Faurecia 2007 annual report - Registration document · Executive Vice-President, Interior Systems...

REGISTRATIONDOCUMENT

2007

Design and creation:

BUSINESS REVIEW AND RESULTS OF OPERATIONS

1.1 Business review 6

1.2 Results of operations 12

1.3 Financial structure and debt 14

1.4 Outlook 14

1.5 Risk management 15

RESEARCH & DEVELOPMENT

2.1 Automaker Expectations 21

2.2 Innovation 22

2.3 Product Planning 23

2.4 Engineering Productivity 24

2.5 Premium Attitude 25

HUMAN RESOURCES

3.1 Safety in the workplace 28

3.2 Skills development 32

3.3 Strengthening economic

and social dialogue 36

3.4 Employee incentive plans 38

ENVIRONMENT

4.1 Faurecia’s products

and the environment 51

4.2 Faurecia’s manufacturing sites


QUALITY

5.1 Breakthrough Quality Plan 60

5.2 Customer Awards 61

5.3 Outlook for 2008 61

CORPORATE GOVERNANCE

6.1 Board of Directors 64

6.2 Executive Committee 68

6.3 Auditing of Accounts 70

6.4 Faurecia and its Shareholders 71

FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS

7.1 Consolidated income statements 77

7.2 Consolidated balance sheets 78

7.3 Consolidated cash fl ow statements 80

7.4 Statement of changes in

consolidated shareholders’ equity 81

7.5 Notes to the consolidated fi nancial

statements 82

7.6 Consolidated companies

as of December 31, 2007 132

7.7 Statutory Auditors’ report on the

consolidated fi nancial statements 136

LEGAL AND FINANCIAL INFORMATION

8.1 Faurecia S.A. 138

8.2 Internal control 162

8.3 Additional information

on Faurecia S.A. 169

COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 2008

9.1 Statutory Auditors’ reports 190

9.2 Agenda 192

9.3 Draft resolutions 192

CROSS-REFERENCE TABLE 197

CONTENTS

1

2

3

4

5

6

7

8

9

Key fi gures 2

Board of Directors, Executive Committee

and Auditors 3

Statement by the person responsible

for the registration document 4

The French version of this registration document

(document de référence) was fi led with the Autorité des

marchés fi nanciers (AMF) on April 28, 2008 pursuant to

Article 212-13 of the AMF’s General Regulations.

It may only be used in connection with a fi nancial

transaction if it is accompanied by a memorandum

approved by the AMF.

2007 REGISTRATION DOCUMENT

Technical perfection, automotive passion

2 Faurecia > 2007 Registration document

THE FAURECIA GROUP Key fi gures

(1) Defined in Note 1.15 to the consolidated financial statements.(2) Earnings before interest, tax, depreciation and amortization = Operating income + depreciation, amortization and provisions for

impairment in value of property, plant and equipment and intangible assets (see Note 26.4 to the consolidated financial statements).(3) Before capitalized development costs and amounts billed to customers (see Note 5.4 to the consolidated financial statements).

Faurecia > 2007 Registration document 3

THE FAURECIA GROUP Board of Directors, Executive Committee and Auditors

Board of Directors as of April 10, 2008

Yann Delabrière

Chairman and Chief Executive Offi cer

Directors:

Jean-Pierre Clamadieu

Frank Esser

Jean-Louis Gérondeau

Jean-Claude Hanus

Gérard Hauser

Isabel Marey-Semper

Ross Mc Innes

Thierry Peugeot

Robert Peugeot

Christian Streiff

Auditors

Members of the Compagnie

Régionale de Versailles

Ernst & Young Audit

Represented by Laurent Miannay

Tour Ernst & Young

11, allée de l’Arche

92037 Paris La Défense Cedex

France

PricewaterhouseCoopers Audit

Represented by Dominique Ménard

63, rue de Villiers

92220 Neuilly-sur-Seine

France

Executive Committee as of April 10, 2008

Yann Delabrière


Arnaud de David-Beauregard

Executive Vice-President, Group Development

Jean-Marc Hannequin

Executive Vice-President, Exhaust Systems Product Group

Frank Imbert

Chief Financial Offi cer

Patrick Koller

Executive Vice-President, Automotive Seating Product Group

Thierry Lemâne

Executive Vice-President, Group Communications

Jacques Le Morvan

Executive Vice-President, Group Purchasing

Jacques Mauge

Executive Vice-President, Group Customer Development

Bruno Montmerle

Executive Vice-President, Group Strategy

Christophe Schmitt

Executive Vice-President, Interior Systems Product Group

Jean-Pierre Sounillac

Executive Vice-President, Group Human Resources

Guy Talbourdet

Executive Vice-President, Modules & Systems Product Group


Person responsible for the registration document

Yann DELABRIÈRE


I hereby declare that, having taken all reasonable care to ensure

that such is the case, the information contained in the registration

document is, to the best of my knowledge, in accordance with the

facts and contains no omission likely to affect its import.

I further declare that, to the best of my knowledge, (i) the

fi nancial statements have been prepared in accordance with the

applicable accounting standards and give a true and fair view of

the assets and liabilities, fi nancial position and results of Faurecia

and the consolidated companies making up the Group, and (ii)

the management report on page 200 represents a fair view of

the business, results and fi nancial position of Faurecia and the

consolidated companies, as well as a description of the main risks

and uncertainties they face.

I obtained a statement from the Statutory Auditors at the end of

their engagement affi rming that they have read the whole of the

registration document and examined the information about the

fi nancial position and the historical accounts contained therein.

Yann DELABRIÈRE

Nanterre, April 28, 2008

INFORMATION OFFICER

Franck IMBERT

Chief Financial Offi cer

Faurecia

2, rue Hennape

92735 Nanterre Cedex – France

Tel.: +33 (1) 72 36 70 00

Fax: +33 (1) 72 36 70 07

THE FAURECIA GROUP Statement by the person responsible for the registration document

CONTENTS


1

5Faurecia > 2007 Registration document


1.1.1 The Faurecia Group 6

1.1.2 Interior Modules 7

1.1.3 Other Modules 10


1.2.1 Operating income 12

1.2.2 Other income statement items 13


1.4 Outlook 14


1.5.1 Financial risks 15

1.5.2 Commercial, legal and technical risks 16

In accordance with Article 28 of European Commission Regulation 809/2004, the following information is incorporated by reference in this

registration document:

the consolidated fi nancial statements, the parent company fi nancial statements, the corresponding Statutory Auditors’ reports, the

comments on the consolidated fi nancial statements and signifi cant events of the year by business, set out respectively on pages 24 to 30,

52 to 90, and 95 to 112 of the 2006 registration document fi led with the AMF on April 24, 2007 under no. D-07-037;

the consolidated fi nancial statements, the parent company fi nancial statements, the corresponding Statutory Auditors’ reports, the

comments on the consolidated fi nancial statements and signifi cant events of the year by business, set out respectively on pages 30 to 79,

87 to 103, 80, 104 and 6 to 11 of the 2005 registration document fi led with the AMF on April 24, 2006 under no. D-06-0312.

The sections of the 2006 and 2005 registration documents not included above are either not applicable for investors or are covered by another

section in the registration document.

•

•


BUSINESS REVIEW AND RESULTS OF OPERATIONS1 Business review

1.1.1 THE FAURECIA GROUP

The Faurecia Group posted consolidated sales of €12,660.7 million

in 2007, up 8.7%. Excluding catalytic converter monoliths, sales

came to €11,075.3 million, representing 7.4% growth on a like-for-

like basis (at constant exchange rates and based on a constant

Group structure). Currency effects had a negative 1.2% impact and

changes in Group structure had a positive effect of 1.7%. Changes

in Group structure during the year included (i) the integration of the

Front End operations acquired from Cadence Innovation France;

and (ii) the inclusion within the Vehicle Interiors business of the

Romania-based company Euro Plastic Systems (Euro APS), which

supplies the Dacia factory in Pitesti, Romania.

The year 2007 was marked by buoyant growth in Faurecia’s

businesses, with the launch of numerous new programs, continued

geographic diversifi cation and strong growth outside Europe.

Non-European sales accounted for over 24% of the Group total

compared with 20% in 2006.

Sales by region(1)

2007 sales break down as follows by major geographic region(1):

Europe posted sales of €9,573.0 million (accounting for 75.6% of

the Group total), representing an increase of 5.2% on a reported

basis and 1.2% like-for-like excluding catalytic converter

monoliths. Changes in Group structure had a positive 2.0%

impact. Growth was fueled by (i) the launch of new vehicles during

the second half of the year for which Faurecia is a major supplier,

including the Audi A4, Peugeot 308, and Renault Laguna; and

(ii) vehicles launched in 2006 such as the BMW Mini, Citroën C4

Picasso, Peugeot 207, and Ford Galaxy;

•

North America turned in another robust performance buoyed by

market share gains. Sales in this region came to €1,857.1 million

and accounted for 14.7% of the Group total. On a like-for-like

basis and excluding catalytic converter monoliths the year-on-

year increase was 42.0%. This strong showing stemmed from (i)

new vehicle launches including the Cadillac CTS and the Dodge

Avenger, as well as the new versions of the Chevrolet Malibu,

Ford Focus and Jeep Liberty; and (ii) the ramp-up of programs

launched in 2006 for vehicles including the BMW X5, Chrysler

Sebring, Ford Edge and Saturn Aura;

in Asia, sales amounted to €747.0 million (5.9% of the Group

total), representing an increase of 20.9% on a reported basis

and 23.8% like-for-like excluding catalytic converter monoliths.

This rise primarily refl ects growth in (i) China, which reported

sales of €410.7 million, representing a year-on-year jump of

32.3% like-for-like and excluding catalytic converter monoliths;

and (ii) Exhaust Systems sales in South Korea which climbed

to €308.3 million, up 7.6% on 2006 at constant exchange rates

and excluding catalytic converter monoliths;

sales turned in by “Other countries” came to €483.6 million,

accounting for 3.8% of the Group total and representing a 13.6%

like-for-like increase excluding catalytic converter monoliths.

The main contributor in 2007 was South America with sales of

€281.1 million in 2007, up 17.1% or 16.8% like-for-like.

Sales by customer (%)(2)

•

•

•

(1) Corresponding to production regions.(1) Corresponding to production regions.

(2) Excluding catalytic converter monoliths.(2) Excluding catalytic converter monoliths.


BUSINESS REVIEW AND RESULTS OF OPERATIONS 1Business review

In 2007 the Group continued to diversify its customer portfolio,

which includes all of the world’s major automakers. Business with

PSA Peugeot Citroën c limbed 3.2%, led by sales of the Peugeot 207

and 308 as well as the Citroën C4 Picasso. Sales to Renault-Nissan

swung up by a sharp 8.9% in the second half of the year, thanks to

higher volumes for the Logan and the launch of the Laguna, bringing

the full-year rise to 0.8%. The Group’s sales to BMW surged 56.5%,

powered by the Mini in Europe and the X5 in North America. At the

same time, sales continued to climb steeply with Chrysler (for the

Sebring and Avenger), soaring 162.7%, and remained buoyant with

Hyundai, up 22.3%. Sales to General Motors dipped 1.0% as 2007

was a transitional year before the launch of the new versions of the

Cadillac CTS and Chevrolet Malibu.

1.1.2 INTERIOR MODULES

1.1.2.1 Automotive Seating

Sales Workforce Sites Countries R&D centers

€5.2 billion 29,200 70 17 7

Automotive Seating reported 2007 sales of €5,175.4 million – up

7.5% on 2006, or 8.2% at constant exchange rates – in a year

that saw the successful worldwide launch of twenty-four new

programs.

In Europe, this segment’s sales rose 2.6% (1.9% excluding the

currency impact) to €4,216.9 million. This increase refl ects market

share gains with BMW and Audi a s well as stable volumes for

French automakers following a signifi cant drop in 2006.

Business was brisk in North America, where sales surged 56.1% at

constant exchange rates, spurred by strong volumes with General

Motors, Chrysler and BMW. Growth was also robust in China and

South America, in line with general automotive market trends.

Based on constant exchange rates sales were up 26.4% in Asia

and 15.2% in South America.

In Europe the start-up of volume production of new vehicles,

representing the renewal of 35% of sales, demonstrated the ability

of Faurecia’s Automotive Seating division to manage complex

programs. The Group supplied all of the complete seat units for the

Peugeot 308, Renault Laguna and Audi A4/A5 which occupy major

positions in the European saloon car market. In tandem, thanks to

the success of the new GM Malibu, Cadillac CTS and BMW X5,

Faurecia was able to strengthen its foothold in the US p remium

market, which is growing strongly and is now as highly demanding

as the European and Japanese markets. During the year, Faurecia

managed a total of more than seventy complete seat and seating

structure programs and delivered over one hundred and fi fty million

seating components and sub-assemblies, including mechanisms,

front and rear structures, covers, foam components and headrests,

integrated into over fi ve million complete seat units.

The Group signifi cantly improved its competitive edge in 2007 by

leveraging its manufacturing base of seventy facilities (including

thirty-two just-in-time sites) spanning seventeen countries. European

facilities were streamlined and results picked up considerably in

North America during the fourth quarter of the year. At the same

time, Faurecia invested heavily in components plants located in

countries with low labor costs, such as the foam facility in Jelcz and

the components and metal frame plants in Walbrzych and Grojec in

Poland. A new components plant also came on stream in 2007 in

Pisek in the Czech Republic. The impacts of these investments will

start to feed through as from 2008 – a year that will see the opening

of two new sites in Morocco and Mexico, respectively dedicated to

seating trim covers and metal frames.

The Automotive Seating division also further boosted its creative

capacity in 2007, with four joint-development contracts and

fi fteen major innovation programs. Product development and

innovation in this business is structured around the two key

areas of standardization and premium solutions. With a view to

meeting the high demands of automakers for cost reductions the

division has stepped up its focus on standardizing all concealed

seating components. This standardization now covers metal sub-

assemblies, trim, foam elements, covers and headrests. In addition,

a new generation of metal frames has been approved that meets

higher safety standards while based on a design that is both lighter

weight and geared to a highly standardized production process.

This concentration on standardization will enable the Group to more

effectively control its capital expenditure and maintain quality levels.

Meanwhile, product innovation has been directed towards premium

solutions with the aim of enhancing the comfort and perceived

quality of visible components.

By combining these two development areas of standardization

and premium solutions the Automotive Seating division expects to

achieve profi table growth over the long term.



Faurecia’s Automotive Seating business ranked close to the top

of the industry charts for patent applications in 2007, with 34 new

innovations and a total portfolio of 2,388 patents. Numerous

new designs for safety, comfort, quality and reduced energy

consumption were presented to automakers through Tech Days,

special Innovation Days, and specifi c events organized with a view

to acquiring new programs. During the year the Product Group hired

a team of specialists based in Holland (Michigan, USA) to research

breakthrough solutions, notably concerning the use of new materials

in seat frames. Overall, the Automotive Seating Product Group

devoted 5.7% of its sales fi gure to research and development.

The year 2007 was rich in new programs with operating margins in

line with the Faurecia Group’s objectives. For example, the Product

Group won contracts for supplying complete seat units for several

major platforms in the European and North American markets as

well as for a number of new vehicles in China and Brazil. In addition,

having previously been selected by Volkswagen, General Motors,

Chery and Chrysler to supply their new generations of metal lateral

frames, in 2007 Faurecia was once again recognized as a leading

world player in this fi eld when the Group was chosen as the global

supplier-developer for the latest standard metal frames for mid-

range Nissan vehicles.

As a result of all these achievements, Faurecia’s Automotive Seating

Product Group is well poised to keep to its profi table growth path,

and expects to deliver another set of sound results in 2008.

1.1.2.2 Vehicle Interiors

Sales Workforce Sites Countries R&D centers

€3.5 billion 19,900 70 19 6

Vehicle Interiors sales edged up 2.5% to €3,545.8 million in 2007.

Like-for-like the increase was 1.6%. Currency effects had a negative

1.2% impact and changes in Group structure had a positive effect

of 2.1%.

In Europe like-for-like Vehicle Interiors sales contracted 5.3%

whereas North America and Asia reported growth of 45.0% and

30.6% respectively, at constant exchange rates.

COCKPITS, INSTRUMENT PANELS, AND DOOR

MODULES AND PANELS

This Product Group reported a 3.3% year-on-year increase in sales,

or 2.3% like-for-like. European sales retreated 5.4% on a like-for-

like basis but surged 45.0% in North America and 30.6% in Asia.

Overall, 2007 was an eventful year, with the launch of 31 production

programs including nine in the United States.

Business levels were higher with French automakers in 2007,

boosted by the launch of the Renault Laguna and Logan programs

and the Peugeot 308, as well as the ramp-up of the Peugeot 207 and

Citroën C4 Picasso for the PSA Peugeot Citroën Group. Business

remained stable with automakers in other European countries,

however. At the same time, manufacturing reorganization measures

continued to be rolled out in France, Spain and Germany.

North America reported sustained sales growth with all of the

Group’s customers, mainly stemming from higher volumes for the

new BMW X5 and the Chrysler Sebring. The year was also rich in

new vehicle launches, including the Chevrolet Malibu, Cadillac CTS,

Jeep Liberty and Dodge Avenger. Two new just-in-time facilities

were set up in Toledo (Ohio) and Lansing (Michigan) in order to

meet demand resulting from steady rises in volumes for General

Motors and Chrysler.

China posted a 35.8% leap in sales at constant exchange rates,

led by sales of the Audi A6 and start-up of deliveries for the Ford

Galaxy and Mondeo.

Another salient feature of the year for the Product Group was strong

demand from automakers for supplier support in international

development programs, which was notably the case for the Renault

Logan in Romania. In addition, acquisitions carried out during 2007

confi rmed the ongoing expansion of the Group’s business with

General Motors, PSA Peugeot Citroën and Ford.

Against the backdrop of tight market conditions, marked by rising

prices for plastics, which are indexed to the price of oil, Faurecia

was able to retain its number one position both in Europe and

worldwide(*) within the instrument panels and door panels market.

(*) Source: Faurecia.(*) Source: Faurecia.



Five new manufacturing facilities opened during the year – of

which four in North America – and three sites were closed in

Western Europe. The Product Group continued to roll out the

Faurecia Excellence System (FES), leading to a major shift in

its manufacturing performance. This system has been lauded

by several of the Group’s customers, including the Ford Motor

Company which presented Faurecia with two World Excellence

Awards for its door modules in 2007 – a gold award for the just-in-

time facility in Cologne (Germany) and a gold award for the Valencia

facility in Spain.

The highlight of the division’s year in terms of innovation was the

presentation of the Group’s “Faurecia Premium Attitude” concept

car at the Los Angeles Auto Show held in mid-November 2007.

Through this full vehicle concept that combines the Group’s six

product lines, Faurecia demonstrated its innovation capabilities that

ally high-end design with manufacturing effi ciency gains achieved

through mass production and standardization. Premium Attitude

is built around two major cutting-edge features which came onto

the market during the year. The fi rst is the RALF concept which

directly integrates an airbag with a fl exible cover into the instrument

panel. The Renault Laguna and Mercedes-Benz S-Class will be

fi tted with these airbags as from early 2008. The second of these

major new launches is the third-generation Highly-Integrated Door

Module (HIM3), which received the Society of Plastics Engineers

Automotive Innovation Award in January and November 2007. This

latest generation of HIM door modules proposes a vanguard use of

plastics with a rail-less window regulator and is already fi tted into

the Dodge Nitro as well as Chrysler’s Jeep Liberty and Cherokee.

ACOUSTIC & SOFT TRIM

This division generated €288.9 million in sales in 2007, on a par

with 2006. Numerous new programs were launched during the

year, including carpeting and acoustic components for the new

Renault Laguna, carpeting, acoustic components and the trunk

compartment for the Nissan Qashqai, as well as parcel shelves for

the new versions of the Ford Mondeo and Toyota Auris.

By setting up a worldwide partnership network the division has

been able to accompany Renault- Nissan in its international vehicle

programs and plans to repeat this process with other automakers.

During the year, its Light Weight Concept acoustic solutions were

further taken up by General Motors and Renault, as well as by a

number of Japanese automakers.

The year 2007 also saw Faurecia’s Acoustic & Soft Trim division

complete the streamlining of its manufacturing operations begun in

2006, by concentrating needle-punched carpet production at the

Mouzon plant in France and grouping its Spanish manufacturing

activities at the Olmedo facility. It also closed its plants at Terrassa

and Fuenlabrada in Spain. The division now has nine manufacturing

sites in Europe that can respond to changes in the output of its major

customers, with a higher proportion of capacity based in Poland

and a focus on low-cost needle-punched carpet production.

Going forward, the division’s market share gains in 2007 will enable

it to boost its sales over the medium term.

Overall, sales posted by the Interior Modules segment came

to €8,721.2 million in 2007, up 5.4% like-for-like, with negative

currency effects of 0.9% exactly offsetting the positive 0.9% of

changes in Group structure.



1.1.3 OTHER MODULES

1.1.3.1 Exhaust Systems

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

D&D centers

€3 billion 7,300 35 14 1 6

Strong growth continued in 2007 for Faurecia’s Exhaust Systems

Product Group , with total sales increasing 16.3% to €2,994.4 million

excluding the negative 3.7% currency impact. Without catalytic

converter monoliths the sales fi gure was €1,409.0 million with

growth coming in at 14.0% excluding the negative 3.8% currency

impact. At constant exchange rates and excluding catalytic

converter monoliths, Exhaust Systems sales advanced 14.0%

in Europe, 11.8% in North America and 18.8% in Asia. Sales of

catalytic converter monoliths climbed 18.5% based on constant

exchange rates. Year-on-year comparisons in this Product Group’s

performance are more effective if catalytic converter monoliths

are excluded as their production costs are extremely volatile due

to fl uctuations in the prices of the precious metals they contain.

However, the risk related to these price fl uctuations is borne by the

automakers who have agreed for these metals to be rebilled on a

cost price basis.

The Product Group’s 2007 results show that it has further fi rmed

up its worldwide positioning. Its 24 plants and 11 just-in-time

sites supply components and full exhaust systems to all major

automakers, on four continents. In all, 14 million vehicles were fi tted

with Faurecia’s exhaust system products during the year.

The world exhaust systems market continued to grow in 2007, under

the combined effect of further rises in precious metal prices and the

application of technical solutions to meet the criteria set down by

the Euro 5 standard which will be effective from September 2009.

From that date all new diesel engines sold in Europe will need to be

fi tted with particulate fi lters.

Major launches carried out in 2006 resulted in a signifi cant increase

in market share for Faurecia’s Exhaust Systems Product Group in

2007, particularly in the United States, China and South Korea. The

Product Group kept up its steady pace of launches in 2007.

In Europe, Faurecia supplies the PSA Peugeot Citroën group with full

exhaust systems for the main engine categories of the Peugeot 308

and catalytic converter/particulate fi lter systems for the Citroën C-

Crosser and Peugeot 4007 four-by-fours. It also supplies exhaust

lines for the new Renault Laguna and the full exhaust system for

the Volkswagen Tiguan. Furthermore, in 2007 it won the contract

to supply the exhaust lines for the c ee’d , Kia’s fi rst vehicle to be

produced in Slovakia.

In the United States, Faurecia’s Exhaust Systems Product Group

participated in the launches of the Mercury Sable and Ford’s new

Taurus as well as Chrysler’s Jeep Liberty, delivering full exhaust

systems for each of these models.

In Asia, the Product Group launched numerous welded manifold

solutions, chiefl y for Hyundai, Kia, Ford and Mazda, as well as for

the full exhaust systems for the Citroën C4 in China and catalytic

converters fi tted into the 1.6L and 1.8L engines of the Skoda

Octavia.

Lastly, in the extremely dynamic Mercosur market, Faurecia

participated in the launch of the new Citroën C4 in Argentina and

the Renault Logan/Sandero in Brazil. It also supplies manifolds in

Brazil that are fi tted with integrated catalytic converters for the small

engine categories of the Volkswagen Golf and Fox.

On the manufacturing front, the Product Group pursued its drive

to improve its cost competitiveness by opening a site in Pisek in

the Czech Republic as well as a new just-in-time facility in Zilina

in Slovakia dedicated to delivering the full exhaust system for the

Kia c ee’d. A new site in Silao in Mexico is scheduled to come on

stream in 2008.

A technical center has been set up in Jang An, located fi fty

kilometers south-east of Seoul, which will enable Faurecia to more

effectively partner South Korean automakers in the development of

their exhaust systems.

The year 2007 saw the combination of soaring oil prices and

growing worldwide awareness of the need to reduce carbon dioxide

emissions. These factors have proved that Faurecia was right in

setting itself the objective of partnering the automotive industry in

developing more energy-effi cient vehicles. The solutions proposed

by Faurecia’s Exhaust Systems division include lighter-weight

products, recovering thermal energy from the exhaust system,

and developing exhaust systems that enable optimal use of high-

performing engines. These solutions were taken up by Renault

in 2007, which selected Faurecia to supply a lightweight exhaust

line for the new Laguna, as well as by PSA Peugeot Citroën,

which is using the Product Group’s heat recovery system in the

Citroën C4 Picasso whereby thermal energy is recovered from the

exhaust system to rapidly heat the vehicle interior in cold weather

conditions.

Thanks to its sustained investment in research and development, to

which it devoted 4.5% of its sales fi gure in 2007 (excluding catalytic

converter monoliths), Faurecia’s Exhaust Systems Product Group

maintained its strong positions in new technologies for treating

nitrogen oxides, notably through its SCR (Selective Catalyst

Reduction) and LNT-Lean NOx Trap systems. These technologies

enable diesel and direct fuel injection petrol engines to meet

future European and US emissions standards, while at the same

time consuming less than current engines. The Product Group is

developing solutions to optimize the technical and fi nancial aspects

of regenerating particulate fi lters, designed to enable pollution

to be controlled at a lower cost and with a lower impact on fuel

consumption.



Front End sales jumped 31.5% to €945.1 million in 2007, refl ecting

the integration of operations acquired as part of Cadence Innovation

France’s bankruptcy proceedings. Completed in January 2007,

this acquisition has enabled Faurecia to boost its business with

both PSA Peugeot Citroën and Renault. Like-for-like growth was

18.9%, spurred by the start-up of operations in North America and

12.2% higher sales in Europe (excluding the impact of changes in

Group structure). During the year Faurecia consolidated its leading

positions in the Front End market, ranking number one in Europe

and number two worldwide (*).

A number of innovations were introduced in 2007, including a

variant of the mEasy technology incorporated into the front ends

of the Audi A5 and A4. Patented by Faurecia, this technology

provides automakers with a range of solutions to optimize front end

assembly in line with the vehicle’s architectural constraints while

meeting high assembly-quality criteria. In addition, during the year

the division used new development methods for bumpers for the

new Renault Twingo, enabling it to reduce delivery lead-times and

factor in numerous variants.

The Front End division completed the upgrade program for its

bumper system manufacturing business in France in 2007, opening

a new paint booth at its Marles les Mines site which will help to meet

the high performance and cost-competitiveness levels expected by

customers. It also implemented a number of anticipatory measures

to develop solutions that comply with new European environmental

standards, particularly relating to emissions of volatile organic

compounds (VOC). Facilities that have been opened since 2005

have experienced signifi cant growth, notably for the Renault Logan

program. The US front end assembly plant in Sterling Heights,

Michigan – which supplies Chrysler – is now producing at full

capacity.

In 2007, the division exceeded the quality objectives for front end

modules set with its customers. For bumpers systems, quality

performance leveled off in a context of new program launches and

large-scale production transfers carried out with a view to integrating

Cadence Innovation’s operations without adversely affecting the

division’s output. Meanwhile, customers were highly receptive to

the division’s new perceived quality method, which entered its initial

application phase during the year. And lastly, orders won in 2007

will enable the division to continue to capture market share within

the PSA Peugeot Citroën, Renault and BMW groups.

In 2008, Faurecia’s Front End division will focus primarily on the

start-up of new programs and continued rollout of its worldwide

customer service process, both in the manufacturing and research

and development spheres.

Altogether, the Other Modules segment posted sales of

€3,939.5 million, up 16.6%, or 16.9% on a like-for-like basis.

Changes in Group structure had a positive 2.8% impact but this

was more than offset by the 3.1% negative effect of changes in

exchange rates. Excluding catalytic converter monoliths like-for-like

growth came to 15.8%.

(*) Source: Faurecia.(*) Source: Faurecia.

1.1.3.2 Front End

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

€0.9 billion 2,500 15 6 1 2


BUSINESS REVIEW AND RESULTS OF OPERATIONS1 Results of operations

1.2.1 OPERATING INCOME (1)

(1) See defi nition in Note 1-15 to the consolidated fi nancial statements.(1) See defi nition in Note 1-15 to the consolidated fi nancial statements.

Operating income for 2007 amounted to €121.1 million and

represented 1.0% of consolidated sales, up €51.9 million and

0.4 points respectively. At €62.8 million, fi rst-half operating income

was down on the €85.1 million recorded for the same period of

2006. Performance swung up sharply in the second half, however,

and the Group ended the period with operating income of

€58.3 million versus a €15.9 million operating loss in the second

six months of 2006.

The upturn in the second half of 2007 primarily refl ects the following

factors:

in Europe, the impact of productivity gains combined with tighter

control over development expenditure and the initial effects of

prior-period restructuring measures, which together offset the

adverse consequences of sales price pressure and high raw

material costs;

North America’s strong recovery during the year, with this region’s

second-half operating loss totaling €11.7 million compared with

€54.8 million for the equivalent period of 2006. This turnaround

was attributable to considerably higher manufacturing

performance coupled with contained purchasing costs and the

renegotiation of certain customer contracts.

The overall increase in operating income from €69.2 million in 2006

to €121.1 million in 2007 was achieved thanks to the reduction in

North America’s operating loss from €81.8 million to €66.0, as well

as improved performance by European operations.

•

•

Interior Modules turned in a stronger showing in 2007 but still

reported an operating loss of €15.5 million, representing a 0.2%

negative operating margin, compared with an operating loss of

€44.5 million and a 0.5% negative operating margin in 2006. At

€136.6 million, and 3.5% of sales, operating income for the Other

Modules segment was up signifi cantly on the 2006 fi gures of

€113.7 million and 3.4% respectively.

Gross research and development costs decreased 2.8% to

€613.1 million, corresponding to 4.8% of sales, compared with

€630.5 million (5.4% of sales) in 2006. Excluding amounts billable

to customers, R&D costs totaled €268.6 million and represented

2.1% of sales in 2007 versus €305.0 million and 2.6% of sales one

year earlier. These reductions refl ect enhanced use of the Group’s

Program Management System for handling program development

processes.

Selling and administrative expenses totaled €356.3 million and

represented 2.8% of sales, down 0.2 points on the 3.0% recorded

for 2006 (€353.0 million).

EBITDA came to €596.8 million, or 4.7% of sales, versus

€587.5 million (5.0% of sales) in 2006.


BUSINESS REVIEW AND RESULTS OF OPERATIONS 1Results of operations

The “Other operating income and expense” item which represented

a net expense of €225.8 million mainly comprised:

an expense of €104.5 million for restructuring measures, down

from €169.2 million in 2006. These measures concerned

1,728 people and correspond to cost-cutting and manufacturing

reorganization plans, primarily in France, Germany and Spain;

€65.1 million in fair value adjustments on certain non-current

assets, as well as €56.1 million in charges to provisions,

representing an aggregate amount of €121.2 million. As

part of the Group’s recovery plan, Faurecia has given priority

focus to turning around signifi cantly loss-making contracts by

implementing large-scale manufacturing recovery programs,

and in certain cases, renegotiating contracts with the customers

concerned. However, despite these measures certain programs

are still potentially loss-making and as a result impairment losses

have been recorded in relation to the corresponding assets

(development costs or property, plant and equipment). Provisions

were also recorded in 2007 for disputes arising during the year.

•

•

Net fi nance costs stood at €101.1 million, or 0.8% of sales, up

from €86.6 million in 2006. This increase stems from the impact

of higher interest rates and a rise in the Group’s average debt over

the year. The average interest rate on the Group’s borrowings rose

from 3.9% to 4.2%. The Group hedges its exposure to changes in

interest rates using caps.

The “Other fi nancial income and expense” item represented a

net expense of €13.8 million and included the €8.7 million impact

of changes in fair value of interest rate instruments, as well as a

€9.4 million expense corresponding to the effect of discounting

pension benefi t obligations (€9.5 million in 2006).

The tax charge for 2007 was €13.6 million, compared with

€35.2 million for the previous year. This decrease includes the

impact of tax savings generated from the formation of a tax group

in Germany.

The Group ended the year with a consolidated net loss of

€230.9 million, or €237.5 million after minority interests of

€6.6 million. The net attributable loss in 2006 came to €447.9 million.

The loss per share was €9.87 in 2007 compared with €18.72 one

year earlier.

1.2.2. OTHER INCOME STATEMENT ITEMS


BUSINESS REVIEW AND RESULTS OF OPERATIONS1 Outlook

Cash fl ow from operations totaled €307.6 million (2.4% of sales),

up €52.4 million on the prior-year fi gure of €255.2 million (2.2% of

sales). This increase was primarily fueled by the rise in the Group’s

operating income .

Working capital requirement decreased by €266.6 million, including

a positive €141.0 million impact arising from the Group’s increased

use of without-recourse sales of receivables.

Capital expenditure for the year amounted to €306.8 million, or

2.4% of sales, on a par with the 2006 fi gure of €302.2 million. This

stability refl ects the Group’s highly selective capital expenditure

strategy, which focuses on the least capital intensive solutions.

Capitalized development costs stood at €159.2 million, down from

€208.3 million in 2006.

Cash fl ows excluding the effects of sales of receivables represented

a net cash infl ow in the second half and a net outfl ow of €58.5 million

over the year. Total cash fl ows for the year represented a net infl ow of

€82.5 million, leading to a reduction in net debt to €1,616.0 million

as of December 31, 2007 from €1,698.5 million as of the previous

year-end.

Total equity amounted to €846.3 million as of December 31, 2007,

down from €1,090.6 million one year earlier due to the appropriation

of the 2007 net loss. This led to an increase in the Group’s gearing

ratio from 1.6 to 1.9.

A breakdown of the Group’s debt is provided in Note 26 to the

consolidated fi nancial statements.

Faurecia confi rms its recovery plan for 2008-2010, targeting

operating income of at least 3% of sales.

The plan’s key focal points, whose results will begin to feed through

as from 2008, are as follows:

a further improvement in quality performance;

tighter control over acquisition and development of new

programs;

a substantial reduction in operating costs;

•

•

•

a recovery in operating income in North America; and

enhanced production innovation capability at constant R&D

costs.

The automotive market environment is expected to be diffi cult in

2008, with fl at sales in Europe and lower volumes in North America.

Despite this unfavorable context, Faurecia is aiming to substantially

improve again its operating income and reduce its debt thanks to

the implementation of its recovery plan.

•

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BUSINESS REVIEW AND RESULTS OF OPERATIONS 1Risk management

1.5.1 FINANCIAL RISKS

Faurecia is essentially exposed to fi nancial risks relating to

fl uctuations in interest rates and the ensuing impact on fi nancial

expense.

1.5.1.1 Interest- and exchange-rate risks

Before taking into account the impact of interest-rate hedges,

85.7% of the Group’s long-term debt was at variable rates as of

December 31, 2007, compared with 86.4% as of end-2006. The

main component of the Group’s fi xed-rate debt is the €300 million

bond issue carried out in October 2005.

Group policy is to systematically hedge the interest rate risk on its

debt. Consequently, in view of the Group’s derivatives portfolio as

of December 31, 2007, a rise in the average level of short-term

interest rates would not signifi cantly impact interest expense. It

would, however, impact consolidated net fi nancial expense, due

to changes in the fair value of derivatives set up to hedge future

interest payable in 2008, 2009 and 2010.

Based on the Group’s interest-rate instruments in place as of

December 31, 2007, a 50bp increase in interest rates (similar to

the increase in 2007) would have an €18 million positive pre-tax

impact on income. Conversely, as the Group’s derivatives primarily

correspond to options, the negative pre-tax impact on income of

a 50bp or more decrease in interest rates would be limited to the

change in the present value of those derivatives as of December 31,

2007, representing €21.8 million.

Interest rates are managed centrally at Group level. Caps, swaps

and other options in euros and US dollars were used for this

purpose in 2007. In addition, fl oors were purchased in order to

benefi t from any lowering of medium-term interest rates on fi xed

rate debt. This policy has enabled the Group to hedge the majority

of its interest rate risk relating to interest payable in 2008 and 2009

and signifi cantly boost its interest cover ratio for 2010.

Faurecia is also exposed to risks arising from fl uctuations in the

exchange rates of certain currencies, particularly due to the location

of some of its production sites as well as the fact that certain

subsidiaries purchase raw materials and other supplies or sell their

products in a currency other than their reporting currency.

The Group Finance department manages these currency risks on

a centralized basis.

The impact of fl uctuations in exchange rates on Faurecia’s income and equity due to transactions effected by Group companies in a currency

other than their reporting currency is set out in the table below:

Currency sold/purchased (in € millions)

EUR/USD

EUR/GBP

EUR/CZK

EUR/PLN

EUR/SKK

EUR/other

USD/CAD

Other/ZAR

USD/MXN

Other/BRL

Fluctuation assumptions (increase in value of currency purchased/sold) 5.0% 4.0% 5.5% 10.0% 5.5% 5.5% 5.0% 5.0% 10.0% 10.0%

Pre-tax impact on income 0.4 0.4 0.5 0.7 1.1 nm (0.3) nm 1.2 1.6

Pre-tax impact on equity (0.3) 0.6 0.7 13.8 2.0 nm 1.2 nm 0.7 0.0


BUSINESS REVIEW AND RESULTS OF OPERATIONS1 Risk management

These impacts refl ect (i) the effect on income of changes in

exchange rates used for the year-end valuation of assets and

liabilities denominated in a foreign currency, net of the impact of

the change in fair value of existing hedging instruments; and (ii) the

effect on equity of changes in the fair value of hedges of forecast

transactions (cash fl ow hedges).

The Group hedges these risks using futures, options, and loans in

foreign currencies, applying strict internal control guidelines under

the supervision of senior management. In addition, subsidiaries

outside the euro zone have been granted inter-company loans

in their functional currencies, representing €415.4 million as of

December 31, 2007. As these loans are refi nanced in euros, the

related exchange-rate risk is hedged through swaps. Details of net

balance sheet positions and currency hedges are provided in Note

30-1 to the consolidated fi nancial statements.

1.5.1.2 Liquidity risks

For its fi nancing, 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, in

October 2005 Faurecia issued €300 million worth of bonds,

maturing in October 2010. This bond issue enabled the Group to

diversify its sources of fi nancing.

The syndicated line of credit is used to guarantee liquidity for

Faurecia’s commercial paper program, which is capped at

€850 million. As of December 31, 2007, Faurecia had issued

commercial paper representing a total amount of €503.7 million

with maturities ranging from one month to one year.

The bond indenture and contract relating to the syndicated line of credit contains covenants based on consolidated fi nancial ratios. These

ratios are disclosed each half-year. Their value as of December 31, 2007 is presented in the table below:

Type of ratioContractual ceiling/fl oor Value as of

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

ratio amount ratio ratio

Adjusted net debt(*)/EBITDA(**) 3.50 ceiling 2.77 1,653.4/596.8 2.97 2.19

EBITDA(**)/net interest 4.50 fl oor 5.90 596.8/101.1 6.78 11.58

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

(**) Earnings before interest, tax, depreciation and amortization = Operating income + depreciation, amortization and provisions for impairment in value of property, plant and equipment and intangible assets.

Failure to comply with the above-mentioned ceilings/fl oors at a

given reference date would entitle the lenders or bondholders to

demand the 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.

1.5.1.3 Commodity risks

The Group manages its exposure to commodity risk by constantly

negotiating with customers and tightly managing inventories. It also

negotiates fi xed-term contracts with suppliers wherever possible

(on an annual basis for steel, and with quarterly index clauses for

plastics). Faurecia does not use derivatives to hedge its purchases

of raw materials and energy.

1.5.2 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. As part of its ongoing drive to ever-enhance

the supply-chain, just-in-time delivery, and supplier relations, it

limits its inventories of raw materials and fi nished and semi-fi nished

products.


BUSINESS REVIEW AND RESULTS OF OPERATIONS 1Risk management

Volume risk is analyzed twice a year with each customer, during

which issues relating to price renegotiations and the amount

of research and development are addressed. The fi nancing of

research and development is variable. It may be paid upfront or as

the parts are delivered, with no guarantee from the customer that

it will pay for the full amount of expenditure incurred. The relevant

contracts sometimes contain clauses concerning the renegotiation

of research and development fi nancing.

Lastly, the Group has not identifi ed any risk of technological

dependence in relation to its products, modules and systems. This

refl ects Faurecia’s proactive strategy – implemented at its 28 R&D

centers – to create its own designs and control the patents that are

essential for its operations.

1.5.2.1 Claims and litigation

To the best of the Company’s knowledge, in the past twelve months

there were no governmental, legal or arbitration proceedings

(including any such proceedings which are pending or threatened

of which it is aware) that may have, or have had in the recent

past, signifi cant effects on the Group and its fi nancial position or

profi tability, apart from those described in this registration document

(see Note 24 to the consolidated fi nancial statements), and which

were covered by adequate provisions based on known factors and

information available at the balance sheet date.

1.5.2.2 Industrial risk management

As it does not have any captive insurance entities, Faurecia’s

system for safeguarding its assets is based on the implementation

and ongoing adaptation of its risk prevention policy as well as its

strategy of transferring high-level risks to the insurance market.

INDUSTRIAL RISK PREVENTION

Faurecia’s industrial risk prevention policy is part of the Group’s

Health, Safety and Environment strategy. The aim is to reduce

accidents caused by fi re and encourage Group sites to achieve

excellence in fi re safety by obtaining the HPR (Highly Protected Risk)

label from Faurecia’s insurer. Since 2005, the insurance premiums

for sites that have been HPR certifi ed 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 fi re insurer. The most recent audit program was

carried out in 2007. Approximately half of the Group’s sites are

classifi ed as HPR or pre-HPR. Four new sites – Hénin Beaumont

in the Vehicle Interiors Product Group and Leipzig, Walbrzych

and Neuenstadt in the Automotive Seating Product Group –

received HPR certifi cation in 2007. Substantially all of the sites

audited in 2007 received confi rmation of their HPR status, or

•

saw an increase in their certifi cation grade. A program of around

113 audits is scheduled for 2008. In total, 95% of Faurecia’s sites

(plants and technical centers) have been regularly audited since

the Group’s launch of its HPR strategy. The audit process for

the Group’s Chinese sites began in 2005 and will continue into

2008;

incorporating fi re safety factors into the early stages of any

plant design or major refurbishing of existing sites, through fi re

partitioning and ensuring that adequate fi re safety equipment is

available;

experience feedback: incidents are systematically analyzed and

the fi ndings circulated throughout the HSE network;

an Intranet-based fi re safety management system developed by

Faurecia, through which the HPR policy is relayed to the entire

Group. This system provides online information including audit

fi ndings, technical specifi cations, feedback and best practices.

A major fi re took place in 2007 at the Mlada Boleslav Interior Systems

facility in the Czech Republic. However, the site’s production

equipment was not affected and the plant started up operations

again immediately. A procedure for verifying the maintenance and

inspection of sprinklers has been set up for all of the Group’s plants

and will be extended in conjunction with its insurer.

FIRE, PROPERTY DAMAGE , AND BUSINESS

INTERRUPTION INSURANCE

On January 1, 2008 Faurecia renewed its fi re, property damage

and business interruption insurance policy for two and a half years

with a leading insurer based on the same rates as for the previous

policy.

The coverage for buildings and equipment is based on replacement

value. Coverage is organized around a “Master” policy, which

includes 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 specifi c

risks.

LIABILITY INSURANCE

Faurecia also renewed its liability coverage on January 1, 2008

based on the same rates as for 2007.

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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•


BUSINESS REVIEW AND RESULTS OF OPERATIONS1

Faurecia > 2007 Registration document

CONTENTS


2RESEARCH & DEVELOPMENT


2.2 Innovation 22





RESEARCH & DEVELOPMENT2

R&D is a key strategic issue for Faurecia. It covers innovation,

development of generic products, and engineering, on a total of

340 programs. And it represents a major commitment on resources:

€613.1 million gross expenditure in 2007, plus management of

tooling costs and plant investment. In all, 3,500 engineers and

technicians at 28 Faurecia R&D centers worldwide control a gross

budget of around €1 billion.

As automakers’ expectations intensifi ed in 2007, R&D becomes a

major arena for competition among equipment vendors.

To meet the challenge Faurecia stepped up its engineering

capabilities, very successfully so judging by enthusiastic response

to its Premium Attitude concept.


RESEARCH & DEVELOPMENT 2Automaker Expectations

Fierce competition between automakers shows through clearly in

their product offerings:

intensifi ed vehicle releases schedule , with some makers’ product

line-ups expanding by up to 50%;

shorter development leadtimes, for rapid renewal of product

ranges;

growing need to release vehicles with distinctive advantages

appreciated by the end consumers ;

tighter constraints on safety, with makers increasingly eager to

anticipate on forthcoming regulations;

longer warranty coverage and extreme consumer attention to

perceived quality, both on initial contact with the vehicle and from

a longer-term viewpoint, for reasons of resale value;

stronger emphasis, in 2007, on environment-related issues (fuel

consumption, pollutant emissions, ecological footprint over

vehicle time ) in automaker priorities and consumer purchase

criteria.

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These factors combine to toughen demands on equipment supplier

performance under very tight economic conditions. Automakers

are demanding these results, which entail increased workload,

within constant overall development outlays. And they also expect

to continue the trend toward spreading program fi nance over the

program cycle , thus requiring equipment suppliers to bear a higher

proportion of program risks.

Faurecia nevertheless regards these trends as holding opportunity

for developing value on its markets and strengthening long-term

competitive standing. Few of its rivals can meet these intensifying

demands, and among the major market players Faurecia fi elds front-

line technology. To meet emerging challenges under tightly imposed

leadtime and cost conditions, Faurecia set up or stepped up a

series of measures on innovation, product planning and engineering

productivity in 2007. And it unveiled the Premium Attitude concept

car as a working showcase to illustrate its innovative capabilities

and stimulate advanced dialogue with customers.


RESEARCH & DEVELOPMENT2 Innovation

Faurecia stands at the crossroads of two major automotive industry

trends:

creation of end-customer value for vehicle differentiation;

improvements in environmental performance.

Faurecia’s increasing investment in innovation takes these two

focuses in each of its product lines; here’s a few examples:

automotive seating:

product solutions for the growing premium segment, with

seats for BMW Mini Clubman in 2007,

improved static and dynamic comfort with the “grand comfort”

project for a seat with multidirectional adjustments developed

jointly with an automaker,

standardization of seat structures and components, such as

mechanisms,

lightweight design;

vehicle interiors:

enhanced perceived quality, illustrated by the new Renault

Laguna, winner of the International Design Festival “best

interior” award,

function integration, with the new-generation door module;

exhaust systems:

compliance with new standards such as Euro V and Euro VI,

improved engine performance, with growth in welded manifolds

(for better high-temperature performance) and exhaust heat

insulation systems,

weight and size reductions, to free up more interior space;

front-end units:

full-function module integration, a high-growth market,

enhanced perceived quality, and integration of functions such

as parking sensors;

acoustic solutions:

improved acoustic performance, without weight and package

penalties, through developments of multilayer materials,

substantial use of recycled materials, with development of

Sommold.

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The boost in innovation would not have been possible without the

improved effi ciency in the innovation process, achieved through

four measures:

reorganization, involving development of poles of product/

process competency , accurate identifi cation of key skills needed

for future development, and close analysis of needs. A major

additional contribution comes from the new Westworks think

tank in the USA, dedicated to innovation and creative design in

all vehicle interior systems;

systematic launch of co-development projects with main

customers, stimulating forward-looking technical dialogue on

concepts and architecture ;

introduction of Quality Basics in Innovation program, which

ensures that industrial and technical risks are identifi ed and

controlled, without imposing excessive constraints on creativity ;

tighter selection of innovation projects, to concentrate resources

on priority challenges addressing identifi ed commercial targets.

Faurecia has a portfolio of 196 innovation projects, broken down

by product line (seats, structures & mechanisms, dashboards,

etc.) and by innovation focus, addressing market expectations

such as perceived quality, driving experience , safety, environment

and standardization. Project progress is managed from initial idea

through to product/process validation, applying a structured process

with decision milestones. The risks inherent to any innovation-driven

endeavor are lifted as development proceeds, on in-house pilot

applications or on upstream co-development programs run with

automaker s. Only validated projects can be offered for application

on customer programs.

R&D-specifi c expenditure can be fi nanced either cash or through

piece price amortization , or through a combination of both

arrangements.

The Faurecia innovation policy yielded a total of 243 patents in 2007,

putting Faurecia among the most inventive companies in its sector.

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RESEARCH & DEVELOPMENT 2Product Planning

Faurecia undertook an in-depth review of its product plan in 2007,

in response to customer demand under constraints specifi c to

Faurecia. Four main focuses were taken:

full integration of product and process teams, for parallel

development of products and the manufacturing processes for

making them;

design of component platforms for splitting development costs

across several models in the vehicle range of one or more

customers. These platforms, in each of Faurecia’s business lines,

are mostly tailor-made, and require in-depth analysis of what

can be standardized and what must remain specifi c, to leave the

automaker suffi cient design freedom for product differentiation.

Standardization scope includes seat and dashboard structures,

door and front-end modules, and exhaust lines;

early allowance for constraints on perceived quality, as it is

extremely costly to correct errors once designs and processes

have been set. Faurecia’s industrial design teams step in at

project inception, to diagnose risks and put forward solutions

as early as possible in the development chain. Perceived quality

concerns the whole vehicle interior, including seats, and the

vehicle exterior, especially for front-end modules and bumpers

fi t and fi nish;

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defi nition of priority solutions on environment matters: weight,

emission control, recyclable materials. Lightweight vehicle design

has become a major challenge for automakers, and Faurecia

modules can together account for around 16% of the total

vehicle weight. In each of its business lines Faurecia develops

products with weight reductions of 25% to 30%, making a very

signifi cant contribution to automakers’ initiatives on lightweight

vehicle design. On emission control, Faurecia’s exhaust system

teams work with automakers across the whole spectrum of

advanced technological solutions (improved combustion, gas

recycling, etc.). Programs on replacing resins by natural fi bers (in

cellulose and other materials) are already yielding economically

and qualitatively competitive alternatives to plastics in a number

of applications. Faurecia largely outpaces its main rivals as

regards upline integration capabilities in this fi eld. In parallel,

teams across all Faurecia businesses are working on recyclability

of materials, taking up “zero waste” (in vehicle soundproofi ng,

for example) as the ultimate objective.

•


RESEARCH & DEVELOPMENT2 Engineering Productivity

Because R&D goals must be met under tight economic constraints,

Faurecia put together a four-year action plan on engineering

productivity in 2007, specifying a steady shift in geographical

siting for its development centers, and constant improvement in

development processes. R&D centers in India and China, where

Faurecia plans to locate over 25% of its total development

capacities by 2010, are growing in response to two needs: local

development of products for local automobile manufacture; and

cost optimization across an increasing proportion of the value

chain in product development for European and North American

markets.

The shift in geographical siting for engineering functions continued

in 2007, consistent with the optimum location principles

determined by Faurecia teams: geographical proximity to customer

sites for effi cient program take-up and interfacing; centralization

and specialization for research and innovation centers; siting in

moderate-cost countries for prototyping, simulation and validation

work. The fast-growing Pune development center in India employs

a workforce of around 200 to provide an increasingly wide range

of services across the whole of the Faurecia group. Then in China,

Faurecia developed a metal structure platform for the global

low-cost vehicle segment, at greatly reduced cost within a very

short timeframe. This unit is already in production with a Chinese

automaker.

Faurecia sees R&D as a powerful competitive lever for strategic

development. Though challenging demands from automaker

customers impose a very fast rate of change, they also hold

substantial opportunity for differentiation and long-term

improvements in economic performance.


RESEARCH & DEVELOPMENT 2Premium Attitude

Faurecia’s Premium Attitude concept car was developed to

showcase product innovation addressing the fast-growing

premium market. Premium Attitude has met with a very enthusiastic

reception from the automotive industry, the press, and the general

public, at international motor shows. Once the preserve of a handful

of upmarket automakers, premium products are spilling over into

neighboring vehicle segments, and customers are being courted

by all manufacturers.

Premium Attitude demonstrates Faurecia’s capacity for expertise,

forward planning and innovation on the automotive market in general

and the premium market in particular. And it also prompts dialogue

very early on in the program take-up process with customers’

design, vehicle package and product planning teams, stimulating

joint ideas on future co-developments.

All Faurecia’s design and engineering teams, in all business lines,

contributed to Premium Attitude. And many of the innovations

showcased on Premium Attitude are being developed under

product -line innovation plans.

Premium Attitude is based on a 1972 Tatra 603/2, an iconic model

in motoring history, yet perfectly neutral today since the brand no

longer exists. It illustrates Faurecia’s proactive stance on facilitating

innovation through direct dialogue with automakers. The interior

space is consistent with today’s norms, enabling Faurecia to do

full justice to the vehicle interior, of key differentiations on today’s

increasingly fragmented auto market.

Those i nnovations demonstrate the future organic growth of

Faurecia. Faurecia’s capacity to offer its customers well-designed,

innovative products is crucial to its sustainable profi tability.

Major focuses for innovation on the Premium Attitude concept car

are:

intelligent design and ease of use:

self-supporting dashboard,

stowage drawer in trunk/rear module,

asymmetrical driver’s seat, with integrated console and multi-

control module;

•

−

−

−

“Magic” experience:

adaptable front seats,

“Magic” rear armrest,

“Relax” function on rear seat,

adjustable door armrest with action linked to seat

adjustments,

“Magic wave” dashboard for different screen modes;

obsessive attention to detail:

“Jewel box” glove compartment,

large inserts in real wood (seats, doors, etc.),

innovative air vents,

ambiance lighting.

Faurecia as T ier one supplier is a solution provider and developes

new architectures (like the self-supporting dashboard) that give

greater freedom to automaker designers and stimulate innovation-

oriented dialogue with customer advanced teams.

The Premium Attitude concept car appeared at the Los Angeles

Auto Show in November 2007 before making its European de but

in Berlin, capital of Europe’s foremost premium automobile market.

It has been presented to Ford, General Motors, Chrysler, Toyota,

Nissan, Hyundai-Kia, PSA Peugeot Citroën, Renault, Mercedes

Benz, BMW, Saab, Audi, Seat, Honda, Tata and Volvo. Feedback

from automakers is extremely positive, and this new form of

dialogue has already spawned several co-development projects

targeting forthcoming vehicle programs.

•

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−

•

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RESEARCH & DEVELOPMENT2

CONTENTS

HUMAN RESOURCES

3



3.1.1 Workplace safety indicators 28

3.1.2 Health and safety training 30

3.1.3 Health and Safety certifi cation 30

3.1.4 Ergonomics and working conditions 31


3.2.1 Employee empowerment 32

3.2.2 Developing manager and professional potential 33

3.2.3 Faurecia University 34

3.2.4 Talent sourcing 35

3.3 Strengthening economic and social dialogue 36

3.3.1 A slowdown in the relocation of manufacturing facilities and employees 36

3.3.2 In-depth discussions with employee representatives 36

3.3.3 A larger and stronger european works council 36

3.3.4 Code of ethics 37

3.3.5 Compensation and benefi ts 37


3.4.1 Voluntary gain-sharing plan (“Intéressement”) 38

3.4.2 Mandatory profi t-sharing plan (“Participation”) 38

3.4.3 Group employee savings plan 38

3.4.4 Stock options 39

3.4.5 Other corporate data 40


HUMAN RESOURCES3 Safety in the workplace

The Group’s HSE policy is clearly outlined in two documents that

defi ne Faurecia’s core principles: the Mission Statement and the

Code of Ethics. These principles provide the basis for HSE policies

at all Faurecia sites worldwide.

Faurecia’s policy in terms of health and safety and working

conditions hinges on two main objectives: ensuring the protection

of employee’s health and improving the safety of employees in the

workplace.

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.

To achieve the goal of reducing the rate of work-related injuries with

lost time within the Group to three per million working hours by the

end of 2008, Faurecia continued to strengthen its commitment to

safety and better working conditions throughout the year.

3.1.1 WORKPLACE SAFETY INDICATORS

The results of initiatives in this area are measured by analyzing

changes in the frequency rate of work-related injuries.

In order to guarantee the same level of workplace safety for all

employees, temporary workers are included in indicator calculations

in the same manner as permanent staff.

The Group’s excellence indicators are FROt and FR1t. FR0t

measures the number of work-related injuries involving a Faurecia

employee or temporary worker, with lost time, per million hours

worked. FR1t measures the number of work-related injuries

involving a Faurecia employee or temporary worker, with or

without lost time, per million hours worked.

First-aid processes are now monitored across the board at the

level of Autonomous Production Units, with a view to further

increasing responsiveness and promoting production teams’

responsibility for accident investigations .

•

•

The frequency rate of work-related injuries with or without lost

time (FR1t) for all Group activities continued to decline, by a little

over 18%, to 15.8. The frequency rate of work-related injuries with

lost time (FR0t) also continued the downward trend witnessed in

previous years, to 4.0.

Out of 242 internal reporting units, 134 have already achieved the

goal set for 2008, meaning that they are below the threshold of

three work-related injuries with lost time per million hours worked

(including temporary employees).

A total of 39 production sites with over 100 employees achieved the

goal of zero work-related injuries with lost time. The fact that these

sites are spread throughout the world proves that the objective

is within reach for all plants, regardless of business segment or

whether the facility is based in a developed or developing country.


HUMAN RESOURCES 3Safety in the workplace

Site Business Country Number of employees

Grojec Frames & Mechanisms Poland 1,632

Stadthagen Frames & Mechanisms Germany 1,588

Puebla Vehicle Interiors Mexico 895

Talmaciu Automotive Seating Romania 758

Vigo Automotive Seating Spain 552

Ben Arous Automotive Seating Tunisia 539

Walbrzych Frames & Mechanisms Poland 520

Puebla cut & sew Vehicle Interiors Mexico 509

Pisek Vehicle Interiors Czech Republic 470

Pisek Frames & Mechanisms Czech Republic 386

Troy West Exhaust Systems USA 366

Port Elizabeth Vehicle Interiors South Africa 366

Wörth Vehicle Interiors Germany 357

Orhangazi Vehicle Interiors Turkey 320

Pamplona Automotive Seating Spain 298

Fradley Vehicle Interiors United Kingdom 295

Peine Vehicle Interiors Germany 286

Fountain Inn Automotive Seating USA 274

Changchun Vehicle Interiors China 265

Lieu-St-Amand Automotive Seating France 256

Troy East Exhaust Systems USA 256

Burlada Exhaust Systems Spain 236

Chongqing Vehicle Interiors China 220

Granger Exhaust Systems USA 208

Changchun Exhaust Systems China 205

Madrid Frames & Mechanisms Spain 205

Sao Paulo Vehicle Interiors Brazil 201

Riverside (MO) Automotive Seating USA 199

Walton Automotive Seating USA 195

Changchun Frames & Mechanisms China 188

Vigo Vehicle Interiors Spain 184

Shanghai Frames & Mechanisms China 169

Böblingen Vehicle Interiors Germany 155

Neuenstadt Automotive Seating Germany 135

Sittard Automotive Seating France 126

Walbrzych Automotive Seating Poland 123

Bains s/Oust Modules & Systems France 121

Quatro Barras Covers Automotive Seating Brazil 110

Palmela Modules & Systems Portugal 108


HUMAN RESOURCES3 Safety in the workplace

3.1.3 HEALTH AND SAFETY CERTIFICATION

In accordance with the Group’s policy to actively prevent health

and safety risks in the workplace, Faurecia’s sites are gradually

implementing workplace health and safety management systems

based on the OHSAS 18001 standard or local equivalents. Two

major environmental audit fi rms have worked in partnership with

Faurecia on this issue since 2005, with a view to enhancing the

organization of OHSAS 18001 assessments and the way in

which they are carried out: SGS is responsible for OHSAS 18001

certifi cation at all of the Group’s sites, and Bureau Veritas is in charge

of performing internal HSE audits alongside Faurecia’s internal audit

team. This partnership program is gradually being rolled out to all

of the Group’s sites. The number of OHSAS 18001 certifi ed sites

continues to rise, with the objective of across-the-board certifi cation

for all main manufacturing sites by the end of 2010.

3.1.2 HEALTH AND SAFETY TRAINING

The Group has focused on providing different types of training and

education programs to raise awareness and guarantee effective

implementation of all aspects of health and safety management.

In 2007, 98,254 hours of health, safety and fi re-prevention training

were provided for 29,530 Group employees, representing an

investment of €1.72 million.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

0

500

1,000

1,500

2,000

2,500

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

0

500

1,000

1,500

2,000

2,500


HUMAN RESOURCES 3Safety in the workplace

3.1.4 ERGONOMICS AND WORKING CONDITIONS

In 2007, 198 cases of occupational illness were reported throughout

the Group, most involving musculoskeletal disorder . To help combat

this problem, Faurecia has taken steps over the past few years to

take more effective account of the strains caused by workstations

and to offset them to the greatest degree possible. The industrial

sites declared total payments of €35.3 million to public or private

insurance providers in 2007 in respect of employee healthcare.

An ergonomic review of 91 sites was carried out within the

Automotive Seating business in 2007, using the AGREPT method

(french acronym for Analysis of Risky Gestu res and their Effects on

Hardness at Work ). This review is also due to be carried out in the

Front End division of the Modules & Systems business.

As a result of these analyses, solutions were implemented at

manufacturing workstations.

The analyses are also used to prepare a list of recommendations

that are systematically taken into account during the design

of products and manufacturing tools. An increasing number

of recommendations from professional ergonomists and HSE

coordinators are being factored into the “Program Management

System” (PMS).

An “Ergonomics” memorandum is now available to all Group process

engineers and managers in charge of effi ciency in manufacturing

systems, to provide additional information on analyzing workloads

and how to take into consideration the ergonomic constraints

of workstations. 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.


HUMAN RESOURCES3 Skills development

Refl ecting the Group’s strategy of providing excellent customer

service, human resource management is a considerable

competitive advantage for Faurecia and one of the keys to its

success. The Group’s strategy in this area is based on two pillars:

employee empowerment and developing the potential of engineers

and managers.

3.2.1 EMPLOYEE EMPOWERMENT

Employee empowerment is the cornerstone of the Faurecia

Excellence System (FES). It is a key factor in boosting industrial

performance. Employee empowerment is a strategic driver for

the Human Resources department, with the objective being the

implementation of Autonomous Production Groups (GAP), which

perform their activities in accordance with standards in force and

actively contribute to improving the performance of their particular

entity.

The progress made in 2007 is the result of priorities set in the

following fi ve areas:

3.2.1.1 Implementing “HOP”

”Human organization of production” (HOP) is central to employee

empowerment. Putting HOP into practice means organizing

the manufacturing sites into four hierarchical levels with smaller

autonomous production groups (GAP) led by GAP leaders. First-

level training is provided by team supervisors. The teams are limited

in size so that the supervisors can provide genuine guidance and

help staff meet performance objectives.

3.2.1.2 Ensuring team stability

Production team stability is vital to a site’s performance, especially

during the launch phase. Factors such as recruitment quality,

training and detailed instructions to employees before they join

the production line are known to have a major impact on team

stability.

3.2.1.3 Making training plans more suitable

This approach has been rolled out to site management teams

group-wide, the goal being to ensure that training actions are

consistent with site priorities. Particular importance is given to

identifying training needs and systematically reviewing progress

and the achievement of objectives.

The deployment of this approach in the second half of 2007

confi rmed that the operational managers pay considerable

attention to training their teams, insofar as the teams have a role to

play in achieving operational objectives.

3.2.1.4 Stepping up use of the Supervisor’s dashboard

Given the progress made in HOP implementation, it has become

even more important to ensure the systematic rollout of the

production site’s objectives to each GAP. For supervisors, these

objectives are set out in a dashboard, by which they can follow

a series of performance indicators in order to check if the results

obtained are in line with expectations and, if necessary, to

pinpoint corrective action requiring management intervention.

The implementation of the supervisor’s dashboard at sites such

as Boblingen in Germany has led to an improvement in operating

results thanks to the individual progress made by supervisors,

GAP leaders and their teams.

3.2.1.5 Involving operator employees in the ongoing improvement drive

Employees at all Group entities are encouraged to put forward

their ideas for improvement, which can then be put into practice

in their particular area. In 2007, the number of ideas per employee

per year increased by 60% to 5.6, and 75% of ideas proposed

were actually put into practice (40% more than in 2006). This

indicator is crucial in enabling us to measure our teams’ autonomy.

The considerable advances made in 2007 show that employee

empowerment is continuing to grow, with the Group reaping the

rewards in terms of manufacturing improvements.


HUMAN RESOURCES 3Skills development

In 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.

3.2.2.1 Changing in line with Group developments

Faurecia is keenly aware of the importance of constantly adapting

resources in line both with changes in customer requirements and

developments in the Group’s organization. With this in mind, the

Group is continuing to expand its network of career management

specialists for managers and technical experts.

3.2.2.2 Tailoring resources to changing needs

The trend registered in 2005 held fi rm in 2006 and 2007. Out of at

total of 9,908 managers and professionals employed by the Group,

almost 38% work outside Western Europe. 56% of new managers

and professionals were hired in the Group’s growth regions of

North America, Central Europe, Asia and South America.

Over 66% of vacancies in Western Europe were fi lled internally.

Inter-segment mobility represented 12% of the 2,103 mobility

programs carried out. Some 80% of program manager vacancies

and 79% of plant manager positions were fi lled internally. In 2007,

the Group’s “talent pool” initiative started to bear fruit, with 80%

of senior management vacancies fi lled internally. At the same

time, 56% of junior management positions were taken up by

internal candidates and we maintained our policy of hiring young

graduates.

A total of 39 contracts were signed under the VIE international

voluntary internship system and almost 60% of VIE interns were

recruited at the end of their placement.

We also extended our targeted graduate recruitment scheme to

Germany, Poland and the United States. During the second half of

the year, 33% of our graduate hires came from selected universities

and colleges, compared with 30% in the fi rst six months.

3.2.2.3 Personalized and pro-active career management

Faurecia encourages its managers and professionals to deepen

their skills in their core discipline in order to hone their expertise

and enhance the value of their experience. This holds particularly

true in the support functions and in Research and Development.

The possibility of moving into a different domain subsequently allows

managers and professionals to learn new technical expertise and

acquire managerial skills. Over 540 managers and professionals

worldwide moved into a new technical area in 2007, accounting

for almost a quarter of the Group’s employee mobility fi gure.

The Group considers internal promotion a priority and has set

very high standards with a stated objective of promoting the next

generation of top managers and experts from within. In line with

this, our promotion rate remained at 10% in 2007.

Opportunities for personal development are available to everybody

within the Group, based on demonstrated individual performance

and potential. Particular focus is placed on managing internal staff

career moves to ensure that employees hold suitable positions in

both the short- and medium-term. Almost half of the employees

identifi ed as ready to change posts were effectively given new

positions in 2007.

Faurecia considers its experts and managers to be of vital

importance and strives to ensure that both categories receive

equal recognition and are offered the same opportunities. 2007

marked the third consecutive year of our process of identifying and

rewarding the expertise of our employees, as a result of which we

appointed 36 new specialists during the year. We also appointed

new senior experts, demonstrating our ability to strengthen the

business-specifi c skills required for each product line. By the end

of 2007, Faurecia counted a total of 196 experts within its ranks.

All of Faurecia’s managers play a key role in the development of the

Group’s teams. The Human Resources department is responsible

for coordinating the overall career management process. Over

1,900 managers and professionals met individually with their career

manager during the year, and several communication initiatives

were introduced by the career managers in this regard.

3.2.2.4 Building for the future today

At the 2007 staffi ng review, 5% of the Group’s top 900 managers

and professionals were identifi ed as high-potential employees. The

collective nature of the review process, from the shop fl oor right

up to General Management, ensures the consistency of the whole

procedure.

By consolidating performance and potential assessments, the

Group can defi ne succession plans for its management teams at

each level of the organization. In 2007, we were able to identify

83% of the successors for our management employees (up from

76% in 2006) with 43% available within a one-year timeframe.

3.2.2 DEVELOPING MANAGER AND PROFESSIONAL POTENTIAL


HUMAN RESOURCES3 Skills development

3.2.3 FAURECIA UNIVERSITY

3.2.3.1 Training programs serving Group needs

In 2007, the Group continued to focus on skills development

for employees through the Faurecia University. The number of

programs on offer once again increased, to 18, with even more

employees now able to take advantage of the courses on offer.

With the addition of Sales Fundamentals and Supervisor/UAP

Manager courses, the University organized a total of 150 sessions

in 11 countries, with some 2,741 employees from 22 countries

taking part.

The Faurecia University continued with the dedicated training

sessions of the last fi ve years, aimed at helping internally-promoted

mangers get to grips with their new role. Plant managers and

program managers hold key positions and are therefore especially

implicated by these sessions. Training for future Group leaders

remained a priority in 2007, and rollout of the Global Leadership

Programs was stepped up a notch. Following a successful pilot

session in April, the Global Leadership II program is now in full

swing. This program focuses on business management and is

being carried out in conjunction with the renowned IESE business

school in Barcelona.

In addition to existing programs for the Sales and Human

Resources departments, 2007 saw the introduction of the

new Sales Fundamentals course, which teaches the industry’s

basic methodologies, main procedures and objectives. Some

63 employees took part in one of four sessions organized over

the year.

The launch of a special program for Supervisors and UAP

Managers illustrated the extent of the University’s reach. This

ambitious 11-day program was set up simultaneously in China,

the Czech Republic, Slovakia, France and Germany. This was the

fi rst Faurecia University program to be run in various languages

worldwide, by a network of external trainers in the countries

concerned. Impeccable coordination was required for the program

to succeed, and each external trainer had to undergo a detailed

and precise training and qualifi cation process. The program will

be extended to Portugal, Brazil, Poland, the US and Canada in

2008.

In close cooperation with the Group’s industrial networks, the

University continued its work to structure and expand its industrial

training offering. It is concentrating on providing internal trainers

at the sites, within the context of training programs and working

groups focused on the Group’s tools and methodology. Employees

worldwide are continually schooled in the Faurecia Excellence

System (FES), through the FES school, signifi cantly enhancing

operational performance.

A SPECIFIC PROCESS FOR ANTICIPATING

FUTURE NEEDS

In 2007, the Group’s medium-term plan included an analysis of the

impact on human resources of changes in our operations.

This analysis was carried out for fi ve functions – production,

program, sales, R&D, and methods – in the six countries undergoing

the most rapid changes, namely France, Germany, Poland, the

Czech Republic, the United States and China.

This approach enables us to better leverage the individual skills and

experience acquired by our employees within the Group and, in

parallel, to effectively measure and forecast our requirements.

Faurecia is now in a better position to predict major changes in its

principal activities and to plan accordingly.

These changes include the ongoing development of industrial sites

in China, the US and, to an even greater extent, Mexico, as well

as operations in progress in new territories such as Russia, Iran

and India. The need for a worldwide R&D network is becoming

increasingly tangible, especially in the Mercosur, Asia, Eastern

Europe and North America regions. Expertise and production

methods also need to be consolidated in each product group.

Given the extremely vibrant nature of our business and the signifi cant

human resources challenges we face, our medium-term Business

Plan has become an important means for the Human Resources

department and General Management to plan and anticipate future

needs.


HUMAN RESOURCES 3Skills development

3.2.4 TALENT SOURCING

3.2.4.1 Attracting and retaining the necessary resources and skills

In 2007, the Group recruited a total of 1,617 managers and

professionals on permanent contracts worldwide. As projected,

the breakdown of new hires refl ects the Group’s sustained growth

in Eastern Europe, Asia and the United States, which represented

11%, 16% and 24% respectively of management and executive

recruits. The Talent Sourcing teams are focused primarily on China,

France, Germany, Poland, Slovakia, the Czech Republic and the

USA. Their goal is to signifi cantly increase the quantity and quality

of new hires through a range of measures such as developing

partnerships with target universities and business schools, creating

a panel of recruitment agencies, and encouraging employees to

put forward potential candidates from their own personal networks.

These initiatives should also help the Talent Sourcing department

to rein in recruitment expenditure.

Through all these measures, the Talent Sourcing team – in

conjunction with the Management Development network – plays

a key role in building up the Group’s talent pool and facilitates

internal mobility. The Group’s priority in this area is to attract,

promote and retain the best talent, through initiatives such as

recruiting graduates (42.5% of external recruitments in France)

from selected institutions (28% of graduate recruits in France), as

well as keeping down the number of external hires and providing

career opportunities to existing employees (60% of the internal

mobility fi gure in 2007).


HUMAN RESOURCES3 Strengthening economic and social dialogue

3.3.1 A SLOWDOWN IN THE RELOCATION OF MANUFACTURING

FACILITIES AND EMPLOYEES

In 2007, the Group continued with the relocation measures needed

to maintain its competitive edge. These measures were more

targeted, however, and care was taken to ensure that all sites

continued to carry out enough business as to remain fi nancially

viable.

Relocation measures affected sixteen sites and approximately

1,800 jobs in 2007, primarily in Western Europe (33% in Spain,

25% in France and 14% in Germany).

Providing employee assistance and holding discussions with

employee representatives remained priorities for the Group:

anticipating change through employment and skills forecasting

and planning agreements;

•

restricting the number of redundancies by fi nding other positions

within the Group; and

reducing the impact of the redundancies that were necessary

by providing employees with outplacement assistance and

encouraging voluntary departures for employees who had found

alternative solutions.

In France in 2007, 32% of employees affected by job cuts found

another position within the Group and almost 60% found an

outplacement or alternative solution, either within the Group or

elsewhere, even before being notifi ed of their redundancy.

•

•

3.3.2 IN-DEPTH DISCUSSIONS WITH EMPLOYEE REPRESENTATIVES

The policy of consulting and negotiating with employee

representatives once again produced results in 2007, with

some 185 agreements signed in 18 countries (compared with

184 agreements in 2006 and 130 in 2005).

54% of these new agreements concerned salaries and benefi ts,

compared with 30% in 2006;

20% related to work organization (30% in 2006);

•

•

11% dealt with the employee-related aspects of restructuring

measures (13% in 2006); and

15% involved other issues (27% in 2005).

France accounted for 102 of these agreements, and Germany

for 38.

•

•

3.3.3 A LARGER AND STRONGER EUROPEAN WORKS COUNCIL

With the four-year founding agreement signed in 2003 about to

expire, the European Works Council reviewed its modus operandi

in 2007. Against a backdrop of consultation with offi cers of the

Works Council and the union expert, and in keeping with the

founding agreement, a new agreement was approved by the

European Works Council and signed on April 24, 2007. The

Council’s new 25-seat composition refl ects Romania’s accession

to the European Union.


HUMAN RESOURCES 3Strengthening economic and social dialogue

This new agreement grants additional resources to the employee

representatives of the FEW (Faurecia European Works Council).

These resources mainly concern the council bureau, tasked with

ensuring ongoing exchange and dialogue between management

and employees and with keeping all parties informed of events.

Under this agreement, the bureau will meet three times a year, and

meetings with General Management will be held on a quarterly

basis.

The Council now has increased responsibilities, and its new

composition has meant new members, with the Group’s six main

countries (France, Germany, Spain, Portugal, Poland and the

Czech Republic) now represented, instead of only four previously.

Additional translators and interpreters are provided as required,

such as during the Council’s preparatory meetings.

The role of the Council’s economic and union experts is subject

to stricter controls, and specifi c resources are granted. A specifi c

budget is allocated for training members of the Works Council.

Terms and conditions for renewing this new four-year agreement

have been set out.

3.3.4 CODE OF ETHICS

In 2004, Faurecia signed the United Nations Global Compact. By

so doing, it undertook to comply with and promote, in its corporate

practice, a set of values and principles based on international

texts and conventions on human rights, labor standards and the

environment.

Changes within the group, new requirements from our clients,

and new trends as regards corporate social responsibility and

sustainable development, have led the Group to draft a new

version of its Code of Ethics.

This Code defi nes the main rules of behavior that Faurecia

employees are expected to apply on a daily basis in their relations

with colleagues and clients alike. It is also used as a guide to make

employees more aware of their responsibilities and encourage

their empowerment. It includes a more stringent whistle-blowing

procedure enabling employees to report any violation of ethics

regulations. Employees can also report their suspicions through the

traditional internal channels. After consultation with the employee

representatives in the various countries, the Code of Ethics was

sent individually to each employee.

3.3.5 COMPENSATION AND BENEFITS

Total payroll costs for the Group, including social security charges,

remained stable at €2,103.6 million in 2007, compared with

€2,104.3 million in 2006, while headcount rose 3.4%.

The Group complies with minimum wage legislation in force in

each country. In most countries, salary increases and changes in

other components of compensation or benefi ts are determined on

the basis of negotiations. Such negotiations led to the signature of

more than 73 agreements within the Group in 2007.

The variable compensation system for personnel in key positions

applies in an identical manner to all eligible employees and is

common to all countries in which the Group has operations. It

is based chiefl y on reference to collective targets. At end-2007,

approximately 2,300 senior executives (out of a total of 10,200)

qualifi ed for this system.

In 2007, Faurecia drew up national policies concerning company

cars for the Czech Republic, Romania, Brazil and China, in

accordance with the corporate company car policy and in line with

practices in each market. These policies comply with the laws in

force in the countries in question. They also apply to all the Group’s

businesses in each country.

Employees’ social security benefi ts were enhanced in Brazil

and Slovakia. Work is ongoing in the USA and France on the

harmonization of healthcare and retirement policies, and a similar

project got off the ground in China.

A new approach to compensation was fl eshed out in 2007, with a

view to defi ning a total remuneration policy in line with the Group’s

objectives and forecast expansion in each of the countries in which

it has operations. This approach also takes account of the human

resources policies and practices applied by our competitors on

local markets. In 2007, policies were fi nalized in Slovakia and got

underway in China and Poland.


HUMAN RESOURCES3 Employee incentive plans

3.4.1 VOLUNTARY GAIN-SHARING PLAN

(“ INTÉRESSEMENT”)

In 2007, four agreements were signed for a period of three

years. These follow on from agreements that expired. Numerous

supplemental agreements were signed in order to set half-yearly

performance indicators. All Faurecia’s French companies except

one are now covered by gain-sharing plans .

In accordance with the Group’s strategy, most of these agreements

contain the following provisions:

gain-sharing pay out on fulfi llment of objectives is capped at

6% of payroll, though in exceptional cases, if objectives are

exceeded, it may be raised to 8%;

gain-sharing pay out is calculated 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 intéressement

and is calculated and paid every six months;

half of the gain-sharing allocation 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 signifi cance to progress indicators. For these sites,

intéressement is spread evenly across the board.

The Group paid out over €9 million in gain-sharing in respect

of 2007.

−

•

3.4.2 MANDATORY PROFIT-SHARING PLAN

(“ PARTICIPATION”)

The mandatory profi t-sharing agreements of the various Group

companies stipulate that employee profi t sharing calculated in

accordance 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 of profi t-sharing reserve may be invested either into

an escrow account or in the corporate mutual funds set up in

connection with the Group Employee Savings Plan (PEG).

The Group profi t-sharing for 2007, paid in 2008, is close to

€3 million.

3.4.3 GROUP EMPLOYEE SAVINGS PLAN

The Faurecia Group employee savings plan set up in 2004 offers

employees the chance to invest in a savings plan by purchasing

units in 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 fourteen.

The Group savings plan may be funded by the payment of the

amounts allocated in respect of gain sharing in profi t sharing plans ,

as well as voluntary contributions made by employees.

Since 2004, voluntary contributions to the “Faurecia Actionnariat”

corporate mutual fund, comprised only of Faurecia shares, have

been entitled to a Company match.

The total amount invested in the corporate mutual funds remained

stable, at €30 million. Over the last two years, however, the total

amount of gain-sharing invested in the employee savings plan

has increased, and voluntary savings and company match have

decreased.

Some €4.5 million has been invested in the savings plan since it

was set up in 2004.


HUMAN RESOURCES 3Employee incentive plans

3.4.4 STOCK OPTIONS

Faurecia has put in place stock option schemes with a view to

motivating and retaining its senior executives. These schemes are

governed by a strict allocation procedure, set out at the Board of

Directors meeting of February 6, 2003.

The Board of Directors decides upon the principle of granting

stock subscription or purchase options once a year, during the

Board Meeting held in February. The list of benefi ciaries, the

number of options granted to each benefi ciary 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 – are determined in April, at

the Board Meeting which issues the notice of the Annual General

Meeting.

A total of 1,258,303 stock subscription options were outstanding

at December 31, 2007.

The Ordinary and Extraordinary Shareholders’ Meeting of

May 29, 2007 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

Group companies and of subsidiaries of which Faurecia holds

more than 50%.

Each option is exercisable for one common share under the terms

and conditions set out below. No other securities exist giving direct

or indirect access to the Company’s capital.

Between 1999 and 2001, the Group granted stock purchase

options to the management of Group companies and of subsidiaries

of which it held more than 50%, allowing them to purchase existing

Faurecia shares. At December 31, 2007, a total of 260,980 stock

purchase options were outstanding.

Details of the stock option plans can be found on page 182 of this

registration document.



3.4.5 OTHER CORPORATE DATA

Year-on-year changes in total headcount

2007 2006 Year-on-year change

Regis-tered head-count

Tem-porary

staff

Total head-count

Of which

% CDI(*)


Tem-porary

staff

Total head-count

Of which

% CDI(*)


Tem-porary

staff

Total head-count

Change in pro-

portion of CDI(*)

(%)

Western Europe 34,064 6,211 40,275 78.1% 35,583 4,716 40,299 82.4% -4.3% 31.7% -0.1% -4.3

of which France 16,766 3,796 20,562 78.8% 17,551 2,725 20,276 84.5% -4.5% 39.3% 1.4% -5.6

Central Europe 10,507 2,064 12,571 71.9% 8,563 1,371 9,934 71.0% 22.7% 50.5% 26.5% 0.9

North America 8,243 851 9,094 84.3% 8,191 1,171 9,362 80.2% 0.6% -27.3% -2.9% 4.1

South America 2,274 74 2,348 90.6% 1,935 99 2,034 88.9% 17.5% -25.3% 15.4% 1.6

Asia 2,988 647 3,635 65.9% 2,343 431 2,774 61.7% 27.5% 50.1% 31.0% 4.3

Other 1,688 102 1,790 67.1% 1,195 84 1,279 84.8% 41.3% 21.4% 40.0% -17.7

Faurecia 59,764 9,949 69,713 77.3% 57,810 7,872 65,682 79.8% 3.4% 26.4% 6.1% -2.5

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

Registered headcount:

Faurecia’s registered headcount grew by 1,954, or 3.4% in 2007.

The number of staff employed on open-ended contracts increased

by 1,501, or 2.9%, and the number of staff on fi xed-term contracts

rose by 453, or 8.4%.

Temporary staff:

The number of temporary staff rose by 2,077 (26.4%) in 2007,

mainly in Western and Central Europe and Asia.

Total headcount:

Total headcount grew by 4,031, or 6.1%.

Despite the number of staff employed on open-ended contracts

increasing over the year, the proportion of open-ended contracts

decreased by 2.5 percentage points from 79.8% to 77.3%, as a

result of the rise in temporary staff numbers.

The proportion of staff on fi xed-term contracts was on a par with

2006, rising from 8.2% to 8.4%, and the proportion of temporary

staff increased from 12.0% to 14.3%.

Total headcount remained stable in Western Europe but increased

in the Group’s other host regions, except for North America where

it declined by 2.9%.

Year-on-year changes in registered headcount

2007 2006

Operators & workers TFA(*)

Managers & Professionals Total



Year-on-year change

Western Europe 21,160 6,530 6,374 34,064 22,260 6,824 6,499 35,583 -4.3%

of which France 9,776 3,296 3,694 16,766 10,489 3,339 3,723 17,551 -4.5%

Central Europe 7,741 1,876 890 10,507 6,337 1,409 817 8,563 22.7%

North America 5,769 795 1,679 8,243 5,756 838 1,597 8,191 0.6%

South America 1,473 502 299 2,274 1,228 442 265 1,935 17.5%

Asia 1,661 485 842 2,988 1,228 447 668 2,343 27.5%

Other 1,322 249 117 1,688 892 208 95 1,195 41.3%

Faurecia 39,126 10,437 10,201 59,764 37,701 10,168 9,941 57,810 3.4%

(*) Technicians, foremen and administrative staff.



Faurecia’s registered headcount increased by 3.4% in 2007.

Year-on-year changes were mixed across the Group’s geographic

regions, however, refl ecting major trends in the global automotive

market as well as in the industry of automotive equipment

suppliers:

in Western Europe the registered headcount decreased by

4.3% (4.6% in 2006);

in all of the other major geographic regions, the registered

headcount increased signifi cantly, particularly in Central Europe

and Asia (up 22.7% and 27.5 % respectively);

•

•

registered headcount in North America remained stable, edging

up 0.6% versus 28.4% in 2006;

2,545 operator positions were created outside Western Europe,

whereas 1,100 positions were eliminated in Western Europe.

Consequently, this category of staff rose by 3.8% during the

year;

the number of TFAs and managers increased by 2.6%.

•

•

•

Year-on-year changes in registered headcount by type of contract


CDI(*) CDD(**) Total CDI(*) CDD(**) Total CDI(**) CDD(**) Total

Western Europe 31,457 2,607 34,064 33,221 2,362 35,583 -5.3% 10.4% -4.3%

of which France 16,209 557 16,766 17,128 423 17,551 -5.4% 31.7% -4.5%

Central Europe 9,041 1,466 10,507 7,052 1,511 8,563 28.2% -3.0% 22.7%

North America 7,669 574 8,243 7,513 678 8,191 2.1% -15.3% 0.6%

South America 2,127 147 2,274 1,809 126 1,935 17.6% 16.7% 17.5%

Asia 2,397 591 2,988 1,711 632 2,343 40.1% -6.5% 27.5%

Other 1,201 487 1,688 1,085 110 1,195 10.7% 342.7% 41.3%

Faurecia 53,892 5,872 59,764 52,391 5,419 57,810 2.9% 8.4% 3.4%

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

The proportion of staff on fi xed-term contracts rose from 9.4% in

2006 to 9.8% in 2007, representing an increase of 453 people.

The 245-person increase in the number of staff on fi xed-term

contracts in Western Europe was primarily attributable to the

Group’s decision to take on more apprentices in France, which led

to an additional 128 apprentice recruitments in 2007 compared

with 2006.

The number of open-ended contracts was up 2.9%, with all regions

except Western Europe contributing to the rise. The increase was

particularly strong in Central Europe and Asia, where the number

of employees on open-ended contracts rose by 1,989 and 686

respectively, up 28% and 40%.



Age pyramid by gender – 2007

Registered headcount

<20 20-29 30-39 40-49 >50 Total

M W M W M W M W M W M W

Operators & workers 686 336 8,183 3,332 8,908 3,500 6,299 2,782 3,620 1,480 27,696 11,430

TFA(*) 102 56 1,946 935 2,580 977 1,873 593 1,024 351 7,525 2,912

Managers & Professionals 3 1 1,403 600 3,456 972 2,258 342 1,028 138 8,148 2,053

TOTAL 791 393 11,532 4,867 14,944 5,449 10,430 3,717 5,672 1,969 43,369 16,395


Women accounted for 27.4% of the Group’s registered headcount

in 2007, representing a year-on-year increase of 1.3 percentage

points.

The number of female workers rose 8.5% in 2007, following a

9.6% year-on-year increase in 2006.

Group staff are relatively young overall, with approximately 63.5%

under the age of 40 and nearly 30% under 30.

A total of 7,641 employees are over 50, accounting for 12.8% of

the registered headcount.

For all age brackets the breakdown by staff category remained

stable year-on-year, with 66% of headcount corresponding

to Operators & workers, 18% to technicians, foremen and

administrative staff, and 16% to managers and professionals.

Year-on-year changes in external recruitment by type of contract

REGISTERED HEADCOUNT


CDI(*) CDD(**) Total CDI(*) CDD(**) Total CDI(*) CDD(**) Total

Western Europe 1,145 2,433 3,578 1,005 2,268 3,273 13.9% 7.3 % 9.3%

of which France 690 626 1,316 472 377 849 46.2% 66.0% 55.0%

Central Europe 2,682 2,133 4,815 1,806 2,507 4,313 48.5% -14.9% 11.6%

North America 2,201 1,225 3,426 2,885 2,077 4,962 -23.7% -41.0% -31.0%

South America 701 135 836 390 104 494 79.7% 29.8% 69.2%

Asia 512 665 1,177 332 583 915 54.2% 14.1% 28.6%

Other 241 494 735 206 227 433 17.0% 117.6% 69.7%

Faurecia 7,482 7,085 14,567 6,624 7,766 14,390 13.0% -8.8% 1.2%

(*) 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 transfers from fi xed-term to

open-ended contracts.

The total number of external hires edged up by 1.2% on 2006.

The number of staff recruited on open-ended contracts rose

13.0%, more than offsetting the year-on-year decrease in the

number of recruitments on fi xed-term contracts.

Central Europe, North America and Asia once again recruited the

largest number of staff externally and total external hires outside

Western Europe accounted for 75.4% of the total Group fi gure.

External recruitment in Western Europe also rose during the year,

up by more than 9%.



Year-on-year changes in external recruitment by staff category


2007 2006





Western Europe 2,041 771 766 3,578 2,127 541 605 3,273

of which France 408 409 499 1 316 202 219 428 849

Central Europe 3,959 701 155 4,815 3,516 540 257 4,313

North America 2,810 230 386 3,426 4,097 362 503 4,962

South America 537 222 77 836 249 184 61 494

Asia 736 175 266 1,177 528 183 204 915

Other 665 47 23 735 374 39 20 433

Faurecia 10,748 2,146 1,673 14,567 10,981 1,849 1,650 14,390


During the year, o perators & workers accounted for 74% of

external hires, TFAs for 15% and managers & professionals for

11%, compared with 76%, 13% and 11% respectively in 2006.

Hires of technicians and foremen rose 16%, while external

recruitment of managers edged up 1.4% and hires of o perators &

workers retreated 1.3%.

External hires by socio-economic category vary depending on

the geographic region concerned as different areas have different

recruitment profi les.

Transfers from fi xed-term to open-ended contracts – year-on-year comparison


2007 2006





Western Europe 343 73 70 486 692 96 68 856

of which France 16 8 28 52 15 10 30 55

Central Europe 1,056 200 64 1,320 1,952 339 74 2,365

North America 414 36 7 457 711 55 24 790

South America 0 31 0 31 0 16 0 16

Asia 380 52 9 441 513 222 325 1,060

Other 37 4 0 41 145 8 1 154

Faurecia 2,230 396 150 2,776 4,013 736 492 5,241


The number of transfers from fi xed-term to open-ended contracts

decreased 57% year-on-year. However, the fi gure for 2006 was

particularly high as it included the impact of Faurecia’s decision to

record all fi xed-term contracts of over two years as open-ended

contracts within the Group.

Compared with 2005, when total transfers came to 1,882, the

number of fi xed-term contracts switched to open-ended contracts

increased by 48% across the Group in 2007.



Departures (broken down by reason) – year-on-year comparison


2007 2006

Resi-gnations

(open-ended

contracts)

Individual redun-

dancies

Collective redun-

dancies Other Total

Resi-gnations

(open-ended

contracts)

Individual redun-

dancies

Collective redun-

dancies Other Total

Western Europe 1,238 905 1,052 1,737 4,932 1,077 1,118 945 1,689 4,829

of which France 521 433 496 495 1,945 420 485 465 551 1,921

Central Europe 1,250 914 102 596 2,862 960 460 1 801 2,222

North America 1,009 1,587 33 736 3,365 928 1,267 30 946 3,171

South America 137 280 4 79 500 69 321 0 64 454

Asia 220 98 5 222 545 148 80 69 235 532

Other 80 79 0 253 412 113 40 0 207 360

Faurecia 3,934 3,863 1,196 3,623(*) 12,616 3,295 3,286 1,045 3,942 11,568

(*) Of which 3,229 on expiry of fixed-term contracts.

The number of employees who left the Group in 2007 totaled

12,616 against 11,568 the previous year, representing an increase

of 9%.

Of these departures, 26% corresponded to the expiry of fi xed-term

contracts while resignations and individual redundancies each

represented almost 31%.

The number of collective redundancies once again refl ected the

Group’s restructuring operations in both Western and Central

Europe.

Training hours – year-on-year comparison

2007 2006

Total training hours

Training hours per employee

Total training hours

Training hours per employee

Western Europe 725,308 23 695,767 21

of which France 349,081 23 292,227 18

Central Europe 341,399 38 392,359 54

North America 160,837 21 197,429 28

South America 55,411 30 56,136 33

Asia 109,801 42 85,904 42

Other 42,214 32 37,155 32

Faurecia 1,434,970 26 1,464,750 28

The average number of training hours per employee came to 26 in

2007 compared with 28 the previous year. This decrease refl ects

a slowdown in training programs in North America and Central

Europe following the signifi cant amounts invested in these regions

in 2006. Conversely, there was a major focus on training in Western

Europe during the period, particularly in France, in order to raise

the overall number of hours from the 2006 level. Consequently, the

average number of training hours for Western European employees

increased from 21 to 23, with the fi gure for France up almost 28%

from 18 to 23.

Group policy is to signifi cantly increase the training available for all

staff categories, especially for site operators.



Expatriates by destination – year-on-year comparison

2007 2006

Western Europe 75 81

of which France 29 34

Central Europe 53 57

North America 45 60

South America 7 4

Asia 61 52

Other 12 12

Faurecia 253 266

The steady high levels of expatriate numbers and their widely diverse nationalities refl ect the Group’s international expansion policy. During

2007 there was a 17% increase in expatriates to Asia.

Disabled employees – year-on-year comparison

2007 2006

Western Europe 999 1,048


Central Europe 19 13

North America 8 9

South America 14 12

Asia 18 0

Other 12 12

Faurecia 1,070 1,094

Faurecia employs some 1,000 disabled people in Western

Europe.

The criteria used to defi ne disabled employees are those set down

in the legislation of each country. In Western Europe – particularly

France – such legislation tends to favor a more proactive approach

than in other countries.

The decrease in the number of disabled employees in Western

Europe in 2007 refl ects the overall reduction in staff numbers in

that region.

The proportion of disabled employees in France was more or less

unchanged from 2006, representing 4.0 % of the country’s total

headcount.

Work schedules in 2007


Two 8-hr shifts Three 8-hr shifts Weekend(1) Other Total

Western Europe 11,179 7,705 199 14,981 34,064

of which France 6,504 2,247 159 7,856 16,766

Central Europe 1,527 6,619 156 2,205 10,507

North America 1,678 2,726 95 3,744 8,243

South America 213 1,338 0 723 2,274

Asia 993 400 46 1,549 2,988

Other 867 459 0 362 1,688

Faurecia 16,457 19,247 496 23,564 59,764

(1) Reduced weekend hours.

Staff work schedules within the Group are aimed at meeting customer needs, based on production capacity at our sites. Shift work and

weekend work mainly concern the production sites and together account for 60.6% of the Group’s registered headcount.



Part-time staff – year-on-year comparison

Part-time staff – 2007

Part-time staff – 2006

Western Europe 611 624


Central Europe 13 2

North America 0 0

South America 0 0

Asia 0 0

Other 0 0

Faurecia 624 626

Substantially all of the Group’s part-time employment contracts are in Western Europe, particularly France.

Part-time staff accounted for 3.7% of the Group’s total registered headcount in France in 2007, versus 2.2% in 2006.

Overtime – year-on-year comparison

2007 2006

Overtime(in hours) % hours worked

Overtime(in hours) % hours worked

Western Europe 1,133,869 1.9% 1,041,643 1.7%

of which France 314,314 1.1% 288,237 1.0%

Central Europe 1,345,215 7.4% 1,011,732 7.0%

North America 1,698,270 10.1% 1,672,647 11.1%

South America 283,418 8.5% 206,096 6.6%

Asia 847,156 15.0% 655,973 14.6%

Other 264,081 8.5% 239,708 9.1%

Faurecia 5,572,008 5.3% 4,827,798 4.7%

Overtime hours are set in accordance with the legislation of each country.

The 0.6 point rise in overtime as a proportion of total hours worked mainly stemmed from increases in Central Europe (0.4 point) and Asia

(0.4 point).

Absenteeism – year-on-year comparison

Absenteeism rate – 2007

Absenteeism rate – 2006

Western Europe 3.6% 3.4%

of which France 3.4% 3.3%

Central Europe 3.9% 3.2%

North America 1.9% 1.8%

South America 2.2% 2.4%

Asia 0.5% 0.7%

Other 3.0% 3.4%

Faurecia 3.2% 3.0%



Absenteeism reported in 2006 and 2007 was due to illness,

workplace accidents and various unauthorized absences.

The number of hours of employee absence increased by 9% year-

on-year to an aggregate 3,322,194 from 3,053,124.

However, the absenteeism rate only rose by 0.2 point as a result of

the 3% increase in the number of hours worked (to 105,163,225

from 102,115,034).

This increase was particularly pronounced in Central Europe.

Subcontracting – year-on-year comparison

2007 2006

One-off subcontracting

projectsOngoing

subcontracting Total

One-off subcontracting

projectsOngoing

subcontracting Total

Western Europe 725 1,245 1,970 743 1,204 1,947

of which France 372 533 905 314 518 832

Central Europe 93 370 463 127 353 480

North America 239 255 494 357 136 493

South America 68 363 431 165 222 387

Asia 12 198 210 22 61 83

Other 46 98 144 52 94 146

Faurecia 1,183 2,529 3,712 1,466 2,070 3,536

The use of subcontractors increased by almost 5% in 2007, with

one-off subcontracting projects decreasing 19% and ongoing sub-

contracting increasing by 22%. The overall growth chiefl y refl ects

increased use of sub-contracting in Asia during the Group’s launch

phases.

Welfare benefi ts in 2007

(in € thousands)

Accommo-dation Transport Catering

Medical services

Supple-mentary

health and personal

risk insurance Subsidies Total

Western Europe 7,814 5,496 5,970 3,007 11,382 4,817 38,487

of which France 7,670 3,833 2,846 1,867 9,333 4,564 30,113

Central Europe 269 1,818 2,070 762 388 1 5,307

North America 260 540 359 360 2,950 40 4,509

South America 462 1,019 1,154 1,406 175 25 4,241

Asia 1,342 977 577 831 133 122 3,982

Other 4 252 255 453 94 12 1,069

Faurecia 10,152 10,103 10,386 6,818 15,121 5,017 57,596


HUMAN RESOURCES3

4ENVIRONMENT


CONTENTS

4.1 Faurecia’s products and the environment 51

4.1.1 Product design 51

4.1.2 Decreasing the weight of products 51

4.1.3 Recycling initiatives 52

4.1.4 Use of natural materials 53

4.1.5 Supplier management 53

4.2 Faurecia’s manufacturing sites and the environment 54

4.2.1 Environmental protection improvement initiatives 54

4.2.2 Certifi cation and training 54

4.2.3 Environmental indicators 55

Water consumption and wastewater discharges 55

Energy consumption and atmospheric emissions 56

Use of ground surfaces (watertight surfaces and total surfaces) 56

Waste generation 57

Other environmental indicators 57


ENVIRONMENT4

Against a background of well-established regulations, Faurecia

now boasts health, safety, environment, eco-design and regulatory

monitoring teams which, at Group, business, or site level are

tasked with identifying environmental and regulatory risks. These

teams analyze the impact of the various regulations and suggest

ways of ensuring that products are compliant. Close collaboration

with suppliers and strict controls as regards components delivered

and purchasing procedures also enable the Group to ensure the

compliance of parts received.

Faurecia is therefore compliant with current regulations on the

elimination of heavy metals and is now concentrating on the

elimination of lead from self-lubricating rings.

Material and substance reporting is ongoing, with a view to

ensuring constructor compliance with the future recycling section

of the approval phase, due to take effect on December 1, 2008 for

new vehicles.


ENVIRONMENT 4Faurecia products and the environment

From the product design phase, and in the technical expertise it

provides to automakers, Faurecia’s environment and sustainable

development policy covers three main issues:

decreasing the weight of components;•

developing recycling initiatives, such as anticipating the end-of-

life phase and optimizing waste and recycled plastic reuse;

stepping up the use of natural materials.

•

•

4.1.2 DECREASING THE WEIGHT OF PRODUCTS

Vehicle weight has become one of the automotive industry’s primary

concerns. CO2 emissions regulations are becoming increasingly

rigorous, and various tax incentives and sanctions are starting to

kick in. In such a climate, weight reduction is seen as a signifi cant

way for a company to stand out from its competitors.

Such developments are of particular importance for Faurecia for

several reasons:

Faurecia products account for a very signifi cant proportion of a

vehicle’s overall weight (15% to 20% for all Faurecia modules

together);

extensive vertical integration allows Faurecia the scope to work

on materials, components and product assembly.

Developments have been structured around various complementary

approaches:

continuous improvement (“Kaizen”) of existing components,

representing weight reductions of 5% to 10%, applies to most

of our products. Designing components in accordance with lean

production principles is of particular importance here;

•

•

•

new materials such as high-elastic-limit steel give weight savings

of around 10% on seat structures, cockpit crossmembers, or

multilayered compounds for improved soundproofi ng;

new product architectures with higher integration rates bring door

module weights down by 3 kg to 4 kg per vehicle. The Inpamo

system combines structure and instrument panel to achieve a

12% weight saving;

standard profi les and new assembly methods, such as a laser

welding technique for assembling metal parts without adding

extra material, bring weight reductions of 10%;

new technologies such as the Fiber Molding Process (FMP)

have resulted in a 30% weight saving in the manufacture of felt

acoustic components.

•

•

•

•

Faurecia takes environmental issues into account at every stage

in the product life cycle, from design to end-of-life. Dealings with

suppliers and the impact of production sites on the ecosystem are

also of concern to the Group.

4.1.1 PRODUCT DESIGN


ENVIRONMENT4 Faurecia products and the environment

4.1.3 RECYCLING INITIATIVES

4.1.3.1 Optimizing use of production waste

In the interests of limiting the environmental impact of its

manufacturing activities, Faurecia has set itself ambitious objectives

on the reuse of production waste and scrap. The Group is particularly

anxious to avoid landfi ll disposal.

Total production waste recycled in 2007 by the Acoustics Division

increased by 16%, reaching an overall recovery rate of 43% by

weight. These efforts are set to continue, with a target of 70%

by 2009.

4.1.3.2 Preparing for end-of-life phase

Under increasingly strict regulations, automakers are making ever

more stringent demands on their equipment suppliers in terms

of recycling end-of-life products. All of Faurecia’s businesses

are concerned by these obligations and, depending on the

characteristics of the component in question, have implemented

plans or solutions to ensure that end-of-life products will be

processed as effi ciently as possible in the future.

For Renault, Faurecia’s Automotive Seating division applied eco-

design rules to the seat padding used in the recent Laguna III. The

padding was developed by examining the removal of foams, the

separation of materials and the chemical compatibility of the various

plastic components. This has enabled Faurecia to anticipate end-

of-life phases such as dismantling and crushing, contributing to the

new Laguna’s compliance with European regulations.

In 2007, the Instrument Panels business launched a study to

assess each of the processing stages involved in a vehicle’s

end-of-life phase. This study was carried out in conjunction with

other industry players and recycling companies. Until now, these

components were crushed at the same time as the vehicle’s frame,

and the plastics could not be recycled. The objective, therefore, is

to determine the feasibility of current processes.

The same type of approach has been adopted for bumpers. 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, to the point where

bumper materials can be recycled from one generation of vehicles

to another without any loss in product functionality. The outcome

of the Group’s research should enable its teams to draw up an

economic and technical model that is most suited to Faurecia for

recycling end-of-life bumpers.

4.1.3.3 Use of recycled plastic

Rarely used in vehicle interiors until now, recycled materials are

increasingly present in new car models. Faurecia is contributing to

these changes, in particular within the Vehicle Interior business, by

offering a growing number of parts made from recycled plastic –

mainly polypropylene (talc-charged or not), or recycled polyolefi n

grades. In the long-term, the tests and validations resulting from

this research should enable the Group to incorporate these

materials into the design of several non-visible instrument panel

components.

Depending on the type and category of the vehicle, various

automotive seating components are now made of recycled

polypropylene. Recycled plastics add up to around three kilograms

across Faurecia Automotive seating components alone. Tests are

in progress to develop new applications, particularly for vehicle

interior parts that are not highly visible. And Faurecia is maximizing

the incorporation of recycled natural fi bers (cotton, in the main) in its

vehicle soundproofi ng systems.


ENVIRONMENT 4Faurecia products and the environment

4.1.4 USE OF NATURAL MATERIALS

New car models are also using more and more natural materials

and fi bers. In anticipation of the trend, Faurecia invested in this

area and can offer its customers a range of solutions made from

recycled materials.

4.1.4.1 Natural fi bers and composites

Faurecia designs and manufactures door panels using composite

materials that combine wood fi bers with polyolefi n or polyester.

These materials contain 63% to 73% of natural fi bers. Instrument

panels are also produced combining linen fi bers and a polypropylene

matrix. These use 40% to 60% natural fi bers, depending on the

mechanical properties required. The use of natural fi bers as

reinforcement in plastic parts brings weight savings of between

25% and 30%. The use of these materials makes the Group less

dependent on oil, the price of which is currently spiraling, and allows

it to reduce its overall environmental footprint. Wood and linen are

entirely renewable and locally available, and require much less start-

up energy than alternative solutions, such as glass fi bers. Faurecia

is one of the few automotive equipment suppliers in the world to

have developed such materials, which are used in both premium

vehicles and volume-production models such as the Citroën C4,

Toyota Corolla and Avensis, Audi A4, Ford C-Max and Volvo C70

Coupé (wood fi bers), and the Opel Astra and SmartForTwo (linen).

4.1.4.2 Biomat

In 2007, Faurecia started research into the replacement of materials

derived from fossil resources with materials derived from fully

renewable resources. Although some solutions do already exist,

none have been able to meet the automotive market’s requirements

in terms of economic positioning or technical feasibility.

Faurecia’s aim is to develop a biopolymer for specifi c vehicle interior

applications, such as inserts, air ducts and trims. These are technical

materials, which meet signifi cant technical requirements in terms

of safety, regulations, thermal resistance, dynamic fatigue, odors,

VOC, etc. They are transformed using traditional, low-investment

processes, and the price per kilogram remains competitive

compared to more conventional materials. This research should

eventually result in an industrial application with high volumes of

materials derived from renewable resources, such as linen, hemp,

cereal, beet and corn.

This project has been earmarked by the Pôle de Compétitivité

Industrie Agro-Ressources, an agro-industry regional business

cluster whose objectives include whole-plant utilization, and, more

generally, sustainable development and respect for the environment.

The production of these materials is forecast for 2010.

4.1.5 SUPPLIER MANAGEMENT

Faurecia’s components purchasing policy continued to evolve

in order to factor in environmental protection at every step in the

product supply chain. Since July 1, 2007, the Group has been

requesting its main suppliers to comply with Faurecia’s corporate

social responsibility and environmental requirements. These

requirements mainly concern compliance with various regulations,

including those on health and safety in the workplace, certifi cation

of the environmental management system (e.g., ISO 14001), the

development of eco-friendly products and a ban on prohibited

products and substances. By the end of 2007, over 180 suppliers

had signed up to these requirements. This request follows on from

the initiative started in 2006, concerning ISO 14001 certifi cation for

the Group’s 400 largest outside suppliers in terms of revenues. By

end-2007, over 60% of suppliers had obtained this certifi cation.

In October 2007, specifi c action was taken with respect to the

implementation of the REACh directive, aimed at all suppliers

providing Faurecia with chemical products or articles containing

chemical substances intended to be released. In accordance with

the recommendations of various automotive industry committees

and working groups, of which it is a member, Faurecia ensures

that suppliers are aware of the directive’s requirements in terms of

registration, evaluation and authorization, and, where applicable,

makes allowance for the withdrawal of some of these substances

from the market.


ENVIRONMENT4 Faurecia’s manufacturing sites and the environment

4.2.1 ENVIRONMENTAL PROTECTION IMPROVEMENT INITIATIVES

To limit the impact of its industrial activities on the natural

environment surrounding its sites, in particular in terms of the

emission of hazardous substances into the air and water and the

generation of greenhouse gas emissions, Faurecia has continued to

introduce pollution abatement equipment for use at the end of the

manufacturing process in order to reduce the quantity and harmful

effects of emissions. For example, the Etupes site has changed

the cooling process for its injection presses, which has helped

to reduce energy consumption. The Audincourt site changed the

primer applied to bumpers for a water-soluble product. Other

sites have swapped traditional adhesives for aqueous adhesives,

helping to reduce VOC emissions. Finally, optimizing logistics fl ows

and curtailing the time slots for heavy goods deliveries has allowed

the Group to limit noise pollution around certain sites. The Group’s

sites invested a total of €4.6 million in environmental protection

measures in 2007. This included bringing existing installations into

compliance with regulations.

4.2.2 CERTIFICATION AND TRAINING

In line with the Group’s environmental policy, Faurecia’s sites are

gradually implementing environmental management systems

based on the ISO 14001 standard within the overall framework of

the Faurecia Excellence System (FES).

External certifi cation and surveillance audits are carried out by

SGS with a view to validating this implementation. The number of

ISO 14001-certifi ed sites continues to rise (99 sites in 2007), with

certifi cation of all production sites with more than 50 employees

targeted for the end of 2009. New or recently consolidated sites are

obliged to obtain this certifi cation within three years.

As well as implementing ISO 14001 management systems, in

2007 Faurecia organized environmental training and awareness-

raising sessions targeted at all employees. In 2007, 11,633 hours

of environmental training were provided to 12,779 employees,

representing an investment of €124 thousand.

ISO 14001 environmental certifi cation

0

5,000

10,000

15,000

20,000

0

50

100

150

200

250


ENVIRONMENT 4Faurecia’s manufacturing sites and the environment

4.2.3 ENVIRONMENTAL INDICATORS

Since the end of 2003, the Faurecia Group has assessed the environmental impact of its operations through an extensive global survey of all

its sites. The reliability of the results increases each year, which has led to greater in-depth awareness of the impacts caused by the Group’s

operations.

WATER CONSUMPTION AND WASTEWATER DISCHARGES

The Group’s total water consumption for 2007 is estimated at

2.8 million cubic meters, an increase of 9.5% on 2006. The origin of

water used by the Group’s plants breaks down as follows: 50% was

drawn from municipal water networks, 32% from rivers and 18%

from groundwater. This water is mainly used for cooling purposes.

Some 52% of the water consumed can be recycled internally or

released directly into the natural environment, while the remainder

is discharged to wastewater networks.

Of the Group’s 182 sites, 78 are required to report self-monitoring data with the local authorities on the quality of their wastewater discharge s.


ENVIRONMENT4 Faurecia’s manufacturing sites and the environment

ENERGY CONSUMPTION AND ATMOSPHERIC EMISSIONS

The Group’s total energy consumption for 2007 is estimated at

1.8 million MWh, broken down as follows:

33% natural gas, 62% electricity, 3% liquefi ed petroleum gas

(LPG), and just over 1% fuel oil and 1% steam. During the year, 86

sites reported that they had put in place plans to manage energy

consumption at local level.

Atmospheric emissions from energy consumption result mainly from

natural gas, liquefi ed petroleum gas and fuel oils. Of the Group’s

182 sites, 86 are required to report self-monitoring data with the

local authorities on the quality of their atmospheric emissions.

The Group’s greenhouse gas emissions, CO2 emissions in

particular (137,000 metric tons of CO2 in 2007), fell considerably

compared with 2005 (171,000 metric tons of CO2), while energy

consumption has remained stable. This is due to more widespread

use of electric energy and lower consumption of certain fuels.

The breakdown of atmospheric emissions is provided on

page 57.

62%

Electricity

3%

Steam

1%

LPG

1%

Fuel oil33%

Natural gas

Direct energy consumption by source in 2007

62%

Electricity

3%

Steam

1%

LPG

1%

Fuel oil33%

Natural gas

Direct energy consumption by source in 2007

USE OF GROUND SURFACES (WATERTIGHT SURFACES

AND TOTAL SURFACES)

Faurecia sites occupy a total surface area of 668 hectares

worldwide, 67% of which is sealed against rainwater.


ENVIRONMENT 4Faurecia’s manufacturing sites and the environment

WASTE GENERATION

The Group generated 201,000 metric tons of waste in 2007, down

13% on 2006. The majority of this waste consisted of metals (42%),

which are released into the metals recycling circuit. As regards

other waste, 17% was recovered externally, for heat or as raw

material, and 5% was eliminated in otherways (incineration without

energy recovery or physico-chemical or biological treatment), 32%

was landfi lled, and 4% was recycled internally.

OTHER ENVIRONMENTAL INDICATORS

List of sites for which a legal ruling is pending on environmental compliance

Site Cause

Fountain Inn Failure to monitor atmospheric emissions in 2005

Granger M onitoring groundwater pollution

Hordain Failure to update an operations permit

Kosice Failure to m onitor atmospheric emissions

San Joao de Madera Compliance with local regulations and monitoring atmospheric emissions

Trabitz Monitoring historical groundwater pollution

Valencia Failure to monitor VOC emissions

Sources of atmospheric emissions in 2007

CO2

N2 O CH

4SO

2NO

2

Natural gas 119,180 1 8 1 126

Liquifi ed petroleum gas 14,011 0 1 0 13

Heavy fuel oil (4% sulfur rate ) 3 0 0 0 0

Low-sulfur industrial fuel oil (2% sulfur rate ) 24 0 0 0 0

Very low sulfur industrial fuel oil (1% sulfur rate ) 274 0 0 2 1

Light fuel oil (0.3% sulfur rate ) 2,510 0 0 5 3

Total in metric tons 136,002 6 9 8 144

ENVIRONMENTAL PENALTIES AND DISPUTES

In 2007, 22 of Faurecia’s sites received a total of 30 notices of

violation or other notices for failure to comply with regulations

concerning the environment, working conditions and health and

safety. These notices were served in relation to updating permits

or other authorizations for operations, failure to respect thresholds

defi ned in the relevant authorizations, noise and odor pollution,

and other issues. Eight of the sites concerned were ordered to pay

€56,000 in penalties. Twelve disputed cases are still in progress

against Faurecia worldwide for issues relating to the environment,

working conditions and health and safety.


ENVIRONMENT4

CONTENTS

QUALITY

5






QUALITY5 Breakthrough Quality Plan

Faurecia management has set quality as number-one priority for

the Group.

In October 2006, Faurecia launched the Breakthrough Quality

Plan, a top-down initiative designed to nurture new mindsets on

quality across all Faurecia sites. Specifi c targets set for 2008 are

a customer rejects of 15 ppm and zero signifi cant alerts on safety

and regulatory issues.

The plan is rooted in seven simple, practical rules on problem-

solving at development and production stages. Rather than

introducing new tools, it involves rigorous, disciplined application of

quality basics (such as QRQC, “quick response on quality control”)

by each employee. Management runs daily shopfl oor reviews,

and Quality Department audits are carried out for critical sites and

projects.

QRQC is a management approach whereby all defects must be

met by corrective action immediately, or within 24 hours at the

latest, working from an in-depth analysis to pinpoint the root

causes of the problems and determine appropriate technical

solutions for cross-functional implementation. It applies at all levels

in the company organization, from production-line operators up to

workshop supervisors and site management. It extends to project

development teams and development centers as well as production

facilities. And it is also used to tackle problems in logistics, supplier

relations and HSE (health-safety-environment).

Through personal involvement from all employees at all levels, a

structured management ramp-up process, and full management

support, the plan produced an immediate improvement in

production quality results:

six-fold reduction of costly quality “walls” in one year;

three-fold reduction in customer refusals, from 103 to 33 ppm

(average for second half of 2007);

2008 target of 15 ppm already reached at over 100 sites out

of 187.

For production quality basics to be effective, development quality

basics must be applied with rigor and discipline by program

teams. With this in mind a wide-reaching training program for

all development personnel was begun in 2007. So far, 70% of

Faurecia’s 3,100 engineers, including innovation teams, have taken

courses.

Under its Breakthrough Quality P lan, Faurecia has also developed

a concrete quality validation review system for critical program

phases.

All programs are monitored over the fi rst six months of volume

production, to the criteria of customer satisfaction, ppm, compliance

with delivery schedules, personnel safety, warranty claims and

safety problems (with zero tolerance). Immediate action is taken on

any problems arising.

In 2007, Faurecia fi nalized rollout of its Faurecia Core Procedures

(FCP), for standardizing quality system architectures and simplifying

preparation for site certifi cation audits.

•

•

•


QUALITY 5Outlook for 2008

Faurecia’s Vehicle Interior Systems Product Group won Ford’s

Gold Excellence Award for its Cologne site in Germany, and the

Silver Excellence Award for its Valencia site in Spain. These are the

highest distinctions awarded by Ford worldwide, in recognition of

excellence in quality, cost and leadtime performance.

Faurecia’s Exhaust Systems product group won the quality trophy

awarded by PSA to its four best suppliers. This distinction rewards

Faurecia’s excellent quality results in volume-production deliveries

(25 ppm on average in 2007, 50% better than in 2006) and its

committed involvement in PSA’s supplier aftersales response

system.

Faurecia is on track to reach its quality targets for 2008, namely

a 15 ppm customer rejects and zero regulatory/safety alerts with

customer impact.

Because customer satisfaction is the ultimate goal of any quality

endeavor, special efforts are made to ensure that all Faurecia

sites understand and meet all their customers’ expectations and

indicators.

Program control remains a major challenge for Faurecia, and a

program excellence plan, along similar lines to the quality plan, is

being fi nalized for rollout in 2008.


QUALITY5

6CORPORATE

GOVERNANCE


CONTENTS


6.1.1 Membership of the Board of Directors 64

6.1.2 Activities of the Board of Directors and its specialized committees 65

6.1.3 Compensation received by the Chairman and Chief Executive Offi cer 66

6.1.4 Directors’ compensation 67


6.2.1 Executive committee compensation 69



6.4.1 Information policy 71

6.4.2 Faurecia’s capital 72

6.4.3 Changes in Faurecia’s share price 72


CORPORATE GOVERNANCE6 Board of Directors

6.1.1 MEMBERSHIP OF THE BOARD OF DIRECTORS

The Board of Directors consists of eleven members, fi ve of whom

are considered to be independent (compared with four in 2006),

based on the defi nition in the report published by the AFEP-MEDEF

working group aimed at improving corporate governance in French

listed companies. Five Directors directly represent the interests of

the majority shareholder. Since February 16, 2007, Yann Delabrière

has been Faurecia’s Chairman and Chief Executive Offi cer. The

Board considers that its membership adequately refl ects the

weight in Faurecia’s ownership structure of Peugeot SA, its key

shareholder.

Members of the Board of Directors are chosen on account of their

skills in Faurecia’s main areas of business, their autonomy and their

determination to consider the interests of all shareholders. The global

and international experience of independent Directors in industry

enhances the decisions and work of the Board. The following

changes occurred on the Board in 2007. On February 2, 2007, the

Board of Directors appointed Christian Streiff to replace Jean-Martin

Folz and this decision was ratifi ed by the Shareholders’ Meeting of

May 29, 2007. Grégoire Olivier resigned from his duties as Director

on February 16, 2007. Following this decision, Yann Delabrière was

elected as Chairman of the Board of Directors and Chief Executive

Offi cer of Faurecia. At the Shareholders’ Meeting of May 29, 2007

Jean-Pierre Clamadieu and Robert Peugeot were appointed to

replace Daniel Dewavrin and Louis Defl ine, respectively, whose

directorships expired. The Board also appointed Sylvie Rucar to

replace Grégoire Olivier and Ross Mc Innes to replace Patrick

Duverger who resigned. Lastly, on October 8, 2007, the Board

appointed Isabel Marey-Semper to replace Sylvie Rucar who

resigned.

As a result of these changes, the Board now has the following

members.

Yann DELABRIÈRE Chairman and Chief Executive Offi cer

Jean-Pierre CLAMADIEU Director

Frank ESSER Director

Jean-Louis GÉRONDEAU Director

Jean-Claude HANUS Director

Gérard HAUSER Director

Ross Mc INNES Director

Isabel MAREY-SEMPER Director

Thierry PEUGEOT Director

Robert PEUGEOT Director

Christian STREIFF Director

In 2007, the Board of Directors reaffi rmed its commitment to

ensuring that Directors are independent by appointing one additional

independent Director as compared to last year. Any Director who

“does not have any relationship with the Company, the Group or the

Group’s management that may impair his/her judgment” is deemed

independent.

As of April 10, 2008, Faurecia’s fi ve independent Directors are

Frank Esser, Ross Mc Innes, Jean-Pierre Clamadieu, Jean-Luc

Gérondeau, and Gérard Hauser.


CORPORATE GOVERNANCE 6Board of Directors

6.1.2 ACTIVITIES OF THE BOARD OF DIRECTORS

AND ITS SPECIALIZED COMMITTEES

6.1.2.1 Board of Directors

ROLE OF THE BOARD OF DIRECTORS

The Board of Directors determines overall business, fi nancial 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, at the Chairman’s initiative the Board deals with all matters

concerning the Company’s affairs and decides on matters involving

the Company, notably in relation to all strategic decisions for the

Company and the Group.

ORGANIZATION OF THE BOARD OF DIRECTORS

The internal rules of the Board of Directors, which may be consulted

by shareholders at the Company’s headquarters, are aimed

at organizing the work of the Board and ensuring that Directors

receive all requisite information. They describe the Board’s modus

operandi and its role in the management of the Company and the

Group as carried out in accordance with the law and the Company’s

bylaws. They also specify the rights and responsibilities of Board

members, particularly regarding the prevention of confl icts of

interest, the holding of multiple directorships and the need for strict

confi dentiality as well as diligence in taking part in the Board’s work.

In addition they set out rules governing transactions involving the

Company’s shares, as recommended by the Autorité des marchés

fi nanciers.

The Board of Directors is free to decide how the general

management of the Company is 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 Offi cer. Since the Board meeting of September 8,

2006, the position of Chief Executive Offi cer has been held by the

Chairman of the Board. The Board of Directors confi rmed this

management method at its meeting of February 16, 2007 when

Yann Delabrière was appointed Chairman and Chief Executive

Offi cer to replace Grégoire Olivier.

The Board of Directors determines the Company’s main economic

and fi nancial strategies in accordance with the law and the

Company’s bylaws.

6.1.2.2 Operation of the Board of Directors

The Board met seven times during 2007, principally to review

the Group’s budget, business activities and results, as well as its

fi nancing and major business strategies. During these meetings

the Board reviewed information prepared by the Audit Committee

and the Appointments and Compensation Committee, including

the interim and annual fi nancial statements, sales and earnings

forecasts, the appointment of a new Chairman and Chief Executive

Offi cer and his powers and compensation, the restructuring of

the Board of Directors, Audit Committee and Appointments and

Compensation Committee, and a stock option plan for directors

and senior managers of the Group. One meeting was devoted to

the Group’s medium-term outlook and strategic direction.

The attendance rate of Directors at Board Meetings in 2007 was

91%. All members of the Board Committees attended every

Committee meeting.

Following a review by the Appointments and Compensation

Committee several years ago, the Board implemented a procedure

for the evaluation of its work, using a survey to obtain feedback

from each Director on the methods of functioning of the Board and

on whether the Directors were given access to all the information

needed to perform their duties and that they were given the

opportunity to formulate any signifi cant observations. Directors’

responses to the survey and suggestions are then analyzed by the

Chairman of the Appointments and Compensation Committee, who

reports to the Board on his fi ndings and the results of his work.

6.1.2.3 Specialized Committees

In 2003, the Board of Directors also set up an Audit Committee and

an Appointments and Compensation Committee.

APPOINTMENTS AND COMPENSATION

COMMITTEE

This Committee is responsible for preparing the Board of Directors’

decisions concerning:

the appointment of future Directors; the Committee must

therefore determine the criteria for selecting Directors, prepare

the selection process and make proposals with regard to the

appointment or reappointment of Directors;

compensation received by corporate offi cers, including the

Chairman;

the granting of stock options.

The Committee met fi ve times in 2007. At its meeting of February 2,

2007, the Board of Directors appointed Christian Streiff as member

of the Appointments and Compensation Committee and Jean

Claude Hanus as Committee Chairman. At its meeting of May 29,

2007, the Board of Directors appointed Jean-Pierre Clamadieu

•

•

•


CORPORATE GOVERNANCE6 Board of Directors

as member of the Appointments and Compensation Committee

and confi rmed the appointments of Christian Streiff, Jean-Claude

Hanus and Gérard Hauser.

AUDIT COMMITTEE

This Committee’s role is to conduct an in-depth review of the interim

and annual fi nancial statements, the Group’s most signifi cant

fi nancial transactions and its reporting package. It monitors off-

balance sheet commitments and information used to assess the

risks incurred by the Group. It is thus responsible for preparing

the Board meetings held to review the interim and annual fi nancial

statements and for informing the other Board members on these

subjects.

For that purpose, it reviews the fi nancial 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 Audit Committee also ensures that the accounting principles

that have a material impact on the presentation of the Company’s

fi nancial statements are formally approved by Management and

the Statutory Auditors, that they are brought to the attention of the

Board of Directors, that the principal accounting procedures and

decisions made are explained and justifi ed by Management to the

Board and reviewed by the Statutory Auditors, that the Statutory

Auditors are given all the information they require to perform their

duties and that they are given the opportunity to formulate any

signifi cant observations they may have.

The Committee met four times in 2007. At its meeting of May 29,

2007, the Board of Directors appointed Christian Streiff as member

and Chairman of the Audit Committee and Ross Mc Innes as

member of the Committee, and confi rmed the appointment of

Jean-Luc Gérondeau. At its meeting of October 8, 2007, the

Board appointed Isabel Marey-Semper as member of the Audit

Committee.

6.1.3 COMPENSATION RECEIVED BY THE CHAIRMAN

AND CHIEF EXECUTIVE OFFICER

Grégoire Olivier stepped down from his position as Chairman

and Chief Executive Offi cer of Faurecia at the Board of Directors

meeting of February 16, 2007. In 2007 he received €87,300 in

fi xed compensation, calculated on a pro rata basis to the time

he worked for the Company during the year, as well as variable

compensation of €190,000 for 2006. His fi xed compensation in

2006 was €217,715 and he received €250,000 that year in the

form of an exceptional bonus. Grégoire Olivier was not granted any

special benefi ts payable in the future.

At its February 16, 2007 meeting the Board of Directors appointed

Yann Delabrière to replace Grégoire Olivier as Chairman and Chief

Executive Offi cer and during the year Yann Delabrière received

€487,828 in fi xed compensation for that position. This amount was

set by the Board prior to Yann Delabrière’s appointment based on

a recommendation made by the Appointments and Compensation

Committee. The Board also decided that Yann Delabrière should

receive variable compensation, representing up to 100% of his

fi xed salary and determined based on (i) operating results; (ii) the

debt-to-EBITDA ratio; (iii) the level of orders for which the operating

margin is at least equal to 3%; and (iv) the quality of his managerial

skills and business approach. Acting on the recommendation of the

Appointments and Compensation Committee, at its February 8,

2008 meeting the Board of Directors set Yann Delabrière’s variable

compensation at €520,000 for 2007.

In addition, Grégoire Olivier and Yann Delabrière respectively

received €3,714 and €17,000 in Directors’ fees in 2007.

The benefi ts in kind granted to Grégoire Olivier and Yann Delabrière

are the same as those granted to Faurecia’s senior executives.

They include a company car and, for the Chairman, the services

of a chauffeur.

The Chairman and Chief Executive Offi cer is not entitled to any

deferred compensation in the event that his term of offi ce is

terminated.

Grégoire Olivier did not receive or exercise any stock options

during 2007.

Yann Delabrière received 40,000 stock options, as decided by the

Board at its meeting on April 16, 2007. The Board also decided

that if Yann Delabrière exercises any of these options before the

end of his term of offi ce he must keep in registered form a number

of shares corresponding to a value representing 20% of the gross

gain on the exercised options.


CORPORATE GOVERNANCE 6Board of Directors

(Gross amounts in €) 2007 2006

Compensation paid to Grégoire Olivier

Total compensation 281,014 476,430

of which variable portion for 2006 190,000 -

of which benefi ts in kind 1,015 1,015

of which exceptional bonus - 250,000

of which Directors’ fees 3,714 8,715

Compensation paid to Yann Delabrière

Total compensation 504,828 20,143

of which variable portion for 2006 - -

of which benefi ts in kind 5,287 -

of which exceptional bonus - -

of which Directors’ fees 17,000 20,143

6.1.4 DIRECTORS’ COMPENSATION

Directors’ compensation is paid in the form of attendance fees,

which are designed to take into account the Board members’

effective attendance at meetings and their attendance at Committee

meetings. Directors therefore receive a fi xed portion in recognition of

their function and a variable portion based on the number of Board

meetings attended. They also receive additional compensation if

they are a member of one of the Board’s Committees.

The Directors in offi ce on December 31, 2007 received the following attendance fees:

DirectorsAttendance fees

paid in 2007Attendance fees

paid in 2006

Jean-Pierre CLAMADIEU €11,429 -

Yann DELABRIÈRE €17,000 €20,143

Frank ESSER €11,857 €10,429

Jean-Louis GÉRONDEAU €21,000 €18,429

Jean-Claude HANUS €21,000 €21,000

Gérard HAUSER €20,143 €21,000

Isabel MAREY-SEMPER €5,857 -

Ross Mc INNES €11,429 -

Grégoire OLIVIER €3,714 €8,715

Thierry PEUGEOT €13,000 €13,000

Robert PEUGEOT €7,429 -

Christian STREIFF €21,000 -

Fixed and variable compensation, as well as all benefi ts granted

by Peugeot SA, the controlling company, to its corporate offi cers

who also hold a corporate offi ce in Faurecia were the following.

The compensation awarded to Christian Streiff in his capacity as

Chairman of the Managing Board of Peugeot SA for 2007 was

€1,906,681 million. The compensation paid to Thierry Peugeot in

his capacity as Chairman of the Supervisory Board of Peugeot SA

amounted to €457,000 in 2007. The compensation paid to Robert

Peugeot in his capacity as member of the Supervisory Board

of Peugeot SA amounted to €22,000 in 2007. Faurecia does

not have any information on its own corporate offi cers who are

not also offi cers of the controlling company. Faurecia specifi es

that no compensation other than the Directors’ attendance fees

mentioned above was paid in 2007 to any of its corporate offi cers

by the Company or its subsidiaries.


CORPORATE GOVERNANCE6 Executive Committee

Faurecia’s executive management is performed under the responsibility of the Chairman and Chief Executive Offi cer by the Group Executive

Committee that meets every month to review the Group’s results and consider general matters concerning the Group.

Its membership was as follows as of April 10, 2008:

Name Position

Yann DELABRIÈRE Chairman of the Board of Directors and Chief Executive Offi cer

Arnaud de DAVID-BEAUREGARD Executive Vice-President, Group Development

Jean-Marc HANNEQUIN Executive Vice-President, Exhaust Systems Product Group

Frank IMBERT Chief Financial Offi cer

Patrick KOLLER Executive Vice-President, Automotive Seating Product Group

Thierry LEMANE Executive Vice-President, Group Communications

Jacques LE MORVAN Executive Vice-President, Group Purchasing

Jacques MAUGE Executive Vice-President, Group Customer Development

Bruno MONTMERLE Executive Vice-President, Group Strategy

Christophe SCHMITT Executive Vice-President, Interior Systems Product Group

Jean-Pierre SOUNILLAC Executive Vice-President, Group Human Resources

Guy TALBOURDET Executive Vice-President, Modules & Systems Product Group

The Faurecia Group is organized into Product Groups which are

responsible for product management and development activities

worldwide.

The Product Groups are responsible for the operating results of

their activities, as well as investments and the management of

operating cash fl ow.

Faurecia comprises four Product Groups:

the Seating Product Group is responsible for the management

and development of the complete seat unit and all aspects

of the design and production of seats such as metal frames,

mechanisms, comfort and security sub-modules, foams and

covers;

the Interior System Product Group is responsible for the

management and development of the main parts which make up

the vehicles’ interior such as instrument panels, cockpits, center

consoles, door panels and door modules;

the Exhaust System Product Group is responsible for the

management and development of complete exhaust systems

and exhaust components covering both the hot and cold ends

of the exhaust system such as particulate and exhaust fume

treatments (hot end) and acoustic solutions (cold end);

•

•

•

the Modules and Systems Product Group comprises the acoustic

package, vehicle exterior and front-end modules divisions.

The functional departments include:

the Finance and Human Resources Departments responsible for

the management of their respective areas of expertise. They are

structured around country-based divisions and shared service

centers in charge of providing fi nancial management services

(cash fl ow, accounting) and human resources management

services to the Faurecia Group as a whole;

the Strategy Department drives the Group’s strategic direction

and medium-term planning, and coordinates the Product Groups

innovation and R&D activities as well as Faurecia’s growth in

emerging markets;

the Customer Development Department coordinates the Group’s

sales policy and the Purchasing Department supervises the

Group’s relations with its suppliers. The Development Department

is in charge of the Group’s external growth operations and

fi nancial and legal management of the relations with its partners

in joint ventures. The Communications Department ensures the

application of the group’s internal and external communications

policies.

•

•

•

•


CORPORATE GOVERNANCE 6Executive Committee

6.2.1 EXECUTIVE COMMITTEE COMPENSATION

The total compensation paid or allocated to Directors and offi cers

of the Company and Group in respect of 2007 amounted to

€7,201,661, including a total of €197,428 in attendance fees.

The fees paid to Executive Committee members include a

variable performance bonus. This is equal to 0%-40% of the basic

compensation of most members, but may reach up to 60%. Each

bonus depends not only on the level of individual performance, but

also on collective performance indicators, such as quality, operating

margin and debt.

If the employment contract of an Executive Committee member

is terminated by Faurecia, that member may receive contractual

severance pay of up to 12 months’ compensation, depending on

his/her position. Such severance pay is not payable in the event of

gross or serious misconduct.


CORPORATE GOVERNANCE6 Auditing of Accounts

In accordance with French law on commercial companies,

Faurecia’s Statutory Auditors certify the Company and Group

fi nancial statements and review the situation of its fully consolidated

subsidiaries.

The Statutory Auditors are appointed by the Shareholders’ Meeting.

The Shareholders’ Meeting of May 29, 2007 renewed the term of

offi ce of PricewaterhouseCoopers and Ernst & Young for a term

of six years. The engagement of PricewaterhouseCoopers, which

was fi rst appointed at the Shareholders’ Meeting of May 27, 2003,

and the engagement of Ernst & Young, which was fi rst appointed

at the Shareholders’ Meeting of June 17, 1983, will expire at the

Shareholders’ Ordinary Meeting to be held in 2013.

In 2007, PricewaterhouseCoopers received €1.9 million in respect

of their audit assignments and €0.04 million in respect of their other

duties. Ernst & Young received €2.8 million in respect of its audit

assignments.

A table giving details of the total fees booked in 2007 by Faurecia

and its fully consolidated subsidiaries for the work entrusted to the

Statutory Auditors appears on page 187.


CORPORATE GOVERNANCE 6Faurecia and its Shareholders

6.4.1 INFORMATION POLICY

Faurecia informs the fi nancial markets of all the appropriate

information to objectively assess its growth strategy and results.

This fi nancial communication policy aims to provide all private and

corporate shareholders with specifi c and accurate information in

accordance with stock market practice.

Its policy is based, fi rst, on the periodic circulation of compulsory

information (periodic publications in the French Bulletin of

Compulsory Legal Announcements, or BALO). This information is

then supplemented by the press releases intended for the fi nancial

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 fi nancial analysts and economic journalists

with a view to giving details of the challenges facing the Group, its

sales and income.

Faurecia’s website (www.faurecia.fr) provides shareholders with

all information on the Group. Furthermore, an e-mail address

([email protected]) and a free subscription system allow

shareholders to receive the documents of their choice directly

(annual report, Company brochure, press releases, etc.).

In 2007, Faurecia facilitated access to regulated information on

its website. Such information can now be found under “Faurecia/

Shareholder information/AMF regulated information.”

Employee shareholders also have access to a dedicated web

space on Faurecia’s Intranet site that provides information on the

Group employee savings plan.

The annual report presented and fi led as a registration document

with the Autorité des marchés fi nanciers (AMF) and the report on

the interim fi nancial statements are circulated on a wide scale

within the fi nancial community.

2008 Timetable

February 11 7:30 a.m. Publication of results – H2 2007 and FY 2007

April 17 7:30 a.m. Publication of sales – Q1 2008

May 27 10:00 a.m. Shareholders’ Meeting

July 22 7:30 a.m. Publication of results – H1 2008

October 20 7:30 a.m. Publication of sales – Q3 2008


CORPORATE GOVERNANCE6 Faurecia and its Shareholders

6.4.2 FAURECIA’S CAPITAL

No shares have been issued that do not represent the Company’s capital. As of December 31, 2007, the Company’s capital amounted to

€170,765,336, divided into 24,395,048 shares of €7 each, all of the same class, subscribed and paid up in full. These shares represent

41,454,505 voting rights.

Based on information taken from shareholder accounts, Faurecia’s ownership structure and voting rights as of December 31, 2007 were as

follows:

Shareholder Shares (%) Double voting rights Single voting rights Total (%)

Peugeot SA 17,285,197 70.85 17,285,197 34,570,394 83.40

Faurecia Actionnariat corporate mutual fund 67,537 0.28 67,537 67,537 0.16

Treasury stock 270,814 1.11

Other 6,771,500 27.76 45,074 6,726,426 6,816,574 16.44

TOTAL 24,395,048 100 17,330,253 6,793,963 41,454,505 100

According to the information disclosed to the Company and/or the

market as of December 31, 2007:

Richelieu Finance holds 7.99% of Faurecia’s capital, representing

4.70% of the Company’s voting rights; this company declared

holding 6.76% of Faurecia’s capital as of February 15, 2008

representing 3.98% of the Company’s voting rights;

no other shareholder holds over 5% of the Company’s capital or

voting rights;

1,660,000 registered shares, i.e., approximately 6.8% of

Faurecia’s capital, are pledged with Société Financière de

Banque (SOFIB).

•

•

•

Peugeot SA is the only holder of registered shares which reported

pledges on the Company’s shares.

The Directors hold approximately 0.001% of the capital and voting

rights.

No shareholders’ agreement has been notifi ed to the Company.

As of April 10, 2008, there were no major changes as compared to

the situation as of December 31, 2007.

6.4.3 CHANGES IN FAURECIA’S SHARE PRICE

Faurecia shares are traded on the Eurolist market of Euronext

Paris SA:

In 2007, the price of Faurecia shares fell by 5.1% to €46.60 at the

end of the year, as compared to €49.08 at the end of 2006. During

the same period, the SBF 120 index rose slightly, by 0.3%. The

average price of Faurecia shares in 2007 was €55.62, the highest

price of €68.00 was recorded in July 2007 and the lowest price

was €46.51.

Trading volumes remained moderate, with average monthly

exchanges of 449,175 shares, representing €25.3 million (rotation

rate of 1.8%).

6.4.3.1 Share price and trading volume (source: Euronext)

Price and trading volume

Price (in €) Trading volume

High Average LowNumber

of shares Amount (in k€)

2006

September 50.80 49.12 47.61 307,595 15,210

October 48.51 45.39 41.70 476,784 21,160

November 55.20 51.20 46.24 519,041 26,570

December 52.55 50.17 47.87 281,430 14,080


CORPORATE GOVERNANCE 6Faurecia and its Shareholders





2007

January 55.35 52.88 49.21 450,145 23,960

February 55.30 53.43 48.20 684,920 36,350

March 54.69 52.39 49.17 369,775 19,290

April 61.50 56.21 52.04 567,467 32,790

May 59.24 56.70 54.01 227,471 12,930

June 60.00 58.37 56.10 290,945 16,980

July 68.00 63.24 58.00 857,363 54,890

August 62.77 57.28 54.81 428,438 24,710

September 59.50 55.11 51.36 447,058 24,160

October 59.50 57.32 53.67 452,604 25,020

November 60.00 53.65 48.54 381,012 20,590

December 52.55 49.92 46.51 232,901 11,629





2008

January 48.16 37.60 30.44 813,972 29,565

February 38.49 35.36 32.10 428,272 15,201

March 35.99 33.77 32.03 372,625 12,602

6.4.3.2 Stock market data

31/12/2007 31/12/2006 31/12/2005

Stock market capitalization at period end (in € millions) 1,136.8 1,190.6 1,246.7

Share price (in €)

highest• 68.00 57.85 74.50

lowest• 46.51 38.50 51.00

At period end (in €) 46.60 49.08 51.45

Shareholders’ equity per share (in €) 32.88 42.56 60.90

6.4.3.3 Dividends

FAURECIA SHARES

YearNumber of shares carrying

dividend rights

Dividends paid

Net dividend (in €) Tax credit (in €)

Aggregate payment Payment date

2004 24,212,051 1.10 - 1.10 06/15/05

2005 24,233,601 - - - -

2006 24,259,236 - - - -

2007 24,395,048 - - - -


CORPORATE GOVERNANCE6 Faurecia and its Shareholders

6.4.3.4 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.

6.4.3.5 Figures Per Share

31/12/2007 31/12/2006 31/12/2005

Basic earnings (loss) per share (in €) (9.87) (18.72) (7.64)

Cash fl ow per share (in €) 13.65 10.14 20.73

The method used to calculate the weighted average number of shares after dilution to determine fi gures per share is explained in Note 9 of

the annex to Faurecia’s consolidated fi nancial statements (page 98).

CONTENTS


7





7.4 Statement of changes in consolidated shareholders’ equity 81

7.5 Notes to the consolidated fi nancial statements 82

7.6 Consolidated companies as of December 31, 2007 132

7.7 Statutory Auditors’ reporton the consolidated fi nancial statements 136


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS 7Consolidated income statements

(in € millions) Notes 2007 2006 2005

SALES 4 12,660.7 11,648.7 10,978.5

Cost of sales 5 (11,914.7) (10,921.5) (10,118.1)

Research and development costs 5 (268.6) (305.0) (276.4)

Selling and administrative expenses 5 (356.3) (353.0) (316.8)

OPERATING INCOME 121.1 69.2 267.2

Other operating income and expense 6 (225.8) (386.0) (315.0)

Income from loans, cash investments and marketable securities 15.9 10.9 9.1

Finance costs (117.0) (97.5) (74.6)

Other fi nancial income and expense 7 (13.8) (3.4) (12.6)

INCOME (LOSS) BEFORE TAX OF FULLY CONSOLIDATED COMPANIES (219.6) (406.8) (125.9)

Current taxes 8 (8.8) (48.1) (32.1)

Deferred taxes 8 (4.8) 12.9 (20.7)

NET INCOME (LOSS) OF FULLY CONSOLIDATED COMPANIES (233.2) (442.0) (178.7)

Equity in net income of companies accounted for by the equity method 13 2.3 4.4 5.9

CONSOLIDATED NET INCOME (LOSS) (230.9) (437.6) (172.8)

Net income attributableto equity holder of the parent (237.5) (447.9) (182.5)

Net income attributable to minority interests 6.6 10.3 9.7

Basic earnings (loss) per share (in €) 9 (9.87) (18.72) (7.64)

Diluted earnings (loss) per share (in €) 9 (9.87) (18.72) (7.64)


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7 Consolidated balance sheets

Assets

(in € millions) Notes Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Goodwill 10 1,288.6 1,289.3 1,414.5

Intangible assets 11 511.4 575.7 600.3

Property, plant and equipment 12 1,408.9 1,452.9 1,620.8

Investments in companies accounted for by the equity method 13 44.8 40.1 34.8

Other equity interests 14 1.8 1.3 2.3

Other non-current fi nancial assets 15 31.7 29.9 26.5

Other non-current assets 16 7.2 9.1 7.4

Deferred tax assets 57.2 54.8 111.6

TOTAL NON-CURRENT ASSETS 3,351.6 3,453.1 3,818.2

Inventories, net 17 566.2 581.4 543.8

Trade accounts receivable 18 1,635.2 1,759.4 1,742.4

Other operating receivables 19 256.1 268.0 239.3

Other receivables and prepaid expenses 20 67.6 62.8 49.3

Currency and interest rate derivatives 30 34.7 28.7 18.1

Cash and cash equivalents 21 550.1 586.6 623.3

TOTAL CURRENT ASSETS 3,109.9 3,286.9 3,216.2

TOTAL ASSETS 6,461.5 6,740.0 7,034.4


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS 7Consolidated balance sheets

Liabilities and shareholders’ equity

(in € millions) Notes Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

SHAREHOLDERS’ EQUITY

Capital stock 22 170.8 169.8 169.6

Additional paid-in capital 198,9 359.6 723.2

Treasury stock (11.5) (12.5) (13.6)

Retained earnings 642.1 917.0 733.2

Translation adjustments 39,2 40.4 46.0

Net loss for the year (237.5) (447.9) (182.5)

TOTAL SHAREHOLDERS’ EQUITY 22 802.0 1,026.4 1,475.9

Minority interests 23 44.3 64.2 64.4

TOTAL EQUITY 846.3 1,090.6 1,540.3

Long-term provisions 24 209.3 220.7 229.1

Long-term debt 26 1,160.0 1,065.6 599.0

Other non-current liabilities 2.9 2.8 3.2

Deferred tax liabilities 11.2 16.6 89.0

TOTAL NON-CURRENT LIABILITIES 1,383.4 1,305.7 920.3

Short-term provisions 24 298.0 254.5 185.3

Short-term debt 26 1,023.5 1,234.3 1,622.4

Prepayments from customers 195.9 133.5 84.1

Trade payables 2,162.6 2,128.9 2,088.0

Accrued taxes and payroll costs 27 427.7 462.5 444.6

Other payables 28 113.2 118.3 130.6

Currency and interest rate derivatives 30 10.9 11.7 18.7

TOTAL CURRENT LIABILITIES 4,231.8 4,343.7 4,573.8

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 6,461.5 6,740.0 7,034.4


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7 Consolidated cash fl ow statements

(in € millions) Notes 2007 2006 2005

I- OPERATING ACTIVITIES

Consolidated net income (loss) (230.9) (437.6) (172.8)

Depreciation and amortization 538.6 754.9 682.6

Deferred tax (benefi ts) charges 4.8 (12.9) 21.2

Increase (decrease) in long-term provisions (10.0) (8.3) (43.9)

Equity in net income of companies accounted for by the equity method, net of dividends received (0.8) (1.6) (1.8)

Capital (gains) losses on disposals of non-current assets 3.1 (20.9) (0.3)

Other 2.8 (18.4) 7.7

CASH FLOW FROM OPERATIONS 307.6 255.2 492.7

Increase (decrease) in short-term provisions 51.4 75.4 28.4

Change in inventories 28.2 (31.5) 3.1

Change in trade account receivables 105.0 (24.8) 63.5

Change in trade payables 45.9 42.0 18.7

Change in other operating receivables and payables 43.9 38.3 28.8

Change in other receivables and payables (7.8) 40.6 29.6

(Increase) decrease in working capital requirement 266.6 140.0 172.1

NET CASH PROVIDED BY OPERATING ACTIVITIES 574.2 395.2 664.8

II- INVESTING ACTIVITIES

Additions to property, plant and equipment 12 (306.8) (302.2) (433.9)

Capitalized development costs (159.2) (208.3) (215.8)

Acquisitions of investments (25.2) (1.6) (9.2)

Proceeds from disposals of property, plant and equipment 9.8 52.3 9.2

Proceeds from disposals of fi nancial assets

Change in investment-related receivables and payables (4.7) (42.4) 37.9

Other movements 4.4 (15.6) (19.9)

NET CASH USED BY INVESTING ACTIVITIES (481.7) (517.8) (631.7)

NET CASH PROVIDED (USED) BY OPERATING AND INVESTING ACTIVITIES (I)+(II) 92.5 (122.6) 33.1

III- FINANCING ACTIVITIES

Issuance of shares by Faurecia and fully-consolidated companies 5.5 1.1 1.5

Dividends paid by the parent company (26.3)

Dividends paid to minority interests in consolidated subsidiaries (11.2) (6.2) (11.6)

Issuance of debt securities and increase in other fi nancial liabilities 129.9 552.0 316.1

Repayments of debt and other fi nancial liabilities (193.0) (476.1) (492.3)

NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (68.8) 70.8 (212.6)

IV- OTHER CHANGES IN CASH AND CASH EQUIVALENTS

Impact of exchange rate changes on cash and cash equivalents (3.8) (8.0) 16.3

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19.9 (59.8) (163.2)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 523.6 583.4 746.6

CASH AND CASH EQUIVALENTS AT END OF YEAR 26 543.5 523.6 583.4


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS 7Statement of changes in consolidated shareholders’ equity

(in € millions)

Number of shares(2)

Capital stock

Additional paid-in capital

Treasury stock

Retained earnings

and net income

(loss) for the year

Translation adjustments

Total shareholders’

equityMinority interests Total

Balance as of Jan. 1, 2005 before appropriation of net income (loss) 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)

Translation adjustments 40.4 40.4 5.7 46.1

Changes 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 1.5

2004 dividend (26.3) (26.3) (11.6) (37.9)

Measurement of stock options 2.4 2.4 2.4

Sales of treasury stock 0.5 1.2 1.7 1.7

Changes in scope of consolidation 0.0 (1.0) (1.0)

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


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 1.1

2005 dividend 0.0 (6.2) (6.2)



Changes in scope of consolidation 0.0 0.0

Recognition of 2005 losses of the parent company (364.5) 364.5 0.0 0.0

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


Translation adjustments (1.2) (1.2) (2.1) (3.3)

Changes in fair value of currency hedging instruments 5.4 5.4 5.4

Total income and expense recognized directly in equity (232.1) (1.2) (233.3) 4.5 (228.8)

Issue of share capital(1) 135,812 1.0 4.5 5.5 5.5

2006 dividend 0.0 (11.2) (11.2)



Changes in scope of consolidation 0.0 (13.2) (13.2)

Recognition of 2006 losses of the parent company (165.2) 165.2 0.0 0.0

Balance as of Dec. 31, 2007 before appropriation of net income (loss) 24,395,048 170.8 198.9 (11.5) 404.6 39.2 802.0 44.3 846.3

(1) Shares issued on exercise of stock options.(2) Including 270,814 treasury shares as of December 31, 2007, compared with 302,154 as of December 31, 2006 and 335,804 as of

December 31, 2005 (see Note 22-3).


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7

CONTENTS

Notes to the consolidated fi nancial statements

Faurecia S.A. and its subsidiaries form one of the world’s leading suppliers of six major vehicle modules:

seats, cockpits, doors, acoustics modules, front ends and exhaust systems. The Group has operations in

28 countries, spanning 190 sites.

Faurecia’s registered offi ce is located in Nanterre, in the Hauts-de-Seine region of France. The Company is

quoted on the Eurolist market of Euronext Paris.

The consolidated fi nancial statements were approved by Faurecia’s Board of Directors on February 8, 2008.

Note 1 Summary of signifi cant accounting policies 83

Note 2 Changes in scope of consolidation 88

Note 3 Events after the balance sheet date 89

Note 4 Information by business segment

and geographic area 89

Note 5 Operating expenses 94

Note 6 Other operating income and expense 95

Note 7 Other fi nancial income and expense 96

Note 8 Corporate income tax 96

Note 9 Earnings (loss) per share 98

Note 10 Goodwill 99

Note 11 Intangible assets 100

Note 12 Property, plant and equipment 101

Note 13 Investments in companies accounted

for by the equity method 102

Note 14 Other equity interests 103

Note 15 Other non-current fi nancial assets 104

Note 16 Other non-current assets 104

Note 17 Inventories 104

Note 18 Trade accounts receivable 105

Note 19 Other operating receivables 105

Note 20 Other receivables and prepaid expenses 106

Note 21 Cash and cash equivalents 106

Note 22 Shareholders’ equity 107

Note 23 Minority interests 109

Note 24 Long- and short-term provisions 110

Note 25 Provisions for pensions and other

employee benefi ts 111

Note 26 Net debt 117

Note 27 Accrued taxes and payroll costs 119

Note 28 Other payables 119

Note 29 Financial instruments 120

Note 30 Hedging of currency and interest rate risks 124

Note 31 Commitments given and contingent

liabilities 129

Note 32 Related party transactions 130

Note 33 Employees 131

Note 34 Information on the consolidating company 131

Note 35 Dividends 131


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS 7Notes to the consolidated fi nancial statements

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated fi nancial statements of the Faurecia Group

have been prepared in accordance with International Financial

Reporting Standards (IFRSs) as adopted by the European Union,

including International Accounting Standards (IASs) and related

interpretations issued by the International Financial Reporting

Interpretations Committee (IFRIC).

The standards used to prepare the 2007 fi nancial statements and

comparative data for 2006 and 2005 are those published in the Offi cial

Journal of the European Union (OJEU) as of December 31, 2007,

and whose application was mandatory at that date.

In accordance with IFRS 1, First-time adoption of International

Financial Reporting Standards, Faurecia elected to apply the

following exemptions at the IFRS transition date:

translation adjustments arising on consolidation were taken to

consolidated retained earnings at January 1, 2004;

unrecognized actuarial gains and losses on employee benefi t

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 to

January 1, 2004.

The Group has not elected to apply the option available under

IAS 19 permitting actuarial gains and losses on pension benefi t

obligations to be recorded directly in equity. Consequently, such

gains and losses are still recognized according to the corridor

method over the expected average remaining working lives of the

employees participating in the plans concerned.

The principal accounting policies applied in the preparation of the

consolidated fi nancial statements are set out below. These policies

have been consistently applied to all the years presented.

The new standards, interpretations and amendments issued by the

IASB whose application was mandatory as of January 1, 2007 have

been applied where appropriate and are listed below. However, as

they did not have a material impact on the fi nancial statements,

comparative prior-year data were not restated.

IFRS 7, “Financial instruments: Disclosures”, which introduces

new disclosure requirements about a company’s exposure to

risks arising from fi nancial instruments and how those risks are

managed (see Note 29).

The amendment to IAS 1 concerning capital disclosures that

enable users of fi nancial statements to evaluate the company’s

objectives, policies and processes for managing capital.

IFRIC 7, “Applying the restatement approach under IAS 29,

Financial reporting in hyperinfl ationary economies”, which is not

currently relevant to the Group’s operations.

IFRIC 10, “Interim fi nancial reporting and impairment”, which

states that companies must not reverse any impairment losses

recognized in a previous interim period in respect of goodwill or

an investment in either an equity instrument or a fi nancial asset

carried at cost.

•

•

•

•

•

•

The Group has not elected to early adopt any standards that have

been published in the Offi cial Journal of the European Union but

which were not effective as of December 31, 2007.

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 a company’s voting rights, and may also arise as a result of

shareholders’ agreements.

Subsidiaries are fully consolidated from the date on which control

is transferred to the Group and are deconsolidated from the date

that control ceases.

Companies over which the Group exercises signifi cant infl uence but

not control – generally through a shareholding of between 20% and

50% of the voting rights – are accounted for by the equity method.

The Faurecia Group’s consolidated fi nancial statements are

presented in euros.

The functional currency of foreign subsidiaries is generally their

local currency. The assets and liabilities of these companies are

translated into euros at the year-end exchange rate and income

statement items are translated at the average exchange rate for the

year. The resulting translation adjustments are recorded in equity.

Certain companies located outside the euro zone which carry out

the majority of their transactions in euros may, however, use euros

as their functional currency.

For companies located in high-infl ation countries, non-monetary

assets and liabilities and the corresponding income statement items

are translated at historical exchange rates, after adjust ment for the

effects of hyperinfl ation. Translation gains and losses on other items

are recognized in the income statement.

All material intercompany transactions are eliminated in

consolidation, including intercompany gains.

Prior to consolidation, the fi nancial statements of subsidiaries and

associates are restated to comply with Group accounting policies.


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7 Notes to the consolidated fi nancial statements

1-2 Goodwill

Goodwill represents the excess of the cost of an acquisition over

the fair value of the Group’s share of the net identifi able assets of

the acquired entity at the date of acquisition.

In accordance with IAS 36, goodwill is not amortized but is tested

for impairment 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 defi ned as the smallest identifi able group of assets that

generates cash infl ows that are largely independent of the cash

infl ows 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

for internal management purposes. The Group has identifi ed 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

A - RESEARCH AND DEVELOPMENT

EXPENDITURE

The Faurecia Group incurs certain development costs in connection

with producing and delivering modules for specifi c customer

orders which are either a) not sold to the customer, or b) paid for

by the customer on delivery of each part, without the customer

guaranteeing full fi nancing of the costs incurred. In accordance

with IAS 38, these development costs are recorded as an intangible

asset where the company concerned can demonstrate:

its intention to complete the project as well as the availability of

adequate technical, fi nancial and other resources to complete

the development;

how the customer contract will generate probable future

economic benefi ts 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 fi ve

years except under exceptional circumstances.

Research costs, and development costs that do not meet the

above criteria, are expensed as incurred.

•

•

•

•

•

•

•

B - OTHER INTANGIBLE ASSETS

Other intangible assets include development and purchase costs

relating to software used within the Group – which are amortized

on a straight-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 own use, less accumulated depreciation.

Maintenance and repair costs are expensed as incurred, except

where they serve to increase productivity or to prolong the useful

life of an asset, in which case they are capitalized.

Borrowing costs are not included in the cost of assets.

Property, plant and equipment are depreciated by the straight-line

method over the estimated useful lives of the assets, as follows:

buildings 20 to 30 years

leasehold improvements, fi xtures and fi ttings 10 to 20 years

machinery, tooling and furniture 3 to 10 years

Certain tooling is produced or purchased for the purpose of

manufacturing parts or modules for customer orders, which are

either a) not sold to the customer, or b) paid for by the customer

on delivery of each part, without the customer guaranteeing full

fi nancing of the costs incurred. In accordance with IAS 16, this

tooling is recognized as property, plant and equipment.

It is depreciated to match the quantities of parts delivered to the

customer over a maximum of three years, in line with the rate at

which models are replaced.

Investment grants are recorded as a deduction from the assets

that they were used to fi nance.

Property, plant and equipment acquired under fi nance leases

which transfer substantially all the risks and rewards incidental to

ownership of the asset to the lessee are recorded under assets

at the fair value of the leased asset or, if lower, the present value

of the minimum lease payments. The assets recognized are

subsequently depreciated as described above. An obligation of

the same amount is recorded as a liability.



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

least once a year. Impairment testing consists of comparing the

carrying amount of an asset, or group of assets, with the higher of

its market value and value in use.

Value in use is defi ned as the present value of the net future cash

fl ows expected to be derived from an asset or group of assets.

The assets are grouped at the lowest levels for which there are

separately identifi able cash fl ows (cash-generating units, or

CGUs). In line with this principle, tests are performed on each

group of intangible assets (development costs) and property, plant

and equipment attributable to a customer contract to compare

the aggregate carrying amount of the assets with the present

value of the expected net future cash fl ows to be derived from

the contract.

An impairment loss is recorded when the assets’ carrying amount

is lower than the present value of the expected net future cash

fl ows. A provision is also recorded for losses to completion on

loss-making contracts.

1-6 Financial assets and liabilities (excluding derivatives)

A - DEFINITIONS

In accordance with IAS 39, the Group classifi es its fi nancial assets

in the following categories: loans and receivables, available-for-

sale, and at fair value through profi t or loss. They are recorded

under the following balance sheet items: “Other equity interests”

(Note 14), “Other non-current fi nancial assets” (Note 15), “Trade

account receivables” (Note 18), “Other operating receivables”

(Note 19), “Other receivables and prepaid expenses” (Note 20)

and “Cash and cash equivalents” (Note 21).

The Group does not use the IAS 39 categories of “Held-to-maturity

investments” or “Financial assets held for trading”.

The Group’s fi nancial liabilities fall within the IAS 39 categories of (i)

at fair value through profi t or loss, and (ii) measured at amortized

cost.

They are recorded under the following balance sheet items: “Short-

term debt” and “Long-term debt” (Note 26), “Accrued taxes and

payroll costs” (Note 27) and “Other payables” (Note 28).

Financial assets and liabilities are broken down into current and

non-current components for maturities of less than and more than

one year, respectively, at the balance sheet date.

B - RECOGNITION AND MEASUREMENT

OF FINANCIAL ASSETS

(a) Other equity interests

Other equity interests correspond to the Group’s interests in the

capital of non-consolidated companies. They are carried in the

balance sheet at cost, which the Group considers as representing

their fair value due to the absence of an active market. An

impairment loss is recognized where there is a prolonged decline in

the value in use of these assets. Value in use is determined based

on the most appropriate fi nancial criteria, generally corresponding

to the Group’s equity in the underlying net assets and the earnings

outlook of the company concerned.

(b) Loans and other fi nancial assets

Loans and other fi nancial assets are stated at nominal value which

corresponds to amortized cost, calculated using the effective

interest method.

Provisions are booked on a case-by-case basis where there is a

risk of non-recovery.

(c) Cash and cash equivalents

Cash and cash equivalents are measured at fair value. They include

current account balances and units in money market funds which

can be sold at short notice and which do not carry a signifi cant risk

of impairment in the event of changes in interest rates.

C - RECOGNITION AND MEASUREMENT

OF FINANCIAL LIABILITIES

(a) Financial liabilities measured at amortized cost

The Group’s fi nancial liabilities are generally measured at amortized

cost using the effective interest method.

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- fi nished products, as well as work-in-progress,

are stated at production cost, determined by the FIFO method.

Production cost includes the cost of raw materials and supplies as

well as direct and indirect production costs, excluding overheads

not linked to production and borrowing costs.

Work-in-progress includes the costs of internally-manufactured

specifi c 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 the corresponding sales are made, as each technical stage

is validated by the customer, or when the tooling is delivered if the

contract does not provide for specifi c technical stages.

Provisions are booked for inventories for which the probable

realizable value is lower than cost.

1-8 Foreign currency transactions

Transactions in foreign currency are converted at the exchange

rate prevailing on the transaction date. Receivables and payables

are converted at the year-end exchange rate and the resulting gain

or loss is recorded in the income statement as operating income

or expenses for operating receivables and payables, and under

“Other fi nancial income and expense” for other receivables and

payables.

1-9 Derivatives

Faurecia uses derivative instruments traded on organized markets

or purchased over-the-counter from fi rst-rate counterparties to

hedge currency 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

operating income when the hedged revenues are received.

Changes in the fair value of instruments used to hedge trade

receivables and payables are 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

fi nancial income and expense” together with changes in the

fair value of instruments used to hedge other receivables and

payables.

Interest rate hedges:

Changes in the fair value of interest rate hedges are recorded

directly in “Other fi nancial income and expense” when a hedging

relationship cannot be demonstrated under IAS 39, or where the

Group has elected not to apply hedge accounting principles.

1-10 Minority interests

This item corresponds to minority shareholders’ interests in the

net assets of consolidated subsidiaries. In the case of subsidiaries

with a negative net worth, minority interests are deducted from

consolidated shareholders’ equity except where an agreement

has been signed requiring minority shareholders to contribute to

fi nancing the Company pro rata to their stake in the capital.

1-11 Provisions for pensions and other employee benefi ts

The Group’s liability for pensions and other employee benefi ts

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 salary levels. Benefi t obligations are partially

funded by contributions to external funds.

In cases where the funds are permanently allocated to the benefi t

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 the

employees participating in the plans. Periodic pension and other

employee benefi t costs are recognized as operating expenses

over the benefi t vesting period, except for the interest cost,

which is recorded under “Other fi nancial income and expense” in

accordance with the alternative method under IAS 19. The impact

of changes in the present value of external funds is also recorded

under this item.

1-12 Stock option plans

Stock options are granted to the management executives of Group

companies and their over 50%-owned subsidiaries, allowing them

to subscribe to new Faurecia shares or to purchase existing shares.

Options granted after November 7, 2002 that had not vested as

of January 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

grant date and the vesting date), with a corresponding adjustment

to equity.

1-13 Restructuring and reorganization provisions

A provision is booked when Group General Management has

decided to rationalize the organization structure and announced

the program to the employees concerned or their representatives.



1-14 Revenue recognition

Sales are recognized when the risks and rewards incidental to

ownership of the modules or parts produced are transferred. This

generally corresponds to when the goods are shipped, or – in the

case of development contracts or the sale of tooling – when the

technical stages are validated by the customer.

If no such technical stages are provided for in the contract, sales

are recognized when the related development work is completed

or the tooling is delivered.

1-15 Operating income

Operating income is the Faurecia Group’s principal performance

indicator.

It corresponds to net income of fully consolidated companies

before:

other operating income and expense, corresponding to material

unusual and non-recurring items including rationalization and

early retirement costs, the impact of exceptional events such

as the discontinuation of a business, the closure or sale of an

industrial site, disposals of non-operating buildings, impairment

losses recorded for property, plant and equipment or intangible

assets, as well as other material and unusual losses;

income from loans, cash investments and marketable

securities;

fi nance costs;

other fi nancial income and expense, which includes the impact

of discounting the pension benefi t obligation and the return

on related plan assets, the ineffective portion of interest rate

and currency hedges, changes in value of interest rate and

currency instruments for which a hedging relationship cannot

be demonstrated under IAS 39, and gains and losses on sales

of shares in subsidiaries;

corporate income tax.

•

•

•

•

•

1-16 Deferred taxes

Deferred taxes are recognized using the liability method for

temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the consolidated

fi nancial statements. Temporary differences mainly arise from tax

loss carryforwards and consolidation adjustments to subsidiaries’

accounts.

Deferred taxes are determined using tax rates (and laws) that have

been enacted or substantially enacted by the balance sheet date

and are expected to apply when the related deferred tax asset is

realized or the deferred tax liability is settled.

Deferred income tax assets are recognized only to the extent that it

is probable that future taxable profi t will be available against which

the temporary differences can be utilized.

Where appropriate, an accrual is booked to cover taxes payable on

the distribution of retained earnings of subsidiaries and associates

which are not considered as having been permanently reinvested.

1-17 Use of estimates

The preparation of fi nancial statements in accordance with IFRS

requires the use of estimates and assumptions when measuring

certain assets, liabilities, income, expenses and obligations . These

estimates and assumptions are primarily used when calculating

the impairment of property, plant and equipment, intangible assets,

goodwill and deferred tax assets, as well as for measuring pension

and other post-employment benefi t obligations and provisions for

restructuring and losses on loss-making contracts. 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.



NOTE 2 CHANGES IN SCOPE OF CONSOLIDATION

2-1 2007

During the year Faurecia acquired a 50% interest in Romania-based

Euro Auto-Plastic Systems srl in the Vehicle Interiors business for

€9.4 million.

In addition, Faurecia set up three new companies in China in 2007

– Faurecia (Shanghai) Automotive Systems Co Ltd., Faurecia

Wuhan Automotive Seating Co Ltd. and Faurecia Qingdao Exhaust

Systems Co Ltd – as well as one new company in South Korea,

Faurecia Trim Korea Ltd.

Faurecia also acquired a 50% interest held by the Duroplast Group

in Faurecia Duroplast Mexico for €18.3 million, raising its stake in

the company to 100%.

In early 2007, Faurecia purchased certain assets of Cadence

Innovation in France for €0.4 million.

2-2 2006

In fi rst-half 2006, Faurecia purchased the US assets held by

the Copo Iberica group which is 50%-owned by Faurecia and

accounted for by the equity method. In addition, Kwang Jin Faurecia

was accounted for by the equity method for the fi rst time in 2006.

Formed in 2005, this South Korea-based company is 50%-owned

by Faurecia.

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 fi nancial statements.

1-18 Earnings per share

Basic earnings per share are calculated by dividing net income

attributable to equity holders of the parent company by the

weighted average number of shares outstanding during the year,

excluding treasury stock.

Diluted earnings per share are calculated by the treasury stock

method which consists of multiplying the number of outstanding

stock options by the ratio between the average exercise price of

outstanding stock options and the average share price for the

year. For the purpose of calculating diluted earnings per share,

the Group adjusts net income attributable to equity holders of

the parent company and the weighted average number of shares

outstanding for the effects of all dilutive potential ordinary shares

(such as stock options).



NOTE 3 EVENTS AFTER THE BALANCE SHEET DATE

No signifi cant post-balance sheet events have occurred.

NOTE 4 INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHIC AREA

IAS 14 defi nes 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 business

segments.

Faurecia has distinguished two separate business segments:

Interior modules and Other modules, which present different risk

profi les.

The segments defi ned refl ect Faurecia’s organization and internal

reporting structure.



4-1 Key fi gures by business segment

2007

(in € millions) Interior modules Other modulesHolding

companies Total

Net sales 8,758.7 3,958.6 189.3 12,906.7

Inter-segment eliminations (37.5) (19.1) (189.3) (245.9)

Consolidated sales 8,721.2 3,939.5 0.0 12,660.7

Operating margin (15.5) 136.6 0.0 121.1

Segment income (loss) (235.5) 128.4 (11.4) (118.5)

Net fi nancial expense (101.1)

Corporate income tax (13.6)

Equity in net income of companies accounted for by the equity method 2.3

Net loss for the year (230.9)

Segment assets

Property, plant and equipment, net 1,096.8 295.0 17.1 1,408.9

Other 3,234.7 1,043.2 18.8 4,296.7

Total segment assets 4,331.5 1,338.2 35.9 5,705.6

Investments in companies accounted for by the equity method 44.8 0.0 0.0 44.8

Other equity interests 1.8

Short and long-term fi nancial assets 624.1

Tax assets (current and deferred) 85.6

Total assets 6,461.9

Segment liabilities 2,573.4 817.0 3.1 3,393.5

Borrowings 2,197.7

Tax liabilities (current and deferred) 24.4

Shareholders’ equity and minority interests 846.3

Total liabilities 6,461.9

Capital expenditure 249.6 45.5 11.7 306.8

Depreciation of property, plant and equipment (263.4) (47.1) (3.2) (313.7)

Impairment in value of property, plant and equipment (23.7) (23.7)



2006


companies Total

Net sales 8,305.8 3,393.6 144.3 11,843.7



Operating margin (44.5) 113.7 0.0 69.2

Segment income (loss) (433.1) 87.9 25.0 (320.2)





Segment assets


Other 3,464.3 1,021.5 23.4 4,509.2


Investments in companies accounted for by the equity method 40.1 40.1





Segment liabilities 2,503.6 767.5 (1.4) 3,269.7

Borrowings 2,314.4


Shareholders’ equity and minority interests 1,090.6




Impairment in value of property, plant and equipment (80.2) (3.9) (84.1)



2005


companies Total

Net sales 8,310.5 2,711.7 99.3 11,121.5



Operating margin 157.7 109.6 267.3

Segment income (loss) (171.3) 105.2 5.7 (60.4)





Segment assets


Other 3,682.5 889.3 19.5 4,591.3


Investments in companies accounted for by the equity method 34.8





Segment liabilities 2,491.1 627.3 25.3 3,143.7

Borrowings 2,240.1


Shareholders’ equity and minority interests 1,540.3




Impairment in value of property, plant and equipment (52.7) (1.3) (54.0)

Sales by business segment break down as follows:

(in € millions) 2007 % 2006 % 2005 %

Interior modules

- Automotive Seating 5,175.4 41 4,812.8 41 4,794.4 44

- Vehicle Interiors 3,545.8 28 3,458.0 30 3,482.7 32

8,721.2 69 8,270.8 71 8,277.1 75

Other modules

- Exhaust Systems 2,994.4 24 2,659.4 23 1,961.3 18

- Front End 945.1 7 718.5 6 740.1 7

3,939.5 31 3,377.9 29 2,701.4 25

TOTAL 12,660.7 100 11,648.7 100 10,978.5 100



4-2 Key fi gures by geographic area

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

2007

(in € millions) France Germany

Other European countries

North America

South America Asia

Other countries Total

Sales 3,059.8 3,022.1 3,388.9 1,853.6 292.6 752.0 291.7 12,660.7

Property, plant and equipment, net 442.9 143.9 510.6 148.3 82.9 63.0 17.3 1,408.9

Capital expenditure 113.8 15.3 96.8 26.4 29.1 19.4 6.0 306.8

Number of employees as of December 31 20,562 8,724 23,560 6,622 4,820 3,826 1,599 69,713

2006



North America

South America Asia


Sales 3,066.5 2,977.8 2,913.2 1,485.9 246.7 634.4 324.1 11,648.6




2005



North America

South America Asia


Sales 3,382.6 2,892.0 2,583.1 1,234.7 221.6 404.2 260.2 10,978.4






NOTE 5 OPERATING EXPENSES

5-1 Analysis by function

(in € millions) 2007 2006 2005

Cost of sales (11,914.7) (10,921.5) (10,118.1)

Research and development costs (268.6) (305.0) (276.4)

Selling and administrative expenses (356.3) (353.0) (316.8)

TOTAL (12,539.6) (11,579.5) (10,711.3)

5-2 Analysis by nature

(in € millions) 2007 2006 2005

Purchases used in production (8,686.1) (7,808.4) (7,232.4)

External expenses (1,118.2) (1,108.7) (1,005.7)

Payroll costs (2,339.8) (2,303.1) (2,185.8)

Taxes other than on income (55.2) (66.3) (60.5)

Other income and expense(1) 125.3 242.6 253.7

Depreciation, amortization and provisions for impairment in value of non-current assets (475.7) (518.3) (491.4)

Charges to and reversals of other provisions 10.1 (17.3) 10.8

TOTAL (12,539.6) (11,579.5) (10,711.3)

(1) Including production taken into inventory or capitalized (development and tooling) 140.9 223.1 256.4

Certain costs previously recognized in cost of sales and selling and administrative expenses have been reclassifi ed to research and development

costs; the fi gures shown for 2006 and 2005 were adjusted by €19.9 million and €16.9 million, respectively.

5-3 Payroll costs

(in € millions) 2007 2006 2005

Wages and salaries(*) (1,854.5) (1,821.4) (1,719.6)

Payroll taxes (485.3) (481.7) (466.2)

TOTAL (2,339.8) (2,303.1) (2,185.8)

(*) O/w temporary employee costs (236.2) (198.8) (231.2)

Details of expenses relating to the Group’s stock option plans and pension costs are provided in Notes 22-2 and 25 respectively.



5-4 Research and development costs

(in € millions) 2007 2006 2005

Research and development costs, gross (613.1) (630.5) (645.0)

A mounts billed to customers and changes in inventories 344.7 296.3 303.9

C apitalized development costs 159.2 208.3 215.8

A mortization of capitalized development costs (158.3) (161.5) (142.6)

C harges to and reversals of provisions for impairment in value of capitalized development costs (1.1) (17.6) (8.5)

Net expense (268.6) (305.0) (276.4)

5-5 Depreciation, amortization and provisions for impairment in value of non-current assets

(in € millions) 2007 2006 2005

Amortization of capitalized development costs (158.3) (161.5) (142.6)

Amortization of other intangible assets (11.6) (12.8) (15.9)

Depreciation of specifi c tooling (13.3) (13.8) (14.6)

Depreciation of other items of property, plant and equipment (291.4) (312.6) (309.8)

Provisions for impairment in value of capitalized development costs (1.1) (17.6) (8.5)

TOTAL (475.7) (518.3) (491.4)

NOTE 6 OTHER OPERATING INCOME AND EXPENSE

(in € millions) 2007 2006 2005

Provisions for contingencies (56.1) (0.1) 7.8

Provisions for impairment in value of Vehicle Interiors goodwill (125.0) (138.4)

Provisions for impairment in value of Vehicle Interiors assets (44.3) (72.8) (41.6)

Other provisions for impairment in value of assets (20.8) (35.7)

Reorganization expenses(*) (104.4) (168.7) (136.2)

Early retirement costs (0.1) (0.5) (1.4)

Gains (losses) on disposals of assets, net 0.7 20.9 0.3

Other (0.8) (4.1) (5.5)

TOTAL (225.8) (386.0) (315.0)

(*) In 2007, this item included €101.7 million worth of restructuring costs, and €2.7 million in provisions for impairment in value of non-current assets (versus respective amounts of €165.5 million and €3.2 million in 2006 and €123.8 million and €12.4 million in 2005).



Restructuring operations

Total reorganization expenses came to €104.4 million in 2007 and early retirement costs totaled €0.1 million. These amounts concerned

1,728 employees and break down as follows by country:

In € millionsNumber

of employees

France 26.9 412

Germany 12.5 283

Spain 41.1 665

Other 24.0 368

TOTAL 104.5 1,728

NOTE 7 OTHER FINANCIAL INCOME AND EXPENSE

(in € millions) 2007 2006 2005

Impact of discounting pension benefi t obligations (9.4) (9.5) (10.0)

Changes in the ineffective portion of gains and losses on currency hedges (1.9) (0.5) (0.9)

Changes in fair value of currency hedges relating to debt 0.8 0.1 (3.9)

Changes in fair value of interest rate instruments (8.7) 7.9 (1.1)

Gains on sales of securities 1.7

Other 3.7 (1.4) 3.3

TOTAL (13.8) (3.4) (12.6)

NOTE 8 CORPORATE INCOME TAX

Corporate income tax can be analyzed as follows:

(in € millions) 2007 2006 2005

Current taxes

- C orporate income tax currently payable (8.8) (37.0) (27.3)

- T ax on intercompany dividends, tax reassessments (11.1) (4.8)

(8.8) (48.1) (32.1)

Deferred taxes

- D eferred taxes for the year (3.7) 44.1 4.3

- I mpairment of deferred tax assets recognized in prior periods (1.1) (31.2) (25.0)

Deferred taxes (4.8) 12.9 (20.7)

TOTAL (13.6) (35.2) (52.8)



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) 2007 2006 2005

Income (loss) before tax of fully consolidated companies (219.6) (406.9) (125.9)

Tax at standard French tax rate (34.43% at end-2007, 34.43% at end-2006 and 34.93% at end-2005) 75.6 140.1 44.0

Impact of income taxable at a reduced rate in France and Spain 9.1 1.1

Impact on deferred taxes of changes in tax rates (5.3) 1.6 (0.5)

Impact of different tax rates applicable to foreign subsidiaries 13.8 19.1 11.8

Tax credits 15.3 49.2 22.3

Utilization of previously unrecognized tax loss carryforwards 3.4 8.1 7.5

Tax loss carryforwards arising during the year for which no deferred tax asset was recognized (111.6) (188.6) (50.4)

Impairment of previously recognized tax assets (1.1) (31.2) (25.0)

Permanent differences (3.7) (42.6) (63.5)

Effective corporate income tax charge (13.6) (35.2) (52.8)

8-2 Deferred taxes

(in € millions) Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Current taxes

- Assets 28.4 26.0 11.2

- Liabilities (13.2) (47.3) (21.3)

15.2 (21.3) (10.1)

Deferred taxes

- Deferred tax assets resulting from tax loss carryforwards 30.1 28.9 63.2

- Deferred tax assets resulting from consolidation adjustments 27.1 25.9 48.4

- Liabilities (11.2) (16.6) (89.0)

46.0 38.2 22.6

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

(in € millions) 2007 2006 2005

Net as of January 1 38.2 22.6 44.0

- Deferred taxes for the year recorded in the income statement(*) (3.7) 44.1 4.3

- Deferred taxes recognized directly in equity (0.6)

- Impact of exchange rate changes and other movements 12.6 2.7 (0.1)

- Impairment of deferred tax assets recognized in prior periods (1.1) (31.2) (25.0)

Net as of December 31 46.0 38.2 22.6

(*) Of which subsidies in the form of tax credits in 2006 20.0



8-3 Unrecognized deferred tax assets


Y+1 4.0 13.0 2.3

Y+2 3.3 3.0 1.9

Y+3 3.1 2.6 2.3

Y+4 4.6 3.1 3.1

Y+5 and beyond 162.8 122.4 52.0

Available indefi nitely 378.8 350.3 239.1

TOTAL 556.6 494.4 300.7

NOTE 9 EARNINGS (LOSS) PER SHARE

(in € millions) 2007 2006 2005

Number of shares outstanding at the year-end(1) 24,395,048 24,259,236 24,233,601

Adjustments:

- treasury stock (270,814) (302,154) (335,804)

- impact of share issues weighted based on the period

between the date of the share issue and the year-end (58,262) (24,968) (6,276)

Basic weighted average number of shares 24,065,972 23,932,114 23,891,521

Weighted impact of dilutive instruments

(stock options)(2) 93,935 90,358 184,537

Weighted average number of shares after dilution 24,159,907 24,022,472 24,076,058

(1) Changes in the number of shares outstanding between 2005 and 2007 can be analyzed as follows:

As of Dec. 31, 2005: number of Faurecia shares outstanding

Faurecia stock options exercised in 2006•24,233,601

25,635

As of Dec. 31, 2006: number of Faurecia shares outstanding

Faurecia stock options exercised in 2007•24,259,236

135,812

As of Dec. 31, 2007: number of Faurecia shares outstanding 24,395,048

(2) As of December 31, 2007, 1,258,303 stock options were outstanding and exercisable, compared with 1,265,715 as of December 31, 2006 and 1,176,550 as of December 31, 2005.The weighted impact of dilutive instruments was calculated using the treasury stock method.In relation to stock options, this method consists of comparing (i) the number of shares that would have been issued if all outstanding stock options had been exercised with (ii) the number of shares that could have been acquired at fair value (i.e. the average Faurecia share price for the year, which was €55.62 in 2007.)



Basic and diluted earnings (loss) per share

Basic and diluted loss per share breakdown as follows:

2007 2006 2005

Net loss (in € millions) (237.5) (447.9) (182.5)

Per share data (in euros)

- basic earnings (loss) per share (9.87) (18.72) (7.64)

- diluted earnings (loss) per share (9.87) (18.72) (7.64)

NOTE 10 GOODWILL

(in € millions) Gross Impairment Net

Net goodwill as of January 1, 2005 1,546.0 0.0 1,546.0

Acquisitions and minority interest buyouts 6.8 6.8

Translation adjustments and other movements 0.1 0.1

Impairment of goodwill (Vehicle Interiors) (138.4) (138.4)

Net goodwill as of December 31, 2005 1,552.9 (138.4) 1,414.5

Translation adjustments and other movements (0.2) (0.2)

Impairment of goodwill (Vehicle Interiors) (125.0) (125.0)


Acquisitions and minority interest buyouts 10.3 10.3

Translation adjustments and other movements (11.0) (11.0)


Net goodwill breaks down as follows by business:


Automotive Seating 792.5 792.5 792.7

Vehicle Interiors 247.0 239.3 364.3

Front End 96.1 96.1 96.1

Exhaust Systems 153.0 161.4 161.4

TOTAL 1,288.6 1,289.3 1,414.5

In accordance with the accounting policies described in Notes 1-2

and 1-5, the carrying amount of each CGU to which goodwill

has been allocated has been compared with the higher of the

CGU’s value in use and market value. Value in use corresponds

to the present value of net future cash fl ows based on the most

recent forecasts drawn up by Group Management for each cash-

generating unit concerned. The most recent forecasts used were

based on the Group’s 2008-2011 medium-term business plan.

The calculation is performed by projecting to perpetuity projected

cash fl ows for the last year of the business plan (i.e. 2011), applying

a growth rate determined based on analysts’ forecast trends for

the automotive market.

The growth rate applied in 2007, 2006 and 2005 was 1.5%.

Faurecia called on an independent expert to calculate the weighted

average cost of capital used to discount future cash fl ows. The

market parameters used in the expert’s calculation were based on

a sample of 11 companies operating in the automotive supplier

sector (six in Europe and fi ve in the US). On the basis of these

parameters and a market risk premium of 4.7%, the weighted

average cost of capital used to discount future cash fl ows was set



at 8.3% in 2007 (7.9% in 2005 and 2006). This rate was applied in

the impairment tests carried out on all of the Group’s CGUs as they

all bear the same specifi c risks relating to the automotive supplier

sector and a multinational operation does not justify geographically

differentiated discount rates.

No impairment losses were recorded following the tests performed

in 2007.

The impairment tests carried out in 2005 and 2006 resulted in

the recognition of goodwill impairment losses in the amount of

€138.4 million and €125.0 million respectively, relating to the

Vehicle Interiors business.

These losses arose as a result of a decline in earnings reported by

the Vehicle Interiors business during 2005 and 2006, which led the

Group to review the business’s medium-term sales and earnings

outlook. The 2005 decline was attributable to a signifi cant rise in

the cost of supplies combined with strong downward pressure on

sales prices, while in 2006 Vehicle Interiors experienced a sharp

decrease in volumes, the impact of start-up costs in the United

States and a further deterioration in market conditions.

The table below shows the sensitivity of the test results to changes in the assumptions used as of December 31, 2007 to determine the value

in use of the two CGUs to which the majority of the Group’s goodwill is allocated:

Sensitivity(in € millions)

Automotive Seating Vehicle Interiors

+1 pt -1 pt +1 pt -1 pt

Rate used to discount future cash fl ows (282.5) 381.3 (132.6) 178.9

Growth rate used to project cash fl ows to perpetuity 312.0 (237.2) 147.4 (109.5)

NOTE 11 INTANGIBLE ASSETS

Intangible assets can be analyzed as follows:

(in € millions)

Development costs

Software and other Total

Net as of January 1, 2005 514.0 22.6 536.6

Additions 215.8 7.3 223.1

Amortization (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 26.6 600.3

Additions 208.3 5.3 213.6

Amortization (161.5) (12.8) (174.3)

Provisions (40.5) 0.0 (40.5)

Translation adjustment and other movements (26.4) 3.0 (23.4)


Additions 159.2 6.3 165.5

Amortization (158.3) (11.6) (169.9)

Additions to provisions(1) (37.5) 0.0 (37.5)

Translation adjustment and other movements (22.9) 0.5 (22.4)


(1) Including a non-recurring impairment loss of €36.4 million related to Vehicle Interiors.



NOTE 12 PROPERTY, PLANT AND EQUIPMENT

(in € millions) Land BuildingsPlant and

equipmentSpecifi c

tooling

Other and assets under construction Total

Net as of January 1, 2005 70.5 361.0 818.3 30.2 254.4 1,534.4

Additions (including own work capitalized)(1) 2.6 31.2 148.3 31.9 226.8 440.8

Disposals (0.1) (21.4) (98.3) 0.0 (17.5) (137.3)

Depreciation and provisions for impairment in value (0.3) (39.7) (235.1) (14.8) (45.4) (335.3)

Non-recurring impairment losses(2) 0.0 0.0 (41.5) 0.0 0.0 (41.5)

Depreciation written off on disposals 0.0 20.3 91.4 0.0 16.4 128.1

Translation adjustment 1.7 14.4 34.3 0.3 8.2 58.9

Other movements 0.5 24.0 133.8 (17.2) (168.4) (27.3)

Net as of December 31, 2005 74.9 389.8 851.2 30.4 274.5 1,620.8


Disposals (13.2) (9.3) (137.9) 0.0 (14.7) (175.1)


Non-recurring impairment losses(2) (2.5) (24.5) (45.7) (7.8) (3.5) (84.0)


Translation adjustment (0.5) (3.9) (17.5) (0.2) (1.0) (23.1)

Other movements (0.2) 12.9 117.3 0.0 (136.1) (6.1)



Disposals (2.3) (31.4) (170.0) (11.9) (29.5) (245.1)


Non-recurring impairment losses(2) (0.5) (5.8) (13.6) (1.3) (2.5) (23.7)


Translation adjustment (0.8) (0.6) (9.2) (0.1) 0.2 (10.5)

Other movements (0.5) 19.3 114.2 0.5 (122.6) 10.9


(1) Including assets held under finance leases in 2005: 6.9 in 2006: 4.0 in 2007: 1.9

(2) Of which: Vehicle Interiors Automotive Seating Front end modules

in 2005in 2006in 2007

(41.5)(65.0)(2.9)

(15.1)(21.9)

(3.9)



(in € millions)

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Gross Depreciation Net Gross Net Net

Land 64.3 (6.7) 57.6 66.3 58.9 74.9

Buildings 857.7 (509.0) 348.7 840.6 347.3 389.8

Plant and equipment 2,707.4 (1,989.4) 718.0 2,699.1 762.3 851.2

Specifi c tooling 107.8 (80.6) 27.2 105.9 27.8 30.4

Other and assets under construction 614.2 (356.8) 257.4 605.3 256.6 274.5

TOTAL 4,351.4 (2,942.5) 1,408.9 4,317.2 1,452.9 1,620.8

Including assets held under fi nance leases 111.7 (70.4) 41.3 93.6 42.6 52.5

NOTE 13 INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD

As of December 31, 2007 this item broke down as follows:

(in € millions) % interest(*)

Group share of equity

Dividends received

by the GroupGroup share

of sales

Group share of total assets

Vanpro Assentos Lda 50 2.3 - 18.3 5.3

Teknik Malzeme 50 6.5 (1.5) 58.6 23.6

Copo Ibérica Sa 50 1.5 - 28.8 14.6

Componentes de Vehiculos de Galicia SA 50 2.6 - 14.2 9.4

Faurecia Japon NHK Kyushi Co. Ltd 19 (6.5) - 27.5 26.2

Faurecia Japon NHK Co. Ltd 50 (2.7) - 54.1 22.1

Arsed d.o.o. 50 0.5 - 20.9 8.8

Kwangin Faurecia Co. Ltd 50 0.7 - 18.0 6.9

SAS Group 50 39.9 1,627.9 353.4

TOTAL - 44.8 (1.5) 1,868.3 470.3

(*) Percent interest held by the company that owns the shares.

SAS is a joint venture with VDO AG which manufactures full cockpit modules with electronics and circuitry built into the instrument panels.

In order to meet the Faurecia Group’s publication deadlines, the consolidated fi nancial statements are prepared using SAS Group’s accounts

for the twelve months ended September 30. Specifi c accounts drawn up for the SAS Group as of December 31 would not give rise to any

material difference.



13-2 Group equity in the net assets of companies accounted for by the equity method


Non-current assets 35.0 42.0 34.6

Current assets 400.7 400.6 380.0

Cash and cash equivalents 34.6 21.3 32.2

TOTAL ASSETS 470.3 463.9 446.8

Shareholders’ equity 44.8 40.1 34.8

Borrowings 28.1 33.2 25.5

Other non-current liabilities 21.7 14.9 48.5

Non-fi nancial current liabilities 375.7 375.7 338.0

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 470.3 463.9 446.8

13-1 Change in investments in companies accounted for by the equity method

(in € millions) 2007 2006 2005

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

Dividends (1.5) (2.8) (4.0)

Group equity in net income 2.3 4.4 5.9

Changes in scope of consolidation - 1.0

Capital increase 3.3 1.5

Translation adjustment 0.6 1.2 (0.2)

Group equity in underlying net assets at end of year 44.8 40.1 34.8

NOTE 14 OTHER EQUITY INTERESTS

(in € millions) % interest

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Gross Net Net Net

SCI Messei 100 0.4 0.1 0.1 0.1

Kwang Jin Faurecia Co. Ltd(*) 50 1.0

Taco-Faurecia 50 0.4 0.4 0.4 0.4

Faurecia Shin Sung(**) 60 0.6 0.6

Other - 1.3 0.7 0.8 0.8

TOTAL 2.7 1.8 1.3 2.3

(*) A South-Korean company accounted for by the equity method for the first time in 2006.(**) A South-Korean company which will be accounted for by the equity method for the first time in 2008.



NOTE 15 OTHER NON-CURRENT FINANCIAL ASSETS

This item includes:

(in € millions)

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Gross Provisions Net Net Net

Long-term loans 25.6 (4.2) 21.4 17.5 20.9

Other 11.3 (1.0) 10.3 12.4 5.6

TOTAL 36.9 (5.2) 31.7 29.9 26.5

NOTE 16 OTHER NON-CURRENT ASSETS

This item includes:


Pension plan surpluses 0.1 0.1 0.1

Guarantee deposits and other 7.1 9.0 7.3

TOTAL 7.2 9.1 7.4

NOTE 17 INVENTORIES

(in € millions)

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Gross Provisions Net Net Net

Raw materials and other supplies 254.7 (21.0) 233.7 241.7 206.4

Work-in-progress 234.3 (34.8) 199.5 211.9 213.8

Finished and semi-fi nished products 153.2 (20.2) 133.0 127.8 123.6

TOTAL 642.2 (76.0) 566.2 581.4 543.8

Work-in-progress as of December 31, 2007 included €38.5 million in r esearch and d evelopment costs billable to customers

(December 31, 2006: €42.1 million; December 31, 2005: €62.2 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 the amount of the related subordinated deposit. The agreement

was renegotiated in 2004 for a one-year period, renewable through

December 2007, in order to provide for the transfer of substantially

all of the risks and rewards relating to the sold receivables. It was

subsequently renewed on November 30, 2007 for a further fi ve

years until end-November 2012.

In order to further diversify its fi nancial resources, in December 2002

Faurecia entered into a second one-year renewable agreement

with another Group bank, extending the receivables sale program

to other French and non-French subsidiaries in Europe. This

program remained in force until May 2007, when it was replaced

by renewable open-ended agreements that provide for the transfer

of substantially all of the risks and rewards of a portion of the sold

receivables.

In addition, in 2004, 2006 and 2007 other receivables sale

agreements were entered into between certain of the Group’s

European subsidiaries and a number of their banks, providing for

the transfer of substantially all of the risks and rewards of the sold

receivables.

The following table shows the amount of sold receivables with

maturities beyond December 31, 2007, 2006 and 2005 for which

substantially all the risks and rewards have been transferred, and

which have therefore been derecognized:


Receivables sold and derecognized 387.5 246.5 212.5Individually impaired receivables do not represent a material

amount in relation to total trade accounts receivable.

Given the high quality of Group counterparties, late payments do not represent a material risk and general arise from administrative issues.

NOTE 19 OTHER OPERATING RECEIVABLES


Prepayments to suppliers 68.5 61.4 66.3

Other receivables(1) 187.6 206.6 173.0



TOTAL 256.1 268.0 239.3

(1) Including recoverable VAT and other taxes. 182.7 195.9 165.5

NOTE 20 OTHER RECEIVABLES AND PREPAID EXPENSES


Current maturities of long-term loans 0.1 0.1 0.1

Prepaid expenses 19.1 18.1 16.3

Current taxes 28.4 26.0 11.2

Other receivables 20.0 18.6 21.7

TOTAL 67.6 62.8 49.3

NOTE 21 CASH AND CASH EQUIVALENTS

As of December 31, 2006, cash and cash equivalents included

current account balances in debit of €401.5 million (December 31,



2006: €530.1 million; December 31, 2005: €558.8 million) and marketable securities of €148.6 million (December 31, 2006: €56.5 million;

December 31, 2005: €64.5 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

The Company’s capital stock is not subject to any external

restrictions. As of December 31, 2007, it amounted to

€170,765,336, divided into 24,395,048 fully paid-up common

shares 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 double voting rights.

As of December 31, 2007, Peugeot SA held 70.85% of Faurecia’s

capital stock and 83.40% of the voting rights.

22-2 Employee stock options

A - 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, 2007 a total of 1,258,303 stock subscription

options were outstanding.

Exercising these options would result in:

capital stock being increased by €8.8 million;

additional paid-in capital being increased by €58.3 million.

•

•

Details of the stock subscription option plans as of December 31, 2007 are set out in the table below:

Date of Shareholders’ Meeting

Date of Board Meeting

Number of options

granted

Of which granted to

senior executive

management/Executive

Committee members

Start of exercise

period

Options exercised

Options forfeited

Number of options

outstanding as of Dec.

31, 2007

Exercise price

(in €)

Expiration of exercise

period

June 18, 1992

April 7, 1994

115,000 75,000

April 8, 1999

93,600 - 21,40025.06 April 6, 2009

May 31, 1994

Oct. 20, 1994

125,000 30,000

Oct. 21, 1999

110,000 - 15,00023.84 Oct. 19, 2009

May 31, 1994

May 3, 1995

71,000 15,000

May 4, 2000

63,000 1,000 7,00026.07 May 2, 2010

May 3, 1995

Sept. 12, 1996

125,000 40,000

Sept. 13, 2001

91,500 - 33,50024.39 Sept. 11, 2011

May 31, 1994

June 26, 1997

54,000 15,000

June 27, 2002

31,500 1,500 21,00040.25 June 25, 2012

June 5, 1997

June 26, 1997

35,500 15,000

June 27, 2002

26,000 9,500 -42.38 June 25, 2007

June 5, 1997 Feb. 22, 2002

351,700 69,500

Feb. 23, 2006

28,200 103,000 220,500June 1, 2001 55.00 Feb. 22, 2012

June 1, 2001 Nov. 28, 2002

269,500 101,000

Nov. 29, 2006

91,097 106,000 72,403May 14, 2002 41.71 Nov. 27, 2012

May 14, 2002

April 14, 2004

268,000 109,000

April 14, 2008

- 104,500 163,50058.18 April 13, 2014

May 25, 2004

April 19, 2005

275,000 122,000

April 18, 2009

- 72,500 202,50063.7 April 18, 2015

May 23, 2005

April 13, 2006

284,000 140,000

April 12, 2010

- 60,000 224,00053.80 April 12, 2016

May 23, 2005

April 16, 2007

288,500 144,000

April 17, 2011

11,000 277,50053.19 April 17, 2017

TOTAL 1,258,303



In accordance with IFRS 2, the fi ve 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




Option exercise price (as of grant date) €41.71 €58.18 €63.70 €53.80 €53.19

Share price as of grant date €41.82 €58.45 €62.05 €53.15 €56.15

Vesting period 4 years 4 years 4 years 4 years 4 years

Expected share dividend 2% 2% 2 % 1.5% 0.0%

Zero coupon rate 3.57% 3.33% 2.93% 3.50% 4.41%

Expected share price volatility 40% 40% 40% 30% 30%

Changes in fair value are recorded under payroll costs over the vesting period, with a corresponding adjustment to equity. The related expense

in 2007 totaled €1.9 million, compared with €2.3 million in 2006.

B - STOCK PURCHASE OPTIONS

Between 1999 and 2001, the Company granted stock options to the management of Group companies and their over 50%-owned subsidiaries,

allowing them to purchase existing Faurecia shares.

As of December 31, 2007 a total of 260,980 stock purchase options were outstanding.

Details of the stock purchase option plans as of December 31, 2007 are set out in the table below:


Date of Board

Meeting

Number of options

granted

Of which granted

to senior executive

managemen/Executive

Committee members

Start of exercise

period

Options exercised

Options forfeited

Number of options


31, 2007

Exercise price

(in €)

Expiration of exercise

period

June 1, 1999

Sept. 6, 1999

200,000 53,100

Sept. 6, 2004

46,600 17,250 136,15052.0 Sept. 5, 2009

June 1, 1999 Sept. 4, 2000

254,000 54,900

Sept. 4, 2005

108,920 42,250 102,830May 22, 2000 40.0 Sept. 3, 2010

May 22, 2000

April 26, 2001

43,500 40,000

April 26, 2005

16,500 5,000 22,00054.5 April 25, 2011

TOTAL 260,980



22-3 Treasury stock

As of December 31, 2007, Faurecia held 270,814 shares in treasury

stock, refl ecting the following transactions:

200,000 shares contributed by ECTRA in 1999;

19,613 shares purchased in 2000 for €0.8 million;



32,745 shares sold in 2004 for €1 million;

74,285 shares sold in 2005 for €2.3 million;


33,650 shares sold in 2006 for €1.3 million;

•

•

•

•

•

•

•

•

31,340 shares sold in 2007 for €1.0 million.

The cost of the shares held in treasury stock as of December 31,

2007 totaled €11.5 million, representing an average cost of €42.48

per share.

At the year-end, Faurecia’s share price was €46.60. A 10% fall in

the share price would represent a decrease of €4.66 per share,

corresponding to a share price of €41.94 which would give rise to a

€0.1 million impairment loss.

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 of December 31, 2007 are exercisable for 260,980 shares (see

Note 22.2 b).

•

NOTE 23 MINORITY INTERESTS

Changes in minority interests were as follows:

(in € millions) 2007 2006 2005

Balance as of January 1 64.2 64.4 60.9

Minority interests in share issues by subsidiaries 0.7

Other changes in scope of consolidation(*) (13.2) (1.0)

Minority interests in net income for the year 6.6 10.3 9.7

Dividends paid to minority shareholders (11.2) (6.2) (11.6)

Translation adjustments (2.1) (4.3) 5.7

Balance as of December 31 44.3 64.2 64.4

(*) Including Faurecia Duroplast Mexico (17.3)



NOTE 24 LONG- AND SHORT-TERM PROVISIONS

24-1 Long-term provisions

LONG-TERM PROVISIONS

(in € millions) 2007 2006 2005

Provisions for pensions and other employee benefi ts

Pensions• 155.4 165.2 170.3

Long-service awards• 21.1 21.2 21.6

Healthcare costs• 26.6 28.1 30.8

203.1 214.5 222.7

Provisions for early retirement costs 6.2 6.2 6.4

TOTAL 209.3 220.7 229.1

MOVEMENTS IN LONG-TERM PROVISIONS

(in € millions) 2007 2006 2005

Balance at beginning of year 220.7 229.1 267.8

Additions to (reversals) of provisions 21.3 21.8 (16.1)

Expenses charged to the provision (13.8) (19.0) (19.8)

Payments to external funds (17.7) (11.5) (10.4)

Other movements (1.2) 0.3 7.6

Balance at end of year 209.3 220.7 229.1

24-2 Short-term provisions

SHORT-TERM PROVISIONS


Restructuring 153.6 161.6 89.0

Risks on contracts and customer warranties 84.5 47.5 46.2

Claims and litigation 26.3 20.9 16.9

Other 33.6 24.5 33.2

TOTAL 298.0 254.5 185.3



Movements in these provisions in 2007 were as follows:

Balance as of Dec. 31, 2006 Additions

Expenses charged to provisions Reversals(*)

Changes in Group structure and other

movementsBalance as of Dec. 31, 2007

Restructuring 161.6 94.4 (90.8) (7.2) (4.4) 153.6

Risks on contracts and customer warranties 47.5 64.0 (25.7) (1.0) (0.3) 84.5

Claims and litigation 20.9 13.7 (8.3) (0.3) 0.3 26.3

Other 24.5 19.4 (5.9) (0.8) (3.6) 33.6

TOTAL 254.5 191.5 (130.7) (9.3) (8.0) 298.0

(*) Surplus provisions.

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.

An initial judgment was handed down on December 19, 2007

in relation to Faurecia Interior Systems USA Inc.’s dispute with

Multimatic for breach of a confi dentiality agreement. This decision

is not yet fi nal.

Faurecia Systèmes d’Echappement, which has long acquired

expertise in conventional impregnated ceramic-based fi ltration

technology, is subject to a claim concerning electrostatic fi ltration

that has been brought before the courts following its unsuccessful

cooperation with a service provider. The Group considers that the

residual risks and impact of these proceedings are not material.

To the best of the Group’s knowledge, no others claims or litigation

are in progress or pending that are likely to have a material impact

on the Group’s consolidated fi nancial position.

NOTE 25 PROVISIONS FOR PENSIONS AND OTHER EMPLOYEE BENEFITS

25-1 Projected benefi t obligation


Projected benefi t obligation

Pension benefi t obligations• 260.5 291.1 328.0

Long-service awards• 21.1 21.2 21.6

Healthcare costs• 30.6 34.9 30.4

TOTAL 312.2 347.2 380.0

Funded status:

Provisions booked in the accounts• 203.1 214.5 222.7

External funds (market value)• 101.3 97.2 106.5

Plan surpluses(1)• (0.1) (0.1) (0.1)

Actuarial gains and losses• 7.9 35.6 50.9

TOTAL 312.2 347.2 380.0

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



25-2 Pension liability

A - DESCRIPTION OF THE PLANS

In addition to the pension benefi ts provided under local legislation

in the various countries where Group companies are located,

Group employees are entitled to supplementary pension benefi ts

and retirement bonuses.

B - 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

specifi c to each country and/or Group company;

mortality assumptions specifi c to each country;

estimated future salary levels, based on infl ation assumptions

and forecasts of individual salary increases for each country;

the expected return on external funds;

discount and infl ation rates (or differential) 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 rate

2007 5.25% 5.00% 6.25%

2006 4.50% 5.10% 5.75%

2005 4.00% 5.00% 5.70%

Infl ation rate

2007 2.00% 2.70% 2.00%

2006 2.00% 2.80% 2.50%

2005 2.00% 2.50% 4.00%

Expected return on external funds

2007 3.47% 7.53% 8.00%

2006 4.00% 8.00% 8.25%

2005 4.00% 8.00% 8.25%

C - INFORMATION ON EXTERNAL FUNDS

External funds are invested as follows:

(in %)

2007 2006 2005

Equities Bonds Equities Bonds Equities Bonds

France 13% 87% 16% 84% 15% 85%

United Kingdom 70% 30% 89% 11% 72% 28%

United States 63% 37% 63% 37% 60% 40%



D - PROVISION FOR THE PENSION LIABILITY RECORDED IN THE BALANCE SHEET

(in € millions)

2007 2006 2005

FranceOutside France Total France

Outside France Total France

Outside France Total

Balance of provision at beginning of year 86.4 78.8 165.2 90.3 79.9 170.2 134.1 81.1 215.2

Allocations for the year 9.3 5.1 14.4 10.4 5.3 15.7 (31.4) 7 (24.4)

Expenses charged to the provision (3.3) (2.1) (5.4) (7.7) (2.1) (9.8) (8.2) (2.1) (10.3)

Payments to external funds (13.5) (4.2) (17.7) (6.6) (4.9) (11.5) (4.2) (6.3) (10.5)

Other movements (1.2) (1.2) 0.6 0.6 0.2 0.2

Balance of provision at end of year 78.9 76.4 155.3 86.4 78.8 165.2 90.3 79.9 170.2



E - CHANGES IN THE PENSION LIABILITY

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

(in € millions) FranceOutside France Total France



Projected benefi t obligation

At beginning of year 127.6 163.4 291.0 143.0 184.9 327.9 145.9 159.7 305.5

Service cost 8.4 3.2 11.6 9.1 5.5 14.5 11.1 4.3 15.4

Interest cost 6.1 7.9 14.0 6.1 7.8 13.9 6.0 9.2 15.2

Benefi ts paid (11.9) (5.6) (17.5) (15.6) (6.0) (21.6) (13.0) (2.3) (15.3)

Change in fair value of external funds (8.8) (14.5) (23.2) (7.5) (7.1) (14.7) 36.3 (2.9) 33.4

Other movements (including translation adjustment) 0.0 (8.4) (8.4) (7.5) (7.5) 17.0 17.0

Curtailment - Settlement (7.1) (7.1) (7.6) (14.1) (21.7) (8.1) (8.1)

Impact of plan closures and amendments 0.0 0.0 (35.1) (35.1)

At end of year 114.4 146.1 260.5 127.6 163.4 291.0 143.0 185.0 328.0

Funded status

At beginning of year 14.8 82.4 97.2 15.7 90.8 106.4 15.9 74.0 89.9

Expected return on external funds 0.5 5.9 6.3 0.6 5.6 6.2 0.6 6.3 6.9

Change in fair value of external funds 0.0 (0.4) (0.4) (0.2) 1.8 1.6 (0.2) (9.5) (9.7)

Other movements (including translation adjustment) 0.0 (7.4) (7.4) (7.3) (7.3) 13.9 13.9

Employer contributions 13.5 4.2 17.7 6.6 4.9 11.5 4.2 6.3 10.4

Benefi ts paid (8.6) (3.5) (12.1) (7.9) (3.7) (11.6) (4.8) (0.2) (5.0)

Curtailment - Settlement 0.0 (9.7) (9.7)

At end of year 20.2 81.0 101.3 14.8 82.4 97.2 15.7 90.8 106.4

Deferred items

At beginning of year 26.4 2.4 28.8 37.0 14.2 51.2 (4.1) 4.4 0.3

New deferred items (8.8) (14.1) (22.9) (7.3) (9.1) (16.4) 36.5 6.6 43.1

Amortization of deferred items (1.4) 0.1 (1.2) (2.0) (0.3) (2.3) (1.1) 0.3 (0.8)

Other movements (including translation adjustment) 0.2 0.2 (0.8) (0.8) 2.9 2.9

Curtailment - Settlement (1.0) (1.0) (1.4) (1.6) (3.0) 0.9 0.9

Impact of plan closures and amendments 0.0 4.9 4.9

At end of year 15.2 (11.3) 3.9 26.4 2.4 28.8 37.0 14.2 51.3

Balance of provision at end of year 79.0 76.4 155.3 86.4 78.6 165.0 90.3 80.0 170.3

F - 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 fi nancial 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:

2007 2006 2005

(in € millions) FranceOutside France Total France



Service cost (8.4) (3.2) (11.6) (9.1) (5.5) (14.6) (11.1) (4.3) (15.4)

Interest cost (6.1) (7.9) (14.0) (6.1) (7.8) (13.9) (6.0) (9.2) (15.2)

Change in top-up scheme 39.9 0.0 39.9

Actual return on external funds 0.5 5.9 6.4 0.6 5.6 6.2 0.6 6.3 6.9

Curtailment - Settlement 6.1 0.0 6.1 6.2 2.7 8.9 9.0 9.0

Amortization of deferred items (1.4) 0.1 (1.3) (2.0) (0.3) (2.3) (1.1) 0.3 (0.8)

Other 0.0 0.0 0.0 0.0

TOTAL (9.3) (5.1) (14.4) (10.4) (5.3) (15.7) 31.3 (6.9) 24.4

a) The defi ned benefi t 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 defi ned contribution plan relating to salary tranches A and B,

whose contribution rate varies depending on the employee’s

seniority within Faurecia;

a defi ned benefi t plan relating to salary tranche C.

The benefi ts 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 signifi cant

defi nitive 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 fi nancing act for 2007, as from

January 1, 2010 collective agreements may no longer provide

the possibility for employers to require an employee to retire

before the age of 65 even if the employee is already entitled

to a full-rate pension. Employees may still elect for voluntary

retirement as from the age of 60 but they will receive a lower

statutory retirement bonus which will be subject to tax and

social security charges.

•

•

Under the French Social Security fi nancing act for 2008, retirement

bonuses paid to employees under compulsory retirement schemes

will be subject to an additional social levy of 25% in 2008 and

50% from 2009 onwards. The Act also discontinues the favorable

tax and social security treatment applied to retirement bonuses

negotiated with employees retiring before the statutory age of

65 and paid between 2010 and 2014 by companies covered by

collective agreements entered into within the scope of the “Fillon”

law.

The Act has led the Group to adjust its assumptions concerning

the type of retirement and, in calculating its pension liabilities as

of December 31, 2007, to use 65 as the assumed retirement age

for managers and, for administrative and technical staff, retirement

at age 60 in 2008 and 2009 and retirement at age 65 from 2010

onwards.

The impact on pension liabilities is an increase of €2.3 million,

which represents an actuarial loss, and the portion in excess of the

10% corridor will be amortized as from 2008 over the remaining

service lives of the benefi ciaries, in accordance with the Group’s

current policy for recognizing actuarial gains and losses.

c) The defi ned benefi t plan that existed within one of the Group’s

US subsidiaries has been closed to new participants and the

benefi ts of existing participants have been frozen.



25-3 Long-service awards

The Group calculates its liability for the payment of long-service awards using the same method and assumptions as for its pension liability. A

provision has been set aside for long-service awards, as follows:


French companies 10.4 10.7 11.2

Foreign companies 10.7 10.5 10.4

TOTAL 21.1 21.2 21.6

25-4 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 26.6 28.1 30.8

TOTAL 26.6 28.1 30.8

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

PERIODIC HEALTHCARE COSTS

(in € millions) 2007 2006 2005

Service cost (3.0) (2.3) (1.3)

Interest cost(*) (1.7) (1.8) (1.7)

Amortization of deferred items (0.4) (0.1) (0.1)

TOTAL (5.1) (4.2) (3.1)

(*) 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 9% rises in service cost, fi nancial expenses

and the projected benefi t obligation.

The impact of a one percentage point decrease in medical cost

trend rates would be 8% reductions in service cost, fi nancial

expenses and the projected benefi t obligation.



NOTE 26 NET DEBT

26-1 Detailed breakdown


Perpetual notes (TDI) - - -

Bonds 300.0 300.0 300.0

Bank borrowings 822.6 725.1 251.9

Other borrowings 9.9 9.2 9.5

Obligations under fi nance leases 27.5 31.3 37.6

SUB-TOTAL – LONG-TERM DEBT 1,160.0 1,065.6 599.0

Current portion of long-term debt 45.5 83.9 47.9

Short-term debt(1) 971.4 1,087.4 1,534.6

Payments issued(2) (a) 6.6 63.0 39.9

Derivatives (net) (17.4) (14.8) 6.1

TOTAL 2,166.1 2,285.1 2,227.5

Cash and cash equivalents (b) (550.1) (586.6) (623.3)

NET DEBT 1,616.0 1,698.5 1,604.2

Net cash and cash equivalents (b) - (a) 543.5 523.6 583.4

(1) Including bank accounts in credit. 117.6 128.2 54.8

(2) Payments awaiting clearance by the bank as they fall due on a non-banking day. The contra-entry is an increase in cash and cash equivalents under assets.

26-2 Maturities of long-term debt

(in € millions) 2009 2010 2011 20122013

and beyond Total

Bonds 300.0 300.0

Bank borrowings 806.6 4.3 3.5 4.0 4.2 822.6

Other borrowings 1.8 4.5 1.6 1.6 0.4 9.9

Obligations under fi nance leases 11.4 5.9 2.8 5.6 1.8 27.5

TOTAL AS OF DECEMBER 31, 2007 819.8 314.7 7.9 11.2 6.4 1,160.0

26-3 Perpetual notes

On October 15, 1991, Faurecia (formerly Bertrand Faure) issued

subordinated perpetual notes (TSDI) amounting to FRF 900 million

(€137.2 million) which were repackaged in 1996 and the

subordination clause eliminated.

These notes paid interest at six-month Pibor plus 1.1% through

October 15, 2006. Since that date their residual value has been

fully written down and the interest rate has become symbolic.

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 can be drawn down for renewable periods of one, three or

six months through November 2009. As of December 31, 2007,

the undrawn portion of this credit line amounted to €800 million.



The contracts relating to these two forms of borrowings include covenants, certain of which concern consolidated fi nancial ratios. As of

December 31, 2007, the Group complied with all of these ratios, as shown in the table below:

Contractual ceiling/fl oor Value as of Dec. 31, 2007

Type of ratio Ratio Amount

Adjusted net debt(*)/EBITDA(**) 3.50 ceiling 2.77 1,653.4/596.8

EBITDA(**)/net interest 4.50 fl oor 5.90 596.8/101.1

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

(**) Earnings before interest, tax, depreciation and amortization = Operating income + depreciation, amortization and provisions for impairment in value of property, plant and equipment and intangible assets.

26-5 Securitization and factoring programs


Financing 723.1 707.5 834.7

Guarantee reserve deducted from borrowings (27.6) (78.6) (85.7)

Cash received as consideration for receivables sold 695.5 628.9 749.0

Receivables sold and derecognized (387.5) (246.5) (212.5)

26-6 Analysis of long- and short-term debt by interest rate and currency

(in € millions) Dec. 31, 2007

Variable rate borrowings 1,855.9 85.7%

Fixed rate borrowings 310.2 14.3%

TOTAL 2,166.1 100.0%

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


Euro 1,704.1 78.7% 1,902.5 83.3% 1,895.7 85.1%

US dollar 262.9 12.1% 184.2 8.1% 230.5 10.4%

Other currencies 199.1 9.2% 198.4 8.7% 101.3 4.5%

TOTAL 2,166.1 100.0% 2,285.1 100.0% 2,227.5 100.0%

As of 31.12.07, the weighted average interest rate on outstanding borrowings was 4.21%.

Part of Faurecia’s fi nancing requirements is met through receivables

sale programs (see Note 18).

As of December 31, 2007, fi nancing under these programs –

corresponding to the cash received as consideration for the

receivables sold – totaled €695.5 million versus €628.9 million one

year earlier.

As of December 31, 2007, 85.7% of the Group’s borrowings were

at variable rates, before taking into account the impact of hedging.

The Group has set up derivatives to hedge the interest rate risk on

the interest payable on its borrowings between January 2008 and

December 2010 (see Note 30.2).



NOTE 27 ACCRUED TAXES AND PAYROLL COSTS


Accrued payroll costs 194.9 183.2 173.3

Accrued payroll taxes 113.7 116.0 122.4

Employee profi t-sharing 3.1 1.8 3.8

Other 116.0 161.5 145.1

TOTAL 427.7 462.5 444.6

NOTE 28 OTHER PAYABLES


Due to suppliers of non-current assets 45.0 50.3 90.9

Deferred income 42.4 11.3 5.7

Current taxes 13.2 47.3 21.3

Other 12.6 9.4 12.7

TOTAL 113.2 118.3 130.6



NOTE 29 FINANCIAL INSTRUMENTS

Financial instruments recorded in the balance sheet

(in € millions)

Dec. 31, 2007 Breakdown by category of instrument(1)

Carrying amount Fair value

Financial assets/

liabilities at fair value

through profi t or

loss(2)

Available-for-sale

fi nancial assets

Loans and receivables

Financial liabilities

measured at amortized

cost Derivatives

Other equity interests 1.8 1.8 1.8

Other non-current fi nancial assets 31.7 31.7 31.7

Trade accounts receivable 1,635.2 1,635.2 1,635.2

Other operating receivables 256.1 256.1 256.1

Other receivables and prepaid expenses 39.2 39.2 39.2

Currency and interest rate derivatives 34.7 34.7 34.7

Cash and cash equivalents 550.1 550.1 550.1 550.1

Total fi nancial assets 2,548.8 2,548.8 550.1 1.8 2,512.3 0.0 34.7

Long-term debt 1,160.0 1,160.0 1,160.0

Short-term debt 1,023.5 1,023.5 1,023.5


Trade payables 2,162.6 2,162.6 2,162.6

Accrued taxes and payroll costs 427.7 427.7 427.7

Other payables 100.0 100.0 100.0


Total fi nancial liabilities 5,080.6 5,080.6 0.0 0.0 0.0 5,069.7 10.9

(1) No financial instruments were transferred between categories in 2007 or 2006.(2) All of the instruments in this category are financial assets or liabilities designated as measured at fair value through profit or loss on

initial recognition in accordance with the criteria set out in Note 1.6.



(in € millions)



Financial assets/


through profi t or

loss(2)

Available-for-sale

fi nancial assets




cost Derivatives









Long-term debt 1,065.6 1,065.6 1,065.6

Short-term debt 1,234.3 1,234.3 1,234.3


Trade payables 2,128.9 2,128.9 2,128.9









(in € millions)



Financial assets/


through profi t or

loss(2)

Available-for-sale

fi nancial assets




cost Derivatives









Long-term debt 599.0 599.0 599.0

Short-term debt 1,622.4 1,622.4 1,622.4


Trade payables 2,088.0 2,088.0 2,088.0







The main measurement methods applied are as follows:

Items accounted for at fair value through profi t or loss, and

hedging instruments, measured using a valuation technique

based on (i) rates quoted on the interbank market, such as

Euribor; and (ii) exchange rates set daily by the European Central

Bank. Equity interests and other available-for-sale securities are

measured at fair value in the balance sheet in accordance with

IAS 39.

•

The Group’s fi nancial liabilities are primarily measured at

amortized cost using the effective interest method.

The fair value of trade receivables and payables related to

manufacturing and sales operations corresponds to their

carrying amount in view of their very short maturities.

•

•



The impact of fi nancial instruments on income can be analyzed as follows:

2007 Breakdown by category of instrument

Income statement

impact

Financial assets/


through profi t or

loss

Available-for-sale

fi nancial assets




cost Derivatives

Translation differences on commercial transactions 8.9 8.5 0.4

Income from loans, cash investments and marketable securities 15.9 15.9

Finance costs (117.0) (117.0)

Other fi nancial income and expense (6.7) 3.1 (9.8)

Net income/(expense) (98.9) 15.9 0.0 11.6 (117.0) (9.4)


Income statement

impact

Financial assets/


through profi t or

loss

Available-for-sale

fi nancial assets




cost Derivatives

Translation differences on commercial transactions (0.9) 0.4 (1.3)



Other fi nancial income and expense 7.4 0 0 (0.1) 0 7.5

Net income/(expense) (80.1) 10.9 0.0 0.3 (97.5) 6.2


Income statement

impact

Financial assets/


through profi t or

loss

Available-for-sale

fi nancial assets




cost Derivatives

Translation differences on commercial transactions 8.1 6.8 1.5



Other fi nancial income and expense (2.6) 3.3 (5.9)

Net income/(expense) (60.0) 9.1 0.0 10.1 (74.6) (4.4)



NOTE 30 HEDGING OF CURRENCY AND INTEREST RATE RISKS

30-1 Hedging of currency risks

Currency risks relating to the commercial transactions of the

Group’s subsidiaries are managed centrally by Faurecia, principally

using forward purchase and sale contracts and options, as well

as foreign currency fi nancing. The Group Finance and Treasury

Department – which reports to Group General Management –

is responsible for managing this centralized system. Hedging

decisions are made by a Market Risk Management Committee

that meets on a monthly basis.

Faurecia hedges its commercial positions either through derivatives

or by setting up loans denominated in the same currency as the

subsidiary’s related exposure. Currency risks on future transactions

are hedged on the basis of estimated cash fl ows determined

in forecasts validated by General Management, and the related

derivatives are classifi ed as cash fl ow hedges.

Subsidiaries outside the euro zone are granted inter-company loans

in their operating currencies. Although these loans are refi nanced

in euros and eliminated on consolidation, they contribute to the

Group’s currency risk exposure and are therefore hedged through

swaps.

As of December 31, 2007

Currency sold/currency purchased (in € millions)

EUR/USD

EUR/GBP

EUR/CZK

EUR/PLN

EUR/SKK

EUR/Other

USD/CAD

Other/ZAR

USD/MXN

Other/BRL

Trade receivables (net of payables) (12.5) (9.0) 21.4 42.0 1.0 3.4 1.4 12.4 14.3 (16.2)

Financial assets (net of liabilities)(*) (243.0) (56.8) (53.1) (121.8) (21.0) 0.4 (16.6) 0.0 (25.8) 0.0

Future transactions (6.0) 15.0 12.0 138.0 36.0 2.6 24.5 (3.3) 6.8 0.0

Net position before hedging (261.6) (50.8) (19.7) 58.2 16.0 6.4 9.3 9.2 (4.7) (16.2)

Currency hedges 253.0 41.8 10.1 (65.2) (36.0) (8.7) (3.0) (9.4) (6.8) 0.0

Net position after hedging (8.6) (9.0) (9.6) (7.0) (20.0) (2.3) 6.2 (0.2) (11.5) (16.2)

(*) Including inter-company financing.



EUR/USD

EUR/GBP

EUR/CZK

EUR/PLN

EUR/SKK

EUR/Other

USD/CAD

Other/ZAR

Other/MXN

Other/BRL

Trade receivables (net of payables) (7.5) (6.9) 20.8 64.4 (3.0) 2.6 6.9 19.2 4.9 4.5

Financial assets(net of liabilities)(*) (160.0) (44.9) 28.9 45.4 0.0 19.6 2.5 1.7 (28.3) 4.4

Future transactions (6.5) 0.0 0.0 84.0 0.0 6.7 27.3 4.5 0.0 0.0

Net position before hedging (174.0) (51.8) 49.7 193.8 (3.0) 28.9 36.7 25.4 (23.4) 8.9

Currency hedges 169.1 48.8 (28.7) (160.4) 0.0 (29.3) (36.4) (20.2) 0.0 (4.4)

Net position after hedging (4.9) (3.0) 21.0 33.4 (3.0) (0.4) 0.3 5.2 (23.4) 4.5






EUR/USD

EUR/GBP

EUR/CZK

EUR/PLN

EUR/SKK

EUR/Divers

USD/CAD

divers/ZAR

divers/MXN

divers/BRL

Trade receivables (net of payables) (10.1) (19.6) 2.0 51.3 3.1 1.5 11.5 12.7

Financial assets (net of liabilities)(*) (229.4) (35.6) 16.4 (44.3) (5.2) 17.1 4.8 25.3 0.0 0.0

Future transactions (7.1) (0.8) 0.0 150.0 0.0 3.5 2.4 0.3 0.0 0.0

Net position before hedging (246.6) (56.0) 18.3 157.1 (2.1) 22.1 18.7 38.3 0.0 0.0

Currency hedges 241.5 43.8 (17.4) (160.4) 5.2 (21.2) (17.0) (29.5) 0.0 0.0

Net position after hedging (5.0) (12.1) 0.9 (3.3) 3.1 0.9 1.8 8.8 0.0 0.0


Currency hedges are recognized in the balance sheet at fair value, determined based on measurements confi rmed by banking counterparties .

Information on hedged notional amounts can be analyzed as follows:

As of Dec. 31, 2007 Carrying amount Maturities

Assets LiabilitiesNotional amount

Within 1 year

1 to 5 years

Beyond 5 years

Fair value hedges

Forward currency contracts• (0.1) (14.0) (14.0)

Currency options•

Inter-company loans in foreign currencies swapped for euros

•3.6 415.4 415.4

Cash fl ow hedges

Forward currency contracts• 0.1

Currency options• 7.9 (225.7) (225.7)

Overhedging and t rading (1.5)

10.0 175.7 175.7

Of which currency hedges for operations 6.4

Of which hedges of receivables and borrowings 3.6



Within 1 year

1 to 5 years

Beyond 5 years

Fair value hedges

Forward currency contracts• (0.7) 28.7 28.7

Options de change• 2.3 2.3


•0.6 337.4 337.4

Cash fl ow hedges

Forward currency contracts•

Currency options• 1.2 129.0 129.0

Overhedging and t rading 1.6

2.7 0.0 497.4 497.4







Within 1 year

1 to 5 years

Beyond 5 years

Fair value hedges

Forward currency contracts• 2.3 13.6 13.6



•331.8 331.8

Cash fl ow hedges

Forward currency contracts•


Overhedging and t rading 2.7 3.9 3.9

5.5 2.3 525.6 525.6



The impact of currency hedges on income and equity can be analyzed as follows:

Impact of cash fl ow hedges(in € millions) Dec. 31, 2007 Dec. 31, 2006

Fair value at beginning of year 1.2 2.4

Changes in effective portion of gains and losses recorded in equity

Changes in ineffective portion of gains and losses recorded in income 0.8 (0.4)

Purchases of options 9.2 3.3

Derecognition on exercise or disposal of instruments (3.3) (4.1)

Fair value at end of year 7.9 1.2

Ineffective portion of hedges recorded in the income statement 0.8 (0.4)

Intrinsic values recycled to the income statement where hedge accounting no longer applied

Pre-tax impact 0.8 (0.4)

Net impact on equity 5.4 (0.8)

The sensitivity of Group net income and equity as of December 31, 2007 to a fl uctuation in transaction currencies other than the functional

currency of each of the Group’s subsidiaries, with all other variables remaining constant, is as follows:


EUR/USD

EUR/GBP

EUR/CZK

EUR/PLN

EUR/SKK

EUR/Other

USD/CAD

Other/ZAR

USD/MXN

Other/BRL

Hypothetical changes (appreciation of currency purchased/currency sold) 5.0% 4.0% 5.5% 10.0% 5.5% 5.5% 5.0% 5.0% 10.0% 10.0%

Pre-tax impact 0.4 0.4 0.5 0.7 1.1 nm (0.3) nm 1.2 1.6

Impact on equity (0.3) 0.6 0.7 13.8 2.0 nm 1.2 nm 0.7 0.0

These impacts refl ect (i) the impact on net income of currency

fl uctuation on the year-end valuation of assets and liabilities

recorded on the balance sheet, net of the impact of the change

in fair (intrinsic) value of existing hedging instruments; and (ii) the

impact on equity of the change in the intrinsic value of hedges of

forecast transactions.



30-2 Interest rate hedges

Faurecia manages the hedging of interest rate risks on a central basis, through the Group Finance and Treasury Department which reports to

Group General Management. Hedging decisions are made by a Market Risk Management Committee that meets on a monthly basis.

The table below provides a schedule of maturities of fi nancial assets and liabilities, according to the interest repricing date.

Dec. 31, 2007 Repricing date

Within 1 year 1 to 5 years Beyond 5 years Total

(in € millions) Intraday to 1 year Fixed rate

Borrowings 1,828.4 337.7 0.0 2,166.1

Cash and cash equivalents 550.1 550.1

Net balance sheet position 1,278.3 337.7 0.0 1,616.0

Fixed rate/variable rate swaps 0.0

Net position after hedging 1,278.3 0.0 337.7 0.0 1,616.0




Borrowings 1,940.5 4.0 340.6 0.0 2,285.1


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





Borrowings 1,876.5 4.0 347.0 0.0 2,227.5


Net balance sheet position 1,253.2 4.0 347.0 0.0 1,604.2

Fixed rate/variable rate swaps 8.0 (4.0) (4.0) 0.0


In 2006, €4 million in fi xed rate long-term borrowings were

swapped for variable rate debt with the same maturity.

The aim of the Group’s interest rate hedging policy is to reduce the

impact of changes in short-term rates on the consolidated income

statement as the majority of its borrowings are at variable rates. The

hedges set up primarily comprise euro- and dollar-denominated

caps and other option-based structures as well as, to a lesser

extent, swaps. They cover interest payable on borrowings from

January 2008 through December 2010.

A number of fl oors have also been purchased in order to benefi t

from any lowering of medium-term interest rates on fi xed rate

debt.

The derivatives purchased are economic hedges of interest-rate

risks on borrowings and do not qualify for hedge accounting

under IAS 39. Changes in the fair value of these instruments are

recognized directly in the income statement under “Other fi nancial

income and expense”.

Interest rate hedging instruments are recognized in the balance

sheet at fair value, determined based on measurements confi rmed

by banking counterparties .



Information on economically hedged notional can be analyzed as follows :

As of Dec. 31, 2007 Carrying amount Notional amount by maturity

Assets Liabilities Within 1 year 1 to 5 years Beyond 5 years

Interest rate options 22.5 (2.9) 2,062 2,610 -

Variable rate/fi xed rate swaps 0.2 176 561 -

Floors 2.0 59 34 -

Accrued premiums payable (8.0)

TOTAL 24.7 (10.9) 2,297 3,205 -



Interest rate options 22.0 2,940 2,303 -


Floor 1.1 639 300 -


TOTAL 25.9 (11.7) 3,711 2,942 -



Interest rate options 7.3 2,592 4,116 -


Floor 0.4


TOTAL 12.6 (16.4) 2,932 4,617 -

The impact of cash fl ow hedge interest rate hedges on income and equity can be analyzed as follows:

Impact of cash fl ow hedges (in € millions) Dec. 31, 2007 Dec. 31, 2006

Fair value at beginning of year 25.9 12.6

Changes in effective portion of gains and losses recorded in equity - -

Changes in ineffective portion of gains and losses recorded in income (8.7) 7.9

Purchases of options 4.6 5.1

Derecognition on exercise or disposal of instruments 0.3

Fair value at year-end 21.8 25.9

Ineffective portion of hedges recorded in the income statement

Intrinsic values recycled to the income statement where hedge accounting no longer applied

Pre-tax impact (8.7) 7.9

Net impact on equity - -



Given the Group’s policy of systematically hedging variable rate

debt and taking into account the profi le of existing derivatives as of

December 31, 2007, an increase in the average level of short-term

interest rates would not have a material impact on net fi nancial

expense.

However, “Other fi nancial income and expense” for the Group

would be impacted by the change in the fair value of derivatives

hedging interest payable in 2008, 2009 and 2010, caused by a

change in interest rates.

The sensitivity tests performed, assuming a 50 bp increase

in average interest rates compared to the yield curve as of

December 31, 2007 (an assumption based on the experience

of 2007), show that the positive effect on pre-tax income can be

estimated at approximately €18 million, taking into account the

profi le of existing derivatives as of December 31, 2007.

In contrast, due to the fact that the derivatives portfolio mainly

consists of options, in the event of a material fall in interest rates

equal to or greater than 50 bp on the yield curve, the negative

impact on other fi nancial income and expense would be limited to

the present value of the derivatives as of December 31, 2007, i.e.

€21.8 million.

NOTE 31 COMMITMENTS GIVEN AND CONTINGENT LIABILITIES

31-1 Commitments given


Future minimum lease payments under operating leases 82.0 81.1 108.5

Debt collateral:

Pledged shares of Group companies•

Mortgages• 14.6 17.2 19.5

Guarantees for the return of prepayments 22.0

Other debt guarantees 22.8 27.9 16.1

Firm orders for property, plant and equipment 130.1 120.5 118.3

Other 4.6 0.5

TOTAL 254.1 246.7 284.9

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


Y + 1 25.6 31.1 24.6

Y + 2 20.3 16.1 20.6

Y + 3 14.2 11.5 16.1

Y + 4 7.0 10.0 12.9

Y + 5 and beyond 14.9 12.4 34.3

TOTAL 82.0 81.1 108.5

Expiry dates of mortgages and guarantees:

(in € millions) Dec. 31, 2007

Within 1 year 10.3

1 to 5 years 17.5

Beyond 5 years 9.6

TOTAL 37.4



31-2 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

the Group’s French companies are entitled to at least twenty hours

of 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 2007, the average utilization rate of this entitlement was 2.7%.

The number of unused accumulated training hours at the year-

end totaled 1,098,182. No provision was recorded in the fi nancial

statements for these individual training entitlements as the Group

does not have suffi ciently reliable historical data to accurately

estimate the related contingent liability. The potential impact is not,

however, considered material.

NOTE 32 RELATED PARTY TRANSACTIONS

32-1 Transactions with PSA Peugeot Citroën

The Faurecia Group is managed independently and transactions with the PSA Peugeot Citroën Group are conducted on arm’s length terms.

Related party transactions with the PSA Peugeot Citroën Group were as follows in 2007, 2006 and 2005:


Sales 2,918.6 2,701.2 2,721.9

Purchases of products, services and materials 28.2 31.8 32.0

Receivables(*) 705.0 776.1 735.7

Payables 59.3 55.4 21.2

(*) After no-recourse sale of receivables of: 259.3 197.0 159.8

32-2 Management compensation

Total compensation for 2007 awarded to the members of the Board

of Directors and the Group Executive Committee amounted to

€7,201,661, including directors’ fees of €197,428 compared with

the year-earlier fi gures of €7,088,269 and €188,574 respectively.

In addition to this compensation, 144,000 Faurecia stock

subscription options were awarded to management during the year,

and the amount recognized with respect to share-based payments

to management was €401,730.



NOTE 33 EMPLOYEES

The number of employees of fully-consolidated companies as of December 31, 2007, 2006 and 2005 was as follows:

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Europe

France• 20,562 20,276 22,148

Germany• 8,724 9,364 10,050

Other European countries• 23,560 20,593 17,299

Sub-total Europe 52,846 50,233 49,497

Outside Europe 16,867 15,449 12,225

TOTAL 69,713 65,682 61,722

The number of employees by business segment was as follows:

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Interior modules 57,467 54,506 51,395

Other modules 11,463 10,657 10,073

Holding companies 783 519 254

TOTAL 69,713 65,682 61,722

The number of employees includes temporary staff.

NOTE 34 INFORMATION ON THE CONSOLIDATING COMPANY

The consolidated accounts of the Group are included in the

consolidated fi nancial statements of the PSA Peugeot Citroën

Group, 75 avenue de la Grande-Armée, 75116 Paris, France.

As of December 31, 20 07, Peugeot SA held 70.85% of the capital

and 83.40% of the voting rights of Faurecia SA.

NOTE 35 DIVIDENDS

The Board of Directors proposes that no dividend be paid with respect to the 2007 fi scal year.


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7 Consolidated companies as of December 31, 2007

Country% interest of the parent company % control(1)

I - FULLY CONSOLIDATED COMPANIES

Faurecia France Parent company

Financière Faurecia « 100.00 100.00

SFEA - Société Foncière pour l’Equipement Automobile « 100.00 100.00

Faurecia Investments « 100.00 100.00

Faurecia Automotive Holdings « 100.00 100.00

Blériot Investissements « 100.00 100.00

Faurecia Services Groupe « 100.00 100.00

Faurecia Global Purchasing “ 100.00 100.00

Faurecia Exhaust International “ 100.00 100.00

Faurecia Verwaltungs GmbH Germany 100.00 100.00

Société Internationale de Participations (S.I.P) Belgium 100.00 100.00

Faurecia Netherlands Holding BV Netherlands 100.00 100.00

United Parts Exhaust Systems AB Sweden 100.00 100.00

Faurecia USA Holdings, Inc. United States 100.00 100.00

AUTOMOTIVE SEATING AND VEHICLE INTERIORS

Faurecia Sièges d’Automobile France 100.00 100.00

Faurecia Industries « 100.00 100.00

EAK Composants pour l’Automobile SAS « 51.00 51.00

EAK Composants pour l’Automobile SNC « 51.00 51.00

Trecia « 100.00 100.00

Siebret « 100.00 100.00

Siemar « 100.00 100.00

Sienor « 100.00 100.00

Sieto « 100.00 100.00

Sieval « 100.00 100.00

Sotexo « 100.00 100.00

Siedoubs « 100.00 100.00

Sielest « 100.00 100.00

ECSA-Etudes et Construction de Sièges pour l’Automobile « 100.00 100.00

Faurecia Interieur Industrie SNC « 100.00 100.00

Faurecia Automotive Industrie SNC « 100.00 100.00

Automotive Sandouville « 100.00 100.00

Société Automobile du Cuir de Vesoul « 100.00 100.00

Faurecia Autositze GmbH Germany 100.00 100.00

Faurecia Automotive GmbH (merged with Faurecia Deutschland Holding GmbH & Co KG) « 100.00 100.00

(1) Total interest of fully-consolidated companies.


FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS 7Consolidated companies as of December 31, 2007


Faurecia Innenraum Systeme GmbH « 100.00 100.00

Industriepark Sassenburg GmbH « 100.00 100.00

Faurecia Industrie NV Belgium 100.00 100.00

Faurecia Asientos Para Automovil Espana SA Spain 100.00 100.00

Asientos de Castilla Leon SA « 100.00 100.00

Asientos del Norte SA « 100.00 100.00

Industrias Cousin Frères SL « 50.01 50.01

Tecnoconfort « 50.00 50.00

Faurecia Automotive Espana SL « 100.00 100.00

Faurecia Interior Systems Espana SA « 100.00 100.00

Faurecia Interior Systems SALC Espana SL « 100.00 100.00

Cartera e inversiones Enrich SA « 100.00 100.00

Asientos de Galicia SL « 100.00 100.00

Valencia Modulos de Puerta SL « 100.00 100.00

Faurecia AST Luxembourg SA Luxembourg 100.00 100.00

Faurecia Automotive seating BV Netherlands 100.00 100.00

Faurecia Assentos de Automovel, Limitada Portugal 100.00 100.00

Sasal « 100.00 100.00

Faurecia Sistemas de Interior de Portugal. Componentes para Automovel SA « 100.00 100.00

EDA - Estofagem de Assentos Lda « 100.00 100.00

Faurecia Automotive Seating UK Ltd United Kingdom 100.00 100.00

Faurecia Midlands Ltd « 100.00 100.00

SAI Automotive Telford Ltd « 100.00 100.00

SAI Automotive Fradley Ltd « 100.00 100.00

SAI Automotive Washington Ltd « 100.00 100.00

Faurecia Interior Systems Sweden AB Sweden 100.00 100.00

Faurecia Fotele Samochodowe Sp.Zo.o Poland 100.00 100.00

Faurecia Walbrzych Sp Zo.o « 100.00 100.00

Faurecia Legnica Sp Zo.o (formerly SAI Automotive Polska Sp Zo.o) « 100.00 100.00

Faurecia Systemy Kierownicze Sp Zo.o « 100.00 100.00

Faurecia Gorzow Sp Zo.o “ 100.00 100.00

Faurecia Lecotex a.s. Czech Republic 100.00 100.00

Faurecia Interior Systems Bohemia (formerly SAI Automotive Bohemia Sro) « 100.00 100.00

Faurecia Components Pisek S r o « 100.00 100.00

Faurecia Seating Talmaciu Sro Romania 100.00 100.00

Euro Auto Plastic Systems S.R.L. « 50.00 50.00

Faurecia Leather Kosice Sro Slovakia 100.00 100.00

Faurecia Slovakia Sro « 100.00 100.00

Faurecia Interior Systems Bratislava Sro « 100.00 100.00

Faurecia Polifl eks Otomotiv Sanayi Ve Ticaret Anonim Sirketi Turkey 100.00 100.00

Faurecia Interior Systems South Africa (Proprietary) Ltd South Africa 100.00 100.00

Société Tunisienne d’Equipements Automobiles Tunisia 100.00 100.00



FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7 Consolidated companies as of December 31, 2007


Faurecia Automotive Seating Canada Ltd Canada 100.00 100.00

Faurecia Canada Investment Company « 100.00 100.00

Faurecia Automotive Seating Inc. United States 100.00 100.00

Faurecia Interior Systems Inc. « 100.00 100.00

Faurecia Argentina SA Argentina 100.00 100.00

Faurecia Automotive do Brasil Ltda Brazil 100.00 100.00

Faurecia Duroplast Mexico S.A. de C.V. Mexico 100.00 100.00

Servicios Corporativos de Personal Especializado, S.A. de C.V. « 100.00 100.00

Faurecia Interior Systems Mexico, S.A. de C.V. « 100.00 100.00

CFXAS (Changchun Faurecia Xuyang Automotive Seating Co., Ltd) China 60.00 60.00

Faurecia (Changchun) Automotive Systems Co., Ltd « 100.00 100.00

Faurecia-GSK (Wuhan) Automotive Seating Co., Ltd « 51.00 51.00

Faurecia (Wuxi) Seating Components Co., Ltd « 100.00 100.00

Faurecia (Shanghai) Management Cy, Ltd « 100.00 100.00

Faurecia (Shanghai) Automotive Systems Co, Ltd « 100.00 100.00

Faurecia (Wuhan) Automotive Seating Co., Ltd « 100.00 100.00

Faurecia Trim Koréa Ltd South Korea 100.00 100.00

Faurecia Automotive Seating India Private Ltd India 100.00 100.00

Faurecia Japan KK (merged with Faurecia Interior Systems KK) Japan 100.00 100.00

EXHAUST SYSTEMS AND FRONT END

Faurecia Systèmes d’é chappement France 100.00 100.00

Faurecia Bloc Avant « 100.00 100.00

Faurecia Cooling System France 100.00 100.00

Faurecia Abgastechnik GmbH Germany 100.00 100.00

Faurecia Kunststoffe Automobilsysteme GmbH « 100.00 100.00

Leistritz Abgastechnik Stollberg GmbH « 100.00 100.00

Faurecia Sistemas de Escape Espana, SA Spain 100.00 100.00

Faurecia Sistemas de Escape Portugal Lda Portugal 100.00 100.00

Faurecia Exhaust Systems AB Sweden 100.00 100.00

Faurecia Magyarorszag Kipufogo-Rendszer Kft Hungary 100.00 100.00

Faurecia Exhaust Systems S.r.o Czech Republic 100.00 100.00

Faurecia Automotive Czech Republic S.r.o. « 100.00 100.00

Faurecia Exhaust Systems South Africa (Proprietary), Ltd. South Africa 100.00 100.00

Faurecia Exhaust Systems, Inc United States 100.00 100.00

Faurecia Sistemas de Escape Argentina SA Argentina 100.00 100.00

Faurecia Sistemas de Escapamento do Brasil Ltda Brazil 100.00 100.00

Faurecia Exhaust Mexicana, SA de CV Mexico 100.00 100.00

Exhaust Services Mexicana, SA de CV « 100.00 100.00

Faurecia Honghu Exhaust Systems Shanghai Co., Ltd (formerly SHEESC) China 51.00 51.00

Faurecia Tongda Exhaust System (Wuhan) Co., Ltd (formerly TEEC) « 50.00 50.00

Faurecia Exhaust Systems Changchun « 51.00 51.00

Faurecia (Shanghai) Business Consulting Cy « 100.00 100.00

Faurecia (Qingdao) Exhaust Systems Co., Ltd « 100.00 100.00



FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS 7Consolidated companies as of December 31, 2007


Faurecia Exhaust Systems Korea South Korea 100.00 100.00

Daeki Faurecia Corporation South Korea 100.00 100.00

II – COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD

AUTOMOTIVE SEATING AND VEHICLE INTERIORS

Componentes de Vehiculos de Galicia SA Spain 50.00 50.00

Copo Iberica SA « 50.00 50.00

Vanpro Assentos Lda Portugal 50.00 50.00

ARSED Doo Slovenia 50.00 50.00

Teknik Malzeme Ticaret Ve Sanayi A.S. Turkey 50.00 50.00

Kwang Jin Faurecia Co. Limited South Korea 50.00 50.00

Faurecia NHK Co Ltd Japan 50.00 50.00

Faurecia NHK Kyushu Ltd « 19.00 19.00

SAS GROUP

SAS Automotive France France 50.00 50.00

Cockpit Automotive Systems Douai SNC France 50.00 50.00

SAS Autosystemtechnik Verwaltungs GmbH Germany 50.00 50.00

SAS Autosystemtechnik GmbH & Co. KG « 50.00 50.00

SAS Automotive N.V. Belgium 50.00 50.00

SAS Autosystemtechnick SA Spain 50.00 50.00

SAS Autosystemtechnik de Portugal Unipessoal Ltda Portugal 50.00 50.00

SAS Automotive Limited United Kingdom 50.00 50.00

SAS Autosystemtechnick Sro Czech Republic 50.00 50.00

SAS Automotive Sro Slovakia 50.00 50.00

SAS Automotive R.S.A. (PTY) Ltd South Africa 50.00 50.00

SAS Automotive do Brasil Ltda Brazil 50.00 50.00

SAS Automotive Systems SA de CV Mexico 50.00 50.00

SAS Automotive Systems & Services SA Mexico 50.00 50.00

SAS Automotive USA Inc. United States 50.00 50.00



FAURECIA – CONSOLIDATED FINANCIAL STATEMENTS7 Statutory Auditors’ report on the consolidated fi nancial statements

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 specifi cally required by French law in all audit reports, whether qualifi ed or not. This

information is presented below the opinion on the consolidated fi nancial statements and includes an explanatory paragraph discussing the auditors’

assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the

consolidated fi nancial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside

of the consolidated fi nancial statements.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France

To the Shareholders,

In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we have audited the accompanying consolidated

fi nancial statements of Faurecia SA and its subsidiaries for the year ended December 31, 2007.

These consolidated fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these consolidated

fi nancial statements based on our audit.

I. Opinion on the consolidated fi nancial statements

We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated fi nancial statements. An audit

also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall

presentation of the consolidated fi nancial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the

Group as at December 31, 2007 and the results of its operations for the year then ended in accordance with IFRS as adopted by the European

Union.

II. Justifi cation of our assessments

In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of 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 fi xed assets show any

indication of impairment, based on the methods described in notes 1-2, 1-5 and 10 to the consolidated fi nancial statements. We reviewed the

methods applied to carry out these impairment tests, as well as the cash fl ow projections and assumptions used. We also verifi ed that note

10 discloses appropriate disclosures in this regard.

• Note 1-16 to the consolidated fi nancial statements, concerning corporate income taxes, specifi es that deferred tax assets are not recognized

in the accounts when it is deemed uncertain that they will be recovered in the future. Our work consisted in verifying that this method 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 fi nancial statements, taken as a whole, and therefore contributed

to the opinion we formed which is expressed in the fi rst part of this report.

III. Specifi c verifi cation

In accordance with professional standards applicable in France, we have also verifi ed the information given in the Group Director’s r eport. We

have no matters to report regarding its fair presentation and conformity with the consolidated fi nancial statements.

Neuilly-sur-Seine and Paris-La Défense, February 18, 2008

The Statutory Auditors

PricewaterhouseCoopers Audit Ernst & Young Audit

Dominique Ménard Laurent Miannay

8LEGAL AND FINANCIAL

INFORMATION

CONTENTS



8.1.1 Management reportof the parent company 138

8.1.2 Income statements 140

8.1.3 Balance sheets 141

8.1.4 Cash fl ow statements 142

8.1.5 Notes to the 2007 parent company fi nancial statements 143

8.1.6 Appropriation of 2007 net income 155

8.1.7 Subsidiaries and associatesas of December 31, 2007 156

8.1.8 Five-year fi nancial summary 158

8.1.9 Securities portfolioas of December 31, 2007 159

8.1.10 Statutory Auditors’ reports 160


8.2.1 Report by the Chairmanof the Board of Directorson internal control drawn upin accordance with Article L. 225-37 of the French Commercial Code 162

8.2.2 Statutory Auditors’ reporton the Chairman’s reporton internal control 168

8.3 Additional informationon Faurecia S.A. 169

8.3.1 History 169

8.3.2 Legal information about the Company 171

8.3.3 Information published aboutthe Company 187


LEGAL AND FINANCIAL INFORMATION8 Faurecia S.A.

8.1.1 MANAGEMENT REPORT OF THE PARENT COMPANY

The parent company, Faurecia S.A., is a holding company which

directly and indirectly provides fi nancial, accounting, general

management and administrative services to companies in the

Group.

Sales for 2007 amounted to €73.1 million versus €87.1 million in

2006, refl ecting a decrease in amounts rebilled to subsidiaries for

services rendered due to Group-level cost reduction measures.

In addition to providing services to Group subsidiaries, since

2006 Faurecia has invoiced trademark royalties to certain

French subsidiaries. These royalties totaled €18.1 million in 2007

(€16.6 million in 2006).

Results

The Company ended 2007 with an operating loss of €2.2 million

versus operating income of €1.7 million in 2006. The majority of

operating expenses are rebilled to the Group’s subsidiaries.

Net fi nancial income came in at €53.2 million compared with net

fi nancial expense of €205.3 million in 2006, due to a sharp decrease

in charges to provisions for impairment of investments. The 2007

fi gure includes the following:

a €22.2 million charge to provisions for impairment of investments,

corresponding to fair value remeasurements of certain shares.

This amount was down signifi cantly on 2006 and 2005, when

charges were recorded for the impact of decreases in valuations

of the Vehicle Interiors business recorded in the consolidated

fi nancial statements;

€128.2 million in dividends received from subsidiaries – including

€100.9 million from Faurecia Investments – compared with

€153.6 million in 2006;

net borrowing costs of €40.9 million (€40.6 million in 2006). In

2007 these costs were contained by the interest rate caps set

up by the Group which limited the impact of rises in interest rates

on the Company’s net debt, which is primarily at fl oating rates

(81.2% as of end-2007).

Net non-recurring income for the year amounted to €2.0 million

and mainly comprised provision reversals. In 2006 this item totaled

€27.8 million and included the impact of two reclassifi cations of

investments within the Group.

•

•

•

The corporate income tax benefi t arising from the results of the

French subsidiaries in the tax group rose €13.7 million from

€10.5 million in 2006 to €24.2 million in 2007.

Faurecia S.A. recorded net income of €77.2 million in 2007 following

two years of net losses.

Financial structure and debt

Net cash provided by operating and investing activities in 2007 came

to €173.5 million. Cash fl ow from operations totaled €105.8 million

and working capital requirement decreased by €65.3 million, mainly

due to repayment to Faurecia of the deposit relating to a European

receivables sale program which terminated in May 2007.

No acquisitions of investments in subsidiaries and associates

were recorded in the 2007 cash fl ow statement. Similarly, capital

increases carried out by Faurecia’s direct subsidiaries had no effect

on the cash fl ow statement in 2007, as the €187.7 million share

issue by the North American subsidiary Faurecia USA Holding

decided as of end-2006 and completed in early 2007 was paid up

by capitalizing receivables and had no impact on the Company’s

fi nancing needs for the year.

The carrying amount of investments in subsidiaries and associates

recognized in the balance sheet as of December 31, 2007 came to

€1,612.4 million, compared with €1,451.2 million one year earlier.

As of December 31, 2007 net debt, corresponding to borrowings

net of cash and cash equivalents, marketable securities and net

inter-company cash advances, amounted to €1,341.1 million,

versus €1,468.1 million as of end-2006.

The Company’s sources of fi nancing comprise the following:

a €300 million bond issue carried out in October 2005 and which

matures in October 2010;

a €1.6 billion syndicated line of credit which can be drawn

down for renewable periods of one to six months, expiring in

November 2009, of which €800 million had been used as of

December 31, 2007;

a commercial paper program issued on the French domestic

market for a total amount of €850 million of which €503.7 million

had been used as of December 31, 2007. The liquidity of this

program is guaranteed by the syndicated line of credit.

The contracts relating to the Company’s bonds and syndicated

line of credit contain covenants, particularly relating to certain

•

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LEGAL AND FINANCIAL INFORMATION 8Faurecia S.A.

consolidated fi nancial ratios. All of these covenants were complied

with as of December 31, 2007.

Total shareholders’ equity amounted to €472.7 million as of

December 31, 2007, versus €390.0 million as of December 31, 2006.

Business review relating to the Company’s subsidiaries

Operations and results of the Company’s subsidiaries are analyzed

in detail when the consolidated fi nancial statements are prepared.

The year 2007 marked the fi rst stages of a turnaround for the

Faurecia Group with an increase in operating income, a decrease in

the consolidated net loss, and tightly controlled borrowings.

At the same time, the Group pursued the restructuring measures

begun several years ago. Faurecia Deutschland Holding and its

mainly German subsidiaries specializing in the Automotive Seating,

Exhaust Systems and Front End businesses were merged into

Faurecia Automotive GmbH with a view to combining all of the

Group’s German subsidiaries in one entity and set up a single tax

group. In parallel, as part of the Group’s international expansion

strategy new subsidiaries were formed in 2007 – notably in Central

Europe and Asia.

The only changes to the Company’s capital stock in the year related

to the issuance of shares on the exercise of stock options by the

Company’s senior managers. The Board of Directors did not use the

authorization given by the Shareholders’ Meeting of May 22, 2006

to increase the capital stock by a maximum amount of €61 million.

The risks to which the Company is exposed are described in the

Management report of the Board of Directors on the consolidated

fi nancial statements.

The draft resolutions presented below are an integral part of this

document and supplement the information provided to shareholders.

In the ordinary resolutions, the Company’s shareholders are asked

to approve the fi nancial statements of the Company and the Group,

as well as to appropriate net income for the year. Shareholders are

also requested to ratify the Board’s October 8, 2007 appointment of

Isabel Marey-Semper as a director. A full list of the other directorships

and positions held by Isabel Marey-Semper is provided in section

8.3.2.2 (page 177) of this registration document.

In the extraordinary resolutions, the Company’s shareholders are

invited to authorize the Board of Directors to issue Faurecia shares

and/or securities carrying rights to shares as described below:

in the sixth and seventh resolutions the Board of Directors

is asking shareholders to renew the authorizations previously

given in order to enable it to rapidly carry out capital increases

whenever required;

the purpose of the sixth resolution, drawn up in accordance

with Articles L. 225-119 et seq. of the French Commercial Code,

is to authorize the Board to issue shares and/or securities

carrying immediate or deferred rights to shares in the Company,

with pre-emptive subscription rights for existing shareholders.

The maximum amount by which the Company’s capital may be

increased under this authorization is €61 million. The maximum

nominal amount of debt securities carrying rights to the

Company’s shares would be capped at €1 billion;

the purpose of the seventh resolution, also drawn up in

accordance with Articles L. 225-119 et seq. of the French

Commercial Code, is to authorize the Board to issue shares

and/or securities carrying immediate or deferred rights to

shares in the Company, subject to the same conditions as in

the sixth resolution but without pre-emptive subscription rights

for existing shareholders. However, the Board may offer existing

shareholders a priority right to subscribe for any issues carried

out under this authorization. The price of the shares to be issued

on the purchase, conversion, exchange or exercise of warrants

would equal at least the average weighted price of the Faurecia

share on the Paris stock exchange over the three trading days

preceding the pricing date, less a maximum discount of 5%;

the Board of Directors is obliged to table an eighth resolution

concerning employee rights issues pursuant to the requirements

of the French Act of February 9, 2001 on employee stock

ownership and the Social Modernization Act of January 2002.

Under this authorization the Board of Directors would be entitled

to issue shares to employees in accordance with Article L. 443-5

of the French Labor Code and subject to an aggregate maximum

ceiling of €5,120,000. The Board of Directors would determine

the issue price for the new shares in accordance with the

provisions of said Article and would set the conditions for paying

up the shares, as well as the terms, conditions and timing of

employee subscriptions.

The Board of Directors does not recommend that shareholders

adopt this resolution in view of the other procedures in place

enabling employees to take up the Company’s shares under

favorable conditions.

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8.1.2 INCOME STATEMENTS

(in € thousands) Notes 2007 2006 2005

Services sold 73,124 87,108 82,779

Sales 73,124 87,108 82,779

Capitalized production 566 155 185

External services (66,214) (78,498) (63,742)

Taxes other than on income (1,461) (2,172) (1,123)

Wages and salaries (13,553) (9,785) (9,307)

Payroll taxes (7,357) (3,841) (3,373)

Depreciation, amortization and provisions (less reversals) (5,224) (7,669) (8,469)

Other income and expenses, net 17,959 16,418 (164)

Total operating expenses (75,284) (85,392) (85,993)

OPERATING INCOME (LOSS) (2,160) 1,716 (3,214)

Financial income 3 204,042 305,536 100,338

Interest and other fi nancial expenses 3 (150,876) (510,798) (522,413)

NET FINANCIAL INCOME (EXPENSE) 3 53,166 (205,262) (422,075)

OPERATING INCOME (LOSS) AFTER NET FINANCIAL INCOME (EXPENSE) 51,006 (203,546) (425,289)

Non-recurring income 4 6,776 86,537 157,435

Non-recurring expense 4 (4,825) (58,738) (164,822)

NET NON-RECURRING INCOME (EXPENSE) 4 1,951 27,799 (7,387)

Employee profi t-sharing

Corporate income tax 5 24,197 10,522 16,918

NET INCOME (LOSS) 77,154 (165,225) (415,758)



8.1.3 BALANCE SHEETS

ASSETS(in € thousands)

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Notes Cost

Depreciation, amortization and

provisions Net Net Net

Intangible assets 6 16,224 14,140 2,084 2,807 5,935

Property, plant and equipment 7 11,023 7,097 3,926 5,469 5,909

Investments 8 2,700,750 930,226 1,770,524 1,741,966 1,944,722

Total fi xed assets 2,727,997 951,463 1,776,534 1,750,242 1,956,566

Trade receivables 47,135 47,135 56,163 27,210

Other receivables 9 824,410 2,898 821,512 783,765 811,112

Cash and cash equivalents 10 18,205 18,205 16,942 16,296

Total current assets 889,750 2,898 886,852 856,870 854,618

Prepaid expenses 11 12,893 12,893 16,176 18,156

Conversion losses 4 4 0 0

Deferred charges 1,259 1,259 2,206 3,175

TOTAL ASSETS 3,631,903 954,361 2,677,542 2,625,494 2,832,515

LIABILITIES AND SHAREHOLDERS’ EQUITY(in € thousands) Notes Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Capital stock 170,765 169,815 169,635

Additional paid-in capital 198,846 359,566 723,184

Legal reserve 16,948 16,948 16,948

Untaxed reserves 8,939 8,939 8,939

Other reserves 3,020

Retained earnings 48,232

Net income (loss) for the year 77,154 (165,225) (415,758)

Untaxed provisions

Total shareholders’ equity 12 472,652 390,043 554,200

Provisions for contingencies and charges 13 4,607 6,140 4,730

Perpetual notes 14 65,734

Other debt 15 1,611,457 1,532,612 1,364,385

Total debt 1,611,457 1,532,612 1,430,119

Operating payables 16 27,659 33,749 25,650

Other payables 16 558,659 661,830 815,889

Total payables 586,318 695,579 841,539

Deferred income 17 2,506 745 1,927

Conversion gains 2 375

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,677,542 2,625,494 2,832,515



8.1.4 CASH FLOW STATEMENTS

(in € millions) 2007 2006 2005

I - OPERATING ACTIVITIES

NET INCOME (LOSS) 77.1 (165.2) (415.8)

Depreciation and amortization 5.3 5.7 7.6

Increase (decrease) in provisions and other long-term liabilities 23.4 383.7 432.2

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

CASH FLOW FROM OPERATIONS 105.8 196.8 31.8

(Increase) decrease in working capital requirement 65.3 (14.6) 13.5

NET CASH PROVIDED BY OPERATING ACTIVITIES 171.1 182.2 45.3

II - INVESTING ACTIVITIES

Acquisitions of intangible assets and property, plant and equipment (2.1) (1.2) (6.2)

Acquisitions of investments in subsidiaries and associates (76.4) (155.2)

Divestments of property, plant and equipment

Disposals of fi nancial investments 4.5 85.7 155.5

NET CASH PROVIDED (USED BY) INVESTING ACTIVITIES 2.4 8.1 (5.9)

NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES (I)+(II) 173.5 190.3 39.4

III - FINANCING ACTIVITIES

Issuance of shares 5.5 1.0 0.8

Dividends paid (26.3)

Issuance of debt securities and increase in borrowings 123.4 540.7 304.4

Repayments of borrowings and perpetual notes (44.6) (438.2) (236.4)

Changes in intercompany borrowings (256.5) (293.2) (84.9)

NET CASH USED BY FINANCING ACTIVITIES (172.2) (189.7) (42.4)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1.3 0.6 (3.0)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 16.9 16.3 19.3

CASH AND CASH EQUIVALENTS AT END OF YEAR 18.2 16.9 16.3



8.1.5 NOTES TO THE 2007 PARENT COMPANY FINANCIAL

STATEMENTS

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The parent company fi nancial statements have been prepared in

accordance with French generally accepted accounting principles

(PCG 99-03 as amended by the regulations of the Comité de

Réglementation Comptable (Accounting Regulation Committee).

The main policies applied are as follows:

A - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at acquisition or production

cost. Depreciation is calculated by the straight-line method over the

estimated useful life of the assets, as follows:

buildings: 25 to 30 years;

leasehold improvements, fi xtures and fi ttings: 7 to 10 years;

other fi xtures and fi ttings: 10 years;

offi ce equipment and computers: 3 to 5 years;

software: 1 to 3 years;

furniture: 10 years.

B - INVESTMENTS

Investments are stated at the lower of cost and value in use. Value

in use is based on the subsidiary’s revalued net assets, profi tability

and future prospects.

For investments intended to be sold, value-in-use estimates also

take into account prices at which prior transactions were carried

out, if any.

C - MARKETABLE SECURITIES

Marketable securities are stated at the lower of cost and market

value.

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•

•

•

D - FOREIGN CURRENCY TRANSACTIONS

Unhedged payables and receivables in foreign currency are

translated at the exchange rate prevailing on the transaction date.

At the 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.

E - 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 benefi t obligation method. The valuation takes into

account the probability of employees staying with the Company

up to retirement age and expected future salary levels. Benefi t

obligations are partially funded by contributions to external funds.

In cases where the funds are permanently allocated to the benefi t

plan concerned, their value is deducted from the related liability.

F - NON-RECURRING ITEMS

Unusual or non-recurring items are included under “Non-recurring

income” and “Non-recurring expense”.

G - FINANCIAL INSTRUMENTS

Interest rate risks are hedged, where appropriate, using fi nancial

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 signifi cant events have occurred since the balance sheet date.



NOTE 3 NET FINANCIAL INCOME (EXPENSE)

(1) This item corresponds to dividends received from subsidiaries and associates:

- In 2007, it included a dividend received from Faurecia Investments amounting to €100,880 thousand; - In 2006, it included 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

- reversals of provisions for financial contingencies and charges 1,269

(4) Including:

- Faurecia Automotive Holding shares 6,618 140,000 343,300

- Faurecia Industries shares 14,000 57,000

- Faurecia Automotive Intérieur France shares 30,753

- Faurecia Automotive GmbH shares 102,880 15,300

- Faurecia USA Holdings Inc. shares 140,000

- Trecia shares 4,056 4,500

- Faurecia Honghu Exhaust Systems Shanghai shares 200

- Sté Internationale de Participation (SIP) shares 11,500 11,500

Net fi nancial income (expense) breaks down as follows:

(in € thousands) 2007 2006 2005

Financial income

Income from investments in subsidiaries and associates(1) 136,766 163,916 48,302

Interest income(2) 67,276 110,856 33,105

Net gains from sales of marketable securities

Reversals of provisions(3) 30,764 18,931

Total 204,042 305,536 100,338

Interest and other fi nancial expenses

Interest expense 116,779 97,718 71,916

Charges to provisions for impairment of investments(4) 22,157 413,080 450,497

Charges to other provisions and other fi nancial expenses 11,940

Total 150,876 510,798 522,413

NET FINANCIAL INCOME (EXPENSE) 53,166 (205,262) (422,075)

The net charges to provisions for impairment of investments

recorded in the parent company fi nancial statements do not

correspond to the asset impairment losses recorded in the

consolidated fi nancial statements due to the application of different

accounting policies. The recognition of goodwill in the consolidated

fi nancial statements, prior to the transition to IFRS, also contributed

to the differences between the amounts recognized in 2005.



NOTE 4 NET NON-RECURRING INCOME (EXPENSE)

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

(in € thousands) 2007 2006 2005

Non-recurring income

From management transactions 5

Proceeds from the disposal of assets(1) 5,270 86,005 156,632

Reversals of provisions(2) 1,506 531 798

Total 6,776 86,536 157,435

Non-recurring expense

On management transactions(3) 405 431 911

Carrying amount of assets and investments sold(4) 4,420 58,306 163,336

Depreciation, amortization and charges to provisions 575

Total 4,825 58,737 164,822

NET NON-RECURRING INCOME (EXPENSE) 1,951 27,799 (7,387)

(1) Including:- proceeds from the sale of investments in subsidiaries

and associates 4,440 85,611 155,553

(Faurecia Automotive Holding Inc shares sold in 2005 to Faurecia USA Holding Inc for €155,133 thousand)

(Faurecia Automotive Intérieur France shares sold to FAH for €9,081 thousand and Faurecia Sistemas de Escape shares transferred to Faurecia Automotive Espana for €76,449 thousand in 2006)

(Faurecia Systemy Kierownicze capital reduction carried out in 2007 in an amount of €4,440 thousand)

(2) Including:- reversals of untaxed provisions- reversals of provisions for contingencies and charges 1,506 531

109689

(3) Including:- restructuring costs 395 313 806

(4) Carrying amounts of investments in subsidiaries and associates sold or transferred (2005: o/w sale of Faurecia Automotive Holdings Inc. shares for €146,303 thousand; 2006: o/w sale of Faurecia Automotive Intérieur France shares for €30,753 thousand and transfer of Faurecia Sistemas de Escape shares for €27,442 thousand; and 2007: o/w sale of Faurecia Systemy Kierownicze shares for €4,420 thousand) 4,420 58,304 163,336



NOTE 5 CORPORATE INCOME TAX

Faurecia has elected to fi le consolidated tax returns. The tax group includes the parent company and its main French subsidiaries. This

election allows Faurecia to obtain a tax benefi t by offsetting any tax losses recorded by the Company and certain of its subsidiaries against

the taxable income of other subsidiaries in the tax group:

(in € thousands) 2007 2006 2005

Tax income from subsidiaries in the tax group 24,524 10,419 17,500

Tax benefi t (expense) – tax audit (327) 103 (582)

TOTAL 24,197 10,522 16,918

NOTE 6 INTANGIBLE ASSETS

Intangible assets can be analyzed as follows:

(in € thousands)

Patents and licenses

Other intangible assets

Intangible assets in progress Total

Net as of January 1, 2005 3,373 3,373

Additions (including own work capitalized) 6,293 6,293

Amortization and provisions for impairment in value (3,731) (3,731)

Net as of December 31, 2005 5,935 0 0 5,935

Additions (including own work capitalized) 365 365

Amortization and provisions for impairment in value (3,493) (3,493)

Net as of December 31, 2006 2,807 0 0 2,807

Additions (including own work capitalized) 1,171 1,347 2,518

Amortization and provisions for impairment in value (2,463) (778) (3,241)

Net as of December 31, 2007 344 393 1,347 2,084



NOTE 7 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment can be analyzed as follows:

(in € thousands)

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Cost Net Net Net

Land 54 54 55 56

Buildings 285 0 1

Other property, plant and equipment in progress 10,684 3,872 5,414 5,852

TOTAL 11,023 3,926 5,469 5,909

(in € thousands) Land Buildings

Other property, plant and

equipment

Property, plant and equipment

in progress Total

Net as of January 1, 2005 56 7 7,000 304 7,367


Disposals 0

Depreciation and provisions for impairment in value (6) (1,338) (1,344)

Depreciation written off on disposals 0

Other movements (258) (258)

Net as of December 31, 2005 56 1 5,806 46 5,909

Additions (including own work capitalized) 227 600 827

Disposals (1) (14) (15)

Depreciation and provisions for impairment in value (1,265) (1,265)

Depreciation written off on disposals 13 13

Other movements 0



Disposals (1) (3) (4)

Depreciation and provisions for impairment in value 3 (1,073) (1,070)

Depreciation written off on disposals 0

Other movements (646) (646)




NOTE 8 INVESTMENTS

(in € thousands)

Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Cost Provisions Net Net Net

Investments in subsidiaries and associates 2,542,603 930,226 1,612,377 1,451,183 1,815,302

Loans to subsidiaries and associates 158,147 158,147 290,783 129,367

Other 0 0 53

TOTAL 2,700,750 930,226 1,770,524 1,741,966 1,944,722

Loans to subsidiaries and associates are due in more than one year.

NOTE 9 RECEIVABLES

NOTE 10 CASH AND CASH EQUIVALENTS

As of December 31, 2007, cash and cash equivalents

corresponded mainly to 270,814 Faurecia shares with a carrying

amount of €11.5 million compared with 302,154 Faurecia shares

with a carrying amount of €12.5 million as of December 31, 2006,

refl ecting the following transactions:

200,000 shares contributed by Ectra in 1999;

19,613 shares purchased in 2000;



32,745 shares sold in 2004;


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•



31,340 shares sold in 2007.

The shares are being held for allocation on exercise of stock options

granted to directors and managers of the Group.

At its 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 stock options with an exercise price of €54.5 each.

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•

•

Receivables mainly comprise:

cash advances to various Group companies totaling €800.6 million

as of December 31, 2007 (December 31, 2006: €694.8 million;

December 31, 2005: €712.2 million);

taxes due by subsidiaries in the tax group, in an amount of

€10.9 million (December 31, 2006: €2.1 million; December 31,

2005: €4.1 million);

corporate income tax receivables in an amount of €6.8 million

as of December 31, 2007 (December 31, 2006: €3.9 million;

December 31, 2005: €2.9 million);

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•

a securitization deposit which amounted to €78.6 million as of

December 31, 2006 and €85.7 million as of December 31, 2005

but was reduced to zero as of December 31, 2007;

recoverable VAT of €1 million compared with €1.1 million in

2006.

Receivables due within one year amounted to €816.5 million as of

December 31, 2007 and those due in more than one year totaled

€5 million.

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NOTE 11 PREPAID EXPENSES

Prepaid expenses mainly comprise:

(in € thousands) Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005

Premiums on currency and interest rate instruments 10,608 14,551 17,863

Commissions and bank charges 118 162 200

Interest on commercial paper 800

Rent 1,324 1,360

Other 43 103 93

TOTAL 12,893 16,176 18,156

NOTE 12 SHAREHOLDERS’ EQUITY

A - MOVEMENTS IN SHAREHOLDERS’ EQUITY

(in € thousands) Dec. 31, 2006

Appropriation of net loss at

the AGM of May 29, 2007

Capital increases

Other movements Dec. 31, 2007

Capital stock 169,815 950 170,765

Additional paid-in capital 359,566 (165,225) 4,505 198,846

Legal reserve 16,948 16,948

Untaxed reserves 8,939 8,939

Other reserves 0 0

Retained earnings 0 0

Net income (loss) for the year (165,225) 165,225 77,154 77,154

Untaxed provisions 0 0

TOTAL 390,043 0 5,455 77,154 472,652

B - CAPITAL STOCK AND ADDITIONAL PAID-IN

CAPITAL

As of December 31, 2007, the Company’s capital stock

amounted to €170,765,336, divided into 24,395,048 fully paid-

up common shares with a par value of €7 each. Shares which

have been registered in the name of the same shareholder for at

least two years carry double voting rights (17,397,010 shares as

of December 31, 2007).

•

The exercise of all the stock options granted to executives and

other employees that were outstanding as of December 31, 2007,

i.e., 1,258,302 options exercisable at an average price of €55.33,

would result in:

capital stock being increased by €8.8 million, corresponding

to 1,258,303 shares with a par value of €7 each;

additional paid-in capital being increased by €58.3 million.

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PROVISIONS FOR CONTINGENCIES

Foreign exchange losses 4

Other 2,200 2,356 2,037

Sub-total 2,204 2,356 2,037

PROVISIONS FOR CHARGES

Provisions for pensions and retirement benefi ts(1) 2,267 3,650 2,542

Other 136 134 151

Sub-total 2,403 3,784 2,693

TOTAL 4,607 6,140 4,730

(1) The provision for pensions and retirement benefits covers the following costs that the Company is required to bear on retirement of employees:- statutory lump-sum bonuses payable to employees on retirement;- supplementary pension benefi ts 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 benefi t obligation has been estimated by independent actuaries using a discount rate of 5.25% and an infl ation rate of 2%.

(in € thousands) 2007 2006 2005

Projected benefi t obligation 7,041 8,498 5,839

Value of external funds 117 (21) (21)

Deferred items (4,891) (4,827) (3,277)

Provision 2,267 3,650 2,541

(in € thousands) 2007 2006 2005

Service cost (495) (505) (571)

Interest cost (404) (253) (234)

Change in top-up scheme 518

Actual return on external funds

Curtailment - Settlement

Amortization of deferred items (548) (350) (1,164)

TOTAL (1,447) (1,108) (1,451)

NOTE 13 PROVISIONS FOR CONTINGENCIES AND CHARGES

(in € thousands) Dec. 31, 2006 Additions

Reversals (utilized

provisions)

Reversals (surplus

provisions)

Payments to retirement

funds Dec. 31, 2007

Provisions for contingencies 2,356 2,204 (850) (1,506) 2,204

Provisions for pensions and retirement benefi ts 3,650 1,447 (330) (2,500) 2,267

Other 134 2 136

TOTAL 6,140 3,653 (1,180) (2,500) 4,607



NOTE 14 PERPETUAL NOTES

On October 15, 1991, Faurecia (formerly Bertrand Faure) issued

subordinated perpetual notes amounting to FRF 900 million

(€137.2 million).

The subordination clause relating to these notes was removed as

part of a restructuring that took place in 1996. The €8.6 million

gain that arose on the restructuring was recognized on a straight-

line basis over the period between July 30, 1996 and October 15,

2006.

The entire operation was approved by the French tax authorities

(Service de la Législation Fiscale) which decided that the tax regime

originally applicable to the notes in 1991 could still apply, i.e. interest

paid was deductible based on the amount effectively received,

corresponding to €98.5 million. However, Article 238 bis-01 of the

French General Tax Code provides that the interest capitalized over

the preceding three years relating to the portion of funds transferred

outside France must be included in taxable income.

As the perpetual notes matured in October 2006, their net amount

(€64.6 million) was taken to the 2006 income statement.

NOTE 15 OTHER DEBT


Bonds 300,000 300,000 299,919

Bank borrowings 1,308,119 1,228,907 1,060,359

Other 3,338 3,705 4,107

TOTAL 1,611,457 1,532,612 1,364,385

On October 5, 2005, Faurecia issued €300 million worth of bonds

redeemable in October 2010.

In addition, Faurecia has access to a medium-term syndicated

line of credit of up to €1,600 million which can be drawn down

for renewable periods of one, three or six months through

November 2009. As of December 31, 2007, the undrawn portion

of this credit line amounted to €800 million.

The contracts relating to the Company’s bonds and syndicated

line of credit contain covenants, particularly relating to certain

consolidated fi nancial ratios, which were all complied with as of

December 31, 2007.

As of year-end 2007, 81.2% of the Company’s debt was at fl oating

rates. This debt is hedged through interest rate options as described

in Note 20-A.

Maturities of other debt are as follows:

(in € thousands) Dec. 31, 2007

Maturing in 2007

Maturing in 2008 511,124



Maturing in 2011 86

Maturing in 2012 and beyond 73

TOTAL 1,611,457



NOTE 16 OPERATING PAYABLES AND OTHER PAYABLES

NOTE 17 DEFERRED INCOME

NOTE 18 DEFERRED TAXES

Deferred taxes relate to:

temporary differences between the recognition of income and

expenses for fi nancial reporting and tax purposes;

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 profi t.

They are computed based on the tax rate for the year in which they

are expected to reverse (i.e. 34.43% for 2008 and beyond).

•

Deferred taxes can be analyzed as follows:

(in € thousands) 31/12/2007 31/12/2006 31/12/2005

Deferred tax liabilities on temporary differences (433) (760) (1,093)

Deferred tax liabilities corresponding to tax savings arising from the use of the tax losses of companies in the tax group (279,763) (204,339) (124,097)

Sub-total deferred tax liabilities (280,196) (205,099) (125,190)

Tax paid on taxable income that is not yet recognized 850 1,543 964

Charges recognized that are deductible for tax purposes in future years 374 1,369 1,347

Future tax savings on tax loss carry forwards of the tax group 262,843 202,778 106,384

Sub-total deferred tax assets 264,067 205,690 108,695

NET DEFERRED TAX (LIABILITIES) ASSETS (16,129) 591 (16,495)


Trade payables 22,682 28,880 19,383

Other operating payables 4,977 4,869 6,267

Sub-total operating payables 27,659 33,749 25,650

Cash advances from subsidiaries 548,442 647,187 795,780

Other 10,217 14,643 20,109

Sub-total other payables 558,659 661,830 815,889

TOTAL 586,318 695,579 841,539

As of December 31, 2007 this item primarily corresponded to

amounts invoiced for a real-estate lease.

As of December 31, 2005 it mainly included deferred income

arising on the restructuring of the perpetual notes in an amount

of €0.7 million. This amount was taken to income in 2006 (see

Note 14).



NOTE 19 FINANCIAL COMMITMENTS

As of December 31, 2007 this item included €21.6 million in guarantees given on behalf of direct and indirect subsidiaries and associates

(December 31, 2006: €30.8 million; December 31, 2005: €36.1 million).

NOTE 20 FINANCIAL INSTRUMENTS USED TO HEDGE MARKET RISKS

A - INTEREST RATE HEDGES

Caps, swaps and other options in euros and US dollars have been set up to hedge interest rate risk on the interest payable on borrowings

between January 2008 and December 2012. Floors were purchased in 2006 and 2007 in order to benefi t from any reduction in medium-term

interest rates on fi xed-rate debt.

Positions for 2008 to 2010 can be analyzed as follows by type of fi nancial instrument:

(in € millions)

Notional amount by maturity

Within 1 year 1 to 5 years Beyond 5 years

Interest rate options 2,062 2,610 -

Variable rate/fi xed rate swaps 176 561 -

Floors 59 34 -

TOTAL 2,297 3,205 -

Premiums reported under assets in the balance sheet as of December 31, 2007 stood at €10.6 million, of which €8.8 million is payable in

installments between 2008 and 2011.

B - CURRENCY HEDGES

Currency risk on intercompany loans to subsidiaries outside the Euro zone that are denominated in their functional currency but referenced in

euros is hedged through swaps.

As of December 31, 2007 currency swaps in place concerned CAD 21.2 million and USD 347.6 million.

NOTE 21 AVERAGE NUMBER OF EMPLOYEES

2007 2006 2005

Management 43 46 47

Other 2 2 2

TOTAL 45 48 49



NOTE 22 DIRECTORS’ COMPENSATION

In 2007, total attendance fees paid to directors amounted to €197,428 compared with €188,574 in 2006.

NOTE 23 RELATED-PARTY TRANSACTIONS

(in € thousands) 2007 2006 2005

In the income statement

- Services invoiced to subsidiaries 90,842 103,718 80,755

- Income from subsidiaries and associates 168,931 183,562 63,129

- Interest income 6,222 7,980 5,531

- Services invoiced by subsidiaries (50,149) (58,419) (47,152)

- Interest expense (21,267) (16,445) (15,296)

In the balance sheet

- Loans to subsidiaries and associates 158,147 290,781 129,366

- Trade and other receivables 854,272 753,655 741,462

- Trade and other payables 566,687 671,279 811,125

Related companies are companies that are fully consolidated in the Faurecia Group consolidated fi nancial statements.

NOTE 24 INFORMATION ON THE CONSOLIDATING ENTITY

Peugeot S.A.

75 avenue de la Grande Armée

75116 Paris

France



8.1.6 APPROPRIATION OF 2007 NET INCOME

(in €)

Net income for the year 77,154,196

Recommended appropriation

1- Source

Retained earnings carried over from prior years 0

Net income for the year 77,154,196

77,154,196

2 - Appropriation

Legal reserve 128,098

Additional paid-in capital

Retained earnings 77,026,098

77,154,196

Dividends for the last three years were as follows:

Number of shares(1)

Net dividend per share Tax credit

Total dividend per share

Year (in €) (in €) (in €)

2004 24,212,051 1.10 - 1.10

2005 24,233,601 - - -

2006 24,259,236 - - -

Recommended for 2007 24,395,048 - - -

(1) Including treasury stock.



(in € thousands)

Capital stock

Reserves and retained

earnings before appropriation of net income

(loss) % interest

Gross value of

investment

Carrying amount of

investment

I. Detailed information

A. SUBSIDIARIES (AT LEAST 50%-OWNED)

Faurecia Investments 75,660 537,031 100.00 452,488 452,488

Financière Faurecia 33,000 31,888 100.00 53,841 53,841

Sté Internationale de Participations (SIP) 9,274 (916) 100.00 30,196 4,596

Faurecia USA Holdings Inc. 14 410,554 82.55 475,299 335,299

Eak SAS 4,668 1,925 51.00 2,420 2,420

Faurecia Sistemas de Escape Argentina(*) 376 5,937 98.00 25,975 7,328

Faurecia Industries 24,498 (35,496) 100.00 138,152 42,152

Faurecia Systèmes d’Échappement 84,730 72,752 100.00 110,316 110,316

SFEA Société Foncière pour l’Équipement Automobile 9,637 839 100.00 9,947 9,947

Faurecia Exhaust Systems SRO (Czech Republic)(*) 6,760 2,012 100.00 5,001 5,001

Faurecia Automotive Holdings 23,423 213,313 100.00 918,260 434,960

Faurecia Exhaust International 4,691 (2,160) 100.00 5,002 2,751

B. ASSOCIATES (10% TO 50%-OWNED)

Faurecia Automotive Espana S.L. 7,138 239,339 10.66 76,449 76,449

Faurecia Automotive GmbH (formerly SAI Automotive AG) 196,420 160,784 27.96 225,020 69,486

Faurecia Tongda Exhaust System Co, Ltd (formerly TEEC) 4,241 10,861 50.00 2,217 2,217

Trecia 203 18,095 50.00 8,556 0

II. Aggregate information about other companies

Subsidiaries and associates not included in section A 3,461 3,123

Subsidiaries and associates not included in section B 3 3

TOTAL 2,542,603 1,612,377

(*) Definitive financial data as of December 31, 2007 are not currently available.

8.1.7 SUBSIDIARIES AND ASSOCIATES AS OF DECEMBER 31, 2007



Outstanding loans and advances

Guarantees given by the

CompanyLast published

salesLast published

net income (loss)

Dividends received or to be received

by the Company for 2007

Exchange rate used for non-French

subsidiaries and associates

35,640 100,880

698,198 3,785 2,486

(1,892)

15,346 17,830 8,205 €1 = USD 1.4721

831 687

1,922 30,919 1,033 €1 = ARS 4.6294

132,675 (12,242)

773,399 9,745 19,770

(13) 278 199

302,419 (5,849) €1 = CZK 26.628

37,439 (87,774)

92

369,702 15,213

2,900 39,348

61,248 5,568 2,933 €1 = CNY 10.7524

58,024 (464) 778

1,204 1,070

8 62

128,178



8.1.8 FIVE-YEAR FINANCIAL SUMMARY

(in €) 2007 2006 2005 2004 2003

1 - Capital stock at year-end

a) Capital stock 170,765,336 169,814,652 169,635,207 169,484,357 169,447,257

b) Number of ordinary shares outstanding 24,395,048 24,259,236 24,233,601 24,212,051 24,206,751

c) Maximum number of shares to be issued

On exercise of stock options 1,258,303 1,265,715 1,176,550 1,011,100 782,100

2 - Results of operations

a) Net sales 73,123,665 87,107,622 82,779,088 67,592,049 56,335,224

b) Income before tax, depreciation, amortization and provisions, and employee profi t-sharing 81,680,821 213,707,224 7,136,829 35,508,672 45,430,754

c) Corporate income tax(1) (24,197,058) (10,521,688) (16,918,749) (41,076,147) (23,741,720)

d) Employee profi t-sharing 0 0 0 0 0

e) Net income (loss) 77,154,196 (165,225,090) (415,757,607) 33,490,721 35,775,918

f) Total dividend 26,633,256 22,028,143

3 - Per-share data

a) Income after tax and employee profi t sharing but before depreciation, amortization and provisions 4.34 9.24 0.99 3.16 2.86

b) Earnings per share 3.16 (6.81) (17.16) 1.38 1.48

c) Net dividend per share 1.10 0.91

4 - Employee data

a) Average number of employees 45 48 49 45 46

b) Total payroll 13,553,151 9,784,935 9,307,516 8,666,414 8,057,569

c) Total benefi ts paid during the year 7,356,994 3,840,829 3,372,568 3,212,143 3,198,762

(1) The amounts in brackets represent tax benefits arising from group relief.



8.1.9 SECURITIES PORTFOLIO AS OF DECEMBER 31, 2007

(in € thousands) Number Type and par valueCarrying amount

1. Main securities

a) Investments in subsidiaries and associates

Faurecia Systèmes d’Echappement 5,648,700 Shares – €15 110,316

Faurecia Investments 5,043,997 Shares – €15 452,488

Faurecia Industries 2,899,200 Shares – €8.45 42,152

Faurecia USA Holdings Inc. 3,600 Shares – USD 0.001 335,299

Sté Internationale de Participations (SIP) 1,168,999 Shares 4,596

Faurecia Automotive Espana S.L. 126,859 Shares – €6 76,449

SFEA Société Foncière pour l’Équipement Automobile 642,499 Shares – €15 9,947

Financière Faurecia 2,200,000 Shares – €15 53,841

Trécia 6,762 Shares – €15 0

Faurecia Exhaust Systems sro. 1 Shares 5,002

Faurecia Magyarorszag Kipufogo-Rendszer Kft 24,900,000 Shares – HUF 1 0

Faurecia Systemy Kierownicze SpZoo 100 Shares – PLN 500 13

Faurecia Sistemas de Escape Argentina SA 1,802,379 Shares – Peso 1 7,328

EAK - Composants pour l’Industrie Automobile SAS 158,722 Shares – €15 2,420

Faurecia Tongda Exhaust System (Wuhan) Co Ltd 1 Shares 2,217

Faurecia Exhaust Systems South Africa Ltd 100 Shares – Rand 1 1,073

Ecia South Africa Ltd 10 Shares – Rand 1 0

EAK - Composants pour l’Industrie Automobile SNC 51,510 Shares – €15 785

Faurecia Honghu Exhaust Systems Shanghai Co Ltd 1 Shares 1,012

Faurecia Automotive Holdings 23,422,554 Shares – €1 434,960

Faurecia Automotive GmbH (formerly SAI Automotive AG) 1 Shares 69,486

Faurecia Services Groupe 2,500 Shares – €16 1

Faurecia Exhaust International 312,750 Shares – €15 2,751

Faurecia Global Purchasing 1 1 share of €1,000 1

Faurecia Sistemas de Escape Portugal Lda 1 Shares 1

Flamant jaune 2,500 Shares – €16 40

Flamant bleu 2,500 Shares – €16 40

Toucan participations SA 2,494 Shares – €16 40

Toucan investissements SA 2,494 Shares – €16 40

Blériot Investissements 2,500 Shares – €16 40

Faurecia Slovakia Sro 1 Shares 1

Faurecia Leather Kosice Sro 1 Shares 1

Goeland Vert SAS 2,315 Shares – €16 37

Sub-total 1,612,377

2. Marketable securities

Faurecia 270,814 Shares – €7 11,504

TOTAL 1,623,881



8.1.10 STATUTORY AUDITORS’ REPORTS

Statutory Auditors’ report on the annual fi nancial statements for the year ended December 31, 2007

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 specifi cally required by French law in all audit reports, whether

qualifi ed or not, and this is presented below the opinion on the annual fi nancial statement. This information includes an explanatory paragraph

discussing the Auditors’ assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the

purpose of issuing an audit opinion on the annual fi nancial statements taken as a whole and not to provide separate assurance on individual

account captions or on information taken outside of the annual fi nancial statements.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable

in France.

To the Shareholders,

In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we hereby report to you, for the year ended

December 31, 2007 on:

the audit of the accompanying annual fi nancial statements of Faurecia S.A.;

the justifi cation of our assessments;

the specifi c verifi cations and information required by law.

These annual fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these annual fi nancial

statements based on our audit.

I - Opinion on the annual fi nancial statements

We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the annual fi nancial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the annual fi nancial statements. An audit also includes

assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall presentation of the

annual fi nancial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the annual fi nancial statements give a true and fair view of the Company’s fi nancial position and its assets and liabilities as

of December 31, 2007, and of the results of its operations for the year then ended, in accordance with the accounting rules and principles

applicable in France.

II - Justifi cation of our assessments

In accordance with the requirements of article 823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our

assessments, we bring to your attention the following matter:

Note 1.2 to the annual fi nancial statements presents the rules and methods applied to investments. A provision for impairment is set aside

if the fair value of an investment falls below its gross value, corresponding to its value on initial recognition. Fair value is based on the

subsidiary’s revalued net assets, profi tability and future outlook. As part of our assessment of the accounting principles and methods, we

verifi ed the appropriateness of the above-mentioned accounting methods, ensured that they were correctly applied and that reasonable

estimates were used.

These assessments were made in the context of our audit of the annual fi nancial statements, taken as a whole, and therefore contributed to

the formation of the opinion expressed in the fi rst part of this report.

III - Specifi c verifi cations and information

We have also performed the specifi c verifi cations required by law, in accordance with professional standards applicable in France.

We have no matters to report as to:

the fair presentation and the conformity with the annual fi nancial statements of the information given in the Director’s report of the Board of

Directors and in the documents addressed to the shareholders with respect to the fi nancial position and the annual fi nancial statements;

the fair presentation of the information given in the Director’s report regarding the remuneration and benefi ts granted to corporate offi cers

and any other commitments made in their favor in connection with, or subsequent to, their appointment, termination or change in function.

We draw your attention to the reasons presented in the Director’s report explaining that your company does not provide any information

relating to remuneration and benefi ts granted by the controlling entity to corporate offi cers of your company who are not also corporate

offi cers of the controlling entity.

As required by law, we have also verifi ed that names of the principal shareholders and holders of voting rights are disclosed in the

Director’s r eport.

Neuilly-sur-Seine and Paris-La Défense, April 9, 2008




•

•

•

•

•

•



Statutory Auditors’ special report on regulated agreements and 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 for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the shareholders,

In our capacity as Statutory Auditors of Faurecia S.A., we hereby present our report on regulated agreements and commitments with third parties.

Agreements and commitments authorized in 2007

In accordance with Article L. 225-40 of the French Commercial Code (Code de Commerce), we have been advised of the following agreements and commitments which were authorized in advance 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 the information provided, on the main terms and conditions of the agreements and commitments that have been disclosed to us, without commenting on their relevance or substance. Under the provisions of Article R. 225-31 of the French Commercial Code, it is the responsibility of shareholders to determine whether the agreements or commitments are appropriate and should be approved.

We carried out our work in accordance with the professional standards applicable in France. Those standards require that we perform procedures to verify that the information given to us agrees with the underlying documents.

With Faurecia Automotive Industrie, Faurecia Industries, Faurecia Intérieur Industrie, Faurecia Sièges d’Automobile, Faurecia Sytèmes d’Echappement, Sielest, Siemar and Sotexo

In accordance with the authorization granted by the Board of Directors on July 17, 2007, on November 30, 2007 Faurecia and the above-mentioned subsidiaries (hereinafter referred to as the “Transferors”) renewed the securitization agreement signed on November 8, 2002 with Société Générale.

The main clauses of the agreement are identical to those in the original agreement, notably concerning the €300 million cap on the amount of receivables that may be sold.

Under this agreement, Faurecia: acts as the Transferors’ representative;receives payments from Société Générale for the sold receivables, and subsequently forwards these payments to the Transferors;pays fees to Société Générale on behalf of all the Transferors which it subsequently passes on to the Transferors under the cash pooling agreement signed between Faurecia and the subsidiaries concerned.

Agreements and commitments entered into in prior years which remained in force during the year

In accordance with the French Commercial Code we were informed of the following commitments and agreements entered into in prior years, which remained in force during the year.

1. With Faurecia USA Holdings Inc. and its subsidiaries

Faurecia USA Holdings Inc. benefi ted from a credit line of USD 491 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’s interest, i.e. USD 247.6 million for a capital increase of USD 300 million.

The USD 300 million capital increase took place on January 31, 2007.

2. With Faurecia Autositze, Faurecia Abgastechnik, Faurecia Innenraum Systems GmbH, Asientos de Castilla Leon, Asientos del Norte, Faurecia Sistemas de Escape España, Faurecia Automotive España and Faurecia Interior Systems España

In accordance with the loan agreement entered into with the above-mentioned companies on December 10, 2002, said companies provided Faurecia S.A. with a credit line totaling a maximum amount of €315 million.

This agreement expired on May 14, 2007.

3. With Faurecia Automotive Industrie, Faurecia Industries, Faurecia Intérieur Industrie, Faurecia Sièges d’Automobile, Faurecia Sytèmes d’Echappement, Sielest, Siemar and Sotexo

In accordance with the loan agreement entered into with the above-mentioned companies on November 8, 2000, said companies provided Faurecia S.A. with a credit line totaling a maximum amount of €300 million.

As of December 31, 2007 the amount outstanding under this agreement totaled €282 million.

4. With Faurecia Sièges d’Automobile

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 Sièges d’Automobile.

As of December 31, 2007, the outstanding balance due from Faurecia Sièges d’Automobile was €14,363.





•••


LEGAL AND FINANCIAL INFORMATION8 Internal control

8.2.1 REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

ON INTERNAL CONTROL DRAWN UP IN ACCORDANCE WITH

ARTICLE L. 225-37 OF THE FRENCH COMMERCIAL CODE

To the shareholders

Pursuant to Article L. 225-37 (6) and (7) of the French Commercial

Code, the Chairman of the Board of Directors is required to present

an 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. This report must also indicate any restrictions

imposed by the Board of Directors on the powers of the Chief

Executive Offi cer and set out the principles and rules adopted by

the Board of Directors to determine the compensation and any and

all benefi ts granted to corporate offi cers.

This report was drawn up based on the work carried out within

the Group under the supervision of a Steering Committee set up

in October 2007 whose members comprise the Head of Audit, the

Head of Group Accounting, and the Head of Legal Affairs. It was

prepared under the responsibility of the Chairman of the Board

of Directors in accordance with Article L. 225-37 of the French

Commercial Code, based on information provided by senior

management. The Chairman of the Board is responsible for internal

control systems and procedures put in place in the Company,

and for all the disclosures required by law in the report on internal

control.

A presentation of the report was provided to the Board of Directors

at its meeting of February 8, 2008.

This report is partially based on the recommendations of the French

securities regulator (Autorité des Marchés Financiers) concerning

internal control systems set out in its Reference Framework

document issued on January 22, 2007 and includes a number

of summarized responses to the questionnaire on accounting

and fi nancial internal control systems attached to the Reference

Framework.

1. Preparing and organizing the work of the Board of Directors

A - MEMBERSHIP AND ROLE OF THE BOARD OF

DIRECTORS

a. Membership of the Board of Directors

The Board of Directors consists of eleven members, fi ve of whom

are considered to be independent (compared with four in 2006),

based on the defi nition in the report published by the AFEP-MEDEF

working group aimed at improving corporate governance in French

listed companies. These independent Directors are Jean-Pierre

Clamadieu, Frank Esser, Jean-Louis Gérondeau, Gérard Hauser

and Ross Mc Innes. Five Directors directly represent the interests

of the majority shareholder. Yann Delabrière has been Faurecia’s

Chairman and Chief Executive Offi cer since February 16, 2007. The

Board considers that its membership structure adequately refl ects

the interest in the Company held by Peugeot SA, its majority

shareholder.

Members of the Board of Directors are chosen on account of their

expertise in the Company’s key business areas, as well as for

their autonomy and determination to consider the interests of all

shareholders. The independent Directors enrich Board discussions

and work thanks to their diverse experience, from an international,

industrial and managerial perspective.

Apart from the Chairman and Chief Executive Offi cer, no member of

the Board of Directors holds an executive management or salaried

position within a Group company.

Details of the directorships and other positions held by all of

Faurecia’s Directors are in this registration document.

b. Role of the Board of Directors

The Board of Directors determines overall business, fi nancial 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, at the Chairman’s initiative the Board deals with all matters

concerning the Company’s affairs and decides on matters involving

the Company, notably in relation to all strategic decisions for the

Company and the Group.

B - ORGANIZATION OF THE BOARD

OF DIRECTORS

The internal rules of the Board of Directors, which may be consulted

by shareholders at the Company’s headquarters, are aimed

at organizing the work of the Board and ensuring that Directors

receive all requisite information. They describe the Board’s modus

operandi and its role in the management of the Company and the

Group as carried out in accordance with the law and the Company’s

bylaws. They also specify the rights and responsibilities of Board

members, particularly regarding the prevention of confl icts of

interest, the holding of multiple directorships and the need for strict


LEGAL AND FINANCIAL INFORMATION 8Internal control

confi dentiality as well as diligence in taking part in the Board’s work.

In addition they set out rules governing transactions involving the

Company’s shares, as recommended by the Autorité des Marchés

Financiers.

The Board of Directors is free to decide how the general

management of the Company is 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 Offi cer. Since the Board meeting of September 8,

2006, the position of Chief Executive Offi cer has been held by the

Chairman of the Board. The Board of Directors confi rmed this

management method at its meeting of February 16, 2007 when

Yann Delabrière was appointed Chairman and Chief Executive

Offi cer to replace Grégoire Olivier.

In 2003, the Board of Directors set up an Audit Committee and an

Appointments and Compensation Committee.

Appointments and Compensation Committee

The main role of this Committee is to provide the Board of Directors

with preparatory information for their decisions on:

the appointment of future Directors, notably determining the

criteria for selecting candidates, preparing the selection process

and recommending elections or re-elections of Directors;

compensation payable to corporate offi cers, including particularly

the Chairman; and

stock option grants.

The Committee met fi ve times in 2007. At its meeting of February 2,

2007, the Board of Directors appointed Christian Streiff as a

member of the Appointments and Compensation Committee and

named Jean-Claude Hanus as Committee Chairman. At its meeting

of May 29, 2007, the Board of Directors appointed Jean-Pierre

Clamadieu as a member of the Appointments and Compensation

Committee and confi rmed the appointments of Christian Streiff,

Jean-Claude Hanus and Gérard Hauser.

Audit Committee

The role of this Committee is to perform a detailed review of the

drafting of the interim and annual fi nancial statements, as well as

of the Group’s major fi nancial transactions. It also examines the

Group’s fi nancial reporting schedules and monitors off-balance

sheet commitments and factors that enable the Group’s risks to be

assessed. It is responsible for preparing the Board Meetings held to

review the interim and annual fi nancial statements and for providing

information to the other Board members on these subjects. For

that purpose, it examines the fi nancial statements before they are

submitted to the Board and issues an opinion on:

the application and relevance of the accounting principles and

methods used (as well as reviewing material risks);

the appointment, fees and audit program of the Statutory

Auditors and issues relating to their independence.

•

•

•

•

•

In addition, the Committee ensures (i) that senior management and

the Statutory Auditors formally approve accounting policies with a

signifi cant impact on the presentation of the fi nancial statements;

(ii) that these accounting policies are presented to the Board of

Directors; (iii) that senior management explains and substantiates

to the Board the main accounting options that are selected; (iv)

that the Statutory Auditors review these options; and (v) that the

Statutory Auditors have access to all the information they require

for performing their duties and are given the means to relay any

signifi cant observations.

The Committee met four times in 2007. On May 29, 2007 the

Board of Directors appointed Christian Streiff as Chairman of the

Audit Committee. It also appointed Ross Mc Innes as a Committee

member and confi rmed the appointment of Jean-Louis Gérondeau.

On October 8, 2007 the Board of Directors appointed Isabel Marey-

Semper as a member of the Audit Committee.

C - OPERATION OF THE BOARD OF DIRECTORS

The Board met seven times during 2007, principally to review

the Group’s budget, business activities and results, as well as its

fi nancing and major business strategies. During these meetings

the Board reviewed information prepared by the Audit Committee

and the Appointments and Compensation Committee, including

the interim and annual fi nancial statements, sales and earnings

forecasts, the appointment of a new Chairman and Chief Executive

Offi cer and his powers and compensation, the restructuring of

the Board of Directors, Audit Committee and Appointments and

Compensation Committee, and a stock option plan for directors

and senior managers of the Group. One meeting was devoted to

the Group’s medium-term outlook and strategic direction.

The attendance rate of Directors at Board Meetings in 2007 was

91%. All members of the Board Committees attended every

Committee meeting.

D - EVALUATION OF THE BOARD OF DIRECTORS

Several years ago, following a review by the Appointments and

Compensation Committee, the Board implemented a procedure

for the evaluation of its work, using a detailed questionnaire to

obtain feedback from each Director on how the Board operates

and on whether (i) they have access to all the information required

for performing their duties, and (ii) they felt that they were able

to relay any signifi cant observations. Directors’ responses to the

questionnaire and their related suggestions are analyzed by the

Chairman of the Appointments and Compensation Committee,

who reports to the Board on his fi ndings.



E - PROCEDURE FOR COMPENSATING

CORPORATE OFFICERS

Details relating to compensation and benefi ts paid to corporate

offi cers as well as the methods used to determine these amounts

are provided in the management report.

2. Internal control procedures

A - INTERNAL CONTROL: DEFINITION AND AIMS

Internal control is defi ned within the Faurecia Group as a

process designed to provide reasonable assurance regarding

the identifi cation, control and prevention of risks regarding the

achievement of the following aims:

the application of instructions and guidelines set by senior

management;

the effective implementation and optimization of operations;

availability, reliability and integrity of the accounting system and

fi nancial and operations-related information;

legal and regulatory compliance;

balancing risks with objectives and expected benefi ts;

protecting the Group’s property and safeguarding its assets;

adapting the organization to changes in standards, particularly

environmental standards;

controlling the risks that the Group may generate for its staff,

customers, suppliers, shareholders and all of its business and

community partners.

Internal control helps Faurecia to attain its strategic objectives, by

protecting it as far as possible against the risks and contingencies

related to its business.

However, like any other control system, it cannot provide an

absolute guarantee that all risks have been eliminated.

B - GENERAL ORGANIZATION AND

DESCRIPTION OF INTERNAL CONTROL

PROCEDURES

Participants and the organization of internal control

procedures

Internal control is more than just a set of standards and procedures.

It is designed to involve everyone throughout the entire Faurecia

Group and therefore includes fully-consolidated subsidiaries. It is

applied not only by the Group’s Executive and Supervisory bodies

(including the Audit Committee, Risk Committee and Internal Audit

department), but also by each and every Group employee in his or

her daily work.

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The main participants in the internal control system:

the Board of Directors, which is responsible for determining

the major strategies for the Group’s business activities and

overseeing their implementation;

the Audit Committee, described earlier in this report, whose

responsibilities are set by the Board of Directors and which

plays a vital role in the performance of internal control and the

monitoring of existing procedures;

the Group Executive Committee, which orchestrates the Group’s

business strategy, allocates the resources required to implement

this strategy, sets the objectives for all Group entities and verifi es

that these objectives are met;

the Risk Committee, created in 2004, which meets twice a year

before the accounts closing date. Meetings are attended by the

Group Chairman, the Chief Financial Offi cer and the Head of

the Internal Audit department. The Committee may request the

assistance of any internal experts who have specialist knowledge

of the matters examined by the Committee. The Risk Committee

evaluates specifi c program-related risks;

the Financing and Treasury department, the Financial Control

department, the Quality Assurance department, the Legal Affairs

department and the Country Financial departments, which play

a specifi c role in the internal control process on account of their

cross-functional skills;

the Internal Audit department – described in more detail

below – which (i) reviews the internal control system and any

changes to the related processes; (ii) ensures that the Group’s

procedures comply with the applicable legislation and market

recommendations; (iii) verifi es that the system as a whole is

complete, consistent and relevant; (iv) sets up and monitors

tests and checks; (v) ensures that the action plans are properly

implemented; and (vi) reports on the system’s effectiveness.

The work of these internal departments is rounded out by the

actions of external parties, 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 fi nancial statements and other audit

engagements regarding the fi nancial statements of Group entities.

In accordance with French company law, the fi nancial statements

of the Company and the Group are certifi ed by two audit fi rms

which undertake a joint review of the full accounts and the

procedures used for preparing them and also examine selected

Group internal control processes concerning the preparation of

accounting and fi nancial information. Backed by members of

their network in each of the Group’s host countries, these two

audit fi rms perform statutory or contractual audit engagements

for all of the Group’s fully consolidated companies;

third-party organizations which carry out the following certifi cation

processes for the whole Group over a three-year cycle:

environment (ISO 14001),

health and safety (OHSAS 18001),

quality (ISO/TS);

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engineers from fi re and property & damage insurance companies

which conduct a two-yearly audit at each of Faurecia’s sites with

the aim of:

assessing fi re risks and any potential impact on production

and customers;

assessing whether the prevention and protection measures in

place are adequate;

issuing recommendations on reducing risks.

Description of internal control procedures

The Group’s internal control system is underpinned by a set of

procedures that can be accessed by all employees via the Intranet.

These procedures form part of the Faurecia Excellence System

(FES) which defi nes the way in which the Group’s employees work

across the globe and structures the Group’s identity

The related FES Core Procedures (FCP) are organized around the

following six Group processes:

leadership, which sets a common framework for all Group entities

in relation to issues such as fi nancial control, setting objectives,

drawing up strategic plans, quality policies, communication and

health and safety;

development, which includes the applicable procedures for

defi ning the Group’s product offering, innovation strategy and

program control measures;

production, corresponding to the various production process

stages within the Group’s plants: preparing for the start-up of

new programs or units; planning and controlling the production

process; and managing fl ows;

customer communications, which details the process for building

up customer relations and ensuring customer satisfaction through

competitively priced high-quality products and services;

partnerships with suppliers, covering processes set up with the

Group’s suppliers with a view to building a sustainable relationship

based on excellence;

staff involvement, encompassing human resource policies.

These procedures are developed by each Group function while

respecting a common general framework, and apply to all Faurecia

entities throughout the world. They are regularly updated and

enhanced.

Program control measures are subject to specifi c procedures in

light of the Group’s core business of designing and manufacturing

parts, sub-assemblies and modules for the automotive industry.

Each contract signed with a customer represents a Program and

corresponds to a project which:

responds to a specifi c request from an automaker (“Request

for Quotation” or RFQ) for the supply of complex automotive

equipment;

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meets set objectives concerning quality, cost and lead times;

meets the Group’s profi tability 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 are used throughout the

life of a Program which is precisely structured into successive

stages through the Group’s Program Management System

(PMS). Each Program involves various milestones from the bid

processing stage to the end of product life. As part of this control

system, Program reviews are carried out once a month by the

Product Group concerned. Formal reports of these reviews are

required and a certain number of documents must be submitted,

including the Business Plan (see below). This process is designed

to identify Program risks on an ongoing basis, in order to draw up

and implement the necessary action plans.

Right from its inception – i.e. during the fi ling of the bid – each

Program is subject to a forward-looking fi nancial 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 regularly updated as assumptions

change, and it contains all the information required to assess

a Program at every stage, right from preparing the quotation,

through contract negotiations and the development phase.

The Code of Ethics – introduced in 2004 and strengthened in 2007

– also forms an integral part of the FCPs. It defi nes the general

rules on ethical behavior applicable on a day-to-day basis to all of

Faurecia’s employees in their relations both inside and outside the

Group, as well as to the Group’s partners. The updated version

of the Code was presented to the European Works Council in

April 2007 and was subsequently discussed with employee

representatives within the Group’s various companies and host

countries. In addition to strengthening the measures already in

place, this Code introduces a whistle-blowing procedure enabling

employees to notify Faurecia, in confi dence, of any breaches of

the law or Group procedures. A reinforced warning procedure has

been set up relating to incidents involving serious risks for Faurecia

in the areas of accounting, fi nancial audit and anti-corruption

measures. An external organization is responsible for handling the

initial process triggered by the warning procedure and will alert

the Group Chairman and CEO if it deems it necessary, who can

then request the Group’s Internal Audit department to perform

the requisite investigations. The Code of Ethics has been widely

relayed throughout the Group – notably via Intranet – so that all

employees can access it and comply with it at all times and in all

circumstances. At the same time, it is aimed at developing a sense

of accountability and involvement among the Group’s staff.

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C - INTERNAL CONTROL PROCEDURES

RELATING TO THE PREPARATION AND

PROCESSING OF ACCOUNTING AND

FINANCIAL INFORMATION

Principles applied to the preparation of fi nancial

statements

The Group’s Accounting and Tax Management department

prepares monthly consolidated fi nancial statements and, more

specifi cally, interim and annual fi nancial information that is issued

publicly. It ensures that local fi nancial managers prepare the

fi nancial statements of subsidiaries in accordance with applicable

regulations, defi nes the Group’s accounting policies under IFRS, and

verifi es that these policies are applied correctly by all subsidiaries. It

also prepares the fi nancial statements of Faurecia S.A.

The following principles are implemented across the Group

regarding the preparation of fi nancial statements:

ensuring that information on transactions is complete;

ensuring that transactions comply with the accounting principles

applicable to the Group;

periodically reviewing the value of assets.

The key to preparing fi nancial and accounting information is to

ensure consistency between fi nancial reporting tools and the

Group’s operating systems. The volume of information involved,

the quality and integrity required to process the information and

ever-tighter fi nancial reporting deadlines – enabling management

to respond quickly and to effi ciently control operations – require the

use of effective information systems. In 2007 the Group launched a

major systems upgrade program and in 2008 the upgraded system

will be test run at several pilot sites before gradually being rolled out

Group-wide.

The Group’s fi nancial statements are prepared using information

provided by each subsidiary and integrated into the Magnitude

reporting and consolidation system. The accounting data

submitted by each subsidiary are prepared in accordance with the

Group’s accounting policies, which since 2004 comply with IFRS

as adopted by the European Union. An IFRS accounting manual

is included in the Faurecia Core Procedures system, which can be

accessed via the Intranet.

Each subsidiary’s accounting information comprises income

statements prepared by nature and by function, as well as a

breakdown by business segment, an analysis of current and

deferred taxes, a balance sheet, cash fl ow statement, and statement

of commitments and contingent liabilities.

Intercompany accounts are reconciled using the ICS software.

The Financial and Accounting department also uses (i) short- and

medium-term forecasts to verify the value of cash-generating

units; (ii) actuarial reports to assess retirement and other employee

benefi t obligations; and (iii) fair-value measurements of derivatives

confi rmed by the Group’s banking counterparties.

In each subsidiary, the head of accounting and the fi nancial

controller have access to all the information they require in order

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to draw up accurate fi nancial statements in compliance with local

GAAP for the statutory accounts and with the Group’s accounting

policies for reporting purposes.

At every interim and annual close the heads of all subsidiaries are

required to prepare an IFRS/local GAAP reconciliation for equity

and income and expenses.

Every month instructions are sent to the accountants and fi nancial

controllers specifying the closing procedures to be followed, such

as for estimating accrued expenses, and informing them of the

applicable deadlines. In addition, Magnitude training sessions are

regularly provided to newly recruited accounting and fi nancial staff.

The preparation of monthly reporting packages requires each

entity to ensure it has the appropriate resources to draw up quality

information.

Off-balance sheet commitments

Off-balance sheet commitments are handled in accordance with a

specifi c identifi cation and valuation process.

Each commitment is tracked by nature. Currency and interest-rate

risks, as well as inter-company fi nancing in foreign currencies, are

managed at Group level under the supervision of the Group Finance

department. Foreign currency hedges are set up where required.

Any sureties or guarantees granted by Faurecia are issued and

monitored at Group level.

Identifi cation and analysis of risks impacting

accounting and fi nancial information

The preparation of full monthly fi nancial statements greatly reduces

risks at interim and annual closes, particularly regarding meeting

fi nancial reporting deadlines. Any problems are anticipated,

intercompany accounts are reconciled every month, specifi c

transactions are accounted for without waiting for the yearly close,

and substantiating tax calculations is a regular exercise.

By preparing and reviewing monthly fi nancial statements and

reconciling them with the budget each entity can detect any

anomalies in the accounts, such as in relation to inventories or

cash fl ows. Implemented in tandem with specifi c procedures, this

process is intended to reduce the risk of errors and fraud.

Hard close procedure

A hard close is carried out at October 31 each year aimed at

anticipating, evaluating and validating the main accounting options

for the yearly close.

Accounting and fi nancial control tools

The Group has drawn up procedures for preparing and processing

fi nancial and accounting information. These procedures comply

with applicable accounting principles and standards and, like all the

other internal control procedures, are available on the Company’s

Intranet. The following fi gure among the most important Group

procedures:

a capital expenditure authorization procedure, aimed at

determining capital spending criteria and designating authorized

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signatories who can commit the Company for amounts up to

pre-defi ned thresholds;

an authorization procedure for capital increases, capital

injections, acquisitions of shareholdings and intercompany

loans;

a procedure for drafting Program Business Plans;

a procedure relating to the acquisition of new programs;

a procedure for consolidating the fi nancial statements.

Financial reporting processes

The Group’s fi nancial reporting processes are aimed at providing

systems for informing and steering the Group’s people and

ensuring maximum responsiveness to any risks that may arise. A

“reporting glossary” describes the content of all reporting data and

procedures explain how reporting should be carried out.

Since 2004 , the Group has used the Magnitude consolidation

system for its monthly reporting process. This tool provides for

the reporting of both fi nancial information (income statement

and balance sheet data) and non-fi nancial information (such as

indicators relating to quality, production, purchasing, safety and

human resources).

The level of control over the process for consolidating results at

Group level has been reinforced by applying blocking controls

upstream in reporting schedules and intermediate controls for the

reporting system.

Monthly reporting data include estimated sales and operating

profi t to be provided by each business unit within three days of

the month-end, and defi nitive data fi ve days after the month-end

prepared in accordance with the Group’s accounting policies.

Every month, an Operations Committee reviews the performance

and action plans of each Group business.

Medium-term plan and the budget

Faurecia’s budget is drawn up on an annual basis and updated

half-yearly.

Group management provides the economic and fi nancial

assumptions to be used in the budget, and sets specifi c objectives

for each operating unit. The budget is then tailored to each plant,

research and development center and administrative center. Finally,

it is converted to monthly periods using standard schedules, and

then consolidated.

In order to more effectively anticipate short-term changes and

improve responsiveness, the monthly reporting package includes

a rolling three-month forecast for the income statement and cash

fl ow statement.

As Faurecia’s contracts span several years, the Group needs a

medium-term overview of its fi nancial position in order to effectively

manage risks. To this end, the Group draws up a fi ve-year plan

known as the medium-term plan each year, in which the Program-

related dimension plays an essential part. This plan makes

it possible to clarify the Group’s outlook in terms of profi tability

and required resources. It is consolidated on the same basis as

the monthly reporting process, by applying the same stringent

procedures, and is used to defi ne the targets set in the budget.

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The Internal Audit department

At the beginning of 2003, the Group created an Internal Audit

department which reports directly to the Group’s Finance

department. In addition, its work is approved and supervised by

the Chairman of the Board and the Audit Committee. The role

of the Internal Audit department is to ensure an optimum level of

effi ciency in all systems of internal fi nancial control, by applying a

systematic and methodical approach. It is authorized to intervene

where required in relation to any Group process throughout the

world. This department conducts its assignments in a wholly

objective manner and systematically supports its fi ndings with

precise facts and fi gures that have been duly verifi ed. All of the

Internal Audit department’s work is made available to Group Senior

Management, to which it reports regularly on the progress of its

assignments and the meeting of its objectives. It presents its audit

plan, as well as the reports it has drawn up 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. In addition, it

provides other Company governance bodies with clarifi cations of

its audit fi ndings, when so requested.

In 2004, the department drew up an Internal Audit Code of

Conduct which defi nes the department’s roles and remit, as well

as the purpose and methods of its assignments. Its resources are

currently being increased so that it can systematically cover all of

the Group’s entities based on a pre-defi ned schedule.

Main developments

During the year the Group continued to develop its risk assessment

policy and enhance its internal control procedures:

it pursued its rollout of the standards and procedures applicable

under the Faurecia Excellence System, notably by introducing

self-assessment questionnaires enabling each site to appraise

whether it complies with these standards;

it strengthened its Code of Ethics, particularly by setting up the

above-described warning procedure;

it launched a risk mapping process, in order to more effectively

identify and manage risks. The aim is to assess risks in each

area and monitor any changes, ensure that appropriate action

plans are put in place by the risk prevention functions and,

where necessary, supplement existing control procedures and

systems. The Group’s main risk factors are explained in the

management report;

it strengthened its Internal Audit function by increasing the

department’s headcount;

in addition, by upgrading its information systems based on SAP

architecture the Group has created standardized, reliable and

up-to-the-minute tools that correspond to Faurecia’s standards

and procedures and which will be gradually rolled out across

the Group.

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3. Limitations placed by the Board of Directors on the powers of the Chairman and Chief Executive Offi cer

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 duties of

the Chairman. These rules also state that the Board should be

consulted on all Company and Group strategic decisions at the

Chairman’s initiative. At its meeting of February 16, 2007, the

Board of Directors authorized the Chairman and Chief Executive

Offi cer to give endorsements or guarantees subject to an overall

ceiling of €50 million, with a limit of €10 million per transaction. If

the Group is required to provide advance repayment guarantees

or performance bonds for contracts with successive performance

commitments, the Chief Executive Offi cer is authorized to provide

guarantees representing a maximum of €5 million per transaction,

subject to the same overall ceiling. Through its internal rules of

operation and within the scope of the applicable laws governing

its business 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

8.2.2 STATUTORY AUDITORS’ REPORT ON THE CHAIRMAN’S

REPORT ON INTERNAL CONTROL

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. This report should be read in conjunction with, and construed in accordance with, French law and professional

auditing standards applicable in France.


In our capacity as Statutory Auditors of Faurecia S.A., and in accordance with Article L. 225-235 of the French Commercial Code (Code de

commerce), we report to you on the report prepared by Faurecia’s Chairman in accordance with Article L. 225-37 of said Code for the year

ended 31 December 2007.

It is for the Chairman to give an account, in his report, notably of the conditions in which the work of the Board of Directors is prepared and

organized and of the internal control procedures in place within the Company.

It is our responsibility to report to you our observations on the information contained in the Chairman’s report concerning the internal control

procedures relating to the preparation and processing of fi nancial and accounting information.

We performed our procedures in accordance with professional standard applicable in France. This standard requires us to perform procedures

to assess the fairness of the information set out in the Chairman’s report concerning the internal control procedures relating to the preparation

and processing of fi nancial and accounting information. These procedures notably consisted of:

obtaining an understanding of the internal control procedures relating to the preparation and processing of fi nancial and accounting

information on which the information presented in the Chairman’s report, and existing documentation is based;

obtaining an understanding of the work performed in order to prepare this information and existing documentation;

determining whether any major internal control weaknesses concerning the preparation and processing of accounting and fi nancial

information that we may have identifi ed as part of our audit are appropriately disclosed in the Chairman’s report.

On the basis of these procedures, we have no matters to report in connection with the information given on the Company’s internal control

procedures relating to the preparation and processing of fi nancial and accounting information, contained in the Chairman of the Board’s report

prepared in accordance with Article L. 225-37 of the French Commercial Code.





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LEGAL AND FINANCIAL INFORMATION 8Additional information on Faurecia S.A.

An industrial history spanning two centuries

Faurecia’s present-day expertise refl ects a long heritage, stretching

back to the beginning of French industrialization. Although

Faurecia’s founding company Ecia (Équipements et Composants

pour l’Industrie Automobile) was formed in 1987 from the merger

of Cycles Peugeot and Aciers & Outillages Peugeot, its industrial

tradition dates back to 1810.

In its current confi guration, Faurecia was formed from the three

French companies Ecia, Bertrand Faure and Sommer Allibert. The

fi rst two merged in 1998, and the third joined the Group in 2001.

With sales of €12.7 billion and a workforce of 60,000 in 28 countries,

Faurecia ranks as the number two automotive equipment supplier

in Europe and number eight 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 fi rst automobiles, in the modern sense, are made,

powered by petrol engines. The fi rst steel tubes follow, patented

by Peugeot and 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 fi rst workshop, making seats for Paris trams and underground

trains.

1929. Bertrand Faure acquires the Epéda process enabling the

company to fi ne-tune its seats for the automotive industry and

develop a new product – the spring mattress. Both businesses take

off signifi cantly after the Second World War. Bertrand Faure clients

include Renault, Peugeot, Citroën, Talbot, Panhard-Levassor,

Berliet and 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 from refrigerator manufacturers to the automotive industry.

1955. The Frères Peugeot company, one of whose subsidiaries

is Peugeot et Cie, starts production of automotive equipment,

diversifying over time to make products such as seats, exhaust

systems and steering columns. Operations extend outside France

and some products are dropped to concentrate on new production

lines.

1972. François Sommer, grandson of Alfred Sommer, merges

his automotive fl oor coverings company with that of Bernard

Deconinck’s company, Allibert, to found the Sommer Allibert Group,

combining know-how in textiles and plastics.

In the early 1980s, Sommer Allibert invests heavily to meet the

needs of the automotive industry and becomes a leading specialist

in interior vehicle fi ttings for all major automakers. International

expansion follows, with the acquisition of Spain-based Lignotock,

and an extended presence in 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. At the same time Bertrand

Faure steps up its international development with the purchase

of the Rentrop Group in Germany, rounding out the acquisitions

made in 1977 in Spain and Portugal. This makes Bertrand Faure

the European number one in automotive seating techniques and

components. From the beginning of the 1990s until 1998, Bertrand

Faure concentrates on its automotive equipment business, selling

off its other businesses in bedding (Epéda and Mérinos), aeronautics

(Ratier-Figeac) and luggage (Delsey).

1992. Ecia sells its bicycles business, followed by its tooling

business in 1993, and makes signifi cant acquisitions of exhaust

systems specialists – including Tubauto and Eli Échappement in

France, Leistritz Abgastechnik in Germany and Silenciadores PCG

in Spain – to become European number one for this module. Its

Seating division joins forces with the Spanish automotive equipment

supplier Irausa to form the company’s fi rst non-French subsidiary,

Ardasa. Clients for exhaust systems, seats, interior fi ttings and front

ends include Volkswagen, Renault, Daimler-Chrysler, Opel, Honda

and Mitsubishi.

(1) Source: Faurecia.(1) Source: Faurecia.

8.3.1 HISTORY


LEGAL AND FINANCIAL INFORMATION8 Additional information on Faurecia S.A.

FORMATION

December 11, 1997. Ecia launches a friendly bid for Bertrand

Faure, bringing its direct and indirect stake in this group to 99%.

The acquisition leads to the formation of the Faurecia Group in 1998

with the underlying aim of focusing on the automotive equipment

business. At the same time as Bertrand Faure sells its luggage

business (Delsey) and aeronautics business (Ratier Figeac), Ecia

sells its motorcycles business (Peugeot Motocycles) to the PSA

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 of over €4 billion, with a

workforce of 32,000. As well as boosting its size and helping it gain

a worldwide position in automotive seating, Bertrand Faure gives

Ecia a broader geographical and commercial reach, especially in

Germany, where the company has strong links with manufacturers

such as Volkswagen and BMW.

Late 1999. The Faurecia Group extends its exhaust systems

coverage in North America with the acquisition of the US company

AP Automotive Systems.

October 2000. Faurecia purchases Sommer Allibert. By fi nancing

this transaction, PSA Peugeot Citroën raises its stake in the

Faurecia Group to 71.5%. With good coverage of Germany and

Spain, the Group commands high market share for vehicle interior

fi ttings in Europe, especially for door panels, instrument panels and

acoustic modules.

2001. The Sommer Allibert acquisition is fi nalized through a buyback

bid addressing Sommer Allibert minority shareholders. The resulting

G roup posts sales of €9.6 billion. Faurecia then buys the remaining

minority shares held by external shareholders in Sommer Allibert’s

German 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, which

holds market share of over 20%. This gives Faurecia’s Exhaust

Systems a manufacturing presence in all continents. In Europe, the

Group fi nalizes an agreement with Siemens-VDO on strengthening

and extending their joint venture (SAS) that assembles cockpits for

BMW, DaimlerChrysler, the Ford group, Renault-Nissan and the

Volkswagen Group.

To step up Korean operations, Faurecia raises its stake in Daeki

(specializing in exhaust systems for Hyundai) to 100%, and sets

up a joint venture with the South Korean company Kwang Jin

Sang Gong, to produce door modules for Hyundai Motor and Kia

Motors.



8.3.2 LEGAL INFORMATION ABOUT THE COMPANY

8.3.2.1 General information about the Company

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

Faurecia is a listed société anonyme (joint-stock corporation)

governed by the French Commercial Code and the related

implementing regulations. It complies with generally accepted

corporate governance principles for listed companies in France,

including those described in the AFEP/MEDEF report on corporate

governance, and reports on its application of these principles in its

registration document.

Faurecia abides by the legal and regulatory provisions that apply

to the governing bodies of listed companies and reports in this

registration document on the application of the recommendations

made in relation to said document

AUDITORS

The Company’s accounts are audited by two Statutory Auditors,

appointed in accordance with Article L. 225-228 of the French

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 identifi er) code: 7010Z (company administration).

CONSULTATION OF CORPORATE DOCUMENTS

During the period of validity of this registration document, the

following documents (or copies thereof) can be consulted at the

Company’s headquarters:

a. The Company’s bylaws;

b. Financial information on Faurecia S.A. and its subsidiaries for

each of the two fi scal years prior to publication of the registration

document.

•

•

•

•

•

Contact:

FAURECIA

Dominique Laulan

General Counsel

2, rue Hennape - 92000 Nanterre - France

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, fi nancial and technical assistance to

subsidiaries and affi liates;

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, real-estate

and other transactions.

THE COMPANY’S ROLE IN RELATION TO ITS

SUBSIDIARIES

Faurecia is a holding company, whose assets are primarily made

up of investments in subsidiaries and associates. The Group’s

industrial assets are held by the operating subsidiaries.

Faurecia provides direct and indirect fi nancial, accounting,

management, administrative and other services to Group

companies.

Group subsidiaries are fi nanced on a centralized basis, primarily

through Faurecia and Financière Faurecia – which performs a cash

pooling role – in order to enable the subsidiaries to benefi t from the

favorable market conditions obtained from lenders by Faurecia.

As of December 31, 2007, the Company’s net debt, corresponding

to borrowings less cash and cash equivalents and net inter-

company cash advances, amounted to €1,341.1 million, compared

with €1,616.0 million in consolidated net debt for the Group as a

whole.

FISCAL YEAR

The Company’s fi scal 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 deducts the 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’

equity represents – or would represent after the planned distribution

– less than its capital stock plus any reserves which, according to

the law or 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

dividend or increase the dividend or pay an exceptional dividend.

The Company’s bylaws provide that the Ordinary Shareholders’

Meeting approving the fi nancial statements for the year may also

decide to offer each shareholder the option between the payment

of the dividend or the interim dividend in cash or in shares.

DIVIDENDS – STATUTE OF LIMITATIONS

Dividends not collected within fi ve years of the payment date will

be time-barred and paid over to the French Treasury.

REGISTRAR AND PAYING AGENT

The registrar and paying agent for Faurecia shares is Crédit Agricole

– Caisse d’Epargne Investor Services (CACEIS). 14, rue Rouget-

de-Lisle, 92862 Issy-les-Moulineaux Cedex 9 France.

STOCK MARKET DATA

Faurecia shares are traded on the Eurolist market of Euronext

Paris SA under ISIN Code FR 0000121147. They are included in

the SBF 250, MID & SMALL 190 and NEXT 150 indexes and are

eligible for inclusion in personal equity plans (PEA) and the deferred

settlement service (SRD).

GENERAL SHAREHOLDERS’ MEETINGS

Shareholders’ Meetings are held at the Company’s headquarters

or at any other venue specifi ed in the notice of Meeting.

Holders of registered shares are notifi ed by mail; the other

shareholders are notifi ed via the relevant banks and brokers through

the fi nancial notices provided for by the applicable regulations.

A continually updated schedule of all of the Group’s fi nancial events,

including the date of the Shareholders’ Meeting, is available on

Faurecia’s website at 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 shares

recorded 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 fi t.

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.

VOTING RIGHTS

The Company’s bylaws do not provide for any restrictions on

voting rights. Voting rights at Ordinary, Extraordinary and Special

Shareholders’ Meetings are exercisable by the benefi cial 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 shares

allotted 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 benefi ciary shareholders.

Shares that are transferred or converted to bearer form are stripped

of double voting rights. However, double voting rights are not lost

and the above-mentioned two-year period continues to run when

shares are transferred following 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 direct line of succession.

DISCLOSURE THRESHOLDS

(ARTICLE 24 OF THE BYLAWS)

When an individual or corporate shareholder, acting alone or in

concert within the meaning of Article L. 233-10 of the French

Commercial Code, raises their interest to above 2% of the

Company’s voting rights, said shareholder must inform the

Company of the total number of shares and voting rights held by

the shareholder, within fi ve trading days of the threshold being

crossed, by registered letter with return receipt requested. This 2%

applies in addition to the 5% disclosure threshold provided for in

Article L. 233-7 of the French Commercial Code. The shareholder

must also inform the Autorité des Marchés Financiers within the

same timeframe, 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

Article L. 233-7 of the French Commercial 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.

ARRANGEMENTS WHOSE OPERATION COULD

RESULT IN A CHANGE IN CONTROL OF THE

COMPANY OR WHICH COULD POSTPONE OR

PREVENT A CHANGE IN CONTROL

To the best of the Company’s knowledge there are no arrangements

in place whose operation could result in a change in control of the

Company at a future date.

There are currently no deeds, bylaws, charters, regulations or

contractual provisions in place that could postpone or prevent a

change in control of the Company.

In the automotive industry sector in which Faurecia operates sub-

contractors do not generally defi ne the technical specifi cations

for subcontracted parts. When on rare occasions subcontractors

are in a position to do this, the Group’s policy is to contractually

arrange for the subcontractor concerned to transfer the relevant

design work in order for it to be used in conjunction with other

services.

MATERIAL CONTRACTS

To date, Faurecia has not entered into any material contracts that

would entail a signifi cant obligation or commitment for the Group,

other than those that fall within the ordinary course of business.

DEPENDENCE

Faurecia is not currently dependent on any patents or

manufacturing processes owned by third parties or on any specifi c

supply contracts to conduct its business.

MATERIAL PROPERTY, PLANT AND EQUIPMENT

The Group’s 190 manufacturing sites and 28 research and

development centers spanning 28 countries enable it to maximize

its local presence and implement its just-in-time delivery strategy.

None of its manufacturing equipment taken on an individual basis

represents a material value in relation to the property, plant and

equipment of the Group as a whole.

8.3.2.2 Additional information on the members of the Board of Directors

GENERAL INFORMATION

The Company has no employee-elected or non-voting Directors.

Each Director must hold at least 20 Faurecia shares throughout his

or her term of offi ce.

Apart from the Chairman and Chief Executive Offi cer, no member

of the Board of Directors holds an executive management or

salaried position within a Group company.

As of April 10, 2008, the only Directors with a family connection

were Thierry Peugeot and Robert Peugeot.

In the past fi ve years no Director has (i) received a conviction in

relation to fraudulent offi ces; (ii) managed a company that has

fi led for bankruptcy or gone into receivership or liquidation; (iii)

received an offi cial public incrimination or sanction by statutory or

regulatory authorities; (iv) been disqualifi ed by a court from acting

as a member of the administrative, management or supervisory

bodies of an issuer, or from acting in the management or conduct

of the affairs of an issuer.

CONFLICTS OF INTEREST

As provided for in the Board of Directors’ internal rules, all Directors

must inform the Board of any actual or potential confl icts of interest

and refrain from voting during the corresponding deliberations. No

such situations arose in 2007.

Aside from regulated agreements (which are the subject of a report

to the Shareholders’ Meeting) no service agreement has been

entered into between a member of the Board of Directors and

Faurecia or any one of its subsidiaries.

Transactions that may be entered into with a shareholder owning

more than 5% of the Company’s capital correspond to day-to-day

routine operations.

At its meeting of December 16, 2005, the Board strengthened

its rules relating to confl icts of interest by adopting a procedure

regarding the communication of insider information. This procedure

– which applies notably to Directors – provides that 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, who are all included in a regularly updated list,

must disclose any trades they carry out in Faurecia’s shares to the

Company which then informs the markets.



DIRECTORSHIPS AND OTHER POSITIONS HELD BY MEMBERS OF THE BOARD OF DIRECTORS

Director Directorship/Position

Yann DELABRIERE

Yann Delabrière, 57, has been Chairman and Chief Executive Offi cer of Faurecia since February 16, 2007. His term of offi ce will expire at the Shareholders’ Meeting to be held in 2013.

Yann Delabrière has been a Director of Faurecia since November 18, 1996. He occupied various positions within the fi nance departments of major manufacturing groups before joining the PSA Peugeot Citroën Group in 1990 where he held the position of Chief Financial Offi cer.

As of December 31, 2007, Yann Delabrière held 1, 100 Faurecia shares.

Business address: FAURECIA - 2, rue Hennape 92735 Nanterre Cedex - France

In addition to his duties as a Director of Faurecia, Yann Delabrière

held the following positions and directorships in 2007:

IN FRANCE (OUTSIDE THE GROUP)

Director of Capgemini

During the last fi ve years, Yann Delabrière has also held the following

positions, which he no longer holds:

IN FRANCE (WITHIN THE GROUP)

Chief Financial Offi cer of the PSA Peugeot Citroën Group

Chairman and Chief Executive Offi cer of Banque PSA Finance

Chairman and Chief Executive Offi cer of Compagnie Générale

de Crédit aux Particuliers – Credipar

Director of Peugeot Citroën Automobiles SA

Director of Automobiles Citroën

Director of Gefco

Chairman of Egery

Chairman of Pergolese Investissements

Chief Executive Offi cer of Grande Armée Participations

Legal Manager of PSA Citroën Finance

Chairman of the Supervisory Board of SIT

Permanent representative of Automobiles Peugeot

on the Board of Directors of Peugeot SA


Member of the Supervisory Board of Sommer Allibert

OUTSIDE FRANCE (WITHIN THE GROUP)

Legal Manager of PSA Services SrL (Italy)

Chairman of the Board of Directors of Peugeot Citroën Argentina SA

(Argentina)

Chairman of the Supervisory Board of Peugeot Finance International

(Netherlands)

Vice-Chairman and Director of PSA International SA (Switzerland)

Jean-Pierre CLAMADIEU

Jean-Pierre Clamadieu, 49, has been a Director

of Faurecia since May 29, 2007. His term of offi ce will

expire at the Shareholders’ Meeting to be held in 2013.

Jean-Pierre Clamadieu has been Chief Executive Offi cer

of Rhodia since October 2003 and Chairman since

March 2008, having previously held various divisional

executive positions. He is also a Director of Rhodia.

As of December 31, 2007 Jean-Pierre Clamadieu held

100 Faurecia shares.

Business address: RHODIA - Immeuble C œur D éfense

tour A, 110 Esplanade Charles de Gaulle -

La Défense 4 - 92931 La Défense Cedex - France

In addition to his duties as a Director of Faurecia, Jean-Pierre Clamadieu



Chief Executive Offi cer and a Director of the Rhodia G roup

During the last fi ve years, Jean-Pierre Clamadieu has also held the following



President of the Pharmacy and Agrochemicals Division, Rhodia

President of the Fine Organics Division, Rhodia

Director of various Rhodia Group subsidiaries




Frank ESSER

Frank Esser, 49, has been a Director of Faurecia

since May 23, 2005. His term of offi ce will expire

at the Shareholders’ Meeting to be held in 2011.

Frank Esser joined SFR as Chief Executive Offi cer

in September 2000 and was appointed Chairman

and Chief Executive Offi cer in 2002.

As of December 31, 2007 Frank Esser held 20 Faurecia

shares.

Business address: SFR - Tour Séquoia - 1, place

Carpeaux - 92915 Paris La Défense - France

In addition to his duties as a Director of Faurecia, Frank Esser



Chairman of the Board of Directors of Vizzavi France

Chairman of the Fédération Française des Télécoms et des communications

électroniques

Director of Neuf Cegetel

Director of Jet Multimedia

Permanent representative of SFR on the Board of Directors of Ltb-R

Member of the Management Board of Vivendi

Director of Vivendi Telecom International

OUTSIDE FRANCE (OUTSIDE THE GROUP)

Member of the Supervisory Board of Maroc Telecom

Director of Vodafone D2 GmbH (Germany)

Director of GSM Association (UK)

During the last fi ve years, Frank Esser has also held the following positions,

which he no longer holds:


Chairman of the Supervisory Board of Cegetel

Chief Executive Offi cer of SFR Cegetel

Jean-Louis GERONDEAU

Jean-Louis Gérondeau, 64, has been a Director

of Faurecia since May 27, 2003. His term of offi ce will

expire at the Shareholders’ Meeting to be held in 2009.

Jean-Louis Gérondeau is Chairman of the Management

Board of the Zodiac group and has long-standing

experience in managing international groups specialized

in the aeronautical industry.

As of December 31, 2007 Jean-Louis Gérondeau

held 100 Faurecia shares.

Business address: ZODIAC - 2, rue Maurice-Mallet -

92130 Issy-les-Moulineaux - France

In addition to his duties as a Director of Faurecia, Jean-Louis Gérondeau



Chairman and Vice-Chairman of the Supervisory Board

of Institut de Développement Industriel

Chairman of Aerazur

Chairman of Intertechnique

Chairman of Aerazur Newco

Chairman of Zodiac Marine Holding

Director of SICMA Aero Seat

Director of Nexans

Permanent representative of Zodiac SA Parachutes de France


Chairman of Zodiac Airline Equipment LLC (USA)

Director of Avox-Eros Services Inc (USA)

Director of Avox Systems Inc. (USA)

Director of Evac International Oy (Finland)

Director of Evac Oy (Finland)

Director of Marine Holding Corp (USA)

Director of Zodiac Espagnola (Spain)

Director of Mag Aerospace Industries Inc (USA)

Director of C&D Zodiac (USA)

Director of C&D Aerospace Canada

Director of Zodiac Automotive UK

Director of Zodiac Automotive US

Director of Zodiac US Corporation

Director of Air Cruisers (USA)

Director of Zodiac Group of Australia

Director of SICMA Aero Seat Services (USA)

During the last fi ve years, Jean-Louis Gérondeau has also held the following



Director of Ferma

Director of Optim Actif




Jean-Claude HANUS

Jean-Claude Hanus, 61, has been a Director of Faurecia

since February 21, 2000. His term of offi ce was renewed

at the May 23, 2005 Shareholders’ Meeting and will expire


Jean-Claude Hanus has spent his entire career

with the PSA Peugeot Citroën Group and is currently

Director of Legal Affairs, Institutional Relations

and Internal Audit of Peugeot SA.

As of December 31, 2007 Jean-Claude Hanus


Business address: PEUGEOT SA,

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

In addition to his duties as Director of Faurecia, Jean-Claude Hanus



Chairman of DJ6

Chairman of Grande Armée Participations

Director of Automobiles Peugeot

Director of Compagnie générale de Crédit aux Particuliers – Credipar

Permanent representative of Peugeot SA on the Board of Directors

of Banque PSA Finance


of Gefco SA


Director of Association Auxiliaire de l’Automobile

Director of Comité des Constructeurs Français Automobiles


Director of Peugeot Citroën Automobiles España SA

During the last fi ve years, Jean-Claude Hanus has also held the following


IN FRANCE

Director of Pergolèse Investissement

Director of Financière Pergolèse


of Automobiles Citroën

Chairman of the Board of Directors of Beaujon Immobilier

Chief Executive Offi cer of Beaujon Immobilier

Gérard HAUSER

Gérard Hauser, 66, has been a Director of Faurecia

since July 22, 2003. His term of offi ce will expire


Gérard Hauser is Chairman and Chief Executive Offi cer

of Nexans and has held executive positions in various

international industrial groups.

As of December 31, 2007 Gérard Hauser held 50 Faurecia

shares.

Business address: NEXANS - 16, rue de Monceau -

75008 Paris - France

In addition to his duties as a Director of Faurecia, Gérard Hauser



Chairman of the Board of Directors of Nexans

Director of Aplix

Director of Alstom

Director of Ipsen

During the last fi ve years, Gérard Hauser has also held the following

positions which he no longer holds:


Director of Electro Banque




Ross MC INNES

Ross Mc Innes, 54, has been a Director of Faurecia

since May 29, 2007. His term of offi ce will expire at the

Shareholders’ Meeting to be held in 2013.

Ross Mc Innes is Vice-Chairman of Macquarie Capital

Europe Ltd and has long-standing executive experience in

major industrial groups.

As of December 31, 2007 Ross Mc Innes held 100

Faurecia shares.

Business address: MACQUARIE EUROPE

41 Avenue George V, 75008 Paris - France

In addition to his duties as a Director of Faurecia, Ross Mc Innes held the

following positions and directorships in 2007:


Member of the Supervisory Board of Générale de Santé SA

Member of the Audit Committee and Nominations and Compensation

Committee of Générale de Santé SA

Representative of the Chairman of Santé Développement Europe

Director of Macquarie Autoroutes de France, Eiffarie, APRR and AREA.

Director of SNEF and Financière du Planier

Director of Bienfaisance Holding


Vice-Chairman of Macquarie Europe Ltd

During the last fi ve years, Ross Mc Innes has also held the following



Chairman of the Management Board of Générale de Santé SA

Permanent representative of Santé Sa rl on the Supervisory Board of

Générale de Santé SA

Chief Financial Offi cer of P.P.R.

Non-voting Director of P.P.R.

Director of CFAO

Director of Rexel

Chief Operating Offi cer of Thales

Director of Thales Air Defence SA, Thales Systèmes Aéroportés SA, and

Thales International.

Director of Electro Banque


Member of the Supervisory Board of Gucci Group NV

Director of Adi Group Holding Pty Limited, Adi Group Pty Limited, Adi

Munitions Pty Limited, and Australian Defence Industries.

Director of Camelot Plc.

Isabel MAREY-SEMPER

Isabel Marey-Semper, 40, has been a Director of Faurecia

since May 29, 2007. Her term of offi ce will expire at the

Shareholders’ Meeting to be held in 2013.

Isabel Marey-Semper has held various executive positions

in major international groups and has been Chief Financial

Offi cer of Peugeot SA since September 1, 2007.

As of January 21, 2008 Isabel Marey-Semper held 200

Faurecia shares.

Business address: PEUGEOT SA - 75, avenue de la

Grande-Armée - 75116 Paris - France.

In addition to her duties as a Director of Faurecia, Isabel Marey-Semper held

the following positions and directorships in 2007:


Chairman and Chief Executive Offi cer of Banque PSA Finance

Director of Compagnie générale de Crédit aux particuliers – Credipar

Director of Gefco SA

Director of Peugeot Citroën Automobiles SA


Director of Association Auxiliaire de l’Automobile

Director of Comité des Constructeurs Français Automobiles


Director of Dongfeng Peugeot Citroën Automobiles Company Ltd

Chairman of the Supervisory Board of Peugeot Finance International NV

Vice-Chairman of PSA International

Director of PSA International




Robert PEUGEOT

Robert Peugeot, 57, has been a Director of Faurecia

since May 29, 2007. His term of offi ce will expire


Robert Peugeot is a member of the Supervisory Board of

Peugeot SA. He has held a number of executive positions,

primarily in the PSA Peugeot Citroën Group, and has

extensive knowledge of the automotive sector.

He was previously a member of the Executive Committee

of the PSA Peugeot Citroën Group and held the position

of Vice-President, Innovation and Quality between

1998 and 2007. He has also been Chairman and Chief

Executive Offi cer of Société Foncière, Financière

et de Participations (FFP) since 2002.

As of December 31, 2007 Robert Peugeot


Business address: PEUGEOT SA


In addition to his duties as a Director of Faurecia, Robert Peugeot



Member of the Supervisory Board of Peugeot SA


Director of Holding Reignier SA

Director of WRG-Waste Recycling Group Ltd

Director of Alpine Holding

Director of Etablissements Peugeot Frères

Director of Imerys

Director of Immeubles et Particpation de l’Est

Director of Sanef

Chairman of the Board of Directors of Simante S.L.

Member of the Supervisory Board of Hermès International

Chairman and Chief Executive Offi cer of Société Foncière, Financière

et de Participations (FFP)

Director of LFPF (La Française de Participations Financières)

Permanent representative of FPP on the Supervisory Board of Zodiac

Statutory representative of FPP as Chairman of Financière Guiraud (SAS)


Director of B-1998, SL

Director of FCC Construcción, SA

During the last fi ve years, Robert Peugeot has also held the following



Member of the Supervisory Board of the Taittinger G roup

Director of Aviva France

Director of Aviva Participations

Director of Fomentos de Construcciones y Contratas, SA (FCC)

Director of Institut Français du Pétrole (IFP)

Director of Société du Louvre


Director of Citroën Danmark A/S

Director of Citroën Deutschland Akitiengesellschaft

Director of Citroën UK Limited

Director of Peugeot Automobiles United Kingdom Ltd

Thierry PEUGEOT

Thierry Peugeot, 50, has been a Director of Faurecia

since April 17, 2003. His term of offi ce was renewed

at the May 23, 2005 Shareholders’ Meeting and will expire


Thierry Peugeot is Chairman of the Supervisory Board

of Peugeot SA He has held various executive positions

in the automotive sector and has a broad international

experience. He is also Chairman of the Supervisory

Board of Peugeot SA and Peugeot SA’s Chairman

of the Compensation and Appointments Committee

and is a member of the Strategy Committee.

As of December 31, 2007 Thierry Peugeot held 20

Faurecia shares.

Business address: PEUGEOT SA - 75, avenue de la

Grande-Armée - 75116 Paris - France.

In addition to his duties as a Director of Faurecia, Thierry Peugeot



Chairman of the Supervisory Board of Peugeot SA

Vice-Chairman and a Director of Établissements Peugeot Frères

Director of Foncière, Financière et de Participation

Director of La Française de Participations Financières

Director of Société Anonyme de Participations


Director of Compagnie Industrielle de Delle

Permanent representative on the Board of Directors of ANSA

Permanent representative of CID on the Board of Directors of LISI

Member of the Supervisory Board of Air Liquide

Director of Immeubles et Participations de l’Est

During the last fi ve years, Thierry Peugeot has also held the following



Director of AMC Promotion

Director of SIA Mulhouse

Chairman and a Director of Immeubles et Participations de l’Est




Christian STREIFF

Christian Streiff, 53, has been a Director of Faurecia

since February 2, 2007.

His term of offi ce will expire at the Shareholders’ Meeting

to be held in 2011.

Christian Streiff is Chairman of the Managing Board

of PSA Peugeot Citroën. He has spent the majority

of his career with the Saint-Gobain G roup where he built

up in-depth international and industrial experience

in a range of different sectors in Europe, the United States,

Brazil and China.

As of December 31, 2007 Christian Streiff


Business address: PEUGEOT SA


In addition to his duties as a Director of Faurecia, Christian Streiff



Chairman of Automobiles Peugeot

Chairman of Automobiles Citroën

Director of Banque PSA Finance

Director of Peugeot Citroën Automobiles

In addition Christian Streiff held the following positions and directorships in

2006:


Chairman and Chief Executive Offi cer of Airbus Holding

Legal Manager of Argos Conseil

Chairman of the Board of Directors of Société Européenne des Produits

Réfractaires (SEPR)

During the last fi ve years, Christian Streiff has also held the following



Chief Operating Offi cer of Compagnie de Saint-Gobain

Chairman and Chief Executive Offi cer of Airbus Holding


Chairman and Chief Executive Offi cer of Saint-Gobain Advanced Ceramics C orp.

Chairman and Chief Executive Offi cer of Carborundum Ventures Inc.

Chairman of the Board of Directors of Saint-Gobain Ceramics & Plastics Inc

Chairman of the Board of Directors of Saint-Gobain Performance

Plastics Corp.

Chairman of the Board of Directors of Saint-Gobain Abrasivos SA

Director of Thyssen-Krupp

Director of Continental AG

Director of PAM Colombia SA

Director of Grindwell Norton Ltd

Director of Kure-Norton Ltd

Director of Saint-Gobain Corporation

Director of Saint-Gobain Pipe Systems Plc.

Chief Executive Offi cer of Saint-Gobain KK

.



8.3.2.3 Additional information on the Company’s capital

As of December 31, 2007 the Company’s capital amounted to

€170,765,336, divided into 24,395,048 fully paid-up shares of €7

each, all of the same class. These shares represent 41,454,505

voting rights. No shares have been issued that do not represent

the 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 shares and/or securities carrying rights to

shares, with or without pre-emptive subscription rights for existing

shareholders. The maximum amount of any capital increases

carried out under this authorization was set at €61,000,000 and

the nominal amount of debt securities issued may not exceed

€1,000,000,000 or the foreign currency equivalent.

The Company did not use this authorization in 2007.

Authorization to increase capital stock:

Date of Shareholders’ Meeting TermAuthorized

amount Amount used(*)

Date of Board Meeting

May 22, 2006 26 months €61,000,000 0 N/A

(*) As of April 10, 2008.

DEBT INSTRUMENTS

At the May 27, 2003 Shareholders’ Meeting, the Board of Directors

was given a fi ve-year authorization to issue bonds with a maximum

nominal value of €1,000,000,000.

Since the French governmental order 2004-604 was issued on

June 24, 2004, the Board of Directors has the exclusive power to

decide on or authorize the issue of bonds, unless the Shareholders’

Meeting decides to exercise this power (Article L. 228-40 al.1 of

the French Commercial Code).

POTENTIAL SHARES

As of December 31, 2007, a total of 1,258,303 employee stock

options were outstanding.

Details of the stock option plans approved as at December 31,

2007 can be found on page 182.

SHARES HELD BY THE COMPANY

As of December 31, 2007, the Company held 270,814 of its own

shares(*), , following the sale of 31,340 shares during the year.

These shares were sold at a price of €40 each to benefi ciaries of

stock options exercisable for existing shares granted under the

September 4, 2000 plan.

(*) See Note 10 to the parent company fi nancial statements.(*) See Note 10 to the parent company fi nancial statements.

CHANGES IN FAURECIA’S CAPITAL OVER THE LAST FIVE YEARS

Amount of capital increase/reduction (in €)

New capital stock

New additional

paid-in capitalNew number

of shares

Year and type of transaction Par value Premium (in €) (in €)

February 2002Increase in capital following the exercise of stock options leading to the issue of 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 options leading to the issue 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 options leading to the issue of 7,300 shares with a par value of €7 51,100 150,737 169,219,757 735,075,199.07 24,174,251



Amount of capital increase/reduction (in €)

New capital stock

New additional

paid-in capitalNew number

of shares

Year and type of transaction Par value Premium (in €) (in €)

March 2003Increase in capital following the exercise of stock options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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 options leading to the issue 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

April 2007Increase in capital following the exercise of stock options leading to the issue of 1,000 shares with a par value of €7 240,800 1,191,084.50 170,055,452 738,756,239.37 24,293,636

October 2007Increase in capital following the exercise of stock options leading to the issue of 24,635 shares with a par value of €7 693,224 3,231,303.27 170,748,676 741,987,542.64 24,392,668



CHANGES IN OWNERSHIP STRUCTURE OVER THE LAST THREE YEARS

Shareholder Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2007

Number of shares % capital

% voting rights


% voting rights


% voting rights

Peugeot SA 17,285,197 71.32 83.87 17,285,197 71.25 83.75 17,285,197 70.85 83.40

Faurecia Actionnariat and Faurecia Actionnariat International corporate mutual funds 74,032 0.31 0.18 71,424 0.29 0.17 67,537 0.28 0.16

Treasury stock 335,804 1.38 - 302,154 1.25 - 270,814 1.11 -

Other 6,538,568 26.98 15.95 6,600,461 27.21 16.08 6,771,500 27.76 16.44

TOTAL 24,233,601 100 100 24,259,236 100 100 24,395,048 100 100

IDENTIFICATION OF SHAREHOLDERS

The Company is entitled to obtain from the organization responsible for clearing securities transactions the names of holders of shares carrying

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.

STOCK OPTIONS

Details of outstanding stock subscription options for newly-issued shares are set out in the table below:

As of December 31, 2007:


Date of Board Meeting/

exercise price (in €)

Number of options

granted

Of which granted

to senior executive


Committee members

Start of exercise

periodExpiration

of exercise period

Options exercised

Options forfeited

Number of options

out-standing as of Dec.

31, 2007

06/18/199204/07/1994

25.06 115,000 75,00004/08/199904/06/2009 93,600 0 21,400

05/31/199410/20/1994

23.84 125,000 30,00010/21/199910/19/2009 110,000 0 15,000

05/31/199405/03/1995

26.07 71,000 15,00005/04/200005/02/2010 63,000 1,000 7,000

05/03/199509/12/1996

24.39 125,000 40,00009/13/200109/11/2011 91,500 0 33,500

05/31/199406/26/1997

40.25 54,000 15,00006/27/200206/25/2012 31,500 1,500 21,000

06/05/199706/26/1997

42.38 35,500 15,00006/27/200206/25/2007 26,000 9,500 0

06/05/199706/01/2001

02/22/200255.00 351,700 69,500

02/23/200602/22/2012 28,200 103,000 220,500

06/01/200105/14/2002

11/28/200241.71 269,500 101,000

11/29/200611/27/2012 91,097 106,000 72,403

05/14/200204/14/2004

58.18 268,000 109,00004/14/200804/13/2014 0 104,500 163,500

05/25/200404/19/2005

63.70 275,000 122,00004/18/200904/18/2015 0 72,500 202,500

05/23/200504/13/2006

53.80 284,000 140,00004/14/201004/14/2016 0 60,000 224,000

05/23/200504/16/2007

53.19 288,500 144,00004/17/201104/17/2017 0 11,000 277,500

TOTAL 1,258,303



Details of outstanding stock purchase options are as follows:

As of De cember 31, 2007 :


Date of Board Meeting/

exercise price (in €)

Number of options

granted

Of which granted

to senior executive


Committee members

Start of exercise

periodExpiration

of exercise period

Options exercised

Options forfeited

Number of options


31, 2007

06/01/199909/06/1999

52 200,000 53,10009/06/200409/05/2009 46,600 17,250 136,150

06/01/199905/22/2000

09/04/200040 254,000 54,900

09/04/200509/03/2010 108,920 42,250 102,830

05/22/200004/26/2001

54.5 43,500 40,00004/26/200504/25/2011 16,500 5,000 22,000

TOTAL 260,980

Stock options granted to/exercised by the ten employees who received the highest number of options

Total number of options

granted/exercised

Weighed average exercise price

(in €)

Options granted to the top ten employee grantees during the year, by the Company and other Group companies entitled to grant options(total) 92,000 53.19

Options exercised during the year by the employees of the Company and other Group companies entitled to grant options who exercised the greatest number of options(total) 24,425 51.38



8.3.2.4 Organization chart of Faurecia Group companies

82,55%

Faurecia ExhaustSystems, Inc.

(USA)

100%

Faurecia ExhaustSystems, LLC

(USA)

100%

Faurecia NetherlandsHolding B.V.

(Netherlands)

100%

Faurecia AutomotiveSeating B.V.

(Netherlands)

100%

United PartsExhaust Systems AB

(Sweden)

100%

Faurecia ExhaustSystems AB(Sweden)

100%

19,17%

Sienor(France)

100%

Siemar(France)

100%

Sielest(France)

100%

Siedoubs(France)

100%

Siebret(France)

100%

Ecsa(France)

100%

Faurecia Siègesd'Automobile

(France)

100%

IndustriasCousin Frères, S.L.

(Spain)

50,01%

Sotexo(France)

100%

Société Automobiledu Cuir de Vesoul

(France)

100%

Sieval(France)

100%

Sieto(France)

100%

VanproAssentos Lda.

(Portugal)

50%

Faurecia Sistemas de Interior de Portugal. Componentes Para Automovel S.A.

(Portugal)

100%

Faurecia - Sistemas de Escape Portugal,

Lda (Portugal)

100%

SASAL(Portugal)

100%

EDA - Estofagem de Assentos, Lda

(Portugal)

100%

Faurecia - Assentos de Automovel,

Limitada (Portugal)

100%

BFTC(Turkey)

100%

Teknik Malzeme(Turkey)

50%

Arsed d.o.o.(Slovenia)

50%

Faurecia Walbrzych Sp.Zo.o

(Poland)

100%

Faurecia Fotele Samochodowe Sp.Zo.o (Poland)

100%

Faurecia Components Pisek s.r.o.

(Czech Republic)

100%

Somil S.A.(Uruguay)

50%

Bertrand FaureArgentina S.A.

(Argentina)

50%

PAB S.A.(Argentina)

50%

Faurecia Azin Pars

(Iran)

51%

Faurecia AutomotiveSeatIng Canada Ltd

(Canada)

100%

Faurecia CanadaInvestment Company

(Canada)

100%

Société Tunisienned'Équipements

d'Automobile (Tunisia)

100%

Faurecia-NHKKyushu Co., Ltd(FNQ) (Japan)

19%

Faurecia-NHKCo., Ltd

(FNK) (Japan)

50%

Faurecia - GSK (Wuhan)Automotive Seating

Co Ltd (China)

51%

CFXAS(China)

60%

FaureciaJapan KK(Japan)

100%

FaureciaMidlands Ltd

(UK)

100%

Faurecia AutomotiveSeating UK Ltd

(UK)

100%

Exhaust ServicesMexicana,

S.A. de C.V. (Mexico)

100%

FaureciaExhaust International

(France)

100%

Faurecia Systèmesd'Echappement

(France)

100%

Faurecia Sistemasde Escape Argentina

SA (Argentina)

100%

Faurecia ExhaustSystems s.r.o.

(Czech Republic)

100%

EciaSouth Africa

(South Africa)

100%

Faurecia ExhaustSystems South Africa

(South Africa)

100%

Faurecia TongdaExhaust System

(Wuhan) Co., Ltd (China)

50%

Faurecia HonghuExhaust Systems

Shanghaï Co. Ltd (China)

51%

Tecnoconfort(Spain)

50%

FaureciaLecotex a.s.

(Czech Republic)

100%

Faurecia AutomotiveSeating India

Private Ltd (India)

100%

Société Internationalede Participations (SIP)

(Belgium)

100%

Faurecia SystemyKierownicze Sp.Zo.o

(Poland)

100%

50%

TRECIA(France)

100%

Faurecia Industries,Inc.

(USA)

FaureciaCooling Systems

(France)

FaureciaIndustries(France)

FaureciaBloc Avant(France)

100%

FaureciaServices Groupe

(France)

100%

FinancièreFaurecia(France)

100% 50%

100% 100%

FaureciaUsa Holdings, Inc.

(USA)

17,45%

Faurecia AutomotiveSeating, Inc.

(USA)

100%

Faurecia Interior Systems, Inc.

(USA)

100%

Faurecia Interior Systems Mexico


100%

FaureciaDuroplast Mexico,

S.A. de CV (Mexico)

100%

Servicios Corporativos dePersonal Especiali-zado,

S.A. de CV (Mexico)

100%

Faurecia AutomotiveGmbH

(Germany)

25,81% 55,02%

FaureciaInvestments

(France)

100%

FAURECIA Simplified organization chart of operating companies

EAK Snc(France)

51%

EAK SAS(France)

51%

Europe North AmericaSouth America, AfricaAsia

82,55%

Faurecia ExhaustSystems, Inc.

(USA)

100%

Faurecia ExhaustSystems, LLC

(USA)

100%

Faurecia NetherlandsHolding B.V.

(Netherlands)

100%

Faurecia AutomotiveSeating B.V.

(Netherlands)

100%

United PartsExhaust Systems AB

(Sweden)

100%

Faurecia ExhaustSystems AB(Sweden)

100%

19,17%

Sienor(France)

100%

Siemar(France)

100%

Sielest(France)

100%

Siedoubs(France)

100%

Siebret(France)

100%

Ecsa(France)

100%

Faurecia Siègesd'Automobile

(France)

100%

IndustriasCousin Frères, S.L.

(Spain)

50,01%

Sotexo(France)

100%

Société Automobiledu Cuir de Vesoul

(France)

100%

Sieval(France)

100%

Sieto(France)

100%

VanproAssentos Lda.

(Portugal)

50%

Faurecia Sistemas de Interior de Portugal. Componentes Para Automovel S.A.

(Portugal)

100%

Faurecia - Sistemas de Escape Portugal,

Lda (Portugal)

100%

SASAL(Portugal)

100%

EDA - Estofagem de Assentos, Lda

(Portugal)

100%

Faurecia - Assentos de Automovel,

Limitada (Portugal)

100%

BFTC(Turkey)

100%

Teknik Malzeme(Turkey)

50%

Arsed d.o.o.(Slovenia)

50%

Faurecia Walbrzych Sp.Zo.o

(Poland)

100%

Faurecia Fotele Samochodowe Sp.Zo.o (Poland)

100%

Faurecia Components Pisek s.r.o.

(Czech Republic)

100%

Somil S.A.(Uruguay)

50%

Bertrand FaureArgentina S.A.

(Argentina)

50%

PAB S.A.(Argentina)

50%

Faurecia Azin Pars

(Iran)

51%

Faurecia AutomotiveSeatIng Canada Ltd

(Canada)

100%

Faurecia CanadaInvestment Company

(Canada)

100%

Société Tunisienned'Équipements

d'Automobile (Tunisia)

100%

Faurecia-NHKKyushu Co., Ltd(FNQ) (Japan)

19%

Faurecia-NHKCo., Ltd

(FNK) (Japan)

50%

Faurecia - GSK (Wuhan)Automotive Seating

Co Ltd (China)

51%

CFXAS(China)

60%

FaureciaJapan KK(Japan)

100%

FaureciaMidlands Ltd

(UK)

100%

Faurecia AutomotiveSeating UK Ltd

(UK)

100%

Exhaust ServicesMexicana,


100%

FaureciaExhaust International

(France)

100%

Faurecia Systèmesd'Echappement

(France)

100%

Faurecia Sistemasde Escape Argentina

SA (Argentina)

100%

Faurecia ExhaustSystems s.r.o.

(Czech Republic)

100%

EciaSouth Africa

(South Africa)

100%

Faurecia ExhaustSystems South Africa

(South Africa)

100%

Faurecia TongdaExhaust System

(Wuhan) Co., Ltd (China)

50%

Faurecia HonghuExhaust Systems

Shanghaï Co. Ltd (China)

51%

Tecnoconfort(Spain)

50%

FaureciaLecotex a.s.

(Czech Republic)

100%

Faurecia AutomotiveSeating India

Private Ltd (India)

100%

Société Internationalede Participations (SIP)

(Belgium)

100%

Faurecia SystemyKierownicze Sp.Zo.o

(Poland)

100%

50%

TRECIA(France)

100%

Faurecia Industries,Inc.

(USA)

FaureciaCooling Systems

(France)

FaureciaIndustries(France)

FaureciaBloc Avant(France)

100%

FaureciaServices Groupe

(France)

100%

FinancièreFaurecia(France)

100% 50%

100% 100%

FaureciaUsa Holdings, Inc.

(USA)

17,45%

Faurecia AutomotiveSeating, Inc.

(USA)

100%

Faurecia Interior Systems, Inc.

(USA)

100%

Faurecia Interior Systems Mexico


100%

FaureciaDuroplast Mexico,

S.A. de CV (Mexico)

100%

Servicios Corporativos dePersonal Especiali-zado,

S.A. de CV (Mexico)

100%

Faurecia AutomotiveGmbH

(Germany)

25,81% 55,02%

FaureciaInvestments

(France)

100%

FAURECIA Simplified organization chart of operating companies

EAK Snc(France)

51%

EAK SAS(France)

51%

Europe North AmericaSouth America, AfricaAsia



100%

Société deParticipations

Industrielles (France)

FaureciaIntérieur Industrie

(France)

FaureciaAutomotive Industrie

(France)

FaureciaGlobal Purchasing

(France)

100% 100% 100%

AutomotiveSandouville

(France)

100%

FaureciaAutomotive Holdings

(France)

100%

50%

Taco FaureciaDesign Center Pvt Ltd

(India)

Euro Auto PlasticSystems s.r.l.

(Romania)

Injectrade 181(South Africa)

Faurecia AD PlastikAutomotive Romania

s.r.l. (Romania)

100% 51% 50%

Faurecia Interior SystemsSouth Africa (Pty) Ltd

(South Africa)

100%

100%

SAI AutomotiveWashington Ltd

(UK)

SAI AutomotiveFradley Ltd

(UK)

FaureciaIndustrie, N.V.

(Belgium)

Faurecia InteriorSystems Bohemia s.r.o.

(Czech Republic)

100% 100% 100%

FaureciaArgentina S.A.

(Argentina)

100%

Faurecia AutomotiveEspana, S.L.

(Spain)

63,88%

10,66%

25,46%

Faurecia LeatherKosice s.r.o.(Slovakia)

60%

Faurecia TechnoplastAutomotive

(Russia)

Faurecia InteriorSystems Bratislava s.r.o.

(Slovakia)

Faurecia GorzowSp.Zo.o(Poland)

Faurecia AutomotiveCzech Republic s.r.o.

(Czech Republic)

100% 100% 100%

Faurecia LegnicaSp.Zo.o(Poland)

100%

49,95%100%

Faurecia InteriorSystems SALC Espana,

S.L. (Spain)

100%

Faurecia Sistemas deEscapamento do Brasil

Ltda (Brazil)

Faurecia Automotivedo Brasil Ltda

(Brazil)

Valencia Modulosde Puerta, S.L.

(Spain)

Faurecia InteriorSystems Espana, S.A.

(Spain)

100% 100% 100%

Cartera e InversionesEnrich S.A.

(Spain)

100%

50%50,05%

Kwang JinFaurecia Co., Ltd

(South Korea)

100%

Faurecia ExhaustSystems Korea(South Korea)

FaureciaTrim Korea

(South Korea)

Faurecia (Wuhan)Automotive Seating

Co., Ltd (China)

Faurecia (Qingdao)Exhaust Systems Co.,

Ltd (China)

100% 100% 100%

Faurecia (Shanghaï)Automotive Systems

Co., Ltd (China)

100%

60%

Faurecia Shin Sung(South Korea)

100%

Faurecia ExhaustMexicana, S.A. de C.V.

(Mexico)

Faurecia (Shanghaï)Business ConsultingCompany Ltd (China)

Daeki FaureciaCorporation

(South Korea)

Faurecia Sistemasde Escape Espana,

S.A. (Spain)

49,23% 100% 100%

Faurecia AsientosPara Automovil

Espana, S.A. (Spain)

100%

100%

Faurecia (Shanghaï)Management Co., Ltd

(China)

100%

Faurecia (Wuxi)Seating Components

Co., Ltd (China)

Faurecia SeatingTalmaçiu s.r.l.

(Romania)

Asientosdel Norte,

S.A. (Spain)

Asientosde Galicia, S.L.

(Spain)

100% 100% 100%

Asientos de CastillaLeon, S.A.

(Spain)

100%

FaureciaSlovakia s.r.o.

(Slovakia)

Copo Iberica,S.A.

(Spain)

68,75% 50%

Faurecia (Changchun)Automotive Systems

Co., Ltd (China)

100%

51%

Faurecia ExhaustSystems Changchun

Co Ltd (China)

Leistritz AbgastechnikStollberg GmbH (LAS)

(Germany)

Faurecia Front EndSouth Africa (Pty) Ltd

(South Africa)

FaureciaAbgastechnik GmbH

(Germany)

100%

31,24%

100% 100%

Faurecia KunststoffeAutomobilsystemeGmbH (Germany)

100%

Faurecia AutositzeGmbH

(Germany)

100%

100%

Dempo OtomotivSanayi ve Ticaret A.S.

(Turkey)

100%

Faurecia PolifleksOtomotiv Sanayi VeTicaret A.S. (Turkey)

Faurecia ASTLuxembourg S.A.

(Luxembourg)

Faurecia InteriorSystems Sweden AB

(Sweden)

IndustrieparkSassenburg GmbH

(Germany)

100% 100% 100%

Faurecia InnenraumSysteme GmbH

(Germany)

100%

Componentes deVehiculos de Galicia

S.A. (Spain)

50%

100%

Cockpit AutomotiveSystems Douai SNC

(France)

100%

SAS AutomotiveFrance

(France)

SAS AutomotiveN.V.

(Belgium)

SASAutosystemtechnik

S.A. (Spain)

SAS Automotive dePortugalUnipessoal

Lda (Portugal)

100% 100% 100%

SAS AutosystemtechnikVerwaltungs GmbH

(Germany)

100%

SAS AutosystemtechnikGmbH & Co. KG

(Germany)

50%

SAS AutosystemtechnikZwickau Verwaltungs

GmbH (Germany)

100%

100%

SAS AutomotiveSystems & ServicesS.A. de CV (Mexico)

SAS AutomotiveSystems,

S.A. de CV (Mexico)

SAS AutomotiveRSA (Pty) Ltd(South Africa)

SAS Automotives.r.o.

(Slovakia)

100% 100% 100%

SAS AutosystemtechnikZwickau GmbH & Co. KG

(Germany)

100%

50,77%

100%

SAS Automotivedo Brasil LTDA

(Brazil)

SAS AutomotrizArgentina S.A.

(Argentina)

SAS AutomotiveUSA, Inc.

(USA)

SAS Autosystemtechniks.r.o.

(Czech Republic)

100% 100% 100%

SAS AutomotiveLtd(UK)

100%

as of December 31, 2007 (direct and indirect holdings)

100%

Société deParticipations

Industrielles (France)

FaureciaIntérieur Industrie

(France)

FaureciaAutomotive Industrie

(France)

FaureciaGlobal Purchasing

(France)

100% 100% 100%

AutomotiveSandouville

(France)

100%

FaureciaAutomotive Holdings

(France)

100%

50%

Taco FaureciaDesign Center Pvt Ltd

(India)

Euro Auto PlasticSystems s.r.l.

(Romania)

Injectrade 181(South Africa)

Faurecia AD PlastikAutomotive Romania

s.r.l. (Romania)

100% 51% 50%

Faurecia Interior SystemsSouth Africa (Pty) Ltd

(South Africa)

100%

100%

SAI AutomotiveWashington Ltd

(UK)

SAI AutomotiveFradley Ltd

(UK)

FaureciaIndustrie, N.V.

(Belgium)

Faurecia InteriorSystems Bohemia s.r.o.

(Czech Republic)

100% 100% 100%

FaureciaArgentina S.A.

(Argentina)

100%

Faurecia AutomotiveEspana, S.L.

(Spain)

63,88%

10,66%

25,46%

Faurecia LeatherKosice s.r.o.(Slovakia)

60%

Faurecia TechnoplastAutomotive

(Russia)

Faurecia InteriorSystems Bratislava s.r.o.

(Slovakia)

Faurecia GorzowSp.Zo.o(Poland)

Faurecia AutomotiveCzech Republic s.r.o.

(Czech Republic)

100% 100% 100%

Faurecia LegnicaSp.Zo.o(Poland)

100%

49,95%100%

Faurecia InteriorSystems SALC Espana,

S.L. (Spain)

100%

Faurecia Sistemas deEscapamento do Brasil

Ltda (Brazil)

Faurecia Automotivedo Brasil Ltda

(Brazil)

Valencia Modulosde Puerta, S.L.

(Spain)

Faurecia InteriorSystems Espana, S.A.

(Spain)

100% 100% 100%

Cartera e InversionesEnrich S.A.

(Spain)

100%

50%50,05%

Kwang JinFaurecia Co., Ltd

(South Korea)

100%

Faurecia ExhaustSystems Korea(South Korea)

FaureciaTrim Korea

(South Korea)

Faurecia (Wuhan)Automotive Seating

Co., Ltd (China)

Faurecia (Qingdao)Exhaust Systems Co.,

Ltd (China)

100% 100% 100%

Faurecia (Shanghaï)Automotive Systems

Co., Ltd (China)

100%

60%

Faurecia Shin Sung(South Korea)

100%

Faurecia ExhaustMexicana, S.A. de C.V.

(Mexico)

Faurecia (Shanghaï)Business ConsultingCompany Ltd (China)

Daeki FaureciaCorporation

(South Korea)

Faurecia Sistemasde Escape Espana,

S.A. (Spain)

49,23% 100% 100%

Faurecia AsientosPara Automovil

Espana, S.A. (Spain)

100%

100%

Faurecia (Shanghaï)Management Co., Ltd

(China)

100%

Faurecia (Wuxi)Seating Components

Co., Ltd (China)

Faurecia SeatingTalmaçiu s.r.l.

(Romania)

Asientosdel Norte,

S.A. (Spain)

Asientosde Galicia, S.L.

(Spain)

100% 100% 100%

Asientos de CastillaLeon, S.A.

(Spain)

100%

FaureciaSlovakia s.r.o.

(Slovakia)

Copo Iberica,S.A.

(Spain)

68,75% 50%

Faurecia (Changchun)Automotive Systems

Co., Ltd (China)

100%

51%

Faurecia ExhaustSystems Changchun

Co Ltd (China)

Leistritz AbgastechnikStollberg GmbH (LAS)

(Germany)

Faurecia Front EndSouth Africa (Pty) Ltd

(South Africa)

FaureciaAbgastechnik GmbH

(Germany)

100%

31,24%

100% 100%

Faurecia KunststoffeAutomobilsystemeGmbH (Germany)

100%

Faurecia AutositzeGmbH

(Germany)

100%

100%

Dempo OtomotivSanayi ve Ticaret A.S.

(Turkey)

100%

Faurecia PolifleksOtomotiv Sanayi VeTicaret A.S. (Turkey)

Faurecia ASTLuxembourg S.A.

(Luxembourg)

Faurecia InteriorSystems Sweden AB

(Sweden)

IndustrieparkSassenburg GmbH

(Germany)

100% 100% 100%

Faurecia InnenraumSysteme GmbH

(Germany)

100%

Componentes deVehiculos de Galicia

S.A. (Spain)

50%

100%

Cockpit AutomotiveSystems Douai SNC

(France)

100%

SAS AutomotiveFrance

(France)

SAS AutomotiveN.V.

(Belgium)

SASAutosystemtechnik

S.A. (Spain)

SAS Automotive dePortugalUnipessoal

Lda (Portugal)

100% 100% 100%

SAS AutosystemtechnikVerwaltungs GmbH

(Germany)

100%

SAS AutosystemtechnikGmbH & Co. KG

(Germany)

50%

SAS AutosystemtechnikZwickau Verwaltungs

GmbH (Germany)

100%

100%

SAS AutomotiveSystems & ServicesS.A. de CV (Mexico)

SAS AutomotiveSystems,

S.A. de CV (Mexico)

SAS AutomotiveRSA (Pty) Ltd(South Africa)

SAS Automotives.r.o.

(Slovakia)

100% 100% 100%

SAS AutosystemtechnikZwickau GmbH & Co. KG

(Germany)

100%

50,77%

100%

SAS Automotivedo Brasil LTDA

(Brazil)

SAS AutomotrizArgentina S.A.

(Argentina)

SAS AutomotiveUSA, Inc.

(USA)

SAS Autosystemtechniks.r.o.

(Czech Republic)

100% 100% 100%

SAS AutomotiveLtd(UK)

100%

as of December 31, 2007 (direct and indirect holdings)



8.3.2.5 Additional information on the audit of the fi nancial statements

A - AUDITORS

Date of fi rst

appointment

Expiration of term

of offi ce

Statutory Auditors

ERNST & YOUNG

represented by Laurent Miannay

member of the Compagnie Régionale de Versailles

11 allée de l’Arche - 92037 Paris La Défense Cedex - France June 17, 1983 2013 AGM

PRICEWATERHOUSECOOPERS AUDIT

represented by Dominique Ménard

member of the Compagnie Régionale de Versailles

63, rue de Villiers - 92208 Neuilly-Sur-Seine - France May 27, 2003 2013 AGM

Alternate Auditors

Auditex May 27, 2003 2013 AGM

Étienne Boris May 23, 2005 2013 AGM

The terms of offi ce of the Statutory and Alternate Auditors were renewed for a period of six years at the Shareholders’ Meeting of May 29,

2007.



B - FEES PAID TO THE AUDITORS

Fees paid by Faurecia and its fully consolidated subsidiaries for engagements performed by the Auditors break down as follows:

(in € thousands)

PricewaterhouseCoopers Audit Ernst & Young

Amount (excl. VAT) % %

Amount (excl. VAT) % %

2007 2006 2007 2006 2007 2006 2007 2006

Audit services

Statutory and contractual audits, certifi cation, review of company and consolidated fi nancial statements 1,905 3,099 96.4% 100.0% 2,834 1,906 99.9% 100.0%

Issuing company 349 380 17.7% 12.3% 273 118 9.6% 6.2%

Fully consolidated subsidiaries 1,556 2,719 78.7% 87.7% 2,561 1,788 90.3% 93.8%

Other services relating directly to the statutory audit engagement 33 1.7% 2 0.1%

Issuing company 11 0.6% 2 0.1%

Fully consolidated subsidiaries 22 1.1%

Sub-total 1,938 3,099 98.0% 100.0% 2,836 1,906 100.0% 100.0%

Other services rendered by networks to fully consolidated subsidiaries

Tax, legal and other services (specifi ed if worth > 10% of audit fees) 39 2.0%

Sub-total 39 2.0%

TOTAL 1,977 3,099 100% 100% 2,836 1,906 100% 100%

8.3.3 INFORMATION PUBLISHED ABOUT THE COMPANY

List of information concerning Faurecia and its stock published in 2007 and fi rst-quarter 2008

Date Type of information Publication

February 14, 2007 Fourth-quarter 2006 sales Bulletin des annonces légales obligatoires (BALO no. 20)

April 16, 2007 2006 sales Bulletin des annonces légales obligatoires (BALO no. 46)

April 23, 2007 Notice of 2007 Annual Shareholders’ Meeting Bulletin des annonces légales obligatoires (BALO no. 49)

May 11, 2007 First-quarter 2007 sales Bulletin des annonces légales obligatoires (BALO no. 57)

June 11, 2007 Voting rights Les affi ches parisiennes

August 10, 2007 Second-quarter 2007 sales Bulletin des annonces légales obligatoires (BALO no. 96)

August 10, 2007 Financial statements for fi rst-half 2007 Bulletin des annonces légales obligatoires (BALO no. 96)

September 3, 2007Approval of 2006 fi nancial statements at the 2007

Annual Shareholders’ Meeting Bulletin des annonces légales obligatoires (BALO no. 106)

September 7, 2007 First-half 2007 fi nancial report Bulletin des annonces légales obligatoires (BALO no. 108)

November 12, 2007 Third-quarter 2007 sales Bulletin des annonces légales obligatoires (BALO no. 136)

November 6, 2007Appointment of Isabel Marey-Semper as a Director to replace Sylvie Rucar Petites affi ches

November 6, 2007Increase in the Company’s capital from

€170,055,452 to €170,748,676 Petites affi ches



Date Type of information Publication

January 11, 2007German innovation award for Faurecia’s

poly urethane cast skin technology 2007 press release

January 23, 2007Faurecia increases its involvement

in the Dacia Logan program 2007 press release

January 31, 2007

Faurecia’s HIM3 door module honored in the United States with SPE Automotive

Innovation Award 2007 press release

February 5, 2007 Second-half and full-year 2006 results 2007 press release

February 6, 2007Proposed appointment of Yann Delabrière

as Chairman and CEO of Faurecia 2007 press release

February 16, 2007Yann Delabrière appointed Chairman

and Chief Executive Offi cer of Faurecia 2007 press release

February 21, 2007Comfort, luxury and innovation: Faurecia’s

contribution to the all-new 2007 Dodge Avenger 2007 press release

April 18, 2007Growth buoyed by start-ups in

North America and Europe 2007 press release

May 10, 2007

Faurecia joins forces with Shinsung Delta Tech to produce plastic parts for the automotive

industry in South Korea 2007 press release

June 29, 2007Faurecia plans to open Mécapolis France,

in October 2008 2007 press release

July 18, 2007 2007 fi rst-half results 2007 press release

July 19, 2007

Faurecia São João da Madeira will manufacture seat structures for the new Volkswagen Polo

and SEAT Ibiza 2007 press release

July 24, 2007

Plan to terminate Faurecia’s injection molds business at Audincourt in the Doubs

region, France 2007 press release

November 8, 2007Michael T. Heneka appointed President

of Faurecia North America 2007 press release

November 29, 2007

Faurecia opens its new production facility at Villers-la-Montagne

in the Meurthe-et-Moselle region in France 2007 press release

December 13, 2007

Faurecia launches “Premium Attitude”: added-value for automakers through design,

innovation and engineering 2007 press release

January 21, 2008Faurecia’s high-security seating program

is certifi ed by the Mov’eo Pole de Compétitivité

January 30, 2008Paris International Motor Show

(February 7 to 10, 2008)

February 8, 2008Paris International Motor Show

(February 7 to 10, 2008)

February 11, 2008 Second half and full year 2007 results 2008 press release

February 25, 2008

Faurecia’s expertise contributes to the recognized high quality of the new Citroën C5 Saloon

and Tourer 2008 press release

February 28, 2008Faurecia supplies the interior of BMW’s all-new

Sports Activity Coupe, the BMW X6 2008 press release

March 13, 2008

APROSYS project: Faurecia co-develops a pre-crash vehicle safety system that is destined

to save lives following side impact 2008 press release

March 17, 2008 Faurecia to open a plant in Morocco 2008 press release

March 21, 2008 Denial – Lettre de l’Expansion 2008 press release

April 2, 2008

Manufacturing reorganization plan for slush operations carried out by Faurecia’s instrument

panels business 2008 press release

April 17, 2008 2008 fi rst quarter sales 2008 press release

CONTENTS

COMBINED SHAREHOLDERS’ GENERAL MEETING

OF MAY 27, 2008

9



9.2 Agenda 192



COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 20089 Statutory Auditors’ reports

STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND

OTHER SECURITIES WITH/WITHOUT PRE-EMPTIVE SUBSCRIPTION

RIGHTS FOR EXISTING SHAREHOLDERS

This is a free translation into English of the Statutory Auditors’ special report on the issue of shares and other securities with/without pre-

emptive subscription rights for existing shareholders issued in the French language and is provided solely for the convenience of English

speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing

standards applicable in France.

(sixth and seventh resolutions of the Ordinary and Extraordinary Shareholders’ Meeting of May 27, 2008)


In our capacity as Statutory Auditors of Faurecia S.A., and in accordance with Articles L. 225-135 and L. 228-92 of the French Commercial

Code (Code de commerce), we present below our report on the authorizations sought by the Board of Directors to issue shares and/or

securities carrying rights to shares.

Based on its report, the Board of Directors is inviting shareholders to grant it a twenty-six month authorization to increase the Company’s

capital and set the related terms and conditions. Said capital increases would be carried out as follows:

by issuing ordinary shares and/or securities carrying rights to shares in the Company and/or equity warrants exercisable for the Company’s

shares, with pre-emptive subscription rights for existing shareholders (sixth resolution);

by issuing ordinary shares and/or securities carrying rights to shares in the Company and/or to debt securities, without pre-emptive

subscription rights for existing shareholders (seventh resolution).

The maximum aggregate par value of the shares that may be issued under the sixth and seventh resolutions, directly or on the conversion,

exchange, redemption or exercise of securities carrying rights to shares, may not exceed €61 million. The maximum nominal amount of debt

securities that may be issued under said resolutions is set at €1 billion.

The Board of Directors is responsible for drawing up a report in compliance with Articles R. 225-113 and R. 225-114 of the French Commercial

Code. Our responsibility is to express an opinion on the fairness of the fi nancial information taken from the fi nancial statements, on the

proposal to waive shareholders’ pre-emptive subscription rights and on certain other information about the capital increases given in the

Board’s report.

We performed our procedures in accordance with professional guidelines applicable in France. Those guidelines require us to perform the

necessary procedures to check the information contained in the Board of Directors’ report about these operations and the method to be used

to determine the price of the securities to be issued.

Subject to our review of the fi nal terms and conditions of any share issues decided by the Board, we have no observations to make on the

proposed method of determining the issue price for securities to be issued under the seventh resolution, as described in the Board’s report.

As the method for determining the issue price for securities to be issued under the sixth resolution has not been described in the Board’s

report we cannot give an opinion on whether said method is appropriate.

Furthermore, as the issue price for securities to be issued under both the sixth and seventh resolutions has not been set, we are not in a

position to express an opinion on the fi nal terms and conditions of the future issues, and consequently, on the proposal made to shareholders

in the seventh resolution to waive their pre-emptive subscription rights.

In accordance with Article R. 225-116 of the French Commercial Code, we will prepare a further report if and when the Board uses these

authorizations to issue shares and/or securities carrying rights to shares.





•

•


COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 2008 9Statutory Auditors’ reports

STATUTORY AUDITORS’ REPORT ON EMPLOYEE RIGHTS ISSUES

This is a free translation into English of the Statutory Auditors’ special report on employee rights issues issued in the French language and is

provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance

with, French law and professional auditing standards applicable in France.

(eighth resolution of the Ordinary and Extraordinary Shareholders’ Meeting of May 27, 2008)


In our capacity as Statutory Auditors of Faurecia S.A., and in accordance with Articles L. 225-135 et seq. of the French Commercial Code

(Code de commerce), we present below our report on the proposed issue of shares, without pre-emptive subscription rights for existing

shareholders, to be offered to employees of Faurecia, representing a maximum amount of €5,120,000.

This resolution is being submitted for shareholder approval in application of Article L. 225-129-6 of the French Commercial Code and Article

L. 443-5 of the French Labor Code (Code du travail).

On the basis described in its report, the Board of Directors is seeking a twenty-six month authorization to set the terms and conditions of the

employee rights issue(s) and is proposing that shareholders waive their pre-emptive subscription rights.

The Board of Directors is responsible for drawing up a report in compliance with Articles R. 225-113 and R. 225-114 of the French Commercial

Code. Our responsibility is to express an opinion on the fairness of the fi nancial information taken from the fi nancial statements, on the proposal

to waive shareholders’ pre-emptive subscription rights and on certain other information about the rights issue(s) given in the Board’s report.

We performed our procedures in accordance with professional guidelines applicable in France. Those guidelines require us to perform the

necessary procedures to check the information contained in the Board of Directors’ report about these operations and the method to be used

to determine the price of the shares to be issued.

Subject to our review of the fi nal terms and conditions of any employee rights issue(s) decided by the Board, we have no observations to make

on the proposed method of determining the issue price of the shares to be issued, as described in the Board’s report.

As the issue price has not been set, we are not in a position to express an opinion on the fi nal terms and conditions of any future employee

rights issues, and consequently, on the proposal made to shareholders to waive their pre-emptive subscription rights.

In accordance with Article R. 225-116 of the French Commercial Code, we will prepare a further report if and when the Board uses this

authorization to carry out employee rights issue(s).






COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 20089 Draft resolutions

RESOLUTIONS PRESENTED TO THE ORDINARY SHAREHOLDERS’

MEETING

I - ORDINARY RESOLUTIONS

1. Approval of the parent company and consolidated fi nancial statements and reports of the Board of Directors and the Statutory Auditors.

2. Appropriation of 2007 net income.

3. Approval of the Statutory Auditors’ special report on regulated agreements.

4. Ratifi cation of the appointment of a Director.

5. Powers for formalities.

RESOLUTIONS PRESENTED TO THE EXTRAORDINARY

SHAREHOLDERS’ MEETING

6. Authorization for the Board of Directors to issue shares and/or securities carrying rights to shares in the Company, with pre-emptive

subscription rights for existing shareholders.

7. Authorization for the Board of Directors to issue shares and/or securities carrying rights to shares in the Company, without pre-emptive


8. Authorization for the Board of Directors to carry out employee rights issues.

9. Powers to carry out formalities.

First resolution

Approval of parent company and consolidated fi nancial statements and reports of the Board of Directors and the Statutory Auditors.

Having reviewed the Board of Directors’ management report and the Statutory Auditors’ general report, the Shareholders’ Meeting approves

said reports in their entirety, as well as the parent company and consolidated fi nancial statements for the year ended December 31, 2007,

as presented.


COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 2008 9Draft resolutions

Second resolution

Appropriation of 2007 net income.

Based on the Board of Directors’ recommendation, the Shareholders’ Meeting resolves to appropriate the parent company’s net income for

the year ended December 31, 2007 as follows (in euros):

Net income for the year 77,154,195,96

Appropriation to the legal reserve 128,097.91

Appropriation to retained earnings 77,026,098.05

As required by law, it is hereby noted that dividends paid in the last three years were as follows:

YearNumber of shares carrying

dividend rightsNet dividend

(in €) Tax credit

Aggregate payment

(in €)

2004 24,212,051 1.10 - 1.10

2005 24,233,601 - - -

2006 24,259,236 - - -

Third resolution

Approval of the Statutory Auditors’ special report on regulated agreements.

Having reviewed the special report drawn up by the Statutory Auditors on agreements governed by Articles L. 225-38 et seq. of the French

Commercial Code, the Shareholders’ Meeting takes note of this report and approves the terms and conclusions thereof.

Fourth resolution

Ratifi cation of the appointment of a Director.

The Shareholders’ Meeting acknowledges the resignation of Sylvie Rucar and resolves to ratify the appointment of Isabel Marey-Semper as

Director for the remaining term of Sylvie Rucar’s offi ce, expiring at the Ordinary Shareholders’ Meeting to be held in 2013 to approve the 2012

fi nancial statements.

Fifth resolution

Powers to carry out formalities.

Full powers are given to the bearer of a copy or extract of these minutes in order to:

- carry out all fi lings, publications and other formalities;

- sign all instruments and documents and take all other necessary actions.


COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 20089 Draft resolutions

II - EXTRAORDINARY RESOLUTIONS

Sixth resolution

Authorization for the Board of Directors to issue shares and/or securities carrying rights to shares in the Company, with pre-emptive subscription

rights for existing shareholders.

Having reviewed the Board of Directors’ report and the Statutory Auditors’ special report, based on the Auditors’ report and in accordance

with Article L. 225-129 et seq. of the French Commercial Code, the Shareholders’ Meeting:

I - Grants the Board of Directors a 26-month authorization as from the date of this Meeting to increase the Company’s capital on

one or more occasions as follows:

a) by issuing, in France or abroad, shares and/or securities carrying immediate or deferred rights to shares in the Company and/or equity

warrants exercisable for the Company’s shares, on a stand-alone basis or attached to securities issued by Faurecia. Shares issued under

this authorization shall be denominated in euros and other securities may be denominated either in euros or in a foreign currency;

b) by capitalizing income, reserves or additional paid-in capital through granting bonus shares or raising the par value of existing shares:

- any shares issued under this authorization shall rank pari passu with all existing shares, except for differences in cum-rights dates.

II - Resolves that:

The aggregate par value of the shares to be issued directly and/or on conversion, exchange, redemption or exercise of other securities

issued pursuant to this authorization must not have the effect of increasing the Company’s capital to above €231,765,336 from its current

level of €170,765,336. This ceiling includes the par value of any additional shares to be issued to protect the rights of holders of existing

securities, but does not include any issue and/or redemption premiums.

III - Resolves that:

The maximum nominal amount of debt securities issued under this authorization that carry rights to the Company’s shares may not exceed

€1,000,000,000.

IV - Resolves that:

Existing shareholders shall have a pre-emptive right to subscribe for the shares and/or other securities issued under this authorization,

pro-rata to their existing holdings.

V - Resolves that:

a) any securities not taken up by shareholders exercising their pre-emptive rights may be offered to the public;

b) in the case of a capital increase carried out by capitalizing income, reserves or additional paid-in capital, any rights to fractions of shares

shall be non-transferable and non-tradable and that the corresponding shares will be sold, with the sale proceeds allocated among the

rights holders within 30 days of the date when the whole number of shares allotted to them is recorded in their securities account;

c) if the Company issues complex securities, existing shareholders shall have no pre-emptive rights to subscribe for the shares to be issued

to the holders of these securities.

VI - The Shareholders’ Meeting gives the Board of Directors full powers to:

- decide on the type of securities to be issued based on fi nancial opportunities in France or abroad, and to set the terms and conditions for

their issue in accordance with the applicable laws and regulations;

- place on record the capital increase(s) carried out under this authorization and amend the Company’s bylaws accordingly;

- carry out all publication and other formalities, enter into any and all agreements with fi nancial institutions related to the issue(s), make any

consequent amendments to the Company’s bylaws, and generally take all other necessary actions.

VII - This authorization supersedes the authorizations to increase the Company’s capital given to the Board of Directors by the

Shareholders’ Meeting of May 22, 2006.


COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 27, 2008 9Draft resolutions

Seventh resolution

Authorization for the Board of Directors to issue shares and/or securities carrying rights to shares in the Company, without pre-emptive


Having reviewed the Board of Directors’ report and the Statutory Auditors’ special report, the Shareholders’ Meeting authorizes the Board

of Directors to issue shares and/or securities carrying immediate or deferred rights to shares in the Company, subject to the ceiling set in

paragraph II of the sixth resolution above. Said issue(s) shall be denominated in euros and may be carried out on one or more occasions, in

France or abroad. Any such issues may be made without pre-emptive subscription rights for existing shareholders where deemed appropriate

by the Board of Directors.

The maximum nominal amount of debt securities issued under this authorization that carry rights to the Company’s shares may not exceed

€1,000,000,000. This ceiling is not cumulative with that set in paragraph III of the sixth resolution above.

The Shareholders’ Meeting resolves that the Board of Directors may offer existing shareholders a priority right to subscribe for any issues

carried out under this authorization, in accordance with Article L. 225-135 of the French Commercial Code.

This authorization is given to the Board of Directors for a period of twenty-six months as from the date of this Meeting.

The shareholders expressly waive their pre-emptive subscription rights in the event that the Board of Directors uses this authorization, and

note that the price of the shares to be issued on the purchase, conversion, exchange or exercise of warrants shall equal at least the average

weighted price of the Faurecia share on the Paris stock exchange over the three trading days preceding the pricing date, less a maximum

discount of 5%.

Eighth resolution

Authorization for the Board of Directors to carry out employee rights issues.

Having reviewed the Board of Directors’ report and the Statutory Auditors’ special report, in accordance with Article L. 225-129-6 of the

French Commercial Code, the Shareholders’ Meeting authorizes the Board of Directors to increase the Company’s capital by carrying out

employee rights issues, on one or more occasions and at its sole discretion, subject to the conditions set out in Article L. 443-5 of the French

Labor Code. The maximum nominal amount of said capital increase(s) may not exceed €5,120,000.

The Shareholders’ Meeting gives the Board of Directors full powers to determine the timing and amount of any such capital increase(s) –

subject to the authorized ceiling – as well as the terms and conditions thereof. It also authorizes the Board to set (i) the issue price for the

newly-issued shares in accordance with Article L. 443-5 of the French Labor Code; (ii) the conditions for paying up the shares; and (iii) the

subscription terms and period.

The Board of Directors shall have full powers to carry out all measures and formalities related to the capital increase(s), amend the Company’s

bylaws to refl ect the new capital and take all other necessary actions.

This authorization is given for a period of twenty-six months as from the date of this Meeting.

Ninth resolution

Powers to carry out formalities.

Full powers are given to the bearer of a copy or extract of the minutes of this Meeting in order to:

- carry out all fi lings, publications and other formalities,

- sign all instruments and documents and take all other necessary actions.



CROSS-REFERENCE TABLE




1. PERSONS RESPONSIBLE 4

2. STATUTORY AUDITORS 3, 70; 186-187

3. SELECTED FINANCIAL INFORMATION 2

4. RISK FACTORS 15-17; 124-129

5. INFORMATION ABOUT THE ISSUER

5.1 History and development of the issuer 169-170

5.2 Investments14; 20; 90-93; 94-95;

100-102

6. BUSINESS OVERVIEW

6.1 Principal activities 6-11; 20-25

6.2 Principal markets 89; 93

6.3 Exceptional factors 61; 111

6.4 Possible dependency: patents, licenses, industrial, commercial or fi nancial contracts 17

6.5 The basis for any statements made by the issuer regarding its competitive position 8-11

7. ORGANIZATIONAL STRUCTURE 184-185

7.1 Brief description of the Group 6-7; 68; 169-170

7.2 List of signifi cant subsidiaries 132-135; 156-157; 184-185

8. PROPERTY, PLANT AND EQUIPMENT

8.1 Existing or planned material tangible fi xed assets 173

8.2A description of any environmental issues that may affect the issuer’s utilization of the tangible fi xed assets 49-57

9. OPERATING AND FINANCIAL REVIEW

9.1 Financial condition 14

9.2 Operating results 12

10. CAPITAL RESOURCES

10.1 Information concerning the issuer’s capital resources 72; 180-183

10.2 Sources and amounts of cash fl ows 14; 80

10.3 Information on borrowing requirements and funding structure 15-16; 117-118

10.4Information regarding any restrictions on the use of capital resources that have materially affected, or could materially affect the issuer’s operations 16 ; 117 -118

10.5 Information regarding the anticipated sources of funds required for planned investments 14

11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES 19-25

12. TREND INFORMATION 61

13. PROFIT FORECASTS OR ESTIMATES n/a

14.ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIES AND SENIOR MANAGEMENT

14.1 Members of the administrative, management or supervisory bodies 64-69; 171; 172-179

14.2Administrative, management, and supervisory bodies and senior management confl icts of interests 173

15 REMUNERATION AND BENEFITS

15.1 The amount of remuneration paid and benefi ts in kind 66-67; 69; 130; 154

15.2The total amounts set aside or accrued by the issuer or its subsidiaries to provide pension, retirement or similar benefi ts 111-115

16. BOARD PRACTICES

16.1 Expiry date of current terms of offi ce 174-179

16.2Service contracts between members of the administrative, management or supervisory bodies and the Company 173



16.3 Information about the issuer’s Audit Committee and Remuneration Committee 65-66; 162-163

16.4 Corporate governance regime 63; 70

17. EMPLOYEES

17.1 Number of employees 2; 40-47

17.2 Shareholdings and stock options 38-39; 107-108; 182-183

17.3 Description of any arrangements for involving the employees in the capital of the issuer 38-39

18. MAJOR SHAREHOLDERS

18.1 Any shareholder owning over 5% of the Company’s capital 72

18.2 Different voting rights 72; 172; 182

18.3 Control of the Company 64; 72; 182

18.4A 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 173

19. RELATED PARTY TRANSACTIONS 130; 154; 161

20.FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES

20.1 Historical fi nancial information 5; 77-82; 140-142; 158

20.2 Pro forma fi nancial information n/a

20.3 Financial statements 75-135; 140-157

20.4 Auditing of historical annual fi nancial information 136; 158

20.5 Age of latest fi nancial information 71

20.6 Interim and other fi nancial information 188

20.7 Dividend policy 73; 74; 171

20.8 Legal and arbitration proceedings 17; 111

20.9 Signifi cant change in the issuer’s fi nancial or trading position n/a

21. ADDITIONAL INFORMATION

21.1 Share capital 72; 180-183

21.2 Memorandum and articles of association 171

21.2.1 A description of the issuer’s objects and purposes 171

21.2.2A description of the rights, preferences and restrictions attached to each class of the existing shares 172

21.2.3A description of what action is necessary to change the rights of holders of the shares, indicating where the conditions are more signifi cant than is required by law 171-172

21.2.4A description of the conditions governing the manner in which Annual General Meetings and Extraordinary General Meetings of Shareholders are called 172

21.2.5An indication of the articles of association, statutes, charter or bylaw provisions, if any, governing the ownership threshold above which shareholder ownership must be disclosed 172

21.2.6

A description of the conditions imposed by the memorandum and articles of association, statutes, charter or bylaws governing changes in the capital, where such conditions are more stringent than is required by law 171-172

22. MATERIAL CONTRACTS 173

23.THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS OF ANY INTEREST n/a

24. DOCUMENTS ON DISPLAY 171

25. INFORMATION ON HOLDINGS 156-157



STATEMENT BY THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 4

MANAGEMENT REPORT

Analysis of the results, fi nancial position and risks of the parent company and the Group and a list of authorizations concerning capital increases (disclosed in accordance with Article L. 225-100 and L. 225-100-2 of the French Commercial Code)

6-61; 64-67; 71-74; 138-139; 171-173; 180-183

Disclosures required pursuant to Article L. 225-100-3 of the French Commercial Code concerning factors that could affect a public tender offer 171

Information on share buyback programs (as required under paragraph 2 of Article L. 225-211 of the French Commercial Code) n/a

FINANCIAL STATEMENTS

Parent company fi nancial statements 140-157

Statutory Auditors’ report on the parent company fi nancial statements 160

Consolidated fi nancial statements 75-135

Statutory Auditors’ report on the consolidated fi nancial statements 136

Design and creation:





1.4 Outlook 14


RESEARCH & DEVELOPMENT


2.2 Innovation 22




HUMAN RESOURCES



3.3 Strengthening economic

and social dialogue 36


ENVIRONMENT

4.1 Faurecia’s products


4.2 Faurecia’s manufacturing sites


QUALITY




CORPORATE GOVERNANCE









7.4 Statement of changes in

consolidated shareholders’ equity 81

7.5 Notes to the consolidated fi nancial

statements 82

7.6 Consolidated companies as of

December 31, 2007 132

7.7 Statutory Auditors’ reporton the

consolidatedfi nancial statements 136

LEGAL AND FINANCIAL INFORMATION



8.3 Additional information

on Faurecia S.A. 169



9.2 Agenda 192


CROSS-REFERENCE TABLE 197

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Faurecia 2007 annual report - Registration document · Executive Vice-President, Interior Systems...

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