Letter to our Shareholders

Prof. Dr. Uwe Loos
Chairman of the board of FAG Kugelfischer Georg Schäfer AG

Schweinfurt, September 13, 2001

Dear Shareholder,

As I'm sure you've read in the newspapers, INA Holding Schaeffler KG submitted an all-share offer for FAG Kugelfischer. This offer, and the merger of INA and FAG that INA is considering, were not discussed with FAG's Board beforehand. We therefore perceive this as an attempt to conduct a hostile takeover.

Currently, after an initial review of the offer, we strongly advise you not to accept this offer, but to continue to hold on to your FAG shares. You have nothing to lose by waiting and taking a considered approach. We are highly convinced that our existing strategy opens up a variety of strategic options that will offer you the shareholder much more attractive opportunities.

Over the last 3 years, FAG Kugelfischer has successfully implemented a strategy involving a balanced, global positioning and a leading product and service portfolio. This stands in stark contrast to INA's positioning as a family business with an overwhelmingly regional focus and a one-sided emphasis on the auto industry.

The limited financial options available to a family business would mean a clear step backwards for our continuing measures in the fields of value enhancement and acquisitions. In this context, I would like to point out our strong progress, demonstrated in our recent joint venture with the Japanese company NTN, which exemplifies FAG Kugelfischer's global strategy.

Above all, FAG's board believes strongly that the current offer bears no reasonable relation to the company's earning power or value and thus to the value of your FAG share. This is all the more true now that stock prices are currently at a low point.

My colleagues and I are currently intensively investigating all options available to FAG. I can assure you that in this endeavour, we remain steadfastly focused on maximising shareholder value.

You will receive a detailed analysis and statement during the coming days.

Yours sincerely,

Prof. Dr. Uwe Loos