Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rules 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

Dated: ~~February~~ 3May 4th, ~~2005~~2006

EPCOS AG

(Translation of registrant’s name into English)

St.-Martin Strasse 53

D-81669 München

Federal Republic of Germany

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ü Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes No ü

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

This Report on Form 6-K contains:

- Press ~~Release of~~release ~~February~~on 3,second ~~2005 with fourth~~ quarter ~~and~~fiscal ~~full~~2006 ~~year~~earnings ~~results~~

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Contents

Interim Report of EPCOS AG at December 31, 2004
		Page
Interim Report on the Consolidated Financial Statements of EPCOS AG at March 31, 2006
About EPCOS		3
Accounting principles		3
Business Development
Q1 2005: EBIT slightly positive despite severe decline in sales		4
Q2 2006: Sales up, earnings significantly improved		4
Consolidated Financial Statements
Statements of income		78
Balance Sheets		8
Balance sheets		9
Statements of shareholders’ equity and comprehensive income		910
Statements of cash flow		1011
Notes to unaudited interim consolidated financial statements		1112

EPCOS AG

Interim Report on the Consolidated Financial Statements of EPCOS AG at ~~December~~ March 31, ~~2004~~2006

About EPCOS

EPCOS AG, a manufacturer of passive electronic components headquartered in Munich, is market leader in Europe and number two worldwide. With its uniquely broad portfolio EPCOS offers a comprehensive ~~portfolio~~range of ~~about~~products ~~40,000~~from ~~different~~a ~~products~~single source. The EPCOS Group has design, manufacturing and marketing facilities in Europe, the Americas and Asia.

Passive electronic components are found in every electrical and electronic product – from automotive and industrial electronics through information and communications to consumer electronics. Components from EPCOS store electrical energy, select frequencies, and protect against overvoltage and overcurrent.

In fiscal ~~2004~~2005 (October 1, ~~2003~~2004, to September 30, ~~2004~~ 2005), EPCOS posted sales of EUR 1.36 24 billion. At September 30, ~~2004~~2005, the company employed about 1516,~~600~~100 people worldwide.

Accounting Principles

~~As permitted under § 292a of the German Commercial Code (Handelsgesetzbuch, HGB),~~ EPCOS AG prepares its consolidated financial statements in accordance with United States Generally Accepted Accounting Principles (US GAAP). ~~The Company is thus released from the obligation to prepare consolidated financial statements in accordance with § 290 et seq. HGB.~~

This interim report was compiled in accordance with German Accounting Standard 6 (DRS 6).

We present EBIT because that is the basis on which we evaluate the operating performance of our ~~four~~three reportable segments and of the EPCOS Group as a whole. We believe that EBIT is a better measure of operating performance than operating income since the latter excludes the impact of foreign exchange gains and losses and other income and expense. In some fiscal years, these line items may have a significant impact on the relative performance of our segments. We calculate EBIT as net loss/income plus (minus) minority interest, provision for income tax and the interest result, net.

EPCOS AG

Q1Q2 ~~2005~~2006:

~~EBIT~~Sales ~~slightly~~up, ~~positive~~earnings ~~despite~~significantly ~~severe decline~~improved ~~in sales~~

•Continuing ~~Sales~~operations ~~of EUR 289 million~~ (~~down~~excluding ~~13%~~tantalum ~~year on year~~capacitors):

•Ø Sustained ~~EBIT~~ positive atdevelopment ~~EUR~~in 1all ~~million~~industries ~~(plus~~served ~~EUR~~and 12regions ~~million in previous year)~~

•Ø ~~Earnings per share~~Sales: ~~minus~~EUR 324 million, up 117% ~~eurocent~~year ~~(plus~~on 15year, ~~eurocents~~up in6% ~~previous~~sequentially ~~year)~~

~~Business~~Ø ~~development~~EBIT: inplus ~~the~~EUR 12 million ~~first~~(Q2 ~~quarter of fiscal~~ 2005: ~~(October~~minus EUR 23 million; 1Q1 to2006: ~~December~~plus ~~31, 2004~~EUR 3 million) proved disappointing and was largely determined by the following factors. Against a background of generally slack demand, inventory adjustments by EPCOS’ customers continued. Consequently, order quantities were reduced and delivery dates postponed. This had an adverse effect on EPCOS’ business with customers in the mobile phone industry, entertainment electronics and components distribution in particular. The continuing fall of the US dollar provided a further negative impact.

New orders ~~for~~and Q1sales ~~fell~~(continuing ~~22% year on year from EUR 368 million to EUR 287 million. Sales~~operations) ~~dropped 13% from EUR 331 million to EUR 289 million.~~

~~New~~In ~~orders~~Q2 ~~and~~2006 ~~sales~~(January ~~fell by~~1 5%– ~~and~~March 31, ~~16%~~2006), ~~respectively~~demand ~~against~~continued ~~the~~to ~~previous~~develop ~~quarter’s~~strongly ~~figures~~in ofall ~~EUR~~industries ~~303~~served ~~million~~and regions. New orders and ~~EUR~~sales increased ~~344~~both ~~million~~sequentially and year on year.

~~Industries~~“EPCOS made positive progress in the first half of 2006,” said Gerhard Pegam, President and ~~regions~~CEO ~~(comparisons~~of EPCOS, ~~year~~at onthe ~~year)~~announcement of the company’s figures for Q2 2006. “Besides increasing the order intake and sales, we also significantly improved our earnings – despite the continued burden of tantalum capacitors. Now that this business has been successfully transferred to KEMET, we are more confident about the future.”

~~The~~Comparison ~~decline in new orders affected business~~ with ~~all~~Q1 ~~industries served. Mobile phones, consumer electronics and components distribution were hit hardest. A similar pattern emerged in sales by industries. Automotive~~2006 ~~electronics business deserves special mention. Here the decline in both new orders and sales was only marginal. New orders in automotive electronics even rose by 15% on a sequential basis.~~

New orders ~~fell~~rose inby ~~all~~4% ~~regions~~to asEUR 348 million ~~well,~~in ~~and~~Q2 ~~the~~2006, ~~severest~~up ~~decline~~from ~~was~~EUR 335 million in ~~Asia.~~the Asprevious ~~China~~quarter. ~~in particular~~Most ~~accounts~~of ~~for~~this agrowth came ~~growing~~from ~~share~~business ofwith ~~world~~products ~~mobile~~for ~~phone~~automotive ~~production~~ and ~~many~~industrial ~~customers in the consumer~~ electronics ~~industry are also located in China~~, ~~this~~as ~~region~~well ~~was~~as ~~hit~~with ~~especially hard by slack demand and inventory adjustments~~distributors. ~~In Germany~~Regionally, ~~new~~ ~~orders~~the ~~were~~bulk ~~fairly~~of ~~stable. Sales declined in all major regions and at more or less~~ the ~~same~~increase ~~rate~~came infrom ~~Asia, Europe, and German domestic business~~Germany.

~~Earnings~~Sales were up 6% to EUR 324 million, against EUR 305 million in Q1. All regions and – with the exception of mobile communications – all industries served contributed to this growth.

~~Despite~~Sequentially, sales improved for all business segments. Capacitors and Inductors posted the ~~severe~~largest ~~decline~~gain inof ~~sales,~~11%. ~~earnings~~Sales ~~before~~of ~~interest~~this ~~and~~segment’s ~~tax~~products ~~(EBIT)~~climbed to EUR 121 million, from EUR 109 million in Q1the ~~2005~~previous ~~were~~quarter. ~~positive~~Sales atof Ceramic Components increased by 6% to EUR 103 million, 1from EUR 97 million in Q1 2006. In the Surface Acoustic Wave (~~against~~SAW) Components asegment, ~~positive~~sales ~~figure~~increased ofabout 1% to EUR 100 million, 12from EUR 98 million in the ~~same~~first quarter of the ~~previous~~current fiscal year).

~~Net~~Comparison ~~income~~with ~~for~~Q2 Q1 2005 ~~was negative at EUR 0.4 million against the previous year’s positive figure of EUR 10 million. Earnings per share were negative at 1 eurocent against a positive figure of 15 eurocents in Q1 2004.~~

~~Net~~Compared ~~cash~~with ~~flow for~~ the ~~past~~second quarter ~~was negative at EUR 43 million against a negative figure~~ of ~~EUR~~fiscal ~~1 million in the previous year. With more or less breakeven earnings~~2005, ~~the~~ ~~major~~both ~~reasons~~new ~~for~~orders ~~this were higher net current assets,~~ and ~~capital~~sales ~~expenditure~~posted indouble-digit ~~Q1 2005 that was higher than depreciation and mainly channeled into new products~~growth.

New orders surged 29%, from EUR 271 million a year ago to EUR 348 million. Double-digit growth in orders came in from every industry served and from every region. At 40%, growth was strongest in orders from component distributors and, in regional terms, from customers in Asia.

EPCOS AG

~~Business~~Sales ~~segments~~increased by 17% from EUR 277 million to EUR 324 million. Sales of products to the automotive electronics industry rose by nearly 30%, which was primarily due to the higher volume of business with piezo actuators. Sales to component distributors (~~comparisons~~up ~~year~~26%) and to the consumer electronics industry (up 23%) were also positive. In both industries, inventory adjustments had weighed heavily on EPCOS’ business in fiscal 2005. Sales of products to the industrial electronics industry were 11% higher than a year) ago. Sales of components for wireline and mobile communications reached the levels achieved in Q2 2005.

InSales ~~the~~were ~~Capacitors~~up ~~segment,~~in ~~sales~~all ~~for~~regions. ~~the~~The ~~first~~strongest ~~quarter~~growth ofwas ~~2005~~posted ~~fell~~by 6%the ~~year~~NAFTA onregion ~~year~~(plus ~~from~~30%) ~~EUR~~and 86Asia ~~million~~(plus ~~to EUR 80 million~~24%). ~~There was~~ aPronounced ~~distinct~~growth ~~decline in tantalum capacitor business. All industries served were affected. Sales~~ of ~~film~~19% ~~capacitors~~ also ~~fell~~came ~~slightly~~from ~~on the whole~~Germany. ~~This could not be offset by the positive sales trend in aluminum electrolytic capacitors for automotive and industrial electronics in particular.~~

~~Negative~~All ~~first~~of EPCOS’ business segments likewise recorded double-~~quarter~~digit ~~EBIT~~growth ofyear ~~EUR~~on 4year. Sales at Capacitors and Inductors rose from EUR 104 million ina ~~Capacitors~~year ~~was~~ago onto ~~the~~EUR 121 million, ~~same~~a ~~level~~gain asof in16%. ~~the~~Almost ~~previous~~all ~~year~~product groups contributed to this growth. In particular, capacitors delivered to a broad range of customers and inductors for automotive electronics applications experienced particularly sharp growth.

Sales in at Ceramic Components ~~fell~~rose 1519% from EUR 88 87 million to EUR 75 103 million ~~in the period under review~~. ~~This~~A ~~decline~~significant ~~particularly~~increase ~~affected business~~ in ~~ceramic~~the ~~capacitors~~sales ~~and~~of ~~varistors~~piezo ~~(voltage-dependent~~actuators ~~resistors)~~primarily ondrove athis ~~broad front~~growth. ~~Sales~~Moreover, sales of sensors and sensor systems ~~also~~– ~~fell~~mostly onto the ~~whole.~~consumer, ~~Business remained stable only in sensors for~~ automotive ~~electronics. Sales of voltage arresters, which protect electronic equipment~~ and ~~systems~~industrial electronics ~~against overvoltage~~industries, ~~were~~but onalso ~~the~~to ~~previous~~distributors ~~year’s~~– ~~level.~~developed ~~Sales of piezo actuators for diesel injection systems increased noticeably~~well. ~~This increase is based on high-volume customer projects extending over several years.~~

AsThe aSAW ~~result~~Components ofsegment ~~falling~~boosted ~~volumes,~~its ~~first-quarter~~sales ~~EBIT~~to EUR 100 million from EUR 86 million in ~~Ceramic~~the ~~Components~~same period last year, a gain of 17%. This substantial increase was ~~negative~~due atabove ~~EUR~~all 3to ~~million~~solid ~~against~~business awith ~~positive~~SAW ~~figure~~products for entertainment electronics applications. Sales of ~~EUR~~SAW 3filters ~~million~~for inmobile communications applications remained more or less unchanged from the previous year.

~~Slack~~Business ~~demand~~with ~~for~~multilayer ~~mobile~~ceramic ~~communications~~modules ~~and~~developed ~~entertainment~~positively. ~~electronics~~EPCOS ~~products~~is constantly ~~hit~~expanding ~~the~~its ~~Surface~~portfolio ~~Acoustic~~of ~~Wave~~products ~~Components~~in ~~(SAW)~~this ~~segment~~field ~~hardest~~and inis Q1now ~~2005.~~also ~~Sales~~tapping ~~fell~~the ~~18%~~fast-growing ~~from~~market ~~EUR~~for ~~116~~WLAN ~~million~~applications. toModules ~~EUR~~for 96WLAN ~~million.~~applications ~~SAW~~thus ~~filters~~made ~~were~~a ~~mainly~~considerable ~~affected.~~contribution ~~The~~to ~~decline~~sales growth in ~~sales~~the SAW Components segment in ~~this~~Q2 ~~sector~~2006. ~~could~~In the ~~not~~quarter beunder ~~offset~~review, byEPCOS ~~growth~~won ~~in radio~~a big-~~frequency~~name ~~modules~~manufacturer of processors for ~~mobile~~personal ~~phones~~computers as a new key account. ~~Sales~~Over ofthe ~~SAW~~next ~~products~~two ~~for~~years, ~~automotive~~EPCOS ~~electronics~~expects ~~applications~~this ~~were~~new ~~fairly~~business ~~stable.~~to generate extra sales in a significant double-digit million euro range.

~~Despite~~Earnings ~~the~~(continuing ~~severe~~operations) ~~decline in sales, SAW Components posted positive EBIT of EUR 10 million in the past quarter against a positive figure of EUR 16 million for the same period of the previous year.~~

InEarnings ~~the~~before ~~Ferrites~~interest and ~~Inductors~~tax ~~segment, first-quarter~~(EBIT) ~~sales~~rose ofto ~~EUR~~plus 38 EUR 12 million ~~were~~in ~~down~~Q2 2006 8%(Q1 2006: onplus ~~the~~EUR 3 million; ~~previous~~Q2 ~~year’s~~2005: ~~figure~~minus of EUR 41 23 million). More or less all product groups and industries served were affected by this decline. A positive exception was business in EMC filters, which ensure electromagnetic compatibility, especially in industrial electronics and the base stations of mobile radio networks. Sales of these products rose during the past quarter.

~~First~~After-~~quarter~~tax ~~EBIT~~earnings in ~~Ferrites~~the ~~and~~quarter ~~Inductors~~under ~~was~~review ~~negative~~came atto plus EUR 8 million 2(Q1 2006: plus EUR 1 million,; asQ2 2005: inminus EUR 46 million). ~~the~~Earnings ~~previous~~per ~~year~~share for Q2 2006 were plus 13 eurocents (Q1 2006: plus 1 eurocent; Q2 2005: minus 70 eurocents).

~~Outlook~~Earnings by business segment

InAs sales ~~Q1 2005~~improved, ~~inventory~~the ~~adjustments~~Capacitors ~~took~~and ~~longer~~Inductors ~~and~~segment ~~demand~~reduced inits ~~general~~EBIT ~~was~~loss ~~weaker~~to ~~than~~minus ~~originally~~EUR 2 million ~~anticipated.~~(Q1 2006: Atminus ~~the~~EUR 6 million; ~~same~~Q2 2005: ~~time~~minus EUR 22 million, ~~demand~~including ~~still~~special charges totaling ~~does~~EUR 17 million). ~~not~~The ~~appear~~persistent strength of the Brazilian real is one of the factors that continues to beburden ~~picking~~earnings upin ~~significantly~~this segment.

~~Only~~Ceramic Components areturned ~~slight~~to ~~sequential increase~~profitability in ~~sales~~the atquarter ~~best~~under isreview. ~~therefore~~EBIT ~~anticipated~~was ~~for~~EUR 1 million Q2(Q1 2006: minus EUR 3 million; Q2 2005: minus EUR 4 million). In addition to

EPCOS expects that sales and earnings for fiscal 2005 as a whole will be lower than the previous year’s figures.

EPCOS AG

~~“We~~the ~~are~~higher ~~working~~sales ~~hard~~volume, steps taken to ~~keep~~increase ~~cutting~~yields ~~costs~~for ~~and~~piezo ~~assume~~actuators ~~that~~contributed ~~our~~to ~~new~~this ~~products~~improvement ~~launched~~in ~~will~~earnings. The ~~provide~~adjustment of the portfolio of multilayer ceramic capacitors likewise had a ~~major~~positive impact. ~~to improve~~EPCOS ~~the~~is ~~situation~~currently infocusing ~~the~~these ~~second~~products ~~half~~primarily ofon ~~the~~automotive ~~year”~~electronics applications, ~~said~~offering ~~EPCOS~~customized ~~President~~products and ~~CEO~~solutions. “The decision to adapt a new strategic approach for these products is proving to be the right one,” Gerhard Pegam affirms. “Even though we are now concentrating our multilayer ceramic capacitors more strongly on specific market segments, EPCOS as Q1a ~~results~~whole ~~were~~is ~~announced~~and remains a broadliner, delivering a very wide range of standard, application-specific and customer-specific products and solutions. EPCOS is not becoming a niche provider!”

~~-----~~SAW Components posted EBIT of plus EUR 12 million (Q1 2006: plus EUR 12 million; Q2 2005: plus EUR 4 million). In this segment, EPCOS is benefiting from both the positive trend in sales and from its position as global market leader in SAW products for mobile communications, multimedia and automotive electronics applications. The increased volume of multilayer module business is now also making a positive contribution to earnings.

~~N.B.~~Key ~~All financial~~ data ~~has been compiled to US GAAP and is not audited except~~ for ~~data~~the atEPCOS ~~September~~Group ~~30,~~(including ~~2004.~~discontinued operations)

Total after-tax earnings in the quarter under review were plus EUR 4 million (Q1 2006: minus EUR 3 million; Q2 2005: minus EUR 49 million). This figure includes a loss of EUR 4 million posted for tantalum capacitors.

In Q2 2006, total earnings per share came to plus 6 eurocents (Q1 2006: minus 5 eurocents; Q2 2005: minus 74 eurocents).

Net cash flow was positive at EUR 3 million in the second quarter of fiscal 2006.

First half-year 2006

Continuing operations

In the first six months of fiscal 2006 (October 1, 2005 – March 31, 2006), new orders rose 28% to EUR 683 million, from EUR 534 million in the same period a year ago. At EUR 629 million, year-on-year sales were up 16% from EUR 544 million.

EBIT improved to plus EUR 15 million in the first half of 2006 (first half of 2005: minus EUR 20 million, including special charges totaling EUR 17 million).

After-tax earnings stood at plus EUR 9 million (first half of 2005: minus EUR 45 million).

EPCOS Group (including discontinued operations)

EBIT for the EPCOS Group as a whole was EUR 2 million (first half of 2005: minus EUR 26 million, including special charges totaling EUR 17 million).

Total after-tax earnings came to plus EUR 1 million (first half of 2005: minus EUR 49 million), including a loss of EUR 8 million posted for tantalum capacitors. The transfer of EPCOS’ tantalum capacitor business to US American capacitor manufacturer KEMET was successfully completed in April. The company has thus eliminated its biggest loss-maker.

Total earnings per share for the first half of 2006 stood at plus 1 eurocent (first half of 2005: minus 75 eurocents).

EPCOS AG

In the first half of the current fiscal year, net cash flow was minus EUR 13 million (first half of 2005: minus EUR 69 million).

“The sale of our tantalum activities to KEMET is giving us a cash inflow of about EUR 70 million,” says CFO Dr. Wilfried Backes, “the majority of which we received when the deal was closed in April.”

Outlook (continuing operations)

Against the backdrop of the overall positive economic development, EPCOS is now more optimistic about its business outlook. For the year as a whole EPCOS expects the increase of sales in its continuing business to be at least in the high single-digit percentage range. EBIT will improve further in the second half of 2006.

N.B. All financial data has been compiled to US GAAP and is not audited except for data at September 30, 2005.

Further dates

~~The~~Results ~~Annual~~for ~~General~~the ~~Meeting~~third quarter of fiscal 2006 will be published ~~held~~ on ~~February 16~~August 1, ~~2005, at the International Congress Center in Munich~~2006. Results for the ~~second~~fourth quarter ofand for fiscal 2005 as a whole will be published onat ~~May~~the 4Annual Press Conference on November 16, ~~2005~~2006.

This document may contain forward-looking statements with respect to EPCOS’ financial condition, results of operations, business, strategy and plans. In particular, statements using the words “expects”, “anticipates” and similar expressions, and statements with regard to management goals and objectives, expected or targeted revenue and expense data, or trends in results of operations or margins are forward-looking in nature. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including changes in our customers’ industries, slower growth in significant markets, changes in our relationships with our principal shareholders, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, currency fluctuations, unforeseen environmental obligations, and general economic and business conditions. EPCOS does not assume any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the Company’s financial results is provided in documents filed with the Bundesanstalt für Finanzdienstleistungsaufsicht and the US Securities and Exchange Commission.

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME, UNAUDITED

for the 3 months ~~ended~~and ~~December~~6 months ended March 31, ~~2004~~2006 and ~~2003~~2005

(EUR thousand, except per share data)

	Q1
	3 months ended				6 months ended
Net sales	2004		2003
	2006		2005		2006		2005
Third parties	242,670		274,598
Net sales from continuing operations
Related parties	45,988		56,220
Third parties	274,415		231,675		535,265		453,011
Total net sales	288,658		330,818
Related parties	49,630		44,850		93,567		90,838
Cost of goods sold	(238,911	)	(263,189	)
Total net sales	324,045		276,525		628,832		543,849
Gross profit	49,747		67,629
Cost of goods sold	(267,952	)	(239,774	)	(523,002	)	(459,322	)
Research and development expenses	(15,119	)	(17,858	)
Gross profit	56,093		36,751		105,830		84,527
Marketing and selling expenses	(27,678	)	(29,899	)
Research and development expenses	(17,134	)	(16,339	)	(35,315	)	(29,650	)
General and administrative expenses	(2,889	)	(3,847	)
Marketing and selling expenses	(27,653	)	(26,280	)	(54,254	)	(52,625	)
	(45,686	)	(51,604	)
General and administrative expenses	(4,002	)	(4,563	)	(7,030	)	(7,429	)
Operating income	4,061		16,025
	(48,789	)	(47,182	)	(96,599	)	(89,704	)
Interest income	438		904
Operating income	7,304		(10,431	)	9,231		(5,177	)
Interest expense	(2,404	)	(2,552	)
Interest income	816		871		1,505		1,306
Foreign exchange losses, net	(2,589	)	(4,287	)
Interest expense	(3,556	)	(2,283	)	(7,021	)	(4,532	)
Other (loss) income, net	(122	)	614
Foreign exchange gains (losses), net	1,010		(1,818	)	806		(4,272	)
Share of net income of unconsolidated affiliates	68		—
Impairment on goodwill	—		(11,800	)	—		(11,800	)
Income before income taxes and minority interest	(548	)	10,704
Other income, net	2,852		1,449		3,731		1,628
Provision for income taxes	141		(936	)
Share of net income of unconsolidated affiliates	512		(216	)	1,213		(148	)
Minority interest	(41	)	(60	)
Income (loss) from continuing operations before income taxes and minority interest	8,938		(24,228	)	9,465		(22,995	)
Net (Loss) income	(448	)	9,708
Provision for income taxes	(562	)	(21,442	)	(227	)	(21,812	)
Basic earnings per share	(0.01	)	0.15
Minority interest	(110	)	(58	)	(200	)	(99	)
Diluted earnings per share	(0.01	)	0.14
Income (loss) from continuing operations	8,266		(45,728	)	9,038		(44,906	)
Reconciliation of Net (Loss) income to EBIT
Loss from discontinued operations, net of income taxes	(4,097	)	(2,942	)	(8,100	)	(4,212	)
Net (Loss) income	(448	)	9,708
Net income (loss)	4,169		(48,670	)	938		(49,118	)
Minority interest	41		60
Earnings per share (basic)
Provision for income taxes	(141	)	936
Net income (loss) from continuing operations	0.13		(0.70	)	0.14		(0.69	)
(Loss) Income before income taxes and minority interest	(548	)	10,704
Net loss from discontinued operations	(0.07	)	(0.04	)	(0.13	)	(0.06	)
Interest expense, net	1,966		1,648
Earnings per share (diluted)
EBIT	1,418		12,352
Net income (loss) from continuing operations	0.12		(0.70	)	0.14		(0.69	)
Net loss from discontinued operations	(0.07	)	(0.04	)	(0.13	)	(0.06	)
Reconciliation of Net income (loss) to EBIT
Net income (loss)	8,266		(45,728	)	9,038		(44,906	)
Minority interest	110		58		200		99
Provision for income taxes	562		21,442		227		21,812
Income (loss) before income taxes and minority interest	8,938		(24,228	)	9,465		(22,995	)
Interest result, net	2,740		1,412		5,516		3,226
EBIT	11,678		(22,816	)	14,981		(19,769	)

See accompanying notes to unaudited consolidated interim financial statements. 8

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

Asas of ~~December~~ March 31, ~~2004~~2006 and September 30, ~~2004~~2005

(EUR thousand, except share data)

	December 31,2004		September 30, 2004
	March 31,2006		September 30, 2005
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	~~186~~170,~~053~~681		~~238~~193,~~386~~438
Accounts receivable, net	~~170~~190,~~817~~288		~~212~~201,~~078~~991
Inventories, net	~~254~~211,~~932~~331		~~240~~226,~~996~~802
Prepaid expenses and other current assets	6248,~~137~~506		4746,~~540~~579
Deferred income taxes	65,~~440~~518		98,~~366~~708
Total current assets	680,379		748,366
Assets held for sale	106,382		—
Property, plant and equipment, net	603,455		604,406
Total current assets	732,706		677,518
Intangible assets, net	32,449		34,195
Property, plant and equipment, net	495,864		576,284
Deferred income taxes	77,139		72,561
Intangible assets, net	17,613		19,141
Other assets	27,345		26,684
Deferred income taxes	82,015		70,169
Total assets	1,420,767		1,486,212
Other assets	41,259		33,822
Total assets	1,369,457		1,376,934
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	~~124~~116,~~051~~966		~~159~~133,~~941~~904
Accrued expenses and other current liabilities	~~127~~111,~~119~~761		~~140~~119,~~834~~065
Short-term borrowings	96102,~~781~~011		~~103~~107,~~001~~467
Current portion of long-term debt	2123,~~523~~511		24,~~778~~944
Deferred income taxes	73,~~460~~830		53,~~847~~629
Total current liabilities	376,934		434,401
Liabilities held for sale	20,016		—
Long-term debt, excluding current installments	192,505		192,745
Total current liabilities	378,095		389,009
Pension liabilities	128,579		126,567
Long-term debt, excluding current installments	200,909		206,127
Deferred income taxes	11,076		12,908
Pension liabilities	170,228		165,768
Other liabilities	38,964		39,322
Deferred income taxes	17,994		18,503
Minority interest	482		705
Other liabilities	40,869		40,270
Total liabilities	748,540		806,648
Minority interest	1,896		764
Total liabilities	809,991		820,441
Shareholders’ equity
Share capital, – 96,280,000 shares authorized, 65,300,000 shares issued and outstanding at December 31, 2004 and at September 30, 2004	65,300		65,300
Share capital, – 96,280,000 shares authorized, 65,300,000 shares issued and outstanding atMarch 31, 2006 and at September 30, 2005	65,300		65,300
Additional paid-in capital	254,833		254,833
Retained earnings	~~406~~288,~~062~~186		~~406~~287,~~510~~248
Accumulated other comprehensive loss	(5348,~~968~~853	)	(4750,~~079~~888	)
Total shareholders’ equity	~~672~~559,~~227~~466		~~679~~556,~~564~~493
Total liabilities and shareholders’ equity	1,~~420~~369,~~767~~457		1,~~486~~376,~~212~~934

See accompanying notes to unaudited consolidated interim financial statements. 9

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

EQUITY AND COMPREHENSIVE INCOME/(LOSS), UNAUDITED

~~For~~for the 36 months ended ~~December~~ March 31, ~~2004~~2006

(EUR thousand)

	Sharecapital	Additionalpaid-inCapital	Retainedearnings		Accumulatedothercomprehensiveincome/(loss)	~~Accumulated other comprehensive Income / (loss)~~		Treasuryshares	~~Treasuryshares~~	Totalshareholders’equity	~~Totalshareholders’equity~~
Balances as of September 30, 2004	65,300	254,833	406,510			(47,079	)		—		679,564
Balances as of September 30, 2005	65,300	254,833	287,248		(50,888	)		—		556,493
Comprehensive Loss:
Comprehensive Income:
Net Loss	—	—	(448	)		—			—		(448	)
Net Income	—	—	938		—			—		938
Currency translation adjustment	—	—	—		(573	~~(6,572~~)	)	—	—	(573	~~(6,572~~)	)
Cash flow hedges (net of tax of 349)	—	—	—			(1,047	)		—		(1,047	)
Cash flow hedges (net of tax of 838)	—	—	—		2,509			—		2,509
Reclassification of losses to net income (net of tax of 105)	—	—	—			314			—		314
Reclassification of gains to net income (net of tax of 43)	—	—	—		(127	)		—		(127	)
Unrealized gains on securities (net of tax of 77)	—	—	—			416			—		416
Unrealized gains on securities (net of tax of 64)	—	—	—		226			—		226
Total comprehensive Loss											(7,337	)
Total comprehensive Income										2,973
Balances as of December 31, 2004	65,300	254,833	406,062			(53,968	)		—		672,227
Balances as of March 31, 2006	65,300	254,833	288,186		(48,853	)		—		559,466

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

EQUITY AND COMPREHENSIVE INCOME/(LOSS), UNAUDITED

~~For~~for the 36 months ended ~~December~~ March 31, ~~2003~~2005

(EUR thousand)

	Share Capital	Additional paid-in capital	Retainedearnings		Accumulated other comprehensive Income / (loss)		Treasuryshares			Totalshareholders’Equity
	ShareCapital	Additionalpaid-incapital	Retainedearnings		Accumulatedothercomprehensiveincome/(loss)		Treasuryshares		Totalshareholders’equity
Balances as of September 30, 2003	65,300	255,225	357,282		(38,253	)	(878	)		638,676
Balances as of September 30, 2004	65,300	254,833	406,510		(47,079	)	—		679,564
Comprehensive Income:
Comprehensive Loss:
Net Income	—	—	9,708		—		—			9,708
Net Loss	—	—	(49,118	)	—		—		(49,118	)
Currency translation adjustment	—	—	—		(62,~~878~~484	)	—		(2,484	~~(6,878~~)	)
Cash flow hedges (net of tax of 422)	—	—	—		(816	)	—			(816	)
Cash flow hedges (net of tax of 67)	—	—	—		(200	)	—		(200	)
Reclassification of gains to net income (net of tax of 43)	—	—	—		(84	)	—			(84	)
Reclassification of loss to net income (net of tax of 182)	—	—	—		546		—		546
Unrealized gains on securities	—	—	—		62		—			62
Unrealized gains on securities (net of tax of 113)	—	—	—		942		—		942
Total comprehensive Income										1,992
Total comprehensive Loss									(50,314	)
Sale of treasury shares	—	—	(392	)	—		878			486
Balances as of March 31, 2005	65,300	254,833	357,392		(48,275	)	—		629,250
Balances as of December 31, 2003	65,300	255,225	366,598		(45,969	)	—			641,154

See accompanying notes to unaudited consolidated interim financial statements. 10

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOW, UNAUDITED

~~For~~for the 36 months ended ~~December~~ March 31, ~~2004~~ 2006 and 2005 ~~2003~~

(EUR thousand)

	Q1
	6 months ended
	2004		2003
	2006		2005
Cash flows from operating activities
Net (loss)/income	(448	)	9,708
Net income (loss)	938		(49,118	)
Adjustment to reconcile net loss/income to net cash provided by operating activities
Depreciation and amortization	37,036		37,818
Depreciation and amortization on intangible and fixed assets	63,727		74,122
Provision for doubtful accounts	(541	)	151
Impairment on goodwill	—		11,800
Loss (Gain) on sale of property, plant and equipment	285		(94	)
Provision for doubtful accounts	246		(5	)
Deferred income tax	(2,270	)	(3,099	)
Gain on sale of property, plant and equipment	(139	)	(177	)
Share of net income of unconsolidated affiliates	(68	)	—
Deferred income tax	(12,130	)	21,296
Minority interest	41		60
Share of net income (loss) of unconsolidated affiliates	(1,213	)	148
Changes in assets and liabilities, excluding effects of acquisitions
Minority interest	200		99
Increase in inventories	(17,488	)	(12,881	)
Other non cash item	2,713		—
Decrease/(Increase) in accounts receivable	39,078		(2,338	)
Changes in assets & liabilities
Increase in prepaid expenses and other current assets	(15,194	)	(306	)
Increase in inventories	(9,846	)	(12,204	)
Decrease in accounts payable	(32,028	)	(15,373	)
Decrease in accounts receivable	1,793		27,864
(Decrease)/Increase in other liabilities	(240	)	1,022
Increase in prepaid expenses and other current assets	(1,657	)	(12,884	)
Decrease in accrued expenses and other current liabilities	(14,149	)	(5,896	)
Decrease in accounts payable	(5,106	)	(34,661	)
Increase in pension liabilities	2,309		1,834
Increase in other liabilities	563		324
Increase in other assets	1.746		899
Decrease in accrued expenses and other current liabilities	(2,784	)	(17,120	)
Net cash provided by operating activities	(1,931	)	11,505
Increase in pension liabilities	4,577		4,702
(Increase)/Decrease in other assets	(3,396	)	534
Net cash provided by operating activities	38,486		14,720
Cash flows from investing activities
Capital expenditures	(3948,~~594~~534	)	(1382,~~280~~491	)
Proceeds from sale of equipment	~~359~~1,146		~~417~~549
Investment securities	—		(25,000	)
Investments in associated and unconsolidated companies	(4,023	)	(2,110	)
Investments in associated and unconsolidated companies	(2,121	)	—
Net cash used in investing activities	(51,411	)	(84,052	)
Net cash used in investing activities	(41,356	)	(37,863	)
Cash flows from financing activities
(Net decrease)/increase in short-term borrowings	(2,671	)	5,271
Net decrease in short-term borrowings	(7,414	)	(8,428	)
Proceeds from borrowing of long-term debt	17,~~909~~492		~~731~~7,373
Principal payments under capital leasing obligations	(619	)	(~~130~~8	)
Principal payments on long-term debt	(59,~~245~~949	)	(113,~~940~~074	)
Sale of treasury shares	—		486
Net cash used in financing activities	(9,890	)	(14,137	)
Net cash provided by (used in) financing activities	(6,013	)	4,418
Effect of exchange rate changes on cash	58		(1,795	)
Effect of exchange rate changes on cash	(3,033	)	(2,442	)
Decrease in cash and cash equivalents	(22,757	)	(85,264	)
Decrease in cash and cash equivalents	(52,333	)	(24,382	)
Cash and cash equivalents at beginning of fiscal year	193,438		238,386
Cash and cash equivalents at beginning of fiscal year	238,386		195,797
Cash and cash equivalents at end of period	170,681		153,122
Cash and cash equivalents at end of period	186,053		171,415

See accompanying notes to unaudited consolidated interim financial statements. 11

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

Notes to unaudited interim consolidated financial statements

1. Basis of Presentation

The unaudited interim consolidated financial statements as of and for the three-month and six-month periods ended ~~December~~ March 31, ~~2004~~2006, and ~~2003~~2005 reflect all adjustments consisting of normal recurring items, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. All ~~significant~~ intercompany balances and transactions as well as all ~~significant~~ intra group profits or losses arising on such transactions have been eliminated in the consolidated financial statements.

The results of operations for any interim period are not necessarily indicative of results for the full year. Such financial statements should be read in conjunction with the audited consolidated financial statements for the year ended September 30, ~~2004~~2005 included in the Company’s Annual Report ~~for~~ ~~2004~~for 2005.

~~Recent~~Options ~~accounting~~granted ~~pronouncements~~to employees

InAs ~~December~~of October 1, ~~2004~~2005, the Company adopted Statement of Financial Accounting Standards ~~Board~~ (~~FASB~~SFAS) ~~issued SFAS~~ No. 123 (revised 2004), Share-Based Payment (SFAS No. 123R), which replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principals Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and related Interpretations. SFAS No. 123R requires companies to recognize the cost resulting from all share-based payment transactions in the financial statements. With certain limited exceptions, the new standard establishes a grant- date, fair-value-based measurement method in accounting for share-based payment transactions. ~~Liability-~~Equity classified awards are tomeasured ~~be remeasured to~~ at fair value atof ~~each reporting date until~~ the ~~award is settled. Equity-classified awards are measured at~~ grant- date, ~~fair value~~ whereas related compensation cost is recognized based on the estimated number of instruments for which the requisite service is expected to be rendered. ~~SFAS~~For ~~123R~~its isequity ~~effective~~classified asawards, of the ~~beginning~~Company ofapplies the ~~first~~modified prospective ~~interim~~transition ~~reporting~~method. ~~period~~Under ~~that~~this ~~begins after~~method, ~~June~~compensation 15cost recognized in the 6 months ending March 31, ~~2005.~~2006, ~~For~~includes ~~its~~(i) compensation ~~equity~~cost for all share-~~classified~~based ~~awards~~payments granted prior to, ~~the~~but ~~Company~~not ~~intends~~yet tovested ~~apply~~as of October 1, 2005 based on the ~~modified~~grant ~~prospective~~date ~~transition~~fair ~~method.~~value ~~Under~~estimated ~~this~~in ~~method~~accordance with SFAS No. 123, ~~unvested~~and ~~equity~~(ii) compensation cost for all share-~~classified~~based ~~awards~~payments granted ~~prior~~subsequent to ~~the~~October 1, ~~effective~~2005, ~~date~~based ofon ~~the~~grant ~~new~~date ~~statement~~fair ~~are accounted~~value ~~for~~estimated ~~under~~in accordance with SFAS No. 123R. ~~and~~In ~~related~~the ~~costs~~six-month ~~are~~periods ~~recognized~~of infiscal ~~the~~2006 ~~income~~compensation ~~statement.~~expense ~~EPCOS~~of isEUR ~~currently~~0.776 million ~~determining~~from ~~the~~stock ~~impact~~based ofcompensation ~~the~~was ~~adoption~~recorded. ofResults ~~SFAS~~for ~~123R~~prior onperiods ~~the~~have ~~Company’s~~not ~~consolidated~~been ~~financial statements~~restated.

11Prior to the adoption of SFAS No. 123R, stock options were accounted for under the intrinsic value method of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations.

See note 3 for further information on stock-based compensation.

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

~~Options~~The ~~granted~~following totable ~~employees~~illustrates recorded compensation expense and the effect on net loss/income and loss/earnings per share if the Company had adopted the fair value based accounting method prescribed by SFAS No. 123:

Pursuant to SFAS No. 123, the Company has elected to apply Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations in accounting for its stock-based compensation plans. The following table illustrates recorded compensation expense and the effect on net loss/income and loss/earnings per share if the Company had adopted the fair value based accounting method prescribed by SFAS No. 123:

NET (LOSS) INCOME AND (LOSS) EARNINGS PER SHARE

~~For~~for the 3 months ~~ended~~and ~~December~~6 months ended March 31, ~~2004~~2006 and ~~2003~~ 2005

(EUR thousand, except share data)

	Q1
	3 months ended				6 months ended
	2004		2003
	2006		2005		2006		2005
Net (loss) income
Net income (loss)
As reported	~~(448~~4,169	)	9(48,~~708~~670	)	938		(49,118	)
Stock-based employee compensation expense determined under fair value based accounting method, net of taxes	~~(930~~—	)	(~~1,743~~430	)	—		(1,360	)
Pro forma	(14,~~378~~169	)	7(49,~~965~~100	)	938		(50,478	)
Basic (loss) earnings per share
Basic earnings (loss) per share
As reported	(0.01	)	0.15
Net income (loss) from continuing operations as reported	0.13		(0.70	)	0.14		(0.69	)
Pro forma	(0.02	)	0.12
Net loss from discontinued operations as reported	(0.07	)	(0.04	)	(0.13	)	(0.06	)
Diluted (loss) earnings per share
Net income (loss) from continuing operations pro forma	0.13		(0.71	)	0.14		(0.71	)
As reported	(0.01	)	0.14
Net loss from discontinued operations pro forma	(0.07	)	(0.05	)	(0.13	)	(0.07	)
Pro forma	(0.02	)	0.12
Diluted (loss) earnings per share
Net income (loss) from continuing operations as reported	0.12		(0.70	)	0.14		(0.69	)
Net loss from discontinued operations as reported	(0.07	)	(0.04	)	(0.13	)	(0.06	)
Net income (loss) from continuing operations pro forma	0.12		(0.71	)	0.14		(0.71	)
Net loss from discontinued operations pro forma	(0.07	)	(0.05	)	(0.13	)	(0.07	)

2.13 ~~Stock-based Compensation~~

The fair value of the Company’s stock options of fiscal 2005 and 2004 used to compute pro forma net (loss) income disclosures was estimated on the date of grant using the Black-Scholes option pricing model based on the following weighted-average assumptions for fiscal 2005 and 2004:

AVERAGE VALUES OF STOCK OPTIONS

For the 3 months ended December 31, 2004 and 2003

	Q1
	2004		2003
Risk-free interest rate	3.16	%	4.13	%
Expected life of options (in years)	5		5
Expected volatility	43.4	%	41	%
Expected dividend yield (in percentage)	1.82	%	1.24	%

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

2. Discontinued Operations

On December 12, 2005, EPCOS signed a contract to sell its Tantalum Capacitor Business Unit to KEMET Inc. based in the United States of America. The sale includes the plants in Evora, Portugal and parts of the activities in Munich and Heidenheim, Germany. EPCOS closed the deal that transfers its tantalum capacitor business effective April 13, 2006. The results of the disposal group are shown as discontinued operations for all periods presented.

In the six months ended March 31, 2006 and 2005, the discontinued operations’ net sales were EUR 45.301 million and EUR 42.368 million, respectively. In the three months ended March 31, 2006 and 2005, net sales were EUR 22.479 million and EUR 21.034 million, respectively. Loss before income taxes and minority interests reported in discontinued operations amounted to EUR -13.830 million and EUR -6.129 million, respectively, for the six months ended March 31, 2006 and 2005. In the three months ended March 31, 2006 and 2005 the loss before income taxes and minority interests was EUR -7.041 million and EUR -4.348 million, respectively.

Assets and liabilities related to the tantalum business are classified as held for sale at March 31, 2006. No impairment was recognized relating to the disposal group in the first two quarters of fiscal 2006. An impairment charge relating to these assets was recorded in the three month period ended September 30, 2005, when the assets were classified as being held and used, but the Company was in negotiations to dispose of the tantalum business.

Cash Flows relating to the discontinued operations for six-month periods ended March 31, 2006 amounted to EUR -17.4 million. Cash used in operating activities amounted to EUR -9.7 million and EUR -7.7 million cash used in investing activities.

The carrying amounts of the major classes of assets and liabilities held for sale as of March 31, 2006 were as follows:

Period ending March 31, 2006

(EUR thousand)


Inventories, net		25,324
Accounts receivable, net		9,927
Property, plant and equipment, net		66,058
Other		5,073

Assets held for sale		106,382

Accounts payable		12,012
Other liabilities		8,004

Liabilities held for sale		20,016

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

3. Stock-based Compensation

The following table summarizes stock option activity:

STOCK OPTION ACTIVITY

	Number ofoptions	Weighted averageexercise price per share (in EUR)
	Number of options	Weighted averageexercise price per share (in EUR)
Balance as of September 30, 2004	2,182,250	45.43
Balance as of September 30, 2005	2,486,750	41.40
Granted	~~340~~339,000	13.7405
Exercised	—	—
Forfeited	6104,~~000~~750	1833.5051
Balance as of December 31, 2004	2,516,250	41.21
Balance as of March 31, 2006	2,721,000	38.17

34. Inventories, net

INVENTORIES, NET

(EUR thousand)

	December 31, 2004	September 30, 2004
	March 31,2006	September 30,2005
Raw materials and supplies	6856,~~892~~753	6259,~~496~~356
Work in process	7061,~~453~~887	7258,~~224~~028
Finished products	~~115~~92,~~587~~691	~~106~~109,~~276~~418
Total inventories, net	~~254~~211,~~932~~331	~~240~~226,~~996~~802

Total inventories as of ~~December~~ March 31, ~~2004~~ 2006 and September 30, ~~2004~~2005, are net of valuation allowances of EUR 26 21.~~912~~423 million and EUR 28 32.~~038~~823 million, respectively.

45. Goodwill and Intangible Assets

NoThe ~~Goodwill~~carrying ~~impairment~~amount ~~was~~of ~~recorded~~goodwill inas ~~the~~of ~~three months ended December~~ March 31, ~~2004~~2006, ~~and~~is ~~2003,~~as ~~respectively.~~follows:

The carrying amount of goodwill as of December 31, 2004, is as follows:

GOODWILL

Balance as of December 31, 2004

(EUR thousand)

Capacitors	Ceramic Components	SAW Components	Ferrites and inductors	Consolidated Total
	March 31,2006	September 30,2005
1,844	4,077	264	13,841	20,026
Capacitors and Inductors	3,947	3,935
Ceramic Components	4,103	4,104
SAW Components	298	299
Consolidated total	8,348	8,338

1315

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

Included in the Consolidated Balance Sheets as of ~~December~~ March 31, ~~2004~~2006 and September 30, ~~2004~~2005 are the following categories of acquired intangible assets:

INTANGIBLE ASSETS (FINITE LIVES)

(EUR thousand)

	December 31, 2004		September 30, 2004
	March 31, 2006		September 30, 2005
	Gross	Net	Gross	Net
Patents, licenses and similar rights	3943,~~570~~001	97,~~967~~287	3942,~~596~~888	118,~~550~~670
Customer lists	3,200	1,~~946~~547	3,200	21,~~026~~707
Other	~~988~~1,172	~~510~~431	~~960~~1,057	~~531~~426
Total intangible assets (finite lives)	4347,~~758~~373	129,~~423~~265	4347,~~756~~145	1410,~~107~~803

Amortization related to intangible assets (finite lives) amounted to EUR 0.891 million for the three-month period ended March 31, 2006 and EUR 1.~~762~~796 million for the ~~three~~six-month period ended ~~December~~ March 31, ~~2004~~2006 (EUR 1.~~639~~ 580 million for the three-month period ended ~~December~~March 31, 2005 and EUR 4.823 million for the six-month period ended March 31, ~~2003~~2005). In accordance with SFAS No. 142, the Company reassessed the useful lives of all other intangible assets in the first ~~three~~six months of fiscal year ~~2005~~2006. There were no changes to such lives and there are no expected residual values associated with these intangible assets. Patents are amortized over the term of the patents, or as for the customer lists, over ten years. Licenses are amortized over the term of the licensing agreement.

The development of the intangible assets (finite lives) of the estimated fiscal year amortization expense is as follows:

ESTIMATED AMORTIZATION EXPENSE

~~Fiscal~~fiscal years

(EUR thousand)

2005		6,174
2006		2,072
2006		2,778
2007		2,986
2007		2,257
2008		1,720
2008		1,104
2009		1,360
2009		831
2010		1,127

5.16 ~~Product warranties~~

The current and noncurrent accruals for product warranties developed as follows:

PRODUCT WARRANTIES

(EUR thousand)

Balance as of September 30, 2004:	7,946
Increase in accruals related to warranties issued during reporting (+)	445
Increase in accruals related to preexisting warranties (+)	—
Utilization of accruals/reduction in liabilities (-)	(1,084	)
Non-utilization of accruals/liabilities (-)	(1,744	)
Foreign exchange translation adjustment	(2	)
Accrual as of December 31, 2004	5,561

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

6. ~~Earnings~~Product ~~per~~warranties ~~Share~~

The current and noncurrent accruals for product warranties developed as follows:

PRODUCT WARRANTIES

(EUR thousand)


Balance as of September 30, 2005:	5,146
Increase in accruals related to warranties issued during reporting period (+)	2,459
Increase in accruals related to preexisting warranties (+)	952
Utilization of accruals/reduction in liabilities (-)	(1,308	)
Non-utilization of accruals/liabilities (-)	(369	)
Reclassification tantalum sale	(320	)
Foreign exchange translation adjustment	9

Accrual as of March 31, 2006	6,568

7. Earnings per Share

Basic earnings (loss) per share are computed by dividing net loss/income by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflect the potential dilution that would occur if the potentially dilutive common shares, such as on the exercise of options, had been issued.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month and six-months periods ended ~~December~~ March 31, ~~2004~~2006 and ~~2003~~2005:

EARNINGS (LOSS) PER SHARE

~~For~~for the 3 months ~~ended~~and ~~December~~6 months ended March 31, ~~2004~~2006 and ~~2003~~2005

(EUR thousand, except share data)

	Q1
	3 months ended				6 months ended
	2004		2003
	2006		2005		2006		2005
Net loss/income -basic	(448	)	9,708
Net income (loss) -basic	4,169		(48,670	)	938		(49,118	)
Interest expense on convertible bonds (net of tax)	—526		~~533~~—		1,061		—
Net loss/income -diluted	(448	)	10,241
Net income (loss) -diluted	4,695		(48,670	)	1,999		(49,118	)
Denominator for basic earnings per share – weighted average shares	65,300,000		65,~~284~~300,~~511~~000		65,300,000		65,300,000
Effect of dilutive shares – stock options	—		~~104,936~~—		—		—
Effect of dilutive shares – convertible bonds	—6,500,000		~~6,500,000~~—		—		—
Denominator for diluted earnings per share – weighted average shares adjusted for dilutive shares	6571,~~300~~800,000		7165,~~889~~300,~~447~~000		65,300,000		65,300,000
Basic earnings per common share, EUR	~~(0.01~~	)	~~0.15~~
Diluted earnings per common share, EUR	(0.01	)	0.14
Net income (loss) from continuing operations	0.13		(0.70	)	0.14		(0.69	)
Net loss from discontinued operations	(0.07	)	(0.04	)	(0.13	)	(0.06	)
Diluted earnings per common share, EUR
Net income (loss) from continuing operations	0.12		(0.70	)	0.14		(0.69	)
Net loss from discontinued operations	(0.07	)	(0.04	)	(0.13	)	(0.06	)

On17 ~~December 31, 2004 6,500,000 shares relating to convertible bonds outstanding were not considered, because the inclusion would be antidilutive.~~

7.EPCOS ~~Pension~~AG ~~plan~~

TheTable following table presents the components of net pension cost for the first three months ended December 31, 2004 and 2003: Contents

CONSOLIDATED FINANCIAL STATEMENTS

On March 31, 2006, 6,500,000 shares relating to convertible bonds outstanding were not considered because the inclusion would be antidilutive for the six-month period. In the three months ending March 31, 2006 6,500,000 shares were included.

8. Pension plan

The following table presents the components of net pension cost for the three and six months ended March 31, 2006 and 2005:

PENSION COST, NET

~~For~~for the 3 months ~~ended~~and ~~December~~6 months ended March 31, ~~2004~~2006 and ~~2003~~2005

(EUR thousand)

	Q1
	3 months ended				6 months ended
	2004		2003
	2006		2005		2006		2005
Service cost	1,~~277~~905		1,~~319~~194		3,679		2,471
Interest cost	2,~~139~~262		2,~~094~~141		4,446		4,280
Expected return on plan assets	(~~289~~452	)	(~~284~~295	)	(828	)	(584	)
Amortization of unrecognized actuarial gains or losses	85734		6685		1,306		170
Unrecognized prior service cost	1314		1413		28		26
Periodic pension cost, net	34,~~225~~463		3,~~209~~138		8,631		6,363

1518

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

89. Business Segments

FINANCIAL INFORMATION ON THE BUSINESS SEGMENTS, UNAUDITED

(UNAUDITED)

(EUR million)

	Capacitors		CeramicComponents		SAWComponents	FerritesandInductors		Eliminations		Consolidated total
	CapacitorsandInductors		CeramicComponents		SAWComponents	Eliminations		Consolidated total
3 months ended December 31, 2004
3 months ended March 31, 2006
Orders received	84136.52		87108.2		73103.34	~~41.7~~		347.8		~~286.7~~
Net sales	80121.40		75103.12		9599.78	~~37.5~~		324.0		~~288.7~~
EBIT	(31.8	)	(31.04	)	1012.41	~~(2.2~~	)	11.7		~~1.4~~
Interest result, net								(2.8	)	~~(1.9~~	)
Loss before income taxes and minority interest										(0.5	)
Income from continuing operations before income taxes and minority interest								8.9
Provision for income taxes								(0.5	)	~~0.1~~
Minority interest								(0.1	)	—
Net loss										(0.4	)
Loss from discontinued operations								(4.1	)
Depreciation and amortization	7.9		8.4		16.6	3.4		0.7		37.0
Net income								4.2
Capital expenditures	13.5		16.8		7.8	1.2		0.3		39.6
Depreciation and amortization	4.4		9.7		12.6	0.4		27.1
3 months ended December 31, 2003
Capital expenditures	4.1		5.1		12.1	0.6		21.9
Orders received	92.7		107.2		118.0	49.8				367.7
3 months ended March 31, 2005
Net sales	85.5		88.3		116.2	40.8				330.8
Orders received	98.8		90.5		81.3			270.6
EBIT	(4.0	)	2.8		16.0	(2.4	)			12.4
Net sales	104.3		86.6		85.6			276.5
Interest result, net										(1.7	)
EBIT	(22.3	)	(4.4	)	3.9			22.8
Income before income taxes and minority interest										10.7
Interest result, net								(1.4	)
Provision for income taxes										(0.9	)
Loss from continuing operations before income taxes and minority interest								(24.2	)
Minority interest										(0.1	)
Provision for income taxes								(21.5	)
Net income										9.7
Minority interest								(0.1	)
Depreciation and amortization	7.6		8.0		18.0	3.6		0.6		37.8
Loss from discontinued operations								(2.9	)
Capital expenditures	1.8		5.3		4.4	1.0		0.8		13.3
Net loss								(48.7	)
Depreciation and amortization	19.5		9.1		15.8	0.6		45.0
Capital expenditures	9.0		22.5		6.9	(0.1	)	38.3

16With effect from October 1, 2005, the business segments “Capacitors” and “Inductors and Ferrites,” were combined to a reportable segment named “Capacitors and Inductors”, based on substantial economic and other similarities between these operating segments after the disposal of the tantalum capacitor business, which was part of the operating segment “Capacitors”.

Balances reported previously have been restated for comparative purposes given the change in the segmentation.

EPCOS AG

CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL INFORMATION ON THE BUSINESS SEGMENTS, UNAUDITED

(EUR million)


	Capacitors and Inductors		Ceramic Components		SAW Components	Eliminations	Consolidated total
6 months ended March 31, 2006
Orders received	260.2		212.7		210.2		683.1
Net sales	230.3		200.3		198.2		628.8
EBIT	(8.2	)	(1.3	)	24.5		15.0
Interest result, net							(5.5	)
Income from continuing operations before income taxes and minority interest							9.5
Provision for income taxes							(0.3	)
Minority interest							(0.2	)
Loss from discontinued operations							(8.1	)
Net income							0.9
Depreciation and amortization	12.7		19.1		25.9	0.9	58.6
Capital expenditures	6.9		12.8		19.7	1.1	40.5

6 months ended March 31, 2005
Orders received	201.8		177.7		154.6		534.1
Net sales	200.8		161.7		181.3		543.8
EBIT	(26.7	)	(7.4	)	14.3		(19.8	)
Interest result, net							(3.2	)
Loss from continuing operations before income taxes and minority interest							(23.0	)
Provision for income taxes							(21.8	)
Minority interest							(0.1	)
Loss from discontinued operations							(4.2	)
Net loss							(49.1	)
Depreciation and amortization	26.7		17.5		32.4	1.2	77.8
Capital expenditures	20.8		39.3		14.7	0.1	74.9

EPCOS AG

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EPCOS AG
Dated: February 3, 2005	By:	/s/ Peter Knoll
Dated: May 4th, 2006	By:	/s/ Peter Knoll
	Name:	Mr. Peter Knoll
	Title:	General Counsel EPCOS AG

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TheTable following table presents the components of net pension cost for the first three months ended December 31, 2004 and 2003: Contents

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