentina 100.00 100.00Faurecia Sistemas de Escapamento do Brasil Ltda Brazil 100.00 100.00Faurecia Exhaust Mexicana SA de CV Mexico 100.00 100.00Exhaust Services Mexicana SA de CV ” 100.00 100.00Faurecia Honghu Exhaust Systems Shanghai Co. Ltd (formerly SHEESC) China 51.00 51.00Faurecia Tongda Exhaust System (Wuhan) Co. Ltd (formerly TEEC) ” 50.00 50.00Faurecia Exhaust Systems Changchun ” 51.00 51.00Faurecia (Shanghai) Business Consulting Cy ” 100.00 100.00FESK (Faurecia Exhaust Systems Korea) South Korea 100.00 100.00Daeki Faurecia Corporation South Korea 100.00 100.00

II – COMPANIES ACCOUNTED FOR BY THE EQUITY METHODAUTOMOTIVE SEATING AND VEHICLE INTERIORSComponentes de Vehiculos de Galicia Spain 50.00 50.00Copo Ibérica SA ” 50.00 50.00Vanpro Assentos Lda Portugal 50.00 50.00ARSED Slovenia 50.00 50.00Teknik Malzeme Ticaret Ve Sanayi AS Turkey 50.00 50.00WBF Technologies Canada 50.00 50.00Bertrand Faure Argentina SA Argentina 50.00 50.00PAB SA ” 50.00 50.00Kwang Jin Faurecia Co. Ltd South Korea 50.00 50.00Faurecia NHK Co. Ltd Japan 50.00 50.00Faurecia NHK Kyushu Ltd ” 50.00 50.00

EXHAUST SYSTEMS AND FRONT ENDSAS GroupSAS Automotive France France 50.00 50.00Cockpit Automotive Systems Douai SNC France 50.00 50.00SAS Autosystemtechnik Verwaltungs GmbH Germany 50.00 50.00SAS Autosystemtechnik GmbH & Co. KG ” 50.00 50.00SAS Autosystemtechnik SA Spain 50.00 50.00SAS Autosystemtechnik de Portugal Unipessoal Ltda Portugal 50.00 50.00SAS Autosystemtechnik Sro Czech Republic 50.00 50.00SAS Automotriz Argentina SA Argentina 50.00 50.00SAS Automotive do Brasil Ltda Brazil 50.00 50.00

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Simplified organization chart of operating companies as of December 31, 2006 (direct and indirect holdings)

Organizational structure


100%

Faurecia AutositzeGmbH(Germany)

FaureciaAbgastechnik GmbH(Germany)

Leistritz AbgastechnikStollberg GmbH (LAS)(Germany)

Faurecia ExhaustSystems ChangchunCo. Ltd (China)

Faurecia AutomotiveGmbH(Germany)

Faurecia Siègesd’Automobile(France)

ECSA(France)

Siebret(France)

Siedoubs(France)

Sielest(France)

Siemar(France)

Sienor(France)

Sieto(France)

Société Automobiledu Cuir de Vesoul(France)

Sotexo(France)

Industrias CousinFrères, SL(Spain)

Faurecia ComponentsPisek Sro(Czech Republic)

Faurecia FoteleSamochodowe SpZoo(Poland)

Faurecia WalbrzychSpZoo(Poland)

ARSED d.o.o.(Slovenia)

Teknik Malzeme(Turkey)

BFTC(Turkey)

Faurecia ExhaustSystems South Africa(South Africa)

Faurecia ExhaustSystems Sro(Czech Republic)

Faurecia Sistemas deEscape Argentina SA(Argentina)

Faurecia Systèmesd’Échappement(France)

Exhaust ServicesMexicana, SA de CV(Mexico)

Faurecia HonghuExhaust SystemsShanghai Co. Ltd(China)

Faurecia TongdaExhaust System(Wuhan) Co. Ltd(China)

Faurecia AutomotiveSeating UK Ltd(United Kingdom)

Faurecia Midlands Ltd(United Kingdom)

Faurecia Japan KK(Japan)

CFXAS(China)

Faurecia GSK(Wuhan) AutomotiveSeating Co. Ltd(China)

Faurecia NHK Co. Ltd(FNK) (Japan)

Faurecia NHK KyushuCo. Ltd(FNQ) (Japan)

Société Tunisienned’Équipementsd’Automobile(Tunisia)

Faurecia AutomotiveSeatIng Canada Ltd(Canada)

WBF Technologies(Canada)

PAB SA(Argentina)

Bertrand FaureArgentina SA(Argentina)

Somil SA(Uruguay)

Faurecia - Assentosde Automóvel Lda(Portugal)

EDA - Estofagemde Assentos Lda(Portugal)

SASAL(Portugal)

Faurecia Sistemas de Escape PortugalLda (Portugal)

Faurecia Sistemas deInterior de Portugal.Componentes ParaAutomóvel SA (Portugal)

Vanpro Assentos Lda(Portugal)

Faurecia

100% 100% 50% 50% 50% 50%

100%

Faurecia AutomotiveSeating India PrivateLtd (India)

Faurecia Lecotex a.s.(Czech Republic)

Tecnoconfort(Spain)

100% 100% 50%

100% 100% 100% 50.01%

100% 100%

100%

100%100% 100% 100% 100%

Financière Faurecia(France)

Faurecia ServicesGroupe(France)

Faurecia Industries(France)

Faurecia Bloc avant(France)

Faurecia CoolingSystems(France)

Trecia(France)

Faurecia AutomotiveHoldings(France)

100% 100% 100% 50% 100%

100% 60%100%

Faurecia Investiments(France)

Faurecia DeutschlandHolding GmbH & Co.KG(Germany)

Faurecia KunststoffeAutomobilsystemeGmbH (Germany)

100% 13% 31.2%

EAK SAS(France)

EAK SNC(France)

Faurecia ExhaustSystems AB(Sweden)

Faurecia AutomotiveSeating BV(Netherlands)

Faurecia NetherlandsHolding BV(Netherlands)

Faurecia ExhaustSystems, Inc.(USA)

51% 51%

55.8%

51% 50% 50%

100%

100%

100%

100% 100% 50% 50%

100% 100% 50%100%

100% 100%100% 100% 100% 51% 50%

100%

100% 51%

50%

100% 100% 100% 100%

27.96% 72.04%

Servicios Corporativosde Personal Especializado, SA de CV(Mexico)

Faurecia DuroplastMexico, SA de CV(Mexico)

Faurecia InteriorSystems Mexico SAde CV (Mexico)

Faurecia InteriorSystems, Inc.(USA)

Faurecia AutomotiveSeating, Inc.(USA)

Faurecia USAHoldings, Inc.(USA)

50% 50% 100% 100%100% 82.55%

17.45%

100% 100%


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100%

Faurecia AutomotiveEspaña, SL(Spain)

Faurecia LeatherKosice Sro(Slovakia)

63.88%

Europe

Asia

South America & Africa

North America

Faurecia AsientosPara AutomovilEspaña, SA (Spain)

Daeki FaureciaCorporation(South Korea)

Faurecia Sistemas de Escape España SA(Spain)

Faurecia (Shanghai)Business ConsultingCompany Ltd (China)

Faurecia ExhaustMexicana, SA de CV(Mexico)

Faurecia TechnoplastAutomotive(Russia)

Asientos de CastillaLeon SA(Spain)

Asientos del Norte SA(Spain)

Asientos de Galicia SL(Spain)

Faurecia SeatingTalmaçiu Sro(Romania)

Componentes deVehiculos de GaliciaSA (Spain)

Faurecia InnenraumSysteme GmbH(Germany)

Faurecia InteriorSystems Sweden AB(Sweden)

Faurecia ASTLuxembourg SA(Luxembourg)

Faurecia PolifleksOtomotiv Sanayi VeTicaret AS (Turkey)

Dempo OtomotivSanayi Ve Ticaret AS(Turkey)

SAS Automotive RSA(Pty) Ltd(South Africa)

SAS AutomotiveSro(Slovakia)

SAS AutomotiveSystems SA de CV(Mexico)

SAS AutomotiveSystems & ServicesSA de CV (Mexico)

SAS Automotive Ltd(United Kingdom)

SAS AutomotiveUSA, Inc.(USA)

SASAutosystemtechnikSro(Czech Republic)

SAS AutomotrizArgentina SA(Argentina)

SAS Automotivedo Brasil Ltda(Brazil)

SASAutosystemtechnikGmbH & Co. KG(Germany)

SASAutosystemtechnikVerwaltungs GmbH(Germany)

SASAutosystemtechnikSA(Spain)

SASAutosystemtechnik dePortugal, UnipessoalLda (Portugal)

SAS AutomotiveBelgium NV(Belgium)

SAS AutomotiveFrance(France)

Cockpit AutomotiveSystems Douai SNC(France)

Faurecia (Changchun)Automotive SystemsCo. Ltd (China)

Faurecia Slovakia Sro(Slovakia)

Copo Ibérica, SA(Spain)

50% 100% 100% 100% 100% 100% 100%

100%

100%

100% 100% 100%

Faurecia (Wuxi)Seating ComponentsCo. Ltd (China)

100%

Faurecia (Shanghai)Management Co. Ltd(China)

100%100%

100%

100% 100%

100% 60%

100%100%

Faurecia LegnicaSpZoo(Poland)

Faurecia GorzowSpZoo(Poland)

Faurecia AutomotiveCzech Republic Sro(Czech Republic)

100% 100% 100%

Faurecia InteriorSystems BratislavaSro(Slovakia)

100%

Faurecia ExhaustSystems Korea(South Korea)

100%

Kwang Jin FaureciaCo, Ltd(South Korea)

50%

50.05%

49.23% 50.77%

100% 100% 100%

100%

50% 100%

68.75%

31.24%

100% 100% 100%

50%

100% 100% 100%

10.66%

FaureciaArgentina SA(Argentina)

Faurecia Industrie NV(Belgium)

Faurecia InteriorSystems South Africa(Pty) Ltd(South Africa)

Faurecia InteriorSystems BohemiaSro(Czech Republic)

Faurecia AD PlastikAutomotive Romanias.r.l.(Romania)

Taco-Faurecia Design Center Pvt Ltd(India)

100% 100% 100% 100% 51% 50%

Cartera e InversionesEnrich SA(Spain)

Valencia Modulos dePuerta, SL(Spain)

Faurecia InteriorSystems España, SA(Spain)

Faurecia Automotivedo Brasil Ltda(Brazil)

Faurecia Sistemas de Escapamento do Brasil Ltda (Brazil)

Faurecia InteriorSystems SALCEspana, SL (Spain)

100% 100% 100% 100%100%

49.95%

AutomotiveSandouville(France)

Faurecia AutomotiveIndustrie(France)

Faurecia GlobalPurchasing(France)

Faurecia IntérieurIndustrie(France)

SAI AutomotiveFradley Ltd(United Kingdom)

SAI AutomotiveWashington Ltd(United Kingdom)

100% 100% 100% 100% 100% 100%


To the Shareholders,

In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we have audited the accompanying consolidated financial statements of Faurecia SA and its subsidiaries for the year ended December 31, 2006.These consolidated financial statements have been approved by the Board of Directors. Our role is to express an opinion on theseconsolidated financial statements based on our audit.

I – Opinion on the consolidated financial statementsWe conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluatingthe overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2006 and the results of its operations for the year then ended in accordance with IFRS as adopted by the European Union.

II – Justification of our assessmentsIn accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to the justificationof our assessments, we bring to your attention the following matters:• The Company performs impairment tests on goodwill at each balance sheet date, and also assesses whether fixed assets show any indication of impairment, based on the methods described in notes 1-2, 1-5 and 10 to the consolidated financial statements. We reviewed the methods applied to carry out these impairment tests, as well as the cash flow projections and assumptions used. We also verified that note 10 discloses appropriate information in this regard.• Note 1-17 to the consolidated financial statements, concerning corporate income taxes, specifies that deferred tax assets are notrecognized in the accounts when it is deemed uncertain that they will be recovered in the future. Our work consisted in verifying that thismethod had been correctly applied and assessing whether the forecast data and assumptions supporting the probability of recovery for these deferred tax assets were reasonable.• As part of our assessment of the accounting rules and principles applied by your Company, we reviewed the criteria used for capitalizing and amortizing development expense and measuring the recoverable amount. We also ensured that note 1-3 discloses appropriate information.These assessments were made in the context of our audit of the consolidated financial statements, taken as a whole, and thereforecontributed to the opinion we formed which is expressed in the first part of this report.

III – Specific verificationIn accordance with professional standards applicable in France, we have also verified the information given in the Group’s ManagementReport. We have no matters to report regarding its fair presentation and consistency with the consolidated financial statements.

Neuilly-sur-Seine and Paris-La Défense, February 5, 2007

The Statutory Auditors

PricewaterhouseCoopers Audit Ernst & Young AuditGuy A. Sitbon Laurent Miannay

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Statutory Auditors’ report on the consolidated financial statements for the year ended December 31, 2006


This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifically required by French law in all audit reports, whether qualified or not. This information is presented below the opinionon the consolidated financial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain significant accounting and auditing matters. Theseassessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements.This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.


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92_ Management report of the parent company

95_ Income statements

96_ Balance sheets

98_ Cash flow statements

99_ Notes to the 2006 financial statements

107_ Appropriation of 2006 net loss

108_ Subsidiaries and investments as of December 31, 2006

110_ Five-year financial summary

111_ Securities portfolio as of December 31, 2006

112_ Statutory Auditors’ report

Parent company financial statements


The parent company, Faurecia, is a holding company which directly and indirectly provides financial, accounting, general managementand administrative services to companies in the Group.

Sales for 2006 amounted to €87.1 million versus €82.8 million in 2005. Payroll costs rose slightly to €13.6 million versus €12.7 million in 2005.

The operating profit amounted to €1.7 million, which represents a return to break-even when compared to previous years: an operatingloss of €3.2 million was incurred in 2005 and a loss of €10.3 million was incurred in 2004.

Faurecia incurred a net financial loss of €205.3 million.This item mainly comprised:• net charges to provisions for impairment of investments of €382.3 million, including a charge of €230.6 million for investments relating

to the Group’s Vehicle Interiors business (excluding the US business) and a charge of €140 million relating to the investment in FaureciaUSA Holdings Inc. Impairment losses relating to the Vehicle Interiors business result from updating the valuations of these investments.They are in line with the impairment tests carried out in the context of preparation of the Group’s consolidated financial statements.The impairment loss relating to the investment in Faurecia USA Holdings, which holds investments in Group subsidiaries in the Seats,Vehicle Interiors and Exhaust Systems businesses, results from start-up costs in the Seats and Vehicle Interiors businesses. An increase of $300 million in the capital stock of Faurecia USA Holdings was decided on at the end of 2006 in order to re-balance the subsidiary’s financial structure;

• dividends from subsidiaries of €153.6 million, including a dividend of €83.9 million from Faurecia Automotive GmbH (Vehicle Interiors business);

• income of €64.6 million on the extinguishment of the accounting debt related to the perpetual notes, which matured in October 2006;• net borrowing costs of €40.6 million (versus €34.8 million the previous year).At December 31, 2006, net debt, corresponding to borrowings net of cash and cash equivalents, marketable securities and net inter-company cash advances, amounted to €1,468.1 million, compared to €1,497.4 million at the end of 2005.

The Company’s sources of financing comprise the following:• a €300 million bond issued in October 2005 which matures in October 2010;• a syndicated line of credit of €1.6 billion which can be drawn down for renewable periods of one to six months,

expiring in November 2009, of which €700 million had been used at December 31, 2006;• a commercial paper program issued on the French domestic market for a total amount of €850 million of which €484,3 million had

been used at December 31, 2006; the syndicated line of credit guarantees the liquidity of this program: the two financing contracts(syndicated credit and bond) contain restrictive clauses, particularly relating to certain consolidated financial ratios, which were allcomplied with at December 31, 2006. At that date, 80.2% of Faurecia’s debt was at variable rates and was hedged through interestrate caps.

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Management report of the parent company



Net non-recurring income for the year amounted to €27.8 million and reflects two main transactions:

• the sale of Faurecia Automotive Intérieur France shares to FAH for €9.1 million (capital loss on sale of €21.7 million);• contribution of the investment in Faurecia Sístemas de Escape to Faurecia Automotive España for €76.4 million (capital gain

on contribution of €49.0 million).

Tax income, recognized as a result of profits made by French subsidiaries in the consolidated tax group, amounted to €10.5 million in 2006 (€16.9 million in 2005).

The net loss for the year was €165.2 million, taking account of the impact of provisions for impairment of investments recognized. As the Company does not have retained earnings, the loss for the year will be deducted from the “Additional paid-in capital” caption,which will be reduced to an amount of €194.3 million. Shareholders’ equity at December 31, 2006 amounted to €390.0 million.

The documents accompanying this report, which are included within Faurecia’s registration document (document de référence),supplement the information provided to shareholders, particularly concerning compensation received by directors and officers. In thisrespect, following Pierre Levi’s resignation from his functions as a Director, as Chairman of the Board of Directors and as Chief ExecutiveOfficer, Grégoire Olivier was coopted as a Director by decision of the Board of Directors on September 8, 2006.

During the same meeting, the Board appointed Grégoire Olivier as its Chairman and decided that the role of Chief Executive Officerwould be assumed by the Chairman of the Board of Directors.

Subsequently, having been called to fill other functions within the PSA Peugeot Citroen Group, Grégoire Olivier was replaced in hisfunctions as Chairman of the Board of Directors by Yann Delabriere on February 16, 2007. During the same meeting, the Boardconfirmed that the role of Chief Executive Officer is assumed by the Chairman of the Board of Directors and, in addition, Grégoire Olivier resigned as a Director.

The Company’s capital stock only underwent minor changes in the years arising from the exercise of stock options by the Company’ssenior managers. The Board of Directors did not use the authorization given by the Shareholders’ Meeting of May 22, 2006 to increasethe capital stock up to a maximum amount of €61,000,000.

The risks that the Company faces are explained in the Management report of the Board of Directors on the consolidated financial statements

The draft resolutions presented below are an integral part of this document and complete the information provided to shareholders. In the ordinary resolutions, the shareholders are asked to approve the financial statements of the Company and the Group, as well as toappropriate the net loss for the year. The shareholders are asked to renew the appointment of Yann Delabrière as a Director for a periodof six years. The shareholders are asked to appoint Sylvie Rucar, Ross Mc Innes, Jean-Pierre Clamadieu and Robert Peugeot as newDirectors. Lastly, shareholders as asked to ratify the Board’s decision of February 2, 2007 to coopt Christian Streiff as a Director.

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As the period of appointment of the Statutory Auditors ends on completion of this General Meeting, the Board proposes that the shareholders renew, for the six-year legal period, the appointment of Ernst & Young as principal Statutory Auditor (and that of the deputyStatutory Auditor for Ernst & Young) and the appointment of PricewaterhouseCoopers as principal Statutory Auditor (and that of thedeputy Statutory Auditor for PricewaterhouseCoopers).

In the extraordinary resolutions, the Board of Directors requests the authorization to issue stock options that could potentially represent600,000 Faurecia shares. These stock-options would be granted by the Board to directors, officers and employees of the Group withina period of thirty-eight months from the date of your decision.

The details of the stock options granted by the Company during the year, the beneficiaries thereof and the number of shares subscribedto or purchased, are provided to you in a special report. Part of this information is dealt with or completed in the section of Faurecia’sregistration document providing general information on your Company.

In the extraordinary resolutions it is also proposed to harmonise article 17 of the Company’s bylaws with the decree of December 11,2006, and to state in the bylaws that the right to participate in Shareholders’ Meetings is justified by the accounting registration of theshares in the shareholders’ name, or that of the intermediary acting on behalf of the shareholder, three working days before theShareholders’ Meeting.

The manner in which the Board of Directors and its specialized Committees operate, together with key information concerning the Group’s internal control system, are described in the Chairman’s report on this matter.

The Chairman’s report on internal control and the accompanying Statutory Auditors’ report are presented in greater detail in the corporate governance section of the registration document.

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(in € thousands) Notes 2006 2005 2004

Services sold 87,108 82,779 67,592

Sales 87,108 82,779 67,592

Capitalized production 155 185 555

External services (78,498) (63,742) (61,837)

Taxes other than on income (2,172) (1,123) (593)

Wages and salaries (9,785) (9,307) (8,666)

Payroll taxes (3,841) (3,373) (3,212)

Depreciation, amortization and

provisions (less reversals) (7,669) (8,469) (3,985)

Other income and expenses 16,418 (164) (149)

Total operating expenses (85,392) (85,993) (77,887)

Operating income (loss) 1,716 (3,214) (10,295)

Financial income 3 305,536 100,338 108,526

Interest and other financial expenses 3 (510,798) (522,413) (105,762)

Net financial income (loss) 3 (205,262) (422,075) 2,764

Operating income (loss) after financial income (loss) (203,546) (425,289) (7,531)

Non-recurring income 4 86,536 157,435 1,226

Non-recurring expense 4 (58,737) (164,822) (1,280)

Net non-recurring income (expense) 4 27,799 (7,387) (54)

Employee profit-sharing

Corporate income tax 5 10,522 16,918 41,076

Net income (loss) (165,225) (415,758) 33,491

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Income statements



Assets

(in € thousands) Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Notes Cost Depreciation, Net Net Netamortisation

and provisions

Intangible assets 13,706 10,899 2,807 5,935 3,373

Property, plant and equipment 6 11,495 6,026 5,469 5,909 7,366

Investments 7 2,650,035 908,069 1,741,966 1,944,722 2,313,620

Total fixed assets 2,675,236 924,994 1,750,242 1,956,566 2,324,359

Trade receivables 56,163 56,163 27,210 20,547

Other receivables 8 783,826 61 783,765 811,112 812,136

Cash and cash equivalents 9 16,942 16,942 16,296 19,233

Total current assets 856,931 61 856,870 854,618 851,916

Prepaid expenses 10 16,176 16,176 18,156 14,635

Conversion losses 0 0 9

Deferred charges 2,206 2,206 3,175 5,678

Total assets 3,550,549 925,055 2,625,494 2,832,515 3,196,597

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Balance sheets



Liabilities and shareholders’ equity

(in € thousands) Notes Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Capital stock 169,815 169,635 169,484

Additional paid-in capital 359,566 723,184 722,515

Legal reserve 16,948 16,948 16,945

Untaxed reserves 8,939 8,939 12,024

Other reserves 3,020

Retained earnings 48,232 40,936

Net loss for the year (165,225) (415,758) 33,491

Untaxed provisions 108

Total shareholders’ equity 11 390,043 554,200 995,503

Provisions for contingencies and charges 12 6,140 4,730 5,221

Long and short-term debt

Perpetual notes 13 65,734 67,028

Other debt 14 1,532,612 1,364,385 1,295,156

Total debt 1,532,612 1,430,119 1,362,184

Operating payables 15 33,749 25,650 24,290

Other payables 15 661,830 815,889 807,382

Total payables 695,579 841,539 831,672

Deferred income 16 745 1,927 2,017

Conversion gains 375

Total liabilities and shareholders’ equity 2,625,494 2,832,515 3,196,597

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(in € millions) 2006 2005 2004

I – Operating activities

Net income (loss) (165.2) (415.8) 33.4

Depreciation and amortization 5.7 7.6 7.2

Increase (decrease) in provisions and other long-term liabilities 383.7 432.2 35.9

Capital (gains) losses on disposals of assets (27.4) 7.8 (0.2)

Cash flow 196.8 31.8 76.3

(Increase) decrease in working capital requirement (14.6) 13.5 10.5

Net cash provided (used) by operating activities 182.2 45.3 86.8

II – Investing activities

Acquisitions of intangible assets and property, plant and equipment (1.2) (6.2) (1.8)

Acquisitions of investments in subsidiaries and affiliates (76.4) (155.2) (34.8)

Other investments

Divestments of property, plant and equipment 0.3

Disposals of financial investments 85.7 155.5

Other decreases in property, plant and equipment 0.5

Net cash provided (used) by investing activities 8.1 (5.9) (35.8)

Net cash provided by operating and investing activities (I)+(II) 190.3 39.4 51.0

III – Financing activities

Issuance of shares 1.0 0.8 0.2

Dividends paid (26.3) (21.6)

Issuance of debt securities and increase in borrowings 540.7 304.4 401.0

Repayments of borrowings and perpetual notes (438.2) (236.4) (451.6)

Changes in intercompany borrowings (293.2) (84.9) 17.7

Net cash (used) by financing activities (189.7) (42.4) (54.3)

Net increase (decrease) in cash and cash equivalents 0.6 (3.0) (3.3)

Cash and cash equivalents at beginning of year 16.3 19.3 22.6

Cash and cash equivalents at end of year 16.9 16.3 19.3

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Cash flow statements



NOTE [1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with French generally accepted accounting principles. The main policies applied are as follows:

1.1 ] PROPERTY, PLANT AND EQUIPMENT

Property and equipment are stated at acquisition or production cost. Depreciation is calculated by the straight-line method over theestimated useful life of the assets, as follows:• buildings: 25 to 30 years;• leasehold improvements, fixtures and fittings: 7 to 10 years;• other fixtures and fittings: 10 years;• office equipment and computers: 3 to 5 years;• software: 1 to 3 years;• furniture: 10 years.

1.2 ] INVESTMENTS

A provision is set aside if the fair value of an investment falls below its cost on initial recognition. Fair value is based on the subsidiary’srevalued net assets, profitability and future prospects.For investments intended to be sold, fair value estimates also take into account prices at which prior transactions were carried out, if any.

1.3 ] MARKETABLE SECURITIES

Marketable securities are stated at acquisition cost or market value, whichever is lower.

1.4 ] FOREIGN CURRENCY TRANSACTIONS

Unhedged payables and receivables in foreign currency are translated at the exchange rate prevailing on the transaction date. At year-end,they are translated at the year-end exchange rate and the resulting gain or loss is recorded in the balance sheet under “Conversion losses”or “Conversion gains”. Hedged payables and receivables are translated at the hedging rate.

1.5 ] PROVISION FOR PENSION AND RETIREMENT BENEFITS

The vested rights of employees under supplementary pension and retirement bonus plans are determined on an actuarial basis using the projected benefit obligation method. The valuation takes into account the probability of employees staying with the Company up to retirement age and expected future salary levels. Benefit obligations are partially funded by contributions to external funds. In cases where the funds are permanently allocated to the benefit plan concerned, their value is deducted from the related liability.

1.6 ] NON RECURRING ITEMS

Unusual or non-recurring items are included under “Non-recurring income and expense”.

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Notes to the 2006 financial statements



1.7 ] FINANCIAL INSTRUMENTS

Interest rate risks are hedged, where appropriate, using financial instruments traded on organized or over-the-counter markets.Hedging gains and losses are recognized on a symmetrical basis with the loss or gain on the hedged item.

NOTE [2] SUBSEQUENT EVENTS

No significant post-balance sheet events have occurred.

NOTE [3] NET FINANCIAL INCOME (LOSS)

Net financial income (loss) breaks down as follows:

(in € thousands) 2006 2005 2004

Financial incomeIncome from investments in subsidiaries and affiliates(1) 163,916 48,302 78,341Other interest and similar income(2) 110,856 33,105 26,460Net gains from sales of marketable securities 3Reversals of provisions(3) 30,764 18,931 3,722

Total 305,536 100,338 108,526

Interest and other financial expensesInterest expense (97,718) (71,916) (66,482)Charges to provisions for impairment of investments(4) (413,080) (450,497) (38,011)Charges to other provisions(5) (1,269)

Total (510,798) (522,413) (105,762)

Net financial income (loss) (205,262) (422,075) 2,764

(1) This item corresponds to dividends and similar income from subsidiaries and affiliates.In 2004, it includes a dividend received from Faurecia Automotive GmbH in the form of Faurecia Automotive Intérieur France shares, amounting to €30,753 thousand.In 2006, it includes a dividend received from Faurecia Automotive GmbH amounting to €83,880 thousand.

(2) including:– income on maturity of perpetual notes 64,567

(3) including:– reversals of provisions for impairment of investments 30,764 17,662 1,400– reversals of provisions for financial contingencies and charges 1,269 2,322

(4) including:• in 2004– a provision against the Faurecia Automotive GmbH investment to offset the dividend received from the Company 30,753• in 2005– Faurecia Automotive Holding investment (343,300)– Faurecia Industries investment (57,000)– Faurecia Automotive Intérieur France investment (30,753)– Faurecia Automotive GmbH investment (15,300)• in 2006– Faurecia Automotive Holding investment (140,000)– Faurecia Industries investment (14,000)– Faurecia USA Holdings Inc. investment (140,000)– Faurecia Automotive GmbH investment (102,880)– Trecia investment (4,500)– Faurecia Honghu Exhaust Systems Shanghai investment (200)– Sté Internationale de Participation (SIP) investment (11,500)

(5) Including:– provisions for currency risks (9)– provisions for financial contingencies and charges (1,260)

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NOTE [4] NET NON-RECURRING INCOME (EXPENSE)

Net non-recurring income (expense) breaks down as follows:

(in € thousands) 2006 2005 2004

Non-recurring income

From management transactions 5

Proceeds from the disposal of assets(1) 86,005 156,632 682

Reversals of provisions(2) 531 798 544

Total 86,536 157,435 1,226

Non-recurring expense

On management transactions (3) (431) (911) (659)

Book value of assets and investments sold(4) (58,306) (163,336) (90)

Depreciation, amortisation and charges to provisions (575) (531)

Total (58,737) (164,822) (1,280)

Net non-recurring income (expense) 27,799 (7,387) (54)

(1) including:proceeds from the sale of investments 85,611 155,553(Faurecia Automotive Holdings Inc. shares sold in 2005 to Faurecia USA Holdings Inc. for 155,133)(Faurecia Automotive Intérieur France shares sold to FAH for 9,081 and Faurecia Sístemas de Escape shares contributed to Faurecia Automotive España for 76,449 in 2006)

(2) including:– reversals of untaxed provisions 109 109– reversals of provisions for contingencies and charges 531 689 435

(3) restructuring costs in 2004 (630)expenses following tax audit in 2005 and 2006 (313) (806)

(4) book value of assets and investments sold or contributed (58,304) (163,336)(of which Faurecia Automotive Holdings Inc. shares for 146,303 in 2005)(of which Faurecia Automotive Intérieur France shares for 30,753 and Faurecia Sístemas de Escape shares contributed for 27,442 in 2006)

NOTE [5] CORPORATE INCOME TAX

Faurecia has elected to file consolidated tax returns. The tax group includes the parent company and its main French subsidiaries. This election allows Faurecia to obtain a tax benefit by offsetting its tax losses, and those of some of its subsidiaries,against the taxable income of other subsidiaries in the tax group:

(in € thousands) 2006 2005 2004

Tax income from subsidiaries in the tax group 10,419 17,500 41,076Tax income (expense) 103 (582)

Total 10,522 16,918 41,076

NOTE [6] PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment can be analyzed as follows:


Cost Net Net Net

Land 55 55 56 56Buildings 288 0 1 7Other property, plant and equipment 11,152 5,414 5,852 7,303

Total 11,495 5,469 5,909 7,366

Capital expenditure amounted to €1,191 thousand in 2006, including €108 thousand on fixtures and fittings, €118 thousand on furniture, €365 thousand on other intangible assets and €600 thousand on assets under construction.

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NOTE [7] INVESTMENTS



Investments in subsidiaries and affiliates 2,359,252 908,069 1,451,183 1,815,302 2,256,286Loans to subsidiaries and affiliates 290,783 290,783 129,367 57,296Other 0 53 38

Total 2,650,035 908,069 1,741,966 1,944,722 2,313,620

Loans to subsidiaries and affiliates, which include the advance made prior to the increase in capital stock of Faurecia USA Holdings Inc.in an amount of €188 milllion, are due for payment more than one year after the balance sheet date.

NOTE [8] RECEIVABLES

These mainly comprise:• cash advances to various Group companies totaling €694.8 million as of December 31, 2006 (December 31, 2005: €712.2 million;

December 31, 2004: €699.3 million);• taxes due by subsidiaries in the tax group, in an amount of €2.1 million (December 31, 2005: €4.1 million; December 31, 2004:

€22.5 million);• corporate income tax receivables in an amount of €3.9 million as of December 31, 2006 (December 31, 2005: €2.9 million;

December 31, 2004: €2.3 million);• a securitization deposit in an amount of €78.6 million as of December 31, 2006 (December 31, 2005: €85.7 million; December 31,

2004: €81.9 million);• recoverable VAT of €1.1 million compared to €3.5 million in 2005.Receivables due within one year amount to €780.5 million; those due after one year amount to €3.3 million.

NOTE [9] CASH AND CASH EQUIVALENTS

At December 31, 2006, this item corresponds mainly to 302,154 Faurecia shares with a carrying value of €12.5 million compared to335,804 Faurecia shares with a carrying value of €13.5 million at December 31, 2005:• 200,000 were contributed by Ectra in 1999;• 19,613 were purchased in 2000;• 96,361 were purchased in 2001;• 96,860 were purchased in 2002;• 32,745 were sold in 2004;• 74,285 were sold in 2005;• 30,000 were purchased in 2005;• 33,650 were sold in 2006.The shares are being held for allocation on exercise of stock options granted to directors and managers of the Group.At the Meetings held on September 6, 1999, September 4, 2000 and April 26, 2001, the Board of Directors decided to grant, respectively,200,000 stock options with an exercise price of €52 each, 254,000 stock options with an exercise price of €40 each and 43,500 stockoptions with an exercise price of €54.5 each.

NOTE [10] PREPAID EXPENSES

Prepaid expenses mainly comprise:


Premiums on currency and interest rate instruments 14,551 17,863 13,028Commissions and bank charges 162 200 271Rent 1,360 1,261Other 103 93 75

Total 16,176 18,156 14,635

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NOTE [11] SHAREHOLDERS’ EQUITY

11.1 ] CHANGES IN SHAREHOLDERS’ EQUITY

(in € thousands) Balance as of Appropriation Increase in Other Balance as Dec. 31, 2005 decision at capital stock movements of Dec. 31, 2006

the AGM of in the yearMay 26, 2006

Capital stock 169,635 180 169,815Additional paid-in capital 723,184 (364,506) 888 359,566Legal reserve 16,948 16,948Untaxed reserves 8,939 8,939Other reserves 3,020 (3,020) 0Retained earnings 48,232 (48,232) 0Net loss for the year (415,758) 415,758 (165,225) (165,225)Untaxed provisions 0 0

Total 554,200 0 1,068 (165,225) 390,043

11.2 ] ADDITIONAL PAID-IN CAPITAL

• As of December 31, 2006, the Company’s capital stock amounted to €169,814,652, divided into 24,259,236 fully paid-up commonshares with a par value of €7 each. Shares which have been registered in the name of the same shareholder for at least two years carrydouble voting rights (17,322,326 shares as of December 31, 2006).

• The exercise of all the stock options granted to directors and managers that were outstanding as of December 31, 2006, i.e., 1,265,715 options exercisable at an average price of €52.21, would result in:

– capital stock being increased by €8.9 million corresponding to 1,265,715 shares with a par value of €7 each;– additional paid-in capital being increased by €57.2 million.

NOTE [12] PROVISIONS FOR CONTINGENCIES AND CHARGES


Provisions for contingenciesForeign exchange losses 9Impairment in value of financial instruments 1,260Other 2,356 2,037 3,941

Sub-total 2,356 2,037 3,941

Provisions for chargesProvisions for pensions and retirement benefits(1) 3,650 2,542 1,091Other 134 151 189

Sub-total 3,784 2,693 1,280

Total 6,140 4,730 5,221

(1) The provision for pensions and retirement benefits covers the costs that the Company must bear on retirement of employees:– statutory lump-sum bonuses payable to employees on retirement;– supplementary pension benefits payable to certain employees.The Company’s obligations for supplementary pension benefits are fully funded under an insured plan. Consequently, the Company has no further pension commitments towards former employees.The benefit obligation has been estimated by independent actuaries using a discount rate of 4.5% and an inflation rate of 2%.

NOTE [13] PERPETUAL NOTES

On October 15, 1991, Faurecia (formerly Bertrand Faure) issued perpetual subordinated notes amounting to €137.2 million bearinginterest at the six-month Pibor plus 1.10% through October 15, 2006 and a symbolic rate of interest thereafter.At the time of issue of the notes, Faurecia signed an agreement with a third party providing for the payment by Faurecia of an initial sumof €38.7 million to be invested in zero coupon bonds. In exchange, the third party gave a commitment to note holders to buy back the perpetual notes after fifteen years.In 1996, Faurecia entered into an agreement with a bank to restructure the perpetual notes to reflect the consequences of the fall in interest rates and the improvement in the financial situation of the Company and its subsidiaries.

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On July 30, 1996, the bank purchased the perpetual notes from the holders at their face value (€137.2 million) plus the interest accruedsince the last half-yearly interest due date. Then it recovered full ownership of the zero coupon bonds, which were sold on July 30, 1996 at their market value.Once the subordination clause was eliminated, the bank sold the notes to a securitization fund created for this purpose. The fund issuedsecurities to new subscribers to finance the purchase of the debt. The €8.6 million profit on the entire transaction was recognized on a straight line basis over the period between July 30, 1996 and October 15, 2006.This operation was approved by the French tax administration (Service de la législation fiscale) and the deductibility of interest based on the actual proceeds received from the issue (i.e. €98.5 million) authorized when the notes were issued in 1991 was maintained.However article 238 bis al. 01 of the French General Tax Code (CGI) provided for the inclusion in taxable income of the amount of interest capitalized over the last three years, on the share of funds transferred outside France.As the perpetual notes matured in October 2006, their net amount (€64.6 million) was reversed through the income statement.

NOTE [14] OTHER DEBT


Bonds 300,000 299,919Bank borrowings 1,228,907 1,060,359 1,293,354Other 3,705 4,107 1,802

Total 1,532,612 1,364,385 1,295,156

Maturities of other debt are as follows:

(in € thousands) As of Dec. 31, 2006

Maturing in 2007 532,404Maturing in 2008Maturing in 2009 700,034Maturing in 2010 300,0592011 and beyond 115

Total 1,532,612

On October 5, 2005, Faurecia issued €300 million of bonds redeemable in October 2010.Faurecia has access to a medium-term syndicated line of credit of up to €1,600 million which can be drawn down for renewable periodsof one, three or six months through November 2009. As of December 31, 2006 the undrawn portion of this credit line amounted to €900 million.The two financing contracts (syndicated credit and bond) contain restrictive clauses, particularly relating to certain consolidated financialratios, which were all complied with at December 31, 2006.Taking into account a swap relating to fixed-rate borrowings of €4 million, 80.2% of the Company’s borrowings are at variable rates.These borrowings are hedged using interest rate options as described in note 19.1.

NOTE [15] OPERATING PAYABLES AND OTHER PAYABLES


Trade payables 28,880 19,383 20,339Other operating payables 4,869 6,267 3,951

Sub-total operating payables 33,749 25,650 24,290

Cash advances from subsidiaries 647,187 795,780 792,961Other 14,643 20,109 14,421

Sub-total other payables 661,830 815,889 807,382

Total 695,579 841,539 831,672

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NOTE [16] DEFERRED INCOME

As of December 31, 2005 this caption primarily corresponded to the deferred income arising on the restructuring of the perpetual notesin an amount of €0.7 million (December 31, 2004: €1.5 million). This amount was taken to income in 2006 (see note n° 13).

NOTE [17] UNRECOGNIZED DEFERRED TAXES

Unrecognized deferred taxes correspond to:• temporary differences between book income and taxable income;• tax loss carryforwards of the tax group;• tax savings arising from the use of tax losses of companies in the tax group which will have to be restored to them if and when they

return to profit.They are computed based on the tax rate for the year in which they are expected to reverse (i.e. 34.43% for 2007 and beyond).Unrecognized deferred taxes can be analyzed as follows:


Deferred tax liabilities on temporary differences (760) (1,093) (1,997)Deferred tax liabilities corresponding to tax savings arising from theuse of the tax losses of companies in the tax group (204,339) (124,097) (75,727)

Sub-total deferred tax liabilities (205,099) (125,190) (77,724)

Tax paid on taxable income that is not yet recognized 1,543 964 522Charges recognized that are deductible for tax purposes in future years 1,369 1,347 1,802Future tax savings on tax loss carry forwards of the tax group 202,778 106,384 73,621

Sub-total deferred tax assets 205,690 108,695 75,945

Unrecognized deferred tax (liabilities) assets 591 (16,495) (1,779)

NOTE [18] FINANCIAL COMMITMENTS

As of December 31, 2006 guarantees consist solely of those given to direct and indirect subsidiaries and affiliates, in an amount of €30.8 million (December 31, 2005: €36.1 million; December 31, 2004: €30.4 million).

NOTE [19] FINANCIAL INSTRUMENTS USED TO HEDGE MARKET RISKS

19.1 ] INTEREST RATE HEDGES

Fixed rate borrowings of €4 million due in more than one year have been swapped for variable rate debt with the same maturities.Furthermore, swaps, caps and other options in euros and USD have been taken out to hedge interest payable on debt betweenJanuary 2007 and December 2009. Floors were purchased in order to be in a position to gain from a possible medium-term reduction ininterest rates on fixed-rate debt.Positions for 2007 to 2009 can be analyzed as follows by type of financial instrument:

(in € thousands) 2007 2008 2009

Caps and other options 2,940 1,508 795Variable rate / fixed rate swaps 132 76 263Floors 639 75 225

3,711 1,659 1,283

Premiums reported under assets in the balance sheet as of December 31, 2006 stood at €14.6 million, including €11.7 million to be paid in installments between 2007 and 2009.

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19.2 ] CURRENCY HEDGES

Although such loans are referenced in euros, currency risk on intercompany loans to subsidiaries outside the Euro zone, in theiroperating currency is hedged through swaps.As of December 31, 2006 currency swaps in place concerned ZAR 40.2 million, CAD 30 million and USD 193.9 million.

NOTE [20] EMPLOYEES

2006 2005 2004

Management 46 47 41Other 2 2 4

Total 48 49 45

NOTE [21] DIRECTORS’ COMPENSATION

In 2006, total attendance fees paid to directors amounted to €188,574 (2005: €192,000).

NOTE [22] RELATED PARTY TRANSACTIONS

(in € thousands) 2006 2005 2004

In the income statementServices invoiced to subsidiaries 103,718 80,755 66,542Income from subsidiaries and affiliates 183,562 63,129 94,813Interest income 7,980 5,531 2,143Services invoiced by subsidiaries (58,419) (47,152) (41,356)Interest expense (16,445) (15,296) (15,068)

In the balance sheetLoans to subsidiaries and affiliates 290,781 129,366 57,296Trade and other receivables 753,655 741,462 741,164Trade and other payables 671,279 811,125 810,214

Related companies are companies that are fully consolidated in the Faurecia Group consolidated accounts.

NOTE [23] INFORMATION ON THE CONSOLIDATING ENTITY

Peugeot SA – 75, avenue de la Grande-Armée – 75116 Paris – France.

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(in euros)

Net loss for the year (165,225,090)

Recommended appropriation:

1 – Source

Retained earnings carried over from prior years –

Net loss for the year (165,225,090)

(165,225,090)

2 – Appropriation

Legal reserve –

Additional paid-in capital (165,225,090)

Retained earnings –

(165,225,090)

Dividends for the last three years were as follows:

Year Number of Net dividend Tax Total revenueshares(1) distributed credit from share

(in euros) (in euros) (in euros)

2003 24,206,751 0.910 0.455 1.3652004 24,212,051 1.100 – 1.1002005 24,233,601 – –

Proposal for 2006 24,259,236 – –

(1) Including treasury stock.

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Appropriation of 2006 net loss



(in € thousands) Capital stock Reserves and retained Share of Grossearnings before capital stock value

appropriation of profit held of investmentsor loss in %

I. DETAILED INFORMATION

A. Subsidiaries (at least 50%-owned)

Faurecia Investments (formerly Bertrand Faure SP) 75,660 602,272 100.00 452,488

Financière Faurecia 33,000 30,590 100.00 53,841

Sté Internationale de Participations (SIP) 9,274 1,276 100.00 30,196

Faurecia USA Holdings Inc. 16 221,942 82.55 287,568

Eak SAS 4,668 1,253 51.00 2,420

Faurecia Automotive España SL 7,138 409,767 10.66 76,449

Faurecia Sistemas de Escape Argentina 451 5,994 98.00 25,975

Faurecia Industries 24,498 (21,668) 100.00 138,152

Faurecia Systèmes d’Échappement 84,730 83,075 100.00 110,316

SFEA – Société Foncière pour l’Équipement Automobile 9,637 760 100.00 9,947

EAK SNC 1,515 1,776 51.00 785

Faurecia Exhaust Systems SRO (Czech republic) 6,549 7,616 100.00 5,001

Faurecia Automotive Holdings 23,423 317,405 100.00 918,260

Faurecia Exhaust International 4,691 (2,251) 100.00 5,002

Faurecia Honghu Exhaust Systems Shanghai (formerly SHEESC) 1,634 1,413 51.00 1,212

Faurecia Exhaust Systems South Africa Ltd 543 10,227 100.00 1,073

B. Investments (10% to 50%-owned)

Faurecia Automotive GmbH (formerly SAI Automotive AG) 150,000 129,460 27.96 225,020

Faurecia Tongda Exhaust System Co, Ltd (formerlyTEEC) 4,436 11,695 50.00 2,217

Trécia 203 20,378 50.00 8,556

II. OTHER INFORMATION

Subsidiaries and investments not included in section A 4,676

Subsidiaries and investments not included in section B 97

TOTAL 2,359,252

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Subsidiaries and investments as of December 31, 2006



Net carrying Outstanding Guarantees Last published Last published Dividends received or Translation rateamount loans and given by sales net income receivable by used for non-French

of investments advances the Company (loss) the Company in subsidiaries the year and investments

452,488 189,341

53,841 573,671 2,605 4,158

16,096 586 5,319

147,568 228,957 1,001 €1 = USD 1.317

2,420 807 627 889

76,449 331,466 16,449

7,328 26,894 1,713 2,046 €1 = ARS 4.0781

42,152 159,374 (20,481)

110,316 709,154 10,724 39,541

9,947 209 328

785 63,637 (4,098) 1,983

5,002 211,542 4,517 €1 = CZK 27.485

434,960 11,333 (23,095)

2,751 62

1,012 473 10,947 16 €1 = CNY 10.2793

1,073 4,402 3,146 8,786 12,858 €1 = ZAR 9.2124

76,087 (62,131) 83,880

2,217 50,688 6,464 1,938 €1 = CNY 10.2793

4,056 63,321 1,555

4,631 7 142

4 810 7

1,451,183 153,089

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(in euros) 2006 2005 2004 2003 2002

1 – Capital stock at year-end

a) Capital stock 169,814,652 169,635,207 169,484,357 169,447,257 169,219,757

b) Number of common shares 24,259,236 24,233,601 24,212,051 24,206,751 24,174,251

c) Maximum number of shares to be created:

• Through exercise of stock options 1,265,715 1,176,550 1,011,100 782,100 817,900

2 – Results of operations

a) Net sales 87,107,622 82,779,088 67,592,049 56,335,224 51,199,132

b) Income before tax, depreciation, amortization and provisions, and employee profit-sharing 213,707,224 7,136,829 35,508,672 45,430,754 9,683,878

c) Corporate income tax(1) (10,521,688) (16,918,749) (41,076,147) (23,741,720) (7,267,778)

d) Employee profit sharing 0 0 0 0 48,301

e) Net income after tax, employee profit sharing, depreciation, amortization and provisions (165,225,090) (415,757,607) 33,490,721 35,775,918 25,156,645

f) Total dividend – – 26,633,256 22,028,143 21,998,568

3 – Earnings per share

a) Income after tax and employee profit sharing and before depreciation, amortization and provisions 9.24 0.99 3.16 2.86 0.70

b) Net income after tax, employee profit sharing,depreciation, amortization and provisions (6.81) (17.16) 1.38 1.48 1.04

c) Dividend per share (net) – 1.10 0.91 0.91

4 – Employee data

a) Average number of employees 48 49 45 46 46

b) Total payroll 9,784,935 9,307,516 8,666,414 8,057,569 10,158,717

c) Total benefits paid during the year(including social security, etc.) 3,840,829 3,372,568 3,212,143 3,198,762 4,016,113

(1) The amounts in brackets represent tax benefits arising from group relief.

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Five-year financial summary



(in € thousands) Number Nature and par Net book value value

1. Main securitiesFaurecia Systèmes d’Échappement 5,648,700 €15 per share 110,316Faurecia Investments 5,043,998 €15 per share 452,488Faurecia Industries 2,899,200 €8.45 per share 42,152Faurecia USA Holdings Inc. 3,600 USD 0.001 per share 147,568Sté Internationale de Participations (SIP) 1,168,999 Share 16,096Faurecia Automotive España SL 126,859 €6 per share 76,449SFEA -Société Foncière pour l’Équipement Automobile 642,499 €15 per share 9,947Financière Faurecia 2,200,000 €15 per share 53,841Trécia 6,762 €15 per share 4,056Faurecia Exhaust Systems Sro 1 Share 5,002Faurecia Magyarorszag Kipufogo-Rendszer Kft 24,900,000 HUF 1 0Faurecia Systemy Kierownicze SpZoo 33,639 PLN 500 4,433Faurecia Sístemas de Escape Argentina SA 1,802,379 Peso 1 7,328EAK – Composants pour l’Industrie Automobile SAS 158,722 €15 per share 2,420Faurecia Tongda Exhaust System (Wuhan) Co. Ltd 22,800,340 Share 2,217Faurecia Exhaust Systems South Africa Ltd 100 Rand 1 per share 1,073EAK – Composants pour l’Industrie Automobile SNC 51,510 €15 per share 785Faurecia Honghu Exhaust Systems Shanghai Co. Ltd 8,568,000 Share 1,012Faurecia Automotive Holdings 23,422,554 €1 per share 434,960Faurecia Automotive GmbH (formerly SAI Automotive AG) 1 Share 76,087Faurecia Services Groupe 2,500 €16 per share 1Faurecia Exhaust International 312,750 €15 per share 2,751Faurecia Global Purchasing 1 €1,000 per share 1Faurecia Sístemas de Escape Portugal Lda 1 Share 1Flamant jaune 2,500 €16 per share 40Flamant bleu 2,500 €16 per share 40Toucan participations SA 2,494 €16 per share 40Toucan investissements SA 2,494 €16 per share 40Faurecia Slovakia Sro 1 Share 1Faurecia Leather Kosice Sro 1 Share 1Goeland Vert SAS 2,315 €16 per share 37

Total shares 1,451,183

2. Other long-term investmentsFaurecia 302,154 €7 per share 12,483

Overall total 1,463,666

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Securities portfolio as of December 31, 2006



To the shareholders,

In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we hereby report to you, for the year endedDecember 31, 2006, on:• the audit of the accompanying annual financial statements of Faurecia SA;• the justification of our assessments;• the specific verifications and information required by law.These annual financial statements have been approved by the Board of Directors. Our role is to express an opinion on these annual financialstatements based on our audit.I – Opinion on the annual financial statementsWe conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the annual financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the annual financial statements. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the annual financial statements give a true and fair view of the Company’s financial position and its assets and liabilitiesas of December 31, 2006, and of the results of its operations for the year then ended, in accordance with the accounting rules andprinciples applicable in France.

II – Justification of our assessmentsIn accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to the justificationof our assessments, we bring to your attention the following matter:Note 1.2 to the annual financial statements presents the rules and methods applied to investments. A provision for impairment is setaside if the fair value of an investment falls below its gross value, corresponding to its value on initial recognition. Fair value is based onthe subsidiary’s revalued net assets, profitability and future outlook. As part of our assessment of the accounting principles andmethods, we verified the appropriateness of the accounting methods mentioned above, ensured that they had been correctly appliedand that reasonable estimates had been used.

The assessments were thus made in the context of our audit of the annual financial statements, taken as a whole, and therefore contri-buted to the formation of the opinion expressed in the first part of this report.

III – Specific verifications and informationWe have also performed the specific verifications required by law, in accordance with professional standards applicable in France.We have no matters to report as to:• the fair presentation and the consistency with the annual financial statements of the information given in the Directors’ report and in

the documents addressed to the shareholders with respect to the financial position and the annual financial statements;• the fair presentation of the information given in the Directors’ report regarding the remuneration and benefits paid to corporate officers

and any other commitments made in their favor in connection with, or subsequent to, their appointment, termination or change infunction. We also bring to your attention the fact that your Company states in its report that it possesses no information relating toremuneration and benefits paid by the controlling Company to corporate officers of the Company who are not simultaneouslycorporate officers of the controlling Company.

As required by law, we have also verified that details of the principal shareholders are disclosed in the Directors’ report.




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Statutory Auditors’ report on the annual financial statementsfor the year ended December 31, 2006


This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. TheStatutory Auditors’ report includes information specifically required by French law in all audit reports, whether qualified or not, and this is presented below the opinion on the annualfinancial statements. This information includes an explanatory paragraph discussing the Auditors’ assessments of certain significant accounting and auditing matters. Theseassessments were considered for the purpose of issuing an audit opinion on the annual financial statements taken as a whole and not to provide separate assurance on individualaccount captions or on information taken outside of the annual financial statements.This report, together with the Statutory Auditors’ report addressing financial and accounting information in the President’s report on internal control, should be read in conjunctionwith, and construed in accordance with, French law and professional auditing standards applicable in France.



In our capacity as Statutory Auditors of Faurecia SA, we hereby present our report on regulated agreements and commitments with third parties.

Agreements and commitments authorized in 2006

In accordance with article L. 225-40 of the French Commercial Code (Code de commerce), we have been advised of the following agreements andcommitments which were authorized by the Board of Directors.

Our responsibility does not include identifying any undisclosed agreements or commitments. We are required to report to shareholders, based on theinformation provided, on the main terms and conditions of the agreements and commitments that have been disclosed to us, without commenting ontheir relevance or substance. Under the provisions of article 92 of the March 23, 1967 decree, it is the responsibility of shareholders to determinewhether the agreements are appropriate and should be approved.

We carried out our work in accordance with the professional standards applicable in France. These standards require that we perform procedures toverify that the information given to us agrees with the underlying documents.

• On September 7, 2006, the Company sold its 14.64% interest in Faurecia Automotive Intérieur France SA to Faurecia Automotive Holdings SAS for€9,080,802, an amount arising from the valuation of the company based on its projected future cash flows. As the carrying amount of the securitiessold had been completely written down at December 31, 2005, the sale price was recognized as profit in the 2006 financial statements.

• On September 14, 2006, in exchange for the allocation of 126,859 shares created by the capital increase of Faurecia Automotive Espana SLP, theCompany contributed the entire capital of Faurecia Sistemas de Escape España SA to Faurecia Automotive España SLP. This contribution was valued,based on the report of an independent expert at €76,449,039, representing a gain on contribution of €49,007,403 for the Company in the 2006financial statements.

These two transactions had been previously authorized by the Board of Directors at its meeting of July 21, 2006.

• Faurecia USA Holdings Inc and its subsidiaries benefit from a credit line of USD491 million at December 31, 2006. At its meeting of December 21,2006, the Board of Directors authorized the inclusion of a portion of this credit line in the capital of Faurecia USA Holdings Inc based on the Company’sinterest, i.e. USD247.6 million for a capital increase of USD300 million.

At December 31, 2006 this authorization had not been used.

Agreements and commitments entered into in prior years which remained in force during the year

In application of the decree of March 23, 1967 decree we were informed of the following agreements and commitments entered into in prior years,which remained in force during the year.

• In accordance with the loan agreement entered into with various French, German and Spanish subsidiaries, said companies provide Faurecia with acredit line of a maximum amount of €315 million.

At December 31, 2006, an amount of €215.7 million was outstanding, representing credit granted by: Faurecia Autositze, Faurecia Abgastechnik,Faurecia Innenraum System GmbH, Asientos de Castilla Leon, Asientos del Norte, Faurecia Systemas de Escape España, Faurecia AutomotiveEspaña, Faurecia Interior Systems España, Valencia Modulos de Puerta, ECSA, Siedoubs, Sienor, Sieto, Trecia, and Automotive Sandouville.

• In accordance with the loan agreement entered into with various operating subsidiaries of the Group, said companies provide Faurecia SA with acredit line of a maximum amount of €300 million.

At December 31, 2006, an amount of €260 million was outstanding, representing credit granted by: Faurecia Industries, Faurecia Sièges d’Automobile,Faurecia Intérieur Industrie, Faurecia Automotive Industrie, Faurecia Systèmes d’Échappement, Sotexo, Siemar and Sielest.

• The Company has given a guarantee to Agence de l’Eau Loire-Bretagne covering a loan for an initial amount of €237,820 made to Faurecia Siègesd’Automobile. At December 31, 2006, the outstanding balance due from Faurecia Sièges d’Automobile was €38,906.




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Statutory Auditors’ special report on regulated agreementsand commitments with third parties


This is a free translation into English of the Statutory Auditors’ special report on regulated agreements and commitments issued in the French language and is provided solely forthe convenience of English speaking readers. This report on regulated agreements and commitments should be read in conjunction with, and construed in accordance with,French law and professional auditing standards applicable in France.


Shareholder information

115_ Information on the company and capital

121_ Stock market information

125_ Corporate governance

143_ Combined shareholders’ general meeting of May 29, 2007


General

COMPANY NAME AND HEADQUARTERS

• Company name: Faurecia• Headquarters: 2, rue Hennape, 92000 Nanterre, France• Tel.: 33 (0) 1 72 36 70 00• Fax: 33 (0) 1 72 36 70 07• www.faurecia.com

LEGAL FORM

Listed société anonyme (joint-stock corporation) governed by the French Commercial Code and the related implementing decrees.

AUDITORS

The Company’s accounts are audited by two principal Statutory Auditors, appointed in accordance with section L. 225-228 of theFrench Commercial Code.

DATE OF INCORPORATION AND TERM

Incorporated on: July 1, 1929.Term expires on: December 31, 2027.

INCORPORATION DETAILS

The Company is registered with the Nanterre Trade and Companies Registry under number 542 005 376.APE (business identifier) code 741 J (company administration).

CONSULTATION OF CORPORATE DOCUMENTS

During the period of validity of this registration document, the following documents (or copies thereof):a. The Company’s bylaws;b. Financial information on Faurecia SA and its subsidiaries for each of the two fiscal years prior to publication of the registration documentcan be obtained from:FAURECIADominique LaulanGeneral Counsel2, rue Hennape92000 Nanterre, France

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Information on the Company and capital



CORPORATE PURPOSE

The Company’s purpose, as set out in article 3 of the bylaws, is summarized below:• To establish, acquire, operate directly or indirectly or invest in any and all industrial, trading or service companies in France or abroad;• To provide administrative, financial and technical assistance to subsidiaries and affiliates;• To manufacture and sell any and all products, accessories or equipment for the automotive and other industries, and generally

to conduct any and all related commercial, industrial, securities and real estate transactions.

THE COMPANY’S ROLE IN RELATION TO ITS SUBSIDIARIES AND AFFILIATES

Faurecia is a holding company, whose assets are primarily made up of investments in subsidiaries and affiliates. The Group’s industrialassets are held by the operating subsidiaries.Faurecia provides direct and indirect financial, accounting, management, administrative and other services to Group companies.Group subsidiaries are financed on a centralized basis, primarily through Faurecia and Financière Faurecia – which performs a cashpooling role – in order to enable the subsidiaries to benefit from the favorable market conditions obtained from lenders by Faurecia.As of December 31, 2006, the net debt of the Company, corresponding to borrowings net of cash and cash equivalents and net inter-company cash advances, amounted to €1,468.1 million, compared with consolidated net debt for the Group which stood at a totalof €1,698.5 million.

FISCAL YEAR

The Company’s fiscal year covers the twelve-month period from January 1 to December 31.

INCOME APPROPRIATION

Income available for distribution corresponds to net income for the year, less any losses carried forward from prior years and any amounts appropriated to reserves in compliance with the law or the bylaws, plus any retained earnings.Out of this income, the Shareholders’ Meeting determines the fraction attributed to shareholders in the form of dividends and deductsthe amounts it considers appropriate to allocate to any reserve funds or to carry forward.However, except in the case of a capital reduction, no distributions may be made to shareholders if the Company’s shareholders’ equityrepresents – or would represent after the planned distribution – less than its capital stock plus any reserves which, according to the lawor the bylaws, are not available for distribution.The Shareholders’ Meeting may also decide to distribute amounts deducted from optional reserves in order to pay an ordinary dividendor increase the dividend or pay an exceptional dividend.The Company’s bylaws provide that the Ordinary Shareholders’ Meeting approving the financial statements for the year may also decideto offer each shareholder the option between the payment of the dividend or the interim dividend in cash or in shares.

GENERAL SHAREHOLDERS’ MEETINGS

Shareholders’ Meetings are held at the Company’s headquarters or at any other venue specified in the notice of Meeting.Holders of registered shares are notified by mail; the other shareholders are notified via the financial notices provided for by the applicable laws issued by the relevant banks and brokers.Faurecia’s financial events, in particular the date of its Shareholders’ Meetings, are continually updated on its website at the followingaddress: www.faurecia.com.To be entitled to attend Shareholders’ Meetings in person or to be represented by proxy, holders of registered shares must have their shares recorded in the registered share account kept by the Company and holders of bearer shares must have their sharesrecorded in a share account kept by their bank or broker at least three (3) days prior to the date of the Meeting.The person who issues the notice of Meeting may, however, reduce this period if he or she sees fit.The rights of shareholders, which may only be amended in accordance with the conditions laid down by French law, are not affected by any other provision of the bylaws.

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VOTING RIGHTS

The Company’s bylaws do not provide for any restrictions on voting rights. Voting rights at Ordinary, Extraordinary and SpecialShareholders’ Meetings are exercisable by the beneficial owner of the shares.

DOUBLE VOTING RIGHTS

All fully paid-up shares that have been registered in the name of the same holder for at least two (2) years carry double voting rights. In the case of a bonus share issue paid up by capitalizing retained earnings, income or additional paid-in capital, the bonus sharesallotted in respect of registered shares carrying double voting rights will also carry double voting rights as from the date of issue. This double voting right may be cancelled following a decision of the Extraordinary Shareholders’ Meeting and after having informed a Special Meeting of the beneficiary shareholders.Any share converted into a bearer share or the ownership of which is transferred loses the double voting right. Nevertheless, transfersfollowing the liquidation of a marital estate, or by way of an inheritance or in the form of an inter vivos gift to a spouse or a relative in thedirect line of succession does not entail the loss of the acquired right and does not interrupt the period provided for in the above paragraph.

DISCLOSURE THRESHOLDS (ARTICLE 24 OF THE BYLAWS)

When an individual or corporate shareholder, acting alone or in concert, within the meaning of section L. 233-10 of the FrenchCommercial Code, crosses the disclosure threshold of 2% of the voting rights, whether above or below the 5% provided for by sectionL. 233-7 of the French Commercial Code, the said shareholder must inform the Company of the total number of shares and voting rightsheld by the shareholder, within five trading days of the threshold being crossed, by registered letter with return receipt requested.The shareholder must also inform the Autorité des marchés financiers within the same time-frame, so that the latter can disclose this information to the public, in accordance with its general regulations.In the case of failure to comply with these disclosure rules, at the request of one or several shareholders present or represented at the Meeting with combined holdings representing at least 2% of the capital or voting rights, the undisclosed shares will be stripped of voting rights. Said request must be recorded in the minutes of the Shareholders’ Meeting.This procedure is in addition to the legal requirements concerning disclosure thresholds set out in section L. 233-7 of the FrenchCommercial Code.The rights of shareholders, which may only be amended in accordance with the conditions laid down by French law, are not affected by any other provision of the bylaws.

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Capital

As of December 31, 2006, the Company’s capital amounted to €169,814,652, divided into 24,259,236 shares of €7 each, all of the sameclass, subscribed and paid up in full. These shares represent 41,279,408 voting rights. No shares have been issued that do not representthe Company’s capital.

AUTHORIZED, UNISSUED CAPITAL

At the May 22, 2006 Ordinary and Extraordinary Shareholders’ Meeting, the Board of Directors was given a twenty-six month authorization to issue, with or without preferential subscription rights for existing shareholders, securities giving direct or indirect accessto the capital of the Company that may have the effect of increasing the capital by a maximum of €61,000,000, with the maximumamount of debt securities being set at €1,000,000,000 or the foreign currency equivalent.The Company did not make use of this authorization in 2006.Authorization to increase capital stock:

Date of the Shareholders’ Meeting Term Amount authorized Amount used (1) Date of the Board Meeting

May 22, 2006 26 months €61,000,000 0 N/A

(1) Amount as of April 17, 2007.

DEBT INSTRUMENTS

At the May 27, 2003 Shareholders’ Meeting, the Board of Directors was given a five-year authorization to issue bonds up to a maximumnominal value of €1,000,000,000. Since the introduction of French ordinance no. 2004-604 of June 24, 2004, the Board of Directors has the sole power to decide on or authorize the issue of bonds, unless the Shareholders’ Meeting decides to exercise this power (section L. 228-40-1).

POTENTIAL SHARES

As of December 31, 2006, a total of 1,265,715 employee stock options were outstanding. Each option is exercisable for one commonshare under the terms and conditions set out below.No other securities exist giving direct or indirect access to the Company’s capital.Details of the outstanding stock-subscription option plans are as follows:As of December 31, 2006

Date of Date of Board Exercise Number of O/w* granted to Start Expiry date Options Options NumberShareholders’ Meeting price options senior executive of exercise of exercise exercised forfeited of optionsMeeting (in €) granted management/ period period outstanding

Executive as of Committee Dec. 31, 2006

members

06/18/1992 04/07/1994 25.06 115,000 75,000 04/08/1999 04/06/2009 73,200 0 41,80005/31/1994 10/20/1994 23.84 125,000 30,000 10/21/1999 10/19/2009 110,000 0 15,00005/31/1994 05/03/1995 26.07 71,000 15,000 05/04/2000 05/02/2010 63,000 1,000 7,00005/03/1995 09/12/1996 24.39 125,000 40,000 09/13/2001 09/11/2011 81,500 0 43,50005/31/1994 06/26/1997 40.25 54,000 15,000 06/27/2002 06/25/2012 28,500 1,500 24,00006/05/1997 06/26/1997 42.38 35,500 15,000 06/27/2002 06/25/2007 14,285 7,000 14,21506/05/1997 02/22/2002 55.00 351,700 69,500 02/23/2006 02/22/2012 5,600 75,400 270,70006/01/200106/01/2001 11/28/2002 41.71 269,500 101,000 11/29/2006 11/27/2012 23,000 88,500 158,00005/14/200205/14/2002 04/14/2004 58.18 268,000 109,000 04/14/2008 04/13/2014 0 73,000 195,00005/25/2004 04/19/2005 63.70 275,000 122,000 04/18/2009 04/18/2015 0 39,500 235,50005/23/2005 04/13/2006 53.80 284,000 140,000 04/14/2010 04/14/2016 0 23,000 261,000

Total 1,265,715

* Of which

SHARES HELD BY THE COMPANY

As of December 31, 2006, the Company held 302,154 of its own shares, following the sale of 33,650 shares in 2006. These shares weresold to the beneficiaries of stock option plans on September 4, 2000 at the price of €40 each.

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CHANGES IN FAURECIA’S CAPITAL OVER THE LAST FIVE YEARS:Year Amount of capital New New New and type increase (reduction) capital premium number of transaction In € stock in € in € of shares

Par value Premium

February 2002Increase in capital following the exercise of stock-subscription options leading to the creationof 7,950 shares with a par value of €7 (including 5,950 shares with a cum-dividend date of January 1, 2001) 55,650 140,314.50 169,163,757 734,912,289.07 24,166,251

July 2002Increase in capital following the exercise of stock-subscription options leading to the creation of 700 shares with a par value of €7 4,900 12,173 169,168,657 734,924,462.07 24,166,951

November 2002Increase in capital following the exercise of stock-subscription options leading to the creation of 7,300 shares with a par value of €7 51,100 150,737 169,219,757 735,075,199.07 24,174,251

July 2003Increase in capital following the exercise of stock- subscription options leading to the creation of 29,150 shares with a par value of €7 204,050 708,714.50 169,423,807 735,783,913.57 24,203,401

December 2003Increase in capital following the exercise of stock- subscription options leading to the creation of 3,350 shares with a par value of €7 23,450 73,994 169,447,257 735,857,907.57 24,206,751

July 2004Increase in capital following the exercise of stock-subscription options leading to the creation of 2,800 shares with a par value of €7 19,600 48,692 169,466,857 735,906,599.57 24,209,551

October 2004Increase in capital following the exercise of stock- subscription options leading to the creation of 1,000 shares with a par value of €7 7,000 35,380 169,473,857 735,941,979.57 24,210,551

February 2005Increase in capital following the exercise of stock- subscription options leading to the creation of 6,500 shares with a par value of €7 45,500 187,600 169,519,357 736,129,579.57 24,217,051

April 2005Increase in capital following the exercise of stock- subscription options leading to the creation of 5,950 shares with a par value of €7 41,650 151,144 169,561,007 736,280,723.57 24,233,001

July 2005Increase in capital following the exercise of stock- subscription options leading to the creation of 7,600 shares with a par value of €7 53,200 328,210 169,614,207 736,608,933.57 24,230,601

October 2005Increase in capital following the exercise of stock- subscription options leading to the creation of 3,000 shares with a par value of €7 21,000 51,620 169,635,207 736,660,553.57 24,233,601

January 2006Increase in capital following the exercise of stock-subscription options leading to the creation of 1,000 shares with a par value of €7 7,000 35,380 169,642,207 736,712,173.57 24,234,601

December 2006Increase in capital following the exercise of stock-subscription options leading to the creation of 24,635 shares with a par value of €7 172,445 852,981.30 169,814,652 737,565,154.87 24,259,236

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Information on the Company’s ownership structure and voting rights

OWNERSHIP STRUCTURE AND VOTING RIGHTS AS OF DECEMBER 31, 2006

Based on information taken from shareholder accounts, Faurecia’s ownership structure and voting rights as of December 31, 2006 were as follows:

Shareholder Shares (%) Voting rights (%)

Double Single Total

Peugeot SA 17,285,197 71.25 17,285,197 34,570,394 83.75Faurecia Actionnariat corporate mutual fund 71,424 0.29 71,424 71,424 0.17Treasury stock 302,154 1.25Other 6,600,461 27.21 37,129 6,563,332 6,637,590 16.08

Total 24,259,236 100 17,322,326 6,634,756 41,279,408 100

According to the information disclosed to the Company and/or the market:• Richelieu Finance holds 8.55% of Faurecia’s capital, representing 5.03% of the Company’s voting rights;• No other shareholder holds over 5% of the Company’s capital or voting rights;• 2,297,500 registered shares are pledged with Natexis Banque Populaire.Peugeot SA is the only holder of registered shares which reported pledges on the Company’s shares.Directors’ interests represent approximately 0.003% of the capital and voting rights.No shareholders’ agreement has been notified to the Company.As of April 16, 2007, there were no major changes as compared to the situation as of December 31, 2006.

CHANGES IN OWNERSHIP STRUCTURE OVER THE LAST THREE YEARS

Shareholder Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2006

Number of % of % of Number of % of % of Number of % of % ofshares capital voting shares capital voting shares capital voting

rights rights rights

Peugeot SA 17,285,197 71.39 83.60 17,285,197 71.32 83.87 17,285,197 71.25 83.75Faurecia Actionnariat corporate mutual fundInternational 87,588 0.36 0.22 74,032 0.31 0.18 71,424 0.29 0.17Treasury stock 380,089 1.57 – 335,804 1.38 – 302,154 1.25 –Other 6,459,177 26.68 16.19 6,538,568 26.98 15.95 6,600,461 27.21 16.08

Total 24,212,051 100 100 24,233,601 100 100 24,259,236 100 100

IDENTIFICATION OF SHAREHOLDERS

The Company is entitled to obtain from the organization responsible for clearing securities transactions the names of holders of sharescarrying voting rights at Shareholders’ Meetings and of securities convertible, redeemable, exchangeable or otherwise exercisable for shares with voting rights, as well as the number of securities held by each such holder and details of any restrictions applicable to the securities.

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Communication policy

GENERAL POLICY

Faurecia notifies the financial markets of all information that may be useful to conduct an objective assessment of its financial position,growth strategy, management policy and business policy. This financial communication policy aims to provide all private and corporateshareholders with specific and accurate information in accordance with stock market practice.Its policy is based, first, on the periodic circulation of compulsory information (periodic publications in the French Bulletin of CompulsoryLegal Announcements, or BALO).This information is then supplemented by the press releases intended for the financial community and, more generally, the public,regarding non-recurring matters that are of major importance in understanding the Company’s strategy. Lastly, periodic meetings are held on an interactive basis for financial analysts and economic journalists with a view to giving details of the challenges facing the Group, its sales and income.A useful tool in the provision of such information is the Company’s website (www.faurecia.fr), which is an efficient means of relaying allof the above information to the shareholders. Furthermore, an e-mail address ([email protected]) and a free subscriptionsystem allow shareholders to receive the documents of their choice directly (annual report, Company brochure, press releases, etc.).Employee shareholders also have access to a dedicated web space on Faurecia’s Intranet site that provides information on the Groupemployee savings plan.The annual report presented and filed as a registration document with the Autorité des marchés financiers (AMF) and the report on theinterim financial statements are circulated on a wide scale within the financial community.

2007 TIMETABLEFebruary 5 7h30 Publication of results – H2 2006 and FY 2006

April 18 7h30 Publication of sales – Q1 2007

May 29 10h30 Shareholders’ Meeting

July 18 7h30 Publication of results – H1 2007

October 24 7h30 Publication of sales – Q3 2007

PRESS RELEASES

List of information published or made public on Faurecia and its stock in 2006

Date Type of information Publication

January 11, 2006 Faurecia’s growth in North America spurs plans for six new plants in 2006 Press release 2006

January 13, 2006 Slight increase in sales – Q4 and FY Press release 2006

February 6, 2006 Results – H2 2005 and FY 2005 Press release 2006

February 13, 2006 Sales – Q4 2005 Bulletin des annonces légalesobligatoires (BALO no. 19)

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Date Type of information Publication

March 22, 2006 Trecia broadens the scope of discussions regarding the 2008 industrial project Press release 2006

April 13, 2006 Sales increased by 3.4% in Q1 2006 Press release 2006and growth continues outside of Europe

April 19, 2006 Faurecia contributes to the performance of the Citroën C6 in terms of pedestrian safety Press release 2006

April 21, 2006 Notice of May 22, 2006 Shareholders’ Meeting Bulletin des annonces légalesobligatoires (BALO no. 48)

April 21, 2006 Faurecia capital increase Les affiches parisiennes no. 46

May 2, 2006 Faurecia honored by General Motors as a 2005 Supplier of the year Press release 2006

May 5, 2006 Notice of May 22, 2006 Shareholders’ Meeting « Les petites affiches »no. 90

May 5, 2006 Shareholders notified that the Chairman’s report on internal control La Tribune newspaperprocedures has been put online

May 10, 2006 Plan for Faurecia’s Evreux plant to focus on vehicle interiors business Press release 2006

May 12, 2006 Sales-Q1 2006 Bulletin des annonces légalesobligatoires (BALO no. 57)

May 19, 2006 Parent Company and Group financial statements for 2005 Bulletin des annonces légalesobligatoires (BALO no. 60)

May 31, 2006 Declaration of voting rights for the May 23, 2005 Shareholders’ Meeting Bulletin des annonces légalesobligatoires (BALO no. 65)

June 7, 2006 New positions for employees and regeneration of the Beaugency employment area Press release 2006

June 15, 2006 Plan for specialization in the airbag business performed on the EAK site in Valentigney Press release 2006

June 23, 2006 New phase of seat rest plan in France Press release 2006

June 29, 2006 Faurecia Sotexo competitiveness plan Press release 2006

July 5, 2006 Approval of 2005 financial statements by the May 22, 2006 Shareholders’ Meeting Bulletin des annonces légalesobligatoires (BALO no. 80)

July 11, 2006 Faurecia Industries refocuses its tool business on the design design and maintenance of injection molds Press release 2006

July 11, 2006 Competitiveness plan for the Hénin-Beaumont site Press release 2006

July 24, 2006 Results – H1 2006 Press release 2006

August 2, 2006 Board of Directors’ August 2, 2006 meeting: Pierre Lévi resigns as Chairman of Faurecia Press release 2006

August 4, 2006 Sales – Q2 2006 Bulletin des annonces légalesobligatoires (BALO no. 93)

August 25, 2006 Grégoire Olivier applies for chairmanship of Faurecia Press release 2006

September 8, 2006 Grégoire Olivier appointed Chairman and CEO of Faurecia Press release 2006

September 11, 2006 Philippe Aumont, Faurecia’s Vice-President Product Plan, Press release 2006sponsors the promotion of Centrale Nantes

September 18, 2006 Faurecia receives the Janus de L’industrie 2006 award for its Happy Attitude concept car Press release 2006

October 12, 2006 Sales stable – Q3 2006 Press release 2006

October 18, 2006 Results – H1 2006 Bulletin des annonces légalesobligatoires (BALO no. 125)

October 20, 2006 Sales – Q3 2006 Bulletin des annonces légalesobligatoires (BALO no. 126)

November 24, 2006 Faurecia does not submit a bid for the Nœux-les-Mines Press release 2006of Cadence Innovation France

December 13, 2006 Faurecia submits a bid to take over the Burnhaupt site, saving Press release 2006153 jobs in Cadence Innovation

December 20, 2006 Faurecia launches its “Pierrepont – Villers-la-Montagne” industrial project Press release 2006

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Stock market information

STOCK MARKET DATA

Faurecia shares are traded on the Eurolist market of Euronext Paris SA:ISIN Code FR 0000121147.They are included in the SBF 120, MID & SMALL 190 and NEXT 150 indexes.They are eligible for the PEA equity savings plan and the deferred settlement service (SRD).

REGISTRAR AND PAYING AGENT

The registrar and paying agent for Faurecia shares is Banque Crédit Agricole – Caisse d’Epargne Investor Services (CACEIS).

DIVIDENDS

Faurecia shares

Year Number of shares carrying dividend rights Dividend Paid on

Net Tax credit Total revenue

2003 24,206,751 €0.91 €0.455 €1.365 July 12, 20042004 24,212,051 €1.10 – €1.10 June 15, 20052005 24,233,601 – – – –

2006 24,259,236 – – – –

DIVIDEND DISTRIBUTION POLICY

The Company distributes dividends in line with the practices of other similar companies, based on the Group’s results for the year.

SHARE PRICE AND TRADING VOLUME (SOURCE: EURONEXT)

Price and trading volume Price (in €) Trading volume

High Average Low Number of shares Amount (in k€)

2005

September 63.55 58.83 57.60 410,771 24,470October 63.50 58.99 55.20 520,985 30,490November 58.30 55.33 51.25 498,577 26,900December 55.95 53.27 51.00 417,423 22,090

2006

January 54.90 52.73 51.10 317,499 16,680February 54.50 53.25 52.25 267,057 14,170March 57.85 53.90 52.30 334,810 18,220April 53.95 52.56 51.45 184,096 9,700May 53.75 51.50 49.10 261,338 13,410June 51.80 49.30 47.15 205,564 10,140July 50.50 45.35 38.50 396,318 16,880August 51.45 44.08 40.10 603,170 27,730September 50.80 49.12 47.61 307,595 15,210October 48.51 45.39 41.70 476,784 21,160November 55.20 51.20 46.24 519,041 26,570December 52.55 50.17 47.87 281,430 14,080

2007

January 55.35 52.88 49.21 450,145 23,960February 55.30 53.43 48.20 684,920 36,350March 54.69 52.39 49.17 369,775 19,290

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CHANGES IN FAURECIA’S SHARE PRICE

As of December 31, 2006 Compared with Dec. 31, 2005 Compared with Dec. 31, 2004

Faurecia (4.6)% (15.1)%SBF 120 19.1% 49.0%DS Autoparts Europe 23.7% 20.2%

STOCK MARKET INFORMATION

Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Stock market capitalization at period end (in € millions) 1,190.6 1,246.7 1,399.4Share price (in €)– highest 57.85 74.50 69.60– lowest 38.50 51.00 48.00At period end (in €) 49.08 51.45 57.80Shareholders’ equity per share (in €) 42.56 60.90 67.74

FIGURES PER SHARE

Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004

Earnings per share after dilution (in €) (18.72) (7.64) 5.45Cash flow per share (in €) 13.76 21.81 29.18

DIVIDENDS – STATUTE OF LIMITATIONS

Dividends not collected within five years of the payment date will be time-barred and paid over to the French Treasury.

CLAIMS AND LITIGATION

Sufficient provisions have been booked in respect of disputes pending as of December 31, 2006 and will not have a material impact on the Group’s financial position.

MATERIAL CONTRACTS

To date, Faurecia has not entered into any major agreement that would entail a material obligation or commitment for the Group, other than those that fall within the ordinary course of business.

RELATIONSHIP OF DEPENDENCE

Faurecia does not currently rely on patents or manufacturing processes owned by third parties or on special supply contracts to conduct its business.

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Board of Directors

Changes in the composition of the Board of Directors are set out in the Board’s report that comments on the Company’s financial statements. As of April 17, 2007, the Board of Directors was made up of ten members, including four independent Directors as definedby the Bouton report. The Company has no employee-elected directors or non-voting members of the Board of Directors. Each Directormust hold at least 20 Faurecia shares throughout his or her term of office.None of the Directors has been sentenced for fraud or has been involved in bankruptcy proceedings during the last five years.The following table indicates the Board members, the date on which they were first appointed and the date of expiration of their term of office.

Name Duties First appointed to the Board Current term expires

Yann DELABRIÈRE Chairman and Chief Executive Officer Board of Directors’ OrdinaryMeeting of Shareholders’ Meeting 2007

November 18, 1996

Louis DEFLINE Director Board of Directors’ Meeting of November 18, 1996 Ordinary Shareholders’ Meeting 2007

Daniel DEWAVRIN Director Board of Directors’ Meeting of July 6, 1992 Ordinary Shareholders’ Meeting 2007

Patrick DUVERGER Director Shareholders’ Meeting of June 1, 1999 Ordinary Shareholders’ Meeting 2011

Frank ESSER Director Shareholders’ Meeting of May 23, 2005 Ordinary Shareholders’ Meeting 2011

Jean-Louis GÉRONDEAU Director Shareholders’ Meeting of May 27, 2003 Ordinary Shareholders’ Meeting 2009

Jean-Claude HANUS Director Board of Directors’ Meeting of February 21, 2000 Ordinary Shareholders’ Meeting 2011

Gérard HAUSER Director Board of Directors’ Meeting of July 22, 2003 Ordinary Shareholders’ Meeting 2009

Thierry PEUGEOT Director Board of Directors’ Meeting of April 17, 2003 Ordinary Shareholders’ Meeting 2011

Christian STREIFF Director Board of Directors’ Meeting of February 2, 2007 Ordinary Shareholders’ Meeting 2011S

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Corporate governance


DETAILED INFORMATION ON THE OFFICE OR DUTIES OF EACH MEMBER OF THE BOARD OF DIRECTORS

Yann DELABRIÈREYann Delabrière, 56, has been Chairman and Chief Executive Officer of Faurecia since February 16, 2007. He has been a Director ofFaurecia since November 18, 1996. The 2007 Shareholders’ Meeting will be asked to renew his term of office. As of December 31, 2006,Yann Delabrière held 700 Faurecia shares.

In addition to his duties as Director of Faurecia, he held the following positions and directorships in 2006:

IN FRANCE (WITHIN THE GROUP)

Chief Financial Officer Groupe PSA Peugeot CitroënChairman and Chief Executive Officer Banque PSA FinanceChairman and Chief Executive Officer Compagnie Générale de Crédit aux Particuliers – CrediparDirector Peugeot Citroën Automobiles SADirector Automobiles CitroënDirector Gefco

IN FRANCE (OUTSIDE THE GROUP)

Director Capgemini

OUTSIDE FRANCE (WITHIN THE GROUP)

Chairman of the Board of Directors Peugeot Citroën Argentina SA (Argentina)Chairman of the Supervisory Board Peugeot Finance International (The Netherlands)Vice-Chairman and Director PSA International SA (Switzerland)

During the last five years, Mr. Delabrière has also held the following positions, which he no longer holds:


Chairman EgeryChairman Pergolese InvestissementsChief Executive Officer Grande Armée ParticipationsManager PSA Citroën FinanceChairman of the Supervisory Board SITPermanent representative ofAutomobiles Peugeoton the Board of Directors Peugeot SA


Member of the Supervisory Board Sommer Allibert


Manager PSA Services SrL (Italy)

Louis DEFLINELouis Defline, 64, has been a Director of Faurecia since November 18, 1996. His term of office will expire at the Shareholders’ Meeting of 2007. Louis Defline is Chairman and Chief Executive Officer of Gefco. As of December 31, 2006, Louis Defline held 81 Faurecia shares.



Director Gefco SA


Director Gefco España SAVice-Chairman and Director Gefco-DTW Logistics Co. Ltd. ChinaDirector Peugeot Motors Company Plc (UK)IN FRANCE (OUTSIDE THE GROUP)

Director Port Autonome du HavreDirector SNCF

During the last five years, Mr. Defline has also held the following positions, which he no longer holds:


Director Port Autonome de Nantes Saint-Nazaire

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Daniel DEWAVRINDaniel Dewavrin, 70, has been a Director of Faurecia since July 6, 1992. His term of office will expire at the Shareholders’ Meeting of 2007. Daniel Dewavrin is Honorary Chairman of the Union of Metallurgy Industries and Businesses (Union des Industries et Métiers de la Métallurgie). As of December 31, 2006, Daniel Dewavrin held 74 Faurecia shares.



Chairman AstriaDirector DagardChairman UESL (Union économique et sociale du logement)Member of the Supervisory Committee Ratier FigeacChairman of the Supervisory Board Faurecia Investments

During the last five years, Mr. Dewavrin has also held the following positions, which he no longer holds:

OUTSIDE FRANCE (OUTSIDE THE GROUP)

Chairman GFI (Groupement des Fédérations Industrielles)

Patrick DUVERGERPatrick Duverger, 68, has been a Director of Faurecia since June 1, 1999. His term of office, which was renewed at the May 23, 2005Shareholders’ Meeting, will expire at the Shareholders’ Meeting of 2011. Patrick Duverger is Honorary Chief Executive Officer of SociétéGénérale. As of December 31, 2006, Patrick Duverger held 163 Faurecia shares.



Member of the Supervisory Board Rémy CointreauDirector Soparexo

During the last five years, Mr. Duverger has also held the following positions, which he no longer holds:


Permanent representative of Société Générale on the Supervisory Board of AccorDirector Aviva ParticipationMember of the Supervisory Board Aviva France

Frank ESSERFrank Esser, 48, has been a Director of Faurecia since May 23, 2005. His term of office will expire at the Shareholders’ Meeting of 2011.Frank Esser is Chairman and Chief Executive Officer of SFR. As of December 31, 2006, Franck Esser held 20 Faurecia shares.



Chairman of the Board of Directors Vizzavi FranceDirector Neuf CegetelPermanent representative of SFRon the Board of Directors Ltb-RMember of the Management Board VivendiDirector Vivendi Telecom International


Member of the Supervisory Board Maroc TelecomDirector Vodafone D2 GmbH (Germany)Director GSM Association (UK)

During the last five years, Mr. Esser has also held the following positions, which he no longer holds:


Chairman Supervisory Board of CegetelChief Executive Officer SFR Cegetel

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Jean-Louis GÉRONDEAUJean-Louis Gérondeau, 63, has been a Director of Faurecia since May 27, 2003. His term of office will expire at the Shareholders’Meeting of 2009. Jean-Louis Gérondeau is Chairman of the Managing Board of the Zodiac group. As of December 31, 2006, Jean-Louis Gérondeau held 100 Faurecia shares.



Chairman and Vice-Chairman of the Supervisory Board Institut de Développement IndustrielChairman AerazurChairman IntertechniqueChairman NewcoChairman Zodiac Marine HoldingDirector SICMA Aero SeatPermanent representative of Zodiac SA Parachutes de France


Chairman Zodiac Airline Equipment LLC (USA)Director Avox-Eros Services Inc. (USA)Director Avox Systems Inc. (USA)Director Marine Holding Corp (USA)Director Evac International Oy (Finland)Director Evac Oy (Finland)Director Zodiac Espagnola (Spain)Director Mag Aerospace Industries Inc. (USA)Director C&D Zodiac (USA)Director C&D Aerospace CanadaDirector Zodiac Automotive UKDirector Zodiac Automotive USDirector Zodiac US CorporationDirector Air Cruisers (USA)Director Zodiac Group of AustraliaDirector Sicma Aero Seat Services (USA)

During the last five years, Mr. Gérondeau has also held the following positions, which he no longer holds:


Director FermaOptim Actif

Jean-Claude HANUSJean-Claude Hanus, 60, has been a Director of Faurecia since February 21, 2000. His term of office, which was renewed at the May 23,2005 Shareholders’ Meeting, will expire at the Shareholders’ Meeting of 2011. Jean-Claude Hanus is Director of Legal Affairs,Institutional Relations and Internal Audit of Peugeot SA. As of December 31, 2006, Jean-Claude Hanus held 100 Faurecia shares.



Chairman DJ6Chairman Grande Armée ParticipationsDirector Automobiles PeugeotDirector Compagnie Générale de Crédit aux Particuliers – CrediparDirector Peugeot Citroën Automobiles España SAPermanent representative of Peugeot SA Board of Banque PSA FinancePermanent representative of Peugeot SA Gefco SA


Director Peugeot Citroën Automobiles España SA

During the last five years, Mr. Hanus has also held the following positions, which he no longer holds:

IN FRANCEDirector Pergolèse InvestissementDirector Financière PergolèseMember of the Supervisory Board SITMember of the Supervisory Board Sommer Allibert

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Permanent representative ofPeugeot SA on the Board of Directors Automobiles CitroënChairman of the Board of Directors Beaujon ImmobilierChief Executive Officer Beaujon Immobilier

Gérard HAUSER

Gérard Hauser, 65, has been a Director of Faurecia since July 22, 2003. His term of office will expire at the Shareholders’ Meeting of 2009.Gérard Hauser is Chairman and Chief Executive Officer of Nexans. As of December 31, 2006, Gérard Hauser held 50 Faurecia shares.



Director ApplixDirector AlstomDirector Ipsen

During the last five years, Mr. Hauser has also held the following positions, which he no longer holds:


Director Electro Banque

Thierry PEUGEOTThierry Peugeot, 49, has been a Director of Faurecia since April 17, 2003. His term of office, which was renewed at the May 23, 2005Shareholders’ Meeting, will expire at the Shareholders’ Meeting of 2011. Thierry Peugeot is Chairman of the Supervisory Board of Peugeot SA. As of December 31, 2006, Thierry Peugeot held 20 Faurecia shares.



Vice-Chairman and Director Établissements Peugeot FrèresDirector Foncière, Financière et de ParticipationDirector La Française de Participations FinancièresDirector Société Anonyme de Participations


Director Compagnie Industrielle de DellePermanent representativeon the Board of Directors ANSAPermanent representative of CIDon the Board of Directors LISIMember of the Supervisory Board Air LiquideDirector Immeubles et Participations de l’Est

During the last five years, Mr. Peugeot has also held the following positions, which he no longer holds:


Director AMC PromotionDirector SIA MulhouseChairman and Director Immeubles et Participations de l’Est

Christian STREIFFChristian Streiff, 52, has been a Director of Faurecia since February 2, 2007. His term of office will expire at the Shareholders’ Meeting of2011. Christian Streiff is Chairman of the Managing Board of PSA Peugeot Citroën and holds 100 Faurecia shares.


Chairman Automobiles PeugeotChairman Automobiles CitroënDirector Banque PSA FinanceDirector Peugeot Citroën Automobiles



Chairman and Chief Executive Officer Airbus HoldingManager Argos ConseilChairman of the Board of Directors Société Européenne des Produits Réfractaires – SEPR

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During the last five years, Mr. Streiff has also held the following positions, which he no longer holds:


Chief Operating Officer Compagnie de Saint-GobainChairman and Chief Executive Officer Airbus Holding


Chairman and Chief Executive Officer Saint-Gobain Advanced Ceramics CorpChairman and Chief Executive Officer Carborundum Ventures Inc.Chairman of the Board of Directors Saint-Gobain Ceramics & Plastics IncChairman of the Board of Directors Saint-Gobain Performance Plastics CorpChairman of the Board of Directors Saint-Gobain Abrasivos SADirector Thyssen-KruppDirector Continental AGDirector PAM Colombia SADirector Grindwell Norton LtdDirector Kure-Norton LtdDirector Saint-Gobain CorporationDirector Saint-Gobain Pipe Systems Plc.Director Saint-Gobain KK

CONFLICTS OF INTEREST

As provided for in the Board of Directors’ internal rules, all Directors must inform the Board of any actual or potential conflicts of interestand refrain from voting during the corresponding deliberations. This procedure was not implemented in 2006.Aside from regulated agreements (which are the subject of a report to the Shareholders’ Meeting called to deliberate in that respect) no service agreement has been entered into between a member of the Board of Directors and Faurecia or one of its subsidiaries.Operations that may be entered into with a shareholder that holds more than 5% of the Company’s capital constitute day-to-day operations.At its meeting of December 16, 2005, the Board strengthened these rules by adopting a procedure regarding the communication of privileged information within the Group. This procedure applies, in particular, to the Company’s Directors. According to the procedure, no transactions may be carried out involving the Company’s shares until the related information has been made public. Directors and certain categories of staff, of whom the list is regularly updated, must declare their transactions to the Company with a view toinforming the markets.

LIST OF THE DIRECTORS’ PROFESSIONAL ADDRESSES

Yann Delabrière Faurecia – 2, rue Hennape – 92735 Nanterre Cedex, France

Louis Defline Gefco – 77-81, rue des Lilas-d’Espagne – 92402 Courbevoie Cedex, France

Daniel Dewavrin UIMM – 56, avenue de Wagram – 75017 Paris, France

Patrick Duverger 8, rue des Bouleaux – 78450 Chavenay, France

Frank Esser SFR – Tour Sequoia – 1, place Carpeaux – 92915 Paris La Défense, France

Jean-Louis Gérondeau Zodiac – 2, rue Maurice-Mallet – 92130 Issy-les-Moulineaux, France

Jean-Claude Hanus Peugeot SA – 75, avenue de la Grande-Armée – 75116 Paris, France

Gérard Hauser Nexans – 16, rue de Monceau – 75008 Paris, France

Thierry Peugeot Peugeot SA – 75, avenue de la Grande-Armée – 75116 Paris, France

Christian Streiff Peugeot SA – 75, avenue de la Grande-Armée – 75116 Paris, France

COMPENSATION RECEIVED BY DIRECTORS AND OFFICERS

The Board of Directors reviewed the compensation received by Pierre Lévi, Chairman and Chief Executive Officer of Faurecia, at itsFebruary 3, 2006 Meeting in accordance with the report of the Appointments and Compensation Committee. He received gross fixedcompensation of €446,779 between January 1, 2006 and August 3, 2006, the date of his resignation. Gross variable compensation paidto Pierre Lévi in 2006 for the year 2005 totaled €117,250 including €11,286 in Directors’ attendance fees. It was set based on theGroup’s operating results for the reference year, net debt and the lead times to customers expressed in ppm* and is capped at 70% of his fixed compensation for the year. Upon expiration of his term of office, in accordance with the decisions taken by the Board ofDirectors on February 5, 2004, Mr. Lévi’s employment contract came back into effect.

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*: the number of defects per million parts produced


Grégoire Olivier, called upon by the Board on September 8, 2006 to replace Pierre Lévi, received fixed compensation totaling€217,715 in 2006 and an exceptional bonus of €250,000. The Board reviewed this compensation and appointed Mr. Olivier upon theproposal of the Appointments and Compensation Committee. Moreover, the Board decided that Mr. Olivier may receive variablecompensation capped at 80% of his annual fixed compensation. Upon the proposal of the Appointments and CompensationCommittee, the Board of Directors decided to set this variable compensation for 2006 at €190,000 (on a prorata temporis basis) at itsmeeting of February 2, 2007. Grégoire Olivier was not granted any special benefit payable in the future.The benefits in kind granted to Mr. Lévi and Mr. Olivier are those granted to Faurecia’s senior executives. They include a company carand, for the Chairman, the services of a chauffeur.Stock-options granted to Mr. Lévi: 40,000Stock-options granted to Mr. Olivier: noneStock-options exercised by Mr. Lévi: 27,900Stock-options exercised by Mr. Olivier: noneIn 2006, Grégoire Olivier also received €8,715 in Directors’ attendance fees.The benefits in kind granted to Mr. Olivier are those granted to Faurecia’s senior executives. They include a company car and theservices of a chauffeur.Stock options granted in 2006: noneStock options exercised in 2006: noneLastly, the Directors received the following attendance fees from the Company:Louis Defline: €13,000Yann Delabrière: €20,143Daniel Dewavrin: €10,429Patrick Duverger: €20,143Frank Esser: €10,429Jean-Martin Folz: €21,000Jean-Louis Gérondeau: €18,429Jean-Claude Hanus: €21,000 Gérard Hauser: €21,000 Pierre Lévi €11,286 Grégoire Olivier: €8,715 Thierry Peugeot: €13,000 Fixed and variable compensation, as well as all benefits granted by Peugeot SA, the controlling company, to its corporate officers whoalso hold a corporate office in Faurecia were the following. The compensation awarded to Jean-Martin Folz in his capacity as Chairmanof the Managing Board of Peugeot SA for 2006 was €1,315,980 and the amount paid in 2006 totaled €1,650,920. The compensationpaid to Thierry Peugeot in his capacity as Chairman of the Supervisory Board of Peugeot SA amounted to €457,000 in 2006. Faureciadoes not have any information on its own corporate officers who are not also officers of the controlling company. Faurecia specifies thatno compensation other than the Directors’ attendance fees mentioned above were paid in 2006 to any of its corporate officers by theCompany or its subsidiaries.

Operation of the Board of Directors and the Internal Audit Department

REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS ON INTERNAL CONTROL


Pursuant to section L. 225-37 (6) and (7) of the French Commercial Code, the Chairman of the Board of Directors is obligated to presentan additional report, appended to the management report, to describe the way in which the work of the Board is prepared and organized,as well as the internal control procedures implemented within the Company. Furthermore, the report must indicate any restrictionsimposed by the Board of Directors on the powers of the Chief Executive Officer. It must set out the principles and rules adopted by theBoard of Directors to determine the compensation and any and all benefits granted to corporate officers.

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Work of the Board of DirectorsMEMBERSHIP OF THE BOARD OF DIRECTORS

The Board of Directors consists of eleven members, four of whom are independent Directors under French corporate governance guide-lines included in the AFEP-MEDEF report. Five Directors directly represent the interests of the majority shareholder. Daniel Dewavrin chairsthe Supervisory Board of Faurecia Investments. Until February 16, 2007, Grégoire Olivier was Faurecia’s Chairman and Chief ExecutiveOfficer. The Board considers that its membership adequately reflects the weight in Faurecia’s ownership structure of Peugeot SA, its keyshareholder. Members of the Board of Directors are chosen on account of their skills, autonomy and their determination to consider theinterests of all shareholders. Furthermore, all Directors have experience and expertise in at least one of Faurecia’s major business fields.The independent Directors contribute their varied experience, in terms of international exposure and diverse industrial and managerialpractice, to the Board’s discussions and work. With the exception of the Chairman and Chief Executive Officer, no member of the Boardof Directors holds an executive management or salaried position within a Group company. All members of Faurecia’s Board of Directorsoccupy other functions and positions which are detailed in the Group’s registration document (document de référence).

ROLE OF THE BOARD OF DIRECTORS

The Board of Directors determines overall business, financial and economic strategies for the Company and the Group and oversees their implementation.Subject to the powers expressly granted to Shareholders’ Meetings and within the limit of the Company’s purpose, the Board deals withall matters concerning the Company’s affairs and decides on matters involving the Company. The Board is consulted with respect to allCompany or Group strategic decisions at the initiative of its Chairman.

ORGANIZATION OF THE BOARD OF DIRECTORS

The internal rules of the Board of Directors, which may be consulted by the shareholders at the Company’s headquarters, are aimed atorganizing the Board’s work systematically in order to make it easier to keep the Directors informed and facilitate their decision-making.The internal rules describe the operation of the Board and its role in the management of the Company, following on from the provisionsset down by law and the Company’s bylaws. They also provide for the rights and responsibilities of Board members, particularly as regards the prevention of conflicts of interest, the holding of multiple directorships and the need for strict confidentiality as well as diligence in taking part in the Board’s work. They also set out rules governing transactions involving the Company’s shares, as recom-mended by the Autorité des marchés financiers.The Board of Directors is free to decide how the general management of the Company shall be carried out. These duties may either be performed by the Chairman of the Board or by another person appointed by the Board of Directors who holds the position of Chief Executive Officer.At its meeting of August 2, 2006, following the resignation of Pierre Lévi, the Board of Directors decided to provisionally separate the duties of Chairman of the Board of Directors from those of Chief Executive Officer.This interim period ended at the Board of Directors’ Meeting of September 8, 2006 when Grégoire Olivier was appointed Chairman of the Board of Directors and Chief Executive Officer of Faurecia. The Board of Directors confirmed this management method at itsmeeting of February 16, 2007 when Yann Delabrière was appointed Chairman and Chief Executive Officer to replace Grégoire Olivier.In 2003, the Board of Directors also set up an Audit Committee and an Appointments and Compensation Committee.

Appointments and Compensation CommitteeThe main role of this Committee is to present opinions and/or recommendations to the Board of Directors concerning:• the appointment of future Directors;• compensation received by corporate officers, including the Chairman;• the granting of stock options.

The Committee met four times in 2006 and reports on its work to the Board of Directors.

At its meeting of February 2, 2007, the Board of Directors appointed Christian Streiff as member of the Appointments and CompensationCommittee and confirmed the appointments of Jean-Claude Hanus and Gérard Hauser. At the same meeting, the Board appointedJean-Claude Hanus as Chairman of the Committee.

Audit CommitteeThis Committee’s role is to prepare in greater depth the review by the Board of the Company’s financial disclosures. It is thus responsiblefor preparing the Board Meetings held to review the interim and annual financial statements and for informing the other Board memberson these subjects. For that purpose, it reviews the financial statements before their submission to the Board and issues an opinion on:• the application and relevance of the accounting principles and methods used and reviews material risks;• the appointment, fees and audit program of the Statutory Auditors and issues relating to their independence.The Committee met four times in 2006 and reports on its work to the Board of Directors.The Board of Directors has appointed Yann Delabrière, Patrick Duverger and Jean-Louis Gérondeau as members of the AuditCommittee. The Committee is chaired by Yann Delabrière.

OPERATION OF THE BOARD OF DIRECTORS

The Board met six times during the fiscal year ended December 31, 2006, principally to review the Group’s budget, business activities,results, and Group financing and its major strategies.

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Four meetings that were specifically devoted to the review of the interim and annual financial statements and results forecasts for the year were prepared by the Audit Committee.One of the Board meetings focused on the Group’s key medium-term strategies and on its competitive positioning. At several meetings,the Board of Directors reviewed the organization and commercial impact of recent developments in the legal proceedings broughtagainst Faurecia in Germany.In 2006, the rate of attendance of the members of the Board of Directors at Board Meetings was 85.71%.All members of the specialized Committees attended every Committee meeting.

EVALUATION OF THE BOARD OF DIRECTORS

Following a review by the Appointments and Compensation Committee, the Board implemented a procedure for the evaluation of itswork, using a survey to obtain feedback from each Director on the methods of functioning of the Board and on whether the key issuesfor the Company are adequately prepared and reviewed.Directors’ responses to the survey and suggestions are then analyzed by the Chairman of the Appointments and CompensationCommittee, who reports to the Board on his findings.This procedure was applied to the Board’s work in 2006.

PROCEDURE FOR COMPENSATING CORPORATE OFFICERS

The amount and method used to determine the compensation and all benefits granted to corporate officers is set out in the management report.

Internal control proceduresINTERNAL CONTROL: DEFINITION AND AIMS

Internal control is defined within the Faurecia Group as a process designed to provide reasonable assurance regarding the identification,control and prevention of risks regarding the achievement of the following aims:• the effective implementation and optimization of operations;• the availability, reliability and integrity of the accounting system and financial and operations-related information;• legal and regulatory compliance;• balance between risks and anticipated benefits;• protection of the Group’s property and safeguarding of its assets.Internal control thus helps Faurecia to attain its strategic objectives, by guarding against the risks and contingencies involved in itsbusiness as far as possible. However, like any other control system, it cannot guarantee an absolute elimination of all risks. Lastly, theInternal Control department occupies a central function within the Group and may intervene in any of the Group’s subsidiaries oraffiliates. No Faurecia subsidiary has its own Internal Control department.

GENERAL ORGANIZATION AND DESCRIPTION OF INTERNAL CONTROL PROCEDURES

Stakeholders and the organization of internal control proceduresInternal control is more than just a set of standards and procedures. It is designed to involve everyone throughout the entire FaureciaGroup. In this regard, it concerns not only senior management (the Board of Directors, the Group Executive Committee and executivemanagers of operating units) and the functions responsible for control (the Audit Committee, Risk Committee and Internal Auditdepartment), but also and more importantly, each and every Group employee in his or her daily work.A large number of internal stakeholders are therefore involved in control activities. They include in particular:• the Board of Directors, which is responsible for determining the major strategies for the Group’s business activities and overseeing the

deployment of these activities;• the Group Executive Committee, which makes decisions on all issues involving the Group’s General Management, oversees

and allocates the necessary resources to implementing the Group’s strategy, sets the objectives of the various legal entities within the Group and supervises their achievement;

• the Audit Committee, described earlier in this report, which is given its responsibilities by the Board of Directors and which plays a vitalrole in the performance of internal control and the monitoring of existing procedures;

• the Risk Committee, created in 2004, which meets twice a year before the financial statements are adopted. Meetings are attended by the Group Chairman, the Chief Financial Officer and the Manager of the Internal Audit department. The Committee may request the assistance of any internal experts who have specialist knowledge of the operations or specific features of the issues deliberated by the Committee. The Risk Committee evaluates program-related risks;

• the Group functions, which have a specific role to play in internal control due to their cross-functional competencies, such as theFinancing and Treasury department, the Financial Control department, the Quality Assurance department, the Legal Affairs andInsurance department or the Country Financial departments;

• the Internal Audit department, which is described in more detail below;These internal control mechanisms are supplemented by the work of external players, including:• the Group’s Statutory Auditors, who perform an audit of the Group every year within the scope of their statutory audit engagement

on the Group’s consolidated financial statements and other audit engagements regarding the financial statements of Group entities;• third-party organizations which carry out a triple certification process for the whole Group over a three-year cycle :

– environment (ISO 14001),– health and safety (OHS AS 18001),– quality (ISO/TS);

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• experts appointed by our insurers carry out controls in two areas for the entire Group every two years:– fire safety,– all risks and business interruption.

Description of internal control proceduresThe Group’s internal control system consists in particular of a set of procedures that are accessible to all Group employees via its Intranet. These procedures are regularly updated and are enhanced on an ongoing basis. They currently comprise the following:• the Faurecia Excellence System (FES), which defines the way in which the Group’s employees work across the globe and describes

the Group’s identity;• a Code of Ethics was introduced in 2004. It was updated in 2006 following the criminal proceedings brought by the State Prosecutor’s

Offices in Frankfurt and Munich and then circulated in 2007. This Code of Ethics defines the general rules on ethical behavior appli-cable on a day-to-day basis to all Faurecia employees in their relations both inside and outside the Group, as well as to its partners. In addition to strengthening the measures already in place, this Code introduces a whistle-blowing procedure enabling employees to notify Faurecia, in confidence, of any violation of statutory provisions or Group procedures. The Code also provides for the creationof a Group Ethics Committee. The Code was circulated via Intranet throughout the Group to ensure that all employees can read and comply with it at all times and in all circumstances;

• a large number of procedures that are specific to each of the Group’s functions and have been developed by such functions within thescope of a common framework. For example, our supplier policy is based on key procedures that are adopted by all Faurecia entitiesworldwide, which focus on four main areas,– management of the supplier panel,– supplier integration during the development phase,– supplier integration during the series phase,– procurement and billing.

Each phase involves procedures that our suppliers agree to follow with a view to building a sustainable partnership with the Group basedon excellence. A review of the main risks inherent in the Group’s operations is currently in progress.

Control of program managementThe Group’s core business is designing and manufacturing modules for the automotive industry. Each contract entered into with a customer constitutes a program.A program can be defined as a project that:• responds to a specific request (“Request for Quotation” or RFQ) for the supply of complex automotive equipment to an automaker;• ensures Quality/cost/leadtime objectives;• meets the Group’s profitability criteria.The life of a program can stretch to ten years, from the beginning of the development phase (including the acquisition phase and industrial production) to the end of series life (production).Various control tools and procedures mark the life of a program. The Program Management System (PMS) organizes a Program’s life intorigorous successive stages. Each program involves various milestones from the bid processing stage to the end of product life. In addition to this control system, program reviews are carried out once a month by the Product Group concerned. These reviews are formalized and a certain number of documents must be submitted, including the Business Plan (see below). This process is designedto identify program risks on an ongoing basis, in order to design and implement the necessary action plans.

Business PlanFrom its inception, before the bid is filed, each program is subject to a forward-looking financial analysis in the form of a Business Plan(BP). BPs are prepared in accordance with a standard method developed and monitored by Group Management. The BP is regularlyupdated as assumptions change, and it contains all the information needed to assess a program at every stage, during the preparationof the quotation, contract negotiations, the development phase and finally during series life.

INTERNAL CONTROL PROCEDURES RELATING TO THE PRODUCTION AND PROCESSING OF ACCOUNTING AND FINANCIALINFORMATION

Principles applied to the preparation of financial statementsThe Group’s Accounting and Tax Management prepares the financial statements for the Faurecia holding company, as well as for otherholding companies, service providers and financial companies within the Group. It also prepares monthly consolidated financial state-ments and, more particularly, half-yearly and annual financial figures that are to be published. It ensures that local financial managersprepare the financial statements of subsidiaries in accordance with applicable regulations, defines the Group’s accounting principles in accordance with IFRS, oversees the application of such principles by all subsidiaries and provides training to the subsidiaries’accountants and controllers.The following principles are implemented across the Group with regard to the preparation of financial statements:• transactions must be exhaustive;• they must comply with the accounting principles applicable to the Group;• periodical review of assets.The key to preparing financial and accounting information is to ensure consistency between financial reporting tools and the Group’s

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operating systems. The volume of information involved, the quality and integrity required to process the information and the shorterdeadlines for the financial reporting package – enabling management to respond quickly and to efficiently control business – require the use of powerful information systems that can be audited. The Group decided to conduct a major overhaul of these systems, whichwill address their technological, administrative and accounting aspects.

Accounting and financial control toolsThe Group has designed the procedures required for producing and processing financial and accounting information. These procedurescomply with applicable accounting principles and standards in force and, like all the other internal control procedures, they are availableon the Company’s Intranet. The following figure among the most important Group procedures:• a capital expenditure authorization procedure, that determines the requirements for justifying the expenditure and identifies authorizedsignatories who can commit the Company up to pre-defined thresholds;• a procedure for requesting subscriptions of shares, share issues, acquisitions of shareholdings and inter-company loans;• a procedure for drafting Program Business Plans;• a procedure relating to the purchase of new programs;• a procedure for consolidating the financial statements.

Accounting and financial reporting processes

The financial reporting processes are aimed at providing instruments for informing and steering the Group and ensuring maximumresponsiveness to any risks that arise. A “reporting glossary” describes the content of all reporting data and procedures explain how reporting should be carried out.

• Description of monthly reportingSince 2004, monthly reporting takes place on the “Magnitude” reporting tool. This tool allows both financial information (incomestatement and balance sheet data) and non-financial information (quality, production, purchasing, safety, HR indicators, etc.) to be reported.The monthly reporting and the statutory consolidation are now prepared on the basis of a single data source.The reporting process is structured around operating units.The level of control over the process for consolidating results at Group level has been reinforced by applying blocking controlsupstream in the reporting package process and intermediate controls related to the reporting system structure.Finally, in order to enable the management teams to react as quickly as possible on the basis of actual quantified data, the monthlyreporting system is fast: after sending estimated sales and operating income data within three days following month-end, operatingunits draw up and send in every month – five days after the monthly close – restated financial statements based on Group standards.These statements are based on a common chart of accounts and include two income statements – presented by function and by nature – as well as a balance sheet showing changes in each caption.

Medium-term planBecause its contracts span several years, Faurecia needs a medium-term overview of its financial position for effective riskmanagement. To this end, the Group draws up a five-year plan known as the medium-term plan each year, in which the Program-relateddimension plays an essential part. This plan makes it possible to clarify Group outlook in terms of size of available resources and profi-tability. It is consolidated on the same basis, by applying the same stringent procedures as for the monthly reporting, and is used to define budget targets.• Budget:

Faurecia’s budget is prepared on an annual basis and operates on a half-yearly schedule, exactly like the Group’s external financialcommunications.Group management provides the economic and financial assumptions to be used in the budget, and sets specific objectives for eachoperating unit. The budget is then built for each plant, development center or administrative center. Finally, it is converted to monthlyperiods using standard schedules, and then consolidated.As the budget for the upcoming half-year is produced, forecast results for the current half are issued, with explanations for anyvariances with respect to the previously set budget for the current half, on a sliding basis.The budget for the current half-year then serves as a basis for comparisons with current results and performance measurements.Rolling forecast:To better anticipate short-term changes and improve responsiveness, the monthly reporting package includes comments and a rollingthree-month forecast for the income statement and cash flows.

• Off-balance sheet commitments:Off-balance sheet commitments are handled in accordance with a specific identification and valuation process.Each commitment is tracked by nature. Currency and interest-rate risks, as well as inter-company financing in foreign currencies, are managed at Group level under the supervision of Group general management. If required, currency risks are hedged. Any suretiesor guarantees granted by Faurecia are similarly issued and monitored at Group level.

• Operations Committee:Each Product Group has an Operations Committee that meets monthly to analyze operating performance and review action plans thatare in progress or have scheduled to meet budget goals.

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THE INTERNAL AUDIT DEPARTMENT

At the beginning of 2003, the Group created an Internal Audit department. This department is placed under the direct responsibility of the Group’s Financial Management. In addition, its work is approved and supervised by the Chairman of the Board and the AuditCommittee. The Internal Audit department aims to guarantee an optimum level of efficiency in all systems of internal financial control, by applying a systematic and methodical approach. It can intervene according to need in all Group processes throughout the world. This department conducts its assignments, in both the financial and operations-related fields, in a wholly objective fashion and alwayssupports its findings with precise facts and quantitative data that have been duly verified. All of the department’s work is made availableto General Management, to which it reports regularly on the progress of its assignments and the meeting of its objectives. It presents a plan for its audit work, the reports produced and details of whether it has met its objectives to the Group Executive Committee twice a year and to the Audit Committee once a year. Other Company departments can also obtain detailed explanations from the InternalAudit teams concerning audit findings.In 2004, the department prepared an Internal Audit Code of Conduct which defines its function, the purpose of its assignments, the remitof its authority and the methodology used during its assignments. These measures should be strengthened with a view to conductingmore in-depth, complex assignments.As an example, the Internal Audit department worked on assignments in the following areas in 2006:• audit of three programs in Europe and North America; Compliance with the Group’s PMS standards during the acquisition and

development phase, to the end of series life. Reliability of the Business Plan and reporting procedures;• audit of compliance with IFRS with regard to the booking of development costs;• audit of the reliability of a quality indicator reporting method implemented on 19 production sites belonging to the Group;• limited audit of three joint ventures in which the Group has a 50% stake;• audit of production sites in China and Tunisia (internal control, reliability of reporting methods);• provision of assistance to KPMG in its assignment concerning proceedings implemented in Germany in cases of improper ethical

conduct;• audit of compliance with Group standards with regard to expenditure commitments.Any corrective action that may be needed has already been defined. Furthermore, the Internal Audit department has followed up theimplementation of actions identified following the audits carried out in 2005.

MAIN DEVELOPMENTS

In 2007, the Group intends to develop its risk assessment policy and improve its internal control procedures. To this end, on account ofthe criminal proceedings brought in Germany in 2006 by the State Prosecutor’s Offices of Frankfurt and Munich against some of theGroup’s employees, management overhauled the procedures for delegating signatory powers, prohibited transfers of cash and centra-lized the control of expenditure. Furthermore, the Group’s Code of Ethics mentioned above was clarified. A review of the main risksinherent in the Group’s operations is currently in progress. The Group should be able to anticipate and improve risk management basedon the main risks identified. The aim is to monitor the development of risks in each area and assess them, ensure that appropriate actionplans are put in place by the risk prevention functions and, where necessary, supplement existing control procedures and systems. Themain risk factors are explained in the management report.

Limitations placed by the Board of Directors on the powers of the Chairman and Chief Executive OfficerAs stated earlier, the Board of Directors has entrusted its Chairman with responsibility for the Company’s General Management. The internal rules of operation of the Board specify the terms and conditions of performance of the Board’s own role as well as the dutiesof the Chairman. These rules also state that the Board is to be consulted on all Company and Group strategic decisions at theChairman’s initiative. At its meeting of September 8, 2006, the Board of Directors authorized the Chairman and Chief Executive Officerto give sureties, security or guarantees up to an overall maximum limit of €50 million, with a limit of €10 million per transaction. If theGroup is required to provide advance repayment guarantees or performance guarantees for contracts with successive performancecommitments, the Chief Executive Officer is authorized to provide, within the same overall maximum limit, guarantees that may notexceed €5 million per transaction. Through its internal rules of operation and within the scope of the applicable laws governing itsbusiness activities, the Board has the powers to deal with all matters required for the smooth running of the Company.

The Chairman of the Board of Directors

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Statutory Auditors’ report, prepared in accordance with section L. 225-235 of the French CommercialCode (Code de commerce), on the report prepared by the Chairman of the Board of Directors of FaureciaSA, on the internal control procedures relating to the preparation and processing of financial andaccounting information


In our capacity as Statutory Auditors of Faurecia SA, and in accordance with section L. 225-235 of the French Commercial Code (Codede commerce), we report to you on the report prepared by the Chairman of your Company in accordance with article L. 225-37 of theFrench Commercial Code for the year ended December 31, 2006.

It is for the Chairman to give an account, in his report, notably of the conditions in which the duties of the Board of Directors are preparedand organized and the internal control procedures in place within the Company.

It is our responsibility to report to you our observations on the information set out in the Chairman’s report on the internal control proce-dures relating to the preparation and processing of financial and accounting information.

We performed our procedures in accordance with professional guidelines applicable in France. These require us to perform proceduresto assess the fairness of the information set out in the Chairman’s report on the internal control procedures relating to the preparationand processing of financial and accounting information. These procedures notably consisted of:

– obtaining an understanding of the objectives and general organization of internal control, as well as the internal control proceduresrelating to the preparation and processing of financial and accounting information, as set out in the Chairman’s report;– obtaining an understanding of the work performed to support the information given in the report.

On the basis of these procedures, we have no matters to report in connection with the information given on the internal control proce-dures relating to the preparation and processing of financial and accounting information, contained in the Chairman of the Board’sreport, prepared in accordance with article L. 225-37 of the French Commercial Code.



PricewaterhouseCoopers Audit ERNST & YOUNG AuditGuy A. Sitbon Laurent Miannay

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Statutory Auditors’ report

This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for theconvenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French lawand professional auditing standards applicable in France.


Executive Committee

Faurecia’s executive management is performed by the Group Executive Committee, which is made up of 14 members. Its membershipwas as follows as of February 16, 2007:

Name Position Date of appointment

Yann DELABRIÈRE Chairman of the Board of Directors and Chief Executive Officer February 16, 2007

Arnaud de DAVID-BEAUREGARD Executive Vice-President, Group Development July 19, 2000

Jean-Marc HANNEQUIN Executive Vice-President, Exhaust Systems Product Group July 1, 2002

Max HODEAU Executive Vice-President, Structures and Mechanisms December 22, 2005

Frank IMBERT Executive Vice-President, Chief Financial Officer June 13, 2005

Patrick KOLLER Executive Vice-President, Automotive Seating Product Group December 18, 2006

Thierry LEMANE Executive Vice-President, Group Communications September 23, 2002

Jacques LE MORVAN Executive Vice-President Group Purchasing May 16, 2005

Jacques MAUGE Executive Vice-President, Customer Development May 29, 2006

Bruno MONTMERLE Executive Vice-President Group Strategy May 10, 2004

James C. ORCHARD Chairman North American May 16, 2005

Christophe SCHMITT Executive Vice-President, Interior Systems Product Group December 22, 2005

Jean-Pierre SOUNILLAC Executive Vice-President, Group Human Resources September 21, 2004

Guy TALBOURDET Executive Vice-President, Modules and Systems Product Group April 1,2005

The full Executive Committee meets twice a month in order to review the principal questions relating to the general organization of the Group. It discusses and prepares decisions on major operations-related issues concerning the Company and its subsidiaries,which are then taken and implemented by each of the Committee’s members in line with their functions.

MANAGEMENT COMPENSATION

The total compensation paid or allocated to Directors and officers of the Company and Group in respect of 2006 amounted to€7,088,269, including a total of €188,574 in Directors’ fees.Compensation of Directors is paid in the form of attendance fees, which are designed to take into account the Board members’ effectiveattendance at Meetings and their attendance at Committee meetings. Directors therefore receive a fixed portion in recognition of theirfunction and a variable portion based on the number of Board Meetings attended. They also receive additional compensation if they area member of one of the Board’s Committees.The fees paid to Management Committee members include a variable performance bonus. This is equal to 0%-40% of the basiccompensation of most members, but may reach up to 60%. Each bonus depends not only on the level of individual performance, butalso on collective performance indicators, such as quality, operating margin and debt.

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Auditors

Appointments of Auditors

Date of first appointment Term of office expires

Statutory Auditors

PricewaterhouseCoopers Auditrepresented by Guy-Alain Sitbon,member of the Compagnie Régionale de Versailles63, rue de Villiers - 92208 Neuilly-sur-Seine, France May 27, 2003 Ordinary Shareholders’ Meeting 2007Ernst & Young Auditrepresented by Laurent Miannay,member of the Compagnie Régionale de Versailles11, allée de l’Arche - 92037 Paris-La Défense Cedex, France June 17, 1983 Ordinary Shareholders’ Meeting 2007

Alternate Auditors

Catherine SABOURET May 27, 2003 Ordinary Shareholders’ Meeting 2007François CARREGA May 23, 2005 Ordinary Shareholders’ Meeting 2007

Fees paid to the Statutory Auditors as of December 31, 2006

PricewaterhouseCoopers Ernst & Young

Amount (excl. tax) % Amount (excl. tax) %

(in € thousands) 2006 2005 2006 2005 2006 2005 2006 2005

Audit servicesStatutory and contractual audits, certification, review of parent company and consolidated financial statements 3,099 3,490 1,906 1,576

Issuing company 380 696 12.26% 19.89% 118 474 6.19% 29.61%Consolidated subsidiaries 2,719 2,794 87.74% 79.85% 1,788 1,102 93.81% 68.83%

Other services relating directly to the statutory audit engagement 0 9 0 0

Issuing company 0 9 0.00% 0.26% 0 0 0.00% 0.00%Consolidated subsidiaries 0 0 0.00% 0.00% 0 0 0.00% 0.00%

Sub-total 3,099 3,499 100.00% 100.00% 1,906 1,576 100.00% 98.44%

Other services rendered by networks to consolidated subsidiariesTax and legal advisory services 25 1.56%Other (specify if audit fees > 10%) 0 0.00% 0.00% 0 0.00% 0.00%

Sub-total 0 0 0.00% 0.00% 0 25 0.00% 1.56%

Total 3,099 3,499 100.00% 100.00% 1,906 1,601 100.00% 100.00%

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EMPLOYEE INCENTIVE PLANS

Optional profit-sharing plan (“Accord d’intéressement”) and compulsory profit-sharing (“Accord de participation”)

OPTIONAL PROFIT-SHARING PLAN (“ACCORD D’INTÉRESSEMENT”)

In 2006, nine agreements were signed for a period of three years. These agreements follow on from the agreements relating to FSA, FSE,FAI, Siedoubs, Sielest, Automotive Sandouille, Siéto and Siebret that expired. A new agreement was signed relating to FCS, which wasset up at the end of 2005.Numerous supplemental agreements were signed in order to set half-yearly performance indicators. Therefore, all the French companiesare now covered by optional profit-sharing agreements.In accordance with the Group’s strategy, most of these agreements contain the following provisions:• the maximum limit on the intéressement (optional employee profit sharing) is set at 6% of payroll in the event that objectives have been

fully achieved, and can in certain exceptional cases be increased to 8% if the objectives are exceeded;• the calculation of intéressement is defined on the basis of two sets of indicators:

– business indicators at the level of the Company and its various sites.This represents approximately 40% of the global intéressement and is calculated and paid every year,– progress indicators calculated at site level and selected from among the Faurecia Excellence System (FES) indicators.This represents approximately 60% of the global intéressementt and is calculated and paid every six months,– half of the allocation made between employees is proportional to salary and half is applied uniformly across the board

(depending on the hours worked);• the agreements signed at the just-in-time (JIT) sites generally accord greater significance to progress indicators. For these sites,intéressement is spread evenly across the board.In respect of 2006, the Group paid out €9.3 million in intéressement to 16 companies.

COMPULSORY PROFIT-SHARING PLAN (“ACCORD DE PARTICIPATION”)

• The compulsory profit-sharing agreements of the various Group companies stipulate that employee profit sharing calculated in accor-dance with the legal formula is allocated among employees pro rata to their compensation for the year in question, subject to compliance with regulatory limits.• The amounts in the participation profit-sharing reserve may be either invested in the corporate mutual funds set up in connection withthe Group Employee Savings Plan (PEG) or paid into an escrow account, according to the choice made by each employee.The principle of the pooling of the participation profit-sharing reserves between Faurecia Bloc Avant (FBA) and Faurecia CoolingSystems (FCS), set up in 2005 when FBA made a partial contribution of assets to the newly created FCS, was renewed for the last timefor 2006.The Group profit-share for 2006, paid in 2007, equals €1.6 million for five companies.

Group Employee Savings Plan (PEG)The Faurecia Group employee savings plan set up in 2004 offers employees the chance to invest in a savings plan by purchasing unitsin a corporate mutual fund.The Group savings plan may be funded by securities. Since 2006, it may also be funded by real property, increasing the number of investment options available to employees to 14.The Group savings plan may be funded by the payment of the amounts allocated in respect of participation and intéressement employeeprofit-sharing, as well as voluntary contributions made by employees.Voluntary contributions to the “Faurecia Actionnariat” corporate mutual fund comprising solely Faurecia shares give rise once again tothe payment in 2006 of a financial contribution by the Company.The total amount invested in the corporate mutual funds remains stable (€30 million), in spite of a slight increase in voluntary contribu-tions. Most of the funds are funded in monetary payments. However, there is a certain diversification in the way in which funds aremanaged.Since its creation in 2004, around €4 million has been invested in the Group’s Employee Savings Plan.

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Stock-options

APPLICABLE PROCEDURE FOR THE ALLOCATION OF STOCK SUBSCRIPTION AND PURCHASE OPTIONS

At its February 6, 2003 Meeting, the Board of Directors adopted a strict procedure in relation to the allocation of stock-subscription andpurchase options.The Board of Directors may only decide upon the principle of granting stock-subscription or purchase options once a year, duringthe Board Meeting held in April in order to convene the Annual General Meeting.The list of beneficiaries, the number of options granted to each beneficiary and the price of the options – which is based on the average of the opening prices quoted for the Company’s shares over the twenty trading days preceding the effective date of grant – will be deter-mined in April, at the Board Meeting which issues the notice of the Annual General Meeting.

STOCK SUBSCRIPTION AND PURCHASE OPTIONS

Stock subscription optionsThe May 23, 2005 Ordinary and Extraordinary Shareholders’ Meeting gave the Board of Directors a 38-month authorization to grant, on one or several occasions, a maximum of 600,000 stock-subscription options to the management and employees of Groupcompanies and their over 50% owned subsidiaries.As of December 31, 2006, a total of 1,265,715 stock-subscription options were outstanding.Details of the stock option plans as of December 31, 2006 can be found on page 118.

Stock purchase optionsBetween 1999 and 2001, the Company granted stock options to the management of Group companies and their over 50% owned subsi-diaries, allowing them to purchase Faurecia shares.As of December 31, 2006, a total of 293,570 stock-purchase options granted were outstanding.Details of the outstanding stock subscription option plans are as follows:As of December 31, 2006

Date of Date of Board Exercise Number of O/w granted Start of Expiration Options Options Number of Shareholders’ Meeting price (in €) options to senior exercise date of exercised forfeited options Meeting granted executive period exercise outstanding as

management/ period of Dec. 31, 2005 Executive

Committee members

06/01/1999 09/06/1999 5 200,000 53,100 09/06/2004 09/05/2009 37,250 17,250 145,50006/01/1999 09/04/2000 40 254,000 54,900 09/04/2005 09/03/2010 96,930 41,000 116,07005/22/200005/22/2000 04/26/2001 54.5 43,500 40,000 04/26/2005 04/25/2011 6,500 5,000 32,000

Total 293,570

INFORMATION CONCERNING THE TEN EMPLOYEES WHO RECEIVED THE HIGHEST NUMBER OF OPTIONS

Stock options granted to the ten employees who received the highest number of options, Total number of Average weighted and options exercised by those employees options granted or shares price (in €)

subscribed/purchased

Options granted to the top ten employee grantees during the year, 82,000 53.80by the Company and other Group companies entitled to grant options(total)

Options exercised during the year by the top ten employee grantees 28,500 41.35of the Company and other Group companies entitled to grant options(total)

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STATEMENT BY THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT (Document de référence)Person responsible for the registration documentYann DELABRIÈRE

Chairman and Chief Executive Officer

I hereby declare that, having taken all reasonable care to ensure that such is the case, the information contained in the registrationdocument is, to the best of my knowledge, in accordance with the facts and contains no omission likely to affect its import.

I obtained a statement from the Statutory Auditors at the end of their engagement affirming that they have read the whole of the registration document and examined the information about the financial position and the historical accounts contained therein.

Yann DELABRIÈRE

Nanterre, April 23, 2007

INFORMATION OFFICER

Frank IMBERTChief Financial OfficerFaurecia2, rue Hennape92735 Nanterre Cedex – FranceTel.: + 33 (1) 72 36 70 00Fax: + 33 (1) 72 36 70 07

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Agenda

RESOLUTIONS PRESENTED TO THE ORDINARY SHAREHOLDERS’ MEETING:

1. Approval of parent company and consolidated financial statements and reports of the Board of Directors and the Statutory Auditors.2. Appropriation of 2006 net loss.3. Approval of the Statutory Auditors’ special report on regulated agreements.4. Ratification of the cooptation of a Director.5. Appointment of four new Directors.6. Renewal of a directorship.7. Renewal of the appointment as principal Statutory Auditor of Ernst & Young Audit.8. Renewal of the appointment as alternate Statutory Auditor of Ernst & Young Audit.9. Renewal of the appointment as principal Statutory Auditor of PricewaterhouseCoopers Audit.

10. Renewal of the appointment as alternate Statutory Auditor of PricewaterhouseCoopers Audit.11. Powers for formalities.

RESOLUTIONS PRESENTED TO THE EXTRAORDINARY SHAREHOLDERS’ MEETING

12. Authorization for the Board of Directors to issue stock options.13. Amendment of article 17 of the bylaws regarding the participation of shareholders at Shareholders’ Meetings.14. Powers for formalities.

Draft resolutions

ORDINARY RESOLUTIONS

First resolution(APPROVAL OF PARENT COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS OF THE BOARD OF DIRECTORSAND THE STATUTORY AUDITORS)

After having reviewed the Board of Directors’ management report and the Statutory Auditors’ general report, the Shareholders’ Meetingapproves the reports in their entirety, as well as the parent company and consolidated financial statements for the year ended December 31, 2006, as presented to it. It notes that the Company incurred a loss of €165,225,090.23 during the year.

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Combined shareholders’ general meeting of May 29, 2007



Second resolution(APPROPRIATION OF 2006 NET LOSS)

Based on the proposal made by the Board of Directors, the Shareholders’ Meeting resolves to appropriate the loss for the year endedDecember 31, 2006 as follows:Net loss for the year –165,225,090Appropriation (by deduction from the following items):Additional paid-in capital 165,225,090Retained earnings 0In order to comply with the provisions of the law, it is noted that dividends paid in the last three years were as follows:

Year Number of shares Net dividend Tax credit Aggregate paymentcarrying dividend rights (in €) (in €) (in €)

2003 24,206,751 0.910 0.455 1.3652004 24,212,051 1.100 – 1.1002005 24,233,601 – – –

Third resolution(APPROVAL OF THE STATUTORY AUDITORS’ REPORT ON REGULATED AGREEMENTS)

After having reviewed the special report drawn up by the Statutory Auditors on the agreements referred to in sections L. 225-38 et seq.of the French Commercial Code, the Shareholders’ Meeting takes note of this report and approves the terms and conclusion thereof.

Fourth resolution(RATIFICATION OF THE COOPTATION OF A DIRECTOR)

The Shareholders’ Meeting acknowledges the resignation of Jean-Martin Folz and resolves to ratify the cooptation of Christian Streiff as Director for the remaining term of Mr. Folz’s office, i.e., until the Ordinary Shareholders’ Meeting held in 2011 to deliberate on thefinancial statements for 2010.

Fifth resolution(APPOINTMENT OF A NEW DIRECTOR)

The Shareholders’ Meeting acknowledges the resignation of Grégoire Olivier at the Board Meeting of February 16, 2007 and resolves to appoint Sylvie Rucar to replace him as Director, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial statements for 2012.

Sixth resolution(APPOINTMENT OF A NEW DIRECTOR)

The Shareholders’ Meeting resolves to appoint Jean-Pierre Clamadieu as Director, to replace Daniel Dewavrin whose term of officeexpires at this Meeting, for a term of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financialstatements for 2012.

Seventh resolution(APPOINTMENT OF A NEW DIRECTOR)

The Shareholders’ Meeting acknowledges the resignation of Patrick Duverger and resolves to appoint Ross McInnes to replace him as Director, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial statements for 2012.

Eighth resolution(APPOINTMENT OF A NEW DIRECTOR)

The Shareholders’ Meeting resolves to appoint Robert Peugeot as Director, to replace Louis Defline whose term of office expires at this Meeting, for a term of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial statements for 2012.

Ninth resolution(RENEWAL OF THE TERM OF OFFICE OF A DIRECTOR)

The Shareholders’ Meeting resolves to renew Yann Delabrière’s directorship for a period of six years, i.e., until the Ordinary Shareholders’Meeting held in 2013 to deliberate on the financial statements for 2012.

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Tenth resolution(RENEWAL OF THE APPOINTMENT AS PRINCIPAL STATUTORY AUDITOR OF ERNST & YOUNG AUDIT)

Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to renew the appointment as principal Statutory Auditorof Ernst & Young Audit for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financialstatements for 2012.

Eleventh resolution(RENEWAL OF THE APPOINTMENT AS ALTERNATE STATUTORY AUDITOR OF ERNST & YOUNG AUDIT)

Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to appoint AUDITEX as alternate Statutory Auditoralongside Ernst & Young Audit, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on thefinancial statements for 2012.

Twelfth resolution(RENEWAL OF THE APPOINTMENT AS PRINCIPAL STATUTORY AUDITOR OF PRICEWATERHOUSECOOPERS AUDIT)

Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to renew the appointment as principal Statutory Auditorof PricewaterhouseCoopers Audit for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on thefinancial statements for 2012.

Thirteenth resolution(RENEWAL OF THE APPOINTMENT AS ALTERNATE STATUTORY AUDITOR OF PRICEWATERHOUSECOOPERS AUDIT)

Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to appoint Étienne Boris as alternate Statutory Auditoralongside PricewaterhouseCoopers Audit, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberateon the financial statements for 2012.

Fourteenth resolution(POWERS FOR FORMALITIES)

Full powers are given to the bearer of a copy or extract of these minutes in order to:• carry out all filings, publications and other formalities;• sign all instruments and documents and take all other necessary actions.

EXTRAORDINARY RESOLUTIONS

Fifteenth resolution(AUTHORIZATION FOR THE BOARD OF DIRECTORS TO ISSUE STOCK OPTIONS)

Upon the proposal of the Board of Directors and after having heard the Statutory Auditors’ special report, the Shareholders’ Meetingresolves to authorize the Board of Directors within the scope of sections L. 225-177 et seq. of the French Commercial Code, to grant, on one or more occasions, over a period of 38 months as from the date of this Shareholders’ Meeting, the option to subscribe for newFaurecia shares issued in connection with a capital increase, to Faurecia’s corporate officers and employees, its over 50% owned subsidiaries and its over 50% directly or indirectly owned sub-subsidiaries, under the conditions provided by law.The total number of options offered by the Board of Directors within the scope of this authorization must not lead to the issue of morethan 600,000 shares with a par value of €7, corresponding to a capital increase in a nominal amount of €4,200,000. The Board of Directors will set the subscription price on the date it resolves to allocate the options. The Shareholders’ Meeting resolves that thisprice must be at least equal to the minimum price calculated in accordance with the laws in force. The price must not be changed duringthe term of validity of the option, other than in the cases provided for by law. By reason of this authorization, the shareholders expresslywaive their preferential right to subscribe to the shares that will be issued as and when the options are exercised.The options will be allocated in accordance with the procedure adopted by the Board on February 6, 2003 and the provisions of Frenchlaw, pursuant to which no option may be granted:• during the ten trading days immediately before and after the date of publication of the consolidated financial statements;• between the date on which Faurecia’s governing bodies receive information which, if made public, may have a material impact on the

price of its shares, and the date that falls ten trading days after the information is made public;• less than twenty trading days before or after a coupon carrying dividend rights or rights to a capital increase is detached.The deadline for exercising these options set by the Board of Directors must fall within eight years of the date on which the options aregranted by the Board.

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The Shareholders’ Meeting gives full powers to the Board of Directors to determine the beneficiaries of the stock-option plan within the limits defined by law, to set the terms and conditions for granting stock-option plans and to carry out all the necessary operationsand formalities.Every year, the Board of Directors will inform the Ordinary Shareholders’ Meeting of the transactions effected within the scope of this resolution.

Sixteenth resolution(AMENDING ARTICLE 17 OF THE BYLAWS REGARDING THE PARTICIPATION OF SHAREHOLDERS AT SHAREHOLDERS’ MEETINGS –BOOKING OF SHARES IN THE NAME OF THE SHAREHOLDER OR INTERMEDIARY REGISTERED TO ACT ON BEHALF OF THE SHAREHOLDERTHREE BUSINESS DAYS BEFORE THE SHAREHOLDERS’ MEETING IN ORDER TO ENTITLE THE SHAREHOLDER TO TAKE PART IN SUCHMEETING)

After having reviewed the Board of Directors’ report, the Shareholders’ Meeting resolves to amend article 17 of the Company’s bylawsregarding the participation of shareholders in Shareholders’ Meetings in line with section 136 of the French decree of March 23, 1967, as amended by the decree of December 11, 2006. As a result, the bylaws are amended as follows:

OLD WORDING

ARTICLE 17

Shareholders’ Meetings are convened and held and the shareholders must deliberate and take their decisions under the conditions set bylaw. They are held at the registered office or any other place stated in the notice of Meeting.To be entitled to attend Shareholders’ Meetings in person or to be represented by proxy, holders of registered shares must have their sharesrecorded in the registered share account kept by the Company and holders of bearer shares must have their shares recorded in a shareaccount kept by their bank or financial intermediary at least five (5) days prior to the date of the Meeting.The person who issues the notice of Meeting may, however, reduce this period if he or she sees fit.Shareholders may also, if the Board of Directors agrees when the Meeting is convened, participate and vote at Shareholders’ Meetings usingvideoconferencing facilities or by any method of telecommunication that allows them to be identified, in accordance with the terms andconditions provided by law.Voting rights at Ordinary, Extraordinary and Special Shareholders’ Meetings are exercisable by the beneficial owner of the shares.All fully paid-up shares that have been registered in the name of the same holder for at least two (2) years carry double voting rights. In thecase of a bonus share issue paid up by capitalizing retained earnings, income or additional paid-in capital, the bonus shares allotted inrespect of registered shares carrying double voting rights will also carry double voting rights as from the date of issue.Any share converted into a bearer share or the ownership of which is transferred loses the double voting right. Nevertheless, transfersfollowing the liquidation of a marital estate, or by way of an inheritance or in the form of an inter vivos gift to a spouse or a relative in the directline of succession does not entail the loss of the acquired right and does not interrupt the period provided for in the above paragraph.

NEW WORDING

ARTICLE 17

Shareholders’ Meetings are convened and held and the shareholders must deliberate and take their decisions under the conditions set bylaw. They are held at the registered office or any other place stated in the notice of Meeting.To be entitled to attend Shareholders’ Meetings in person or to be represented by proxy, holders of registered shares must have their sharesrecorded in the registered share account kept by the Company and holders of bearer shares must have their shares recorded in a shareaccount kept by their bank or broker at least three (3) days prior to the date of the Meeting.Shareholders may also, if the Board of Directors agrees when the Meeting is convened, participate and vote at Shareholders’ Meetingsusing videoconferencing facilities or by any method of telecommunication that allows them to be identified, in accordance with the termsand conditions provided for by law.Voting rights at Ordinary, Extraordinary and Special Shareholders’ Meetings are exercisable by the beneficial owner of the shares.All fully paid-up shares that have been registered in the name of the same holder for at least two (2) years carry double voting rights. In thecase of a bonus share issue paid up by capitalizing retained earnings, income or additional paid-in capital, the bonus shares allotted inrespect of registered shares carrying double voting rights will also carry double voting rights as from the date of issue.Any share converted into a bearer share or the ownership of which is transferred loses the double voting right. Nevertheless, transfersfollowing the liquidation of a marital estate, or by way of an inheritance or in the form of an inter vivos gift to a spouse or a relative in thedirect line of succession does not entail the loss of the acquired right and does not interrupt the period provided for in the above paragraph.

Seventeenth resolution(POWERS FOR FORMALITIES)

Full powers are given to the bearer of a copy or extract of these minutes in order to:• carry out all filings, publications and other formalities;• sign all instruments and documents and take all other necessary actions.

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Statutory Auditors’ report on the granting of stock subscription options to corporate officers andemployees (fifteenth resolution of the Ordinary and Extraordinary Shareholders’ Meeting of May 29, 2007)


In our capacity as Statutory Auditors of Faurecia SA, and in accordance with the terms of the assignment provided for in articles L225-177and R225-144 of the French Commercial Code (Code de commerce), we hereby report to you on the granting of stock subscriptionoptions to corporate officers and employees of Faurecia SA, its more than 50%-owned subsidiaries, and its sub-subsidiaries that aredirectly or indirectly more than 50%-owned.

It is the responsibility of the Board of Directors to prepare a report on the reasons for granting stock subscription options and theproposed terms and conditions for setting the subscription price. Our responsibility is to comment on the proposed terms and condi-tions for setting the subscription price.

We performed our procedures in accordance with professional standards applicable in France. Those standards require that we verifythat the proposed terms and conditions for setting the subscription price are disclosed in the Board of Directors’ report, that they complywith the legal provisions with regard to shareholder information and that they do not appear obviously inappropriate.

We have no comment to make regarding the proposed terms and conditions.

Neuilly-sur-Seine and Paris-La Défense, April 16, 2007



Statutory Auditors’ report

This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for theconvenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French lawand professional auditing standards applicable in France.


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The following cross-reference table is intended to inform the reader of this annual report of the headings under which he may obtain theinformation required under section 212-7 of the general regulations of the Autorité des marchés financiers (AMF) and annex I to ECregulation no. 809/2004 of April 29, 2004 for use as a registration document within the meaning of section 212-13 of the general regulations of the AMF.

Headings of annex I to EC regulation no. 809/2004 page

1. PERSONS RESPONSIBLE 142

2. STATUTORY AUDITORS 139

3. SELECTED FINANCIAL INFORMATION 12-13, 53-84, 95-111

4. RISK FACTORS 28-30

5. INFORMATION ABOUT THE ISSUER5.1. History and development of the issuer 9-10, 24-275.2. Investments 13, 24-27, 62-65

6. BUSINESS OVERVIEW6.1. Principal activities 15-19, 24-27, 62-656.2. Exceptional factors n/a6.3. Possible dependency: patents, licenses or contracts 29, 1246.4. The basis for any statements made by the issuer regarding its competitive position 11

7. ORGANIZATIONAL STRUCTURE 88-89

8. PROPERTY, PLANTS AND EQUIPMENT8.1. Existing or planned material tangible fixed assets n/a8.2. A description of any environmental issues that may affect

the issuer’s utilization of the tangible fixed assets n/a

9. OPERATING AND FINANCIAL REVIEW 24-27, 53-84, 95-110

10. CAPITAL RESOURCES 55-57, 73-74, 79-81, 102-104, 118-124,

11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES 12, 15, 16, 20-21, 26, 29, 32, 53, 65, 66

12. TREND INFORMATION n/a

13. PROFIT FORECASTS OR ESTIMATES n/a

14. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIESAND SENIOR MANAGEMENT

14.1. Members of the administrative, management or supervisory bodies 125-129, 13814.2. Administrative, management, and supervisory bodies and senior management conflicts of interests

15. COMPENSATION AND BENEFITS15.1. The amount of compensation paid and benefits in kind 84, 130, 13815.2. The total amounts set aside or accrued by the issuer or its subsidiaries

to provide pension, retirement or similar benefits 75-78

16. BOARD PRACTICES16.1. Date of expiration of the current term of office 12516.2. Service contracts between members of the administrative, management

or supervisory bodies and the Company16.3. Information about the issuer’s Audit Committee and Remuneration Committee 133-13616.4. Corporate governance regime 125-139

Cross-reference table


Headings of annex I to EC regulation no. 809/2004 page

17. EMPLOYEES17.1. Shareholdings and stock options 140-14117.2. Description of any arrangements for involving the employees in the capital of the issuer 140-141

18. MAJOR SHAREHOLDERS18.1. In so far as is known to the issuer, the name of any person other than a member of the administrative,

management or supervisory bodies who, directly or indirectly, has an interest in the issuer’s capital or voting rights which is notifiable under the issuer’s national law, together with the amount of each such person’s interest or, if there are no such persons, an appropriate negative statement 118-120

18.2. A description of any arrangements, known to the issuer, the operation of which may at a subsequent date result in a change in control of the issuer 116, 120

18.3. Control of the Company 120, 12918.4. A description of any arrangements, known to the issuer, the operation of which may at a subsequent

date result in a change in control of the issuer 120

19. RELATED PARTY TRANSACTIONS 84, 106, 113

20. FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES

20.1. Historical financial information 53-57, 95-98, 11020.2. Pro forma financial information n/a20.3. Financial statements 53-85, 95-10620.4. Auditing of historical annual financial information 90, 112-11320.5. Age of latest financial information 12/31/0620.6. Interim and other financial information 95-10620.7. Dividend policy 107, 12320.8. Legal and arbitration proceedings 7920.9. Significant change in the issuer’s financial or trading position 51

21. ADDITIONAL INFORMATION21.1. Share capital 118-12021.2. Memorandum and articles of association

21.2.1. A description of the issuer’s objects and purposes 11621.2.2. A description of the rights, preferences and restrictions attaching to each class of the existing shares 11721.2.3. A description of what action is necessary to change the rights of holders of the shares,

indicating where the conditions are more significant than is required by law 11621.2.4. A description of the conditions governing the manner in which Annual General Meetings

and Extraordinary General Meetings of Shareholders are called 11621.2.5. An indication of the articles of association, statutes, charter or by law provisions, if any,

governing the ownership threshold above which shareholder ownership must be disclosed 11621.2.6. A description of the conditions imposed by the memorandum and articles of association, statutes, charter or

by law governing changes in the capital, where such conditions are more stringent than is required by law 116

22. MATERIAL CONTRACTS N/A

23. THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS OF ANY INTEREST N/A

24. DOCUMENTS ON DISPLAY 115

25. INFORMATION ON HOLDINGS 85-89, 108-109, 111

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FAURECIA

Head office2, rue Hennape92735 Nanterre CedexTel.: (33) 1 72 36 70 00Fax: (33) 1 72 36 70 07http://www.faurecia.comGroup communication contact: Thierry Lemâne

SOUTH AFRICA

EXHAUST SYSTEMS

Cnr Henry Ford & Nicoll RoadElmosa Park, Nieve TownshipPO Box 9956000 Port ElizabethTel.: (27) 41 451 0936Fax: (27) 41 451 0948

INTERIOR SYSTEMSMODULES & SYSTEMS

Cnr Larch avenue & Wattle squareHolland ParkPO Box 7706000 Port ElizabethTel.: (27) 41 393 4200Fax: (27) 41 393 2216

GERMANY

SEATS

Nordsehler Strasse 3831655 StadthagenTel.: (49) 5721 702 0Fax: (49) 5721 702 370

EXHAUST SYSTEMS

Herboldshofer Strasse 3590765 FürthTel.: (49) 911 76 100Fax: (49) 911 76 10 466

INTERIOR SYSTEMS

Faureciastraße 176767 HagenbachTel.: (49) 72 73 80 10Fax: (49) 72 73 80 15 55

MODULES & SYSTEMS

Maria Goeppert strasse 3 Halle E/GVZ85057 IngolstadtTel: (49) 841 490 490 Fax: (49) 841 490 49 49

ARGENTINA

EXHAUST SYSTEMSINTERIOR SYSTEMS

Carlos Pellegrini Y ViamonteLanus – Placia de Buenos Aires1824 LanusTel.: (54) 11 4001 8800Fax: (54) 11 4001 8859

BELGIUM

INTERIOR SYSTEMS

Industrielaan 198 Bd Industriel1070 BruxellesTel: (32) 2 331 06 13Fax: (32) 2 331 37 75

BRAZIL

SEATS

Avenida Prefeito DomingosMocelin Neto, 777Borda do Campo km 77,CEP 830420 Quatro BarrasTel.: (54) 41 4009 8000Fax: (55) 41 4009 1560

EXHAUST SYSTEMS

Av Nossa senhora do bom sucesso,3344, Mod 3&4,Campo Allegre12420-010 PindamonhangabaTel.: (55) 12 3644 4200Fax: (55) 12 3644 4201

INTERIOR SYSTEMS

Avenida Dom Pedro II,288 8° andar – Bairro Jardim09080-000 Santo AndreTel.: (55) 11 4993 7900Fax: (55) 11 4432 0525

CANADA

SEATS

6141 Vipond DriveON L5T 2B2, Mississauga-OntarioTel.: (1) 905 670 0218Fax: (1) 905 670 1415

CHINA

SEATS

3rd Floor, n°91 Building, n°1199Qinzhou North Road, Caohejing Hi-Tech Park,200233 ShanghaiTel: (86) 21 3401 4588 Fax: (86) 21 6495 9007

EXHAUST SYSTEMS

No. 1 Chuang Ye RoadWuhan Technical and EconomicDevelopment Zone430056 WuhanTel.: (86) 27 84 89 1745Fax: (86) 27 84 89 2261

INTERIOR SYSTEMS

3rd Floor, No. 91 Building,No. 1122 QinzhouNorth Road, Caohejing Hi-Tech Park200233 ShanghaiTel.: (86) 21 3401 4588Fax: (86) 21 6495 9007

SOUTH KOREA

EXHAUST SYSTEMS

1264, Jungwang-dongShiheung City Kyungi-do,Tel.: (82) 31 434 6300-4Fax: (82) 31 434 6305-6

INTERIOR SYSTEMS

Faurecia Trim Korea LTD2DA-601 shihwa industrial complex#1264 Jeongwang-Dong, Shiheung-city, Kyungki-do

Main Group addresses


SPAIN

SEATS

Calle 2, No.20-22,Sector A. Pol. Ind. Zona Franca8040 BarcelonaTel.: (34) 932 239 970Fax: (34) 932 234 688

EXHAUST SYSTEMS

Camiño do Caramuxo 3336213 VigoTel.: (34) 986 213 838Fax: (34) 986 214 600

INTERIOR SYSTEMS

Autovia A-3, Madrid-Valencia,Km 334,5Apartado de Correos 18046930 Quart de Poblet (Valencia)Tel.: (34) 96 196 00 00Fax: (34) 96 196 00 69

MODULES & SYSTEMS

Polígono de la Estacion s/n° 47410 Olmedo (Valladolid)Tel.: (34) 9 83 60 18 20 Fax: (34) 9 83 60 02 93

UNITED STATES

SEATS

2380 Meijer DriveTroy, MI 48084Tel.: (1) 248 288 1000Fax: (1) 248 288 1074

INTERIOR SYSTEMS

2050 Auburn RoadAuburn Hills, MI 48326Tel.: (1) 248 409 3500Fax: (1) 248 409 3501

EXHAUST SYSTEMS

543 Matzinger RoadToledo, OH 43612Tel.: (1) 419 727 5000Fax: (1) 419 727 5025

MODULES & SYSTEMS

6100 Sims DriveSterling Heights, Michigan 48313Tel.: (1) 248 658 1302Fax: (1) 248 658 1303

FRANCE2, rue Hennape92735 Nanterre CedexTel.: (33) 1 72 36 70 00Fax: (33) 1 72 36 70 07

INDIA

INTERIOR SYSTEMS

Sai Radhe Building - 3rd floor Plot n° 100 & 101Raja Bahadur Mills Road, Behind HotelLe Meridian Pune – Sangamwadi Pune 411001Tel.: (91) 20 30586700Fax (91) 20 30586800

JAPAN

SEATSEXHAUST SYSTEMS INTERIOR SYSTEMSMODULES & SYSTEMS

Innotech Bldg., 3F3-17-6, Shin-Yokohama,Kohoku-ku Yokohama222-0033Tel.: (81) 045 478 7500Fax: (81) 045 478 7509

LUXEMBOURG

MODULES & SYSTEMS

Op der Sang 14ZI Eselborn-LentzweilerL-9779 EselbornTel.: (352) 94 90 90Fax: (352) 94 90 81

MEXICO

INTERIOR SYSTEMS

Parque Industrial Finsa Nave 17Autopista México – Puebla72710 PueblaTel.: (52) 222 219 87 00Fax: (52) 222 210 54 62

EXHAUST SYSTEMS

Boulevard Henry Ford #53,Parque Industrail Dynatech-Sur,Somora 83200 HermosilloTel.: (52) 662 108 1100Fax: (52) 662 108 1108

THE NETHERLANDS

SEATS

Kleibergweg7NL 6130 PC Sittard (Born)Tel.: (31) 46 420 78 78Fax: (31) 46 420 78 82

POLAND

SEATS

Ul. Spoldzielcza 405-600 GrójecTel.: (48) 48 665 01 13Fax: (48) 48 664 37 11

INTERIOR SYSTEMS

Ul. Szczecinska 3166-400 Gorzow WielkopolskiTel.: (48) 95 72 19 304Fax: (48) 95 72 19 309

MODULES & SYSTEMS

ul, Jaworzynska 29759-220 LegnicaTel: (48) 76 866 53 00 Fax: (48) 76 866 53 01v

PORTUGAL

SEATS

Rua Comendador Rainho 44 –Apartado 613701-953 São João da MadeiraTel.: (351) 256 839 200Fax: (351) 256 839 207

INTERIOR SYSTEMS

Parque Industrial AutoeuropaQuinta da Marquesa ICCI 102072950 – 678 PalmelaTel.: (351) 21 213 51 00Fax: (351) 21 210 80 36

EXHAUST SYSTEMS

Estrada do Aeroporto Santa Maria5301-902 BragançaTel.: (351) 273 310 025 Fax: (351) 273 310 022/3

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CZECH REPUBLIC

SEATS

Mesickà 27639002 TàborTel.: (420) 381 494 111Fax: (420) 381 259 782

EXHAUST SYSTEMS

Horka 3429401 Bakov Nad JizerouTel.: (420) 326 799 111Fax: (420) 326 799 120

EXHAUST SYSTEMS

Faurecia Automotive Czech Republics.r.o.Sedláãkova 6/472397 01 PísekTel.: (420) 389 820 313Fax: (420) 389 820 220

INTERIOR SYSTEMS

Plazy 10029301 Mlada BoleslavTel.: (420) 326 370 111Fax: (420) 326 370 100

ROMANIA

SEATS

DN7 km 256 + 83655570 TalmaçiuTel.: (40) 269 208 700Fax: (40) 269 555 486

INTERIOR SYSTEMS

Euro Auto Plastic Systems SRL2A Uzinei street house 9BMioveniArges

SLOVAKIA

INTERIOR SYSTEMS

Opletalova 7384107 BratislavaTel.: (421) 2 6930 7714Fax: (421) 2 6930 7735

INTERIOR SYSTEMS

Modules & SystèmesPriemyselná 1920 01 HlohovecTel: (421) 918 712 068Fax: (421) 33 7302 441

EXHAUST SYSTEMS

Prilohy 5091 701 Trnava

SLOVENIA

SEATS

Kandijska Cesta 608000 Novo MestroTel.: (386) 7391 81 70Fax: (386) 7391 81 72

SWEDEN

INTERIOR SYSTEMS

Kärrlyckegatan 11418 78 GöteborgTel.: (46) 31 758 0100Fax: (46) 31 758 0199

EXHAUST SYSTEMS

Nya Bergkvaravägen 15-17 Box 501385-25 TorsasTel.: (46) 486 13000Fax: (46) 486 10401

TUNISIA

SEATS

Route de Mornag km 6ZI de Bata2013 Ben ArousTel.: (216) 71 38 30 06Fax: (216) 71 38 40 43

TURKEY

SEATS

Teknik MalzemeGeçit Köyü Giripi471 16150 BursaTel.: (90) 224 244 73 00Fax: (90) 224 244 65 87

INTERIOR SYSTEMS

SAI Automotive Polifleks ASHürriyet MahallesiHarmansazi mevki16800 OrhangaziTel.: (90) 224 573 60 60Fax: (90) 224 573 60 65

UNITED KINGDOM

INTERIOR SYSTEMSSEATS

Common LaneFradley Business ParkWS13 8NQ Fradley (Lichfield)Tel.: (44) 1543 445 200Fax: (44) 1543 444 434

MODULES & SYSTEMS

Staithes Road – Pattinson SouthIndustrial Estate – District 8 – Tyne & Wear, NE38 8NW WashingtonTel: (44) 191 419 7900 Fax: (44) 191 419 4753


Executive Committeeas of February 16, 2007


Arnaud de David-BeauregardEVP Group Development

Jean-Marc HannequinEVP Exhaust Systems Product Group

Max HodeauEVP Structures & Mechanisms Product Group

Frank ImbertChief Financial Officer

Patrick KollerEVP Automotive Seating Product Group

Thierry LemâneEVP Group Communications

Jacques Le MorvanEVP Group Purchasing

Jacques MaugeEVP Group Customer Development

Bruno MontmerleEVP Group Strategy

James C. OrchardEVP North America

Christophe SchmittEVP Interior Systems Product Group

Jean-Pierre SounillacEVP Group Human Resources

Guy TalbourdetEVP Modules & Systems Product Group

AuditorsMembers of the CompagnieRégionale de Versailles

PricewaterhouseCoopers AuditRepresented by Guy-Alain Sitbon63, rue de Villiers92220 Neuilly-sur-SeineFrance

Ernst & Young AuditRepresented by Laurent MiannayTour Ernst & Young11, allée de l’Arche92037 Paris La Défense cedexFrance

Board of Directorsas of February 16, 2007


Directors:

Louis DeflineDaniel DewavrinPatrick DuvergerFrank EsserJean-Louis GérondeauJean-Claude HanusGérard HauserThierry PeugeotChristian Streiff

Board of Directors, Executive Committee and Auditors

This registration document (document de référence) was filedwith the Autorité des marchésfinanciers (AMF) on April 24, 2007 pursuant to article 212-13 of AMF’s General Regulations. It may only be used in connectionwith a financial transaction if it isaccompanied by a memorandumapproved by the AMF.

Group Communications+33 (0)1 72 36 70 05Financial information available online at www.faurecia.com (“Finance & Shareholders” section)

Faurecia headquarters2, rue Hennape92735 Nanterre Cedex - France

2007 Financial agenda

FEBRUARY 5

Publication of full-year and second half 2006 results, presentation in Paris

APRIL 18

Publication of first quarter 2007 sales figures

MAY 29

Annual General Meeting, Nanterre

JULY 18

Publication of first half 2007 results, presentation in Paris

OCTOBER 24

Publication of third quarter 2007 sales figures

Photo credits: S. de Bourgies; A. Gonin; S. Muratet; Nick Parsons; Larry Peplin;

C. Peus; B. Schittny; Getty Images; Studio Rauzier – Rivière; Faurecia Photobank.

Edition: 146 & Compagnie

Design and publication:

Contacts


06

Safety

Environment

Comfort & convenience

Design & perceived quality

A f o r c e f o r a u t o m o t i v e p r o g r e s s

RE

GIS

TRAT

ION

DO

CU

ME

NT

Technical perfection, automotive passionTechnical perfection, automotive passion


Documents

Comfort & convenience Design & perceived quality · Frank Esser Jean-Louis Gérondeau Jean-Claude Hanus Gérard Hauser Thierry Peugeot Christian Streiff ... presentation in Paris