Annual Report 1998

Robert Bosch GmbH Robert-Bosch-Platz 1 D-70839 -Schillerhöhe

Mailing address: Postfach 10 60 50 D-70049

Telephone + 49 711 8 11- 0 Fax + 49 711 8 11- 66 30

www.bosch.de KH/WVK1 1 987 782 124 auf 100 on 100 in in Deutschland · Printed Papier Gedruckt paper % chlorfreiem % chlorine-free Key Figures Bosch Group Business Sectors and Divisions

Automotive Equipment

Bosch Group Worldwide 1998 1997 ABS and braking systems Lighting technology Engine-management systems – gasoline

Sales 50,333 46,851 percentage change versus prior year + 7.4 + 13.9 Bodywork electrics Fuel-injection technology – diesel On-board electronics Foreign sales as a percentage of sales 65 65

Research and development expense 3,478 3,257 Mobile communications1 Semiconductors and control units Starters and alternators as a percentage of sales 6.9 7.0

Investments in tangible fixed assets 3,773 2,905 as a percentage of depreciation 148 125 Aftermarket products, after-sales service, test equipment and technology Number of employees average for the year 188,017 179,719 as of January1, 1999/1998 189,537 180,639

Total assets 36,343 34,906 Communications Technology2

Equity capital 11,869 11,377 Private networks Broadband networks Aerospace engineering as a percentage of total assets 33 33 Public networks Terminals Security systems

Net income for the year 850 1,659

Unappropriated earnings (Dividends of GmbH) 80 2,209 Consumer Goods

Values in million DM Power tools Thermotechnology Household appliances3

Capital Goods

Automation technology Packaging machinery

Front-page illustration: We introduced high-pressure injection systems for direct- injection diesel engines. Shown here is the production of Common Rail injectors in our Bamberg plant. 1 -Werke GmbH (100% Bosch) 2 Bosch Telecom GmbH (100% Bosch) and product groups 3 BSH Bosch und Siemens Hausgeräte GmbH (50% Bosch) Status as of January 1, 1999 Table of Contents

Page

Supervisory Council 4

Management 5

Supervisory Council Report 6

Management Report 8

Automotive Equipment Business Sector 14

Communications Technology Business Sector 22

Consumer Goods Business Sector 26

Capital Goods Business Sector 30

International Business 32

Research and Development 36

Employees of the Bosch Group 38

Financial Statements of the Bosch Group Worldwide 40

Major Companies of the Bosch Group Worldwide 54

Financial Statements of Robert Bosch GmbH 56

Ten Year Statistics Bosch Group Worldwide 58

3 Supervisory Council Management

Dr. phil. Dr. rer. oec. h.c. Dr.-Ing. Wolfgang Eychmüller, Prof. Gero Madelung, Munich Effective July 1, 1999 Marcus Bierich, Stuttgart Ulm/Donau Formerly Technical University Munich Chairman Chairman of the Board of Management Chair of Aviation Technology Board of Management Board of Management Former Chairman of the Board of of Wieland-Werke AG Management of Robert Bosch GmbH Prof. Dr. rer. nat. Hermann Scholl Hermann Scholl Ruth Fischer-Pusch, Stuttgart Hans-Joachim Queisser, Stuttgart Chairman Chairman Walter Bauer, Kohlberg Trade Unions of the Metal Industry, Formerly Director at the Max-Planck- Deputy Chairman District Management Institute for Solid-State Research Heiner Gutberlet Rainer Hahn Chairman of the Joint Shop Council Baden-Württemberg until December 31, 1998 of Robert Bosch GmbH as well as of Urs B. Rinderknecht, Ennetbaden Claus Dieter Hoffmann the Combined Shop Council, and Hans-Henning Funk, Hildesheim Chief Executive of UBS AG Rainer Hahn Chairman of the Shop Council of the Chairman of the Shop Council of Robert S. Oswald Reutlingen Plant the Hildesheim Plant and Member Gerhard Sautter, Claus Dieter Hoffmann of the Joint Shop Council of Chairman of the Shop Council of the as of July 1, 1998 Stephan Rojahn Dr. jur. Peter Adolff, Stuttgart, Robert Bosch GmbH Feuerbach Plant, and Deputy Chairman former Member of the Board of of the Joint Shop Council of Robert Robert S. Oswald Gotthard Romberg Management of Allianz Versicherungs- Dr. jur. Karl Gutbrod, Stuttgart Bosch GmbH and the Combined Shop as of July 1, 1998 Aktiengesellschaft Former Member of the Board of Council Tilman Todenhöfer Management of Robert Bosch GmbH Tilman Todenhöfer Knut Angstenberger, Stuttgart Chairman of the Board of Trustees of Hans Peter , Department Manager at the Feuerbach GmbH Chairman of the Board of Management Hubert Zimmerer Deputy Members of the Plant, and Chairman of the Joint of Andreas Stihl AG & Co until June 30, 1999 Board of Management Speaker Group of Robert Bosch GmbH Gudrun Hamacher, Frankfurt and of the Group Speaker Committee Managing Member of the Board of Manfred Wenkemann, Homburg Bernd Bohr Directors of the Trade Unions of the Chairman of the Shop Council of the Associate Members to the Dr. h.c. Bo Erik Berggren, Stockholm Metal Industry Homburg Plant of Robert Bosch GmbH Board of Management Wolfgang Chur Deputy Chairman of the Board and Member of the Joint Shop Council of Directors of Investor AB Hans-Joachim Jaquet, of Robert Bosch GmbH Werner Andexser Siegfried Dais Mörfelden-Walldorf until March 31, 1999 until November 26, 1998 Dr. Ulrich Cartellieri, Frankfurt Chairman of the Joint Shop Council of Member of the Supervisory Bosch Telecom GmbH and Chairman Hans Wolff, Bamberg Siegfried Dais Council of Deutsche Bank AG of the Shop Council of Bosch Telecom Chairman of the Shop Council GmbH at Frankfurt of the Bamberg Plant and Hans Hugendubel Member of the Joint Shop Council until December 31, 1998 Dieter Klein, Wolfersheim of Robert Bosch GmbH Chairman of the Shop Council of the Stephan Rojahn Homburg Plant of Robert Bosch GmbH and Member of the Joint Shop Council Gotthard Romberg of Robert Bosch GmbH as of April 1, 1999

Olaf Kunz, Frankfurt Managing Director of the Trade Unions of the Metal Industry, Department for Union Policy

4 5 Supervisory Council Report

In its sessions and using written Also as of April 21, 1998, the employee The Supervisory Council of Robert monthly reports, the Supervisory representatives Rudolf Baron and Bosch GmbH, acting on the recom- Council of Robert Bosch GmbH kept Dietfried Blanarsch left the Supervi- mendation of the shareholders, at its itself regularly informed about the sory Council. Newly elected were meeting of April 13, 1999, appointed progress of business and the com- Hans-Joachim Jaquet and Manfred the former associate members to the pany’s situation. Business develop- Wenkemann. The latter retired as of Board of Management Stephan Rojahn ments, financial situation, investment March 31, 1999 and as a result left the and Gotthard Romberg as full mem- plans, as well as new technical devel- Supervisory Council. Dieter Klein was bers of the Board of Management, and opments were presented and dis- appointed as his successor by the Dr. Siegfried Dais as deputy member, cussed in detail. Reporting and discus- Stuttgart court per April 1, 1999. The all effective as of July 1, 1999. In addi- sion included all important companies Council expresses its appreciation for tion, the Council, following the recom- of the Bosch Group. the constructive teamwork of the em- mendation of the shareholders, named ployee representative members leav- Dr. Bernd Bohr, previously in charge Schitag Ernst & Young Deutsche Allge- ing the Council. of development at the ABS and brak- meine Treuhand AG, Stuttgart, audited ing systems division, Wolfgang Chur, the accounting and financial state- As of July 1, 1998, the former associate previously speaker for the manage- ments of Robert Bosch GmbH and the members of the Board of Manage- ment of the mobile communications Bosch Group. The auditors in all cases ment Dr. Claus Dieter Hoffmann and division, and Franz Fehrenbach, previ- gave their unqualified opinion. The Robert S. Oswald became full mem- ously speaker for the management of Supervisory Council concurs with the bers of the Board. the diesel fuel-injection technology audit findings, and recommends that division, to deputy members of the the shareholders approve the financial Upon reaching retirement age, Dr. Board of Management, all effective as statements of Robert Bosch GmbH and Heiner Gutberlet left the Board of of July1, 1999. follow the proposal of the Board of Management of Robert Bosch GmbH Management for the disposition of net as of December 31, 1998. He has mean- income. while been elected to the Board of Stuttgart, April 1999 Trustees of the Robert Bosch Stiftung For the Supervisory Council As of April 21, 1998, Dr. Robert E. GmbH. Hans Hugendubel took early Dr. Marcus Bierich Ehret, Jörg A. Henle, and Dr. Wolf- retirement as of December 31, 1998. Chairman gang Hugo left the Supervisory Coun- Dr. Werner Andexser also left the com- cil as new members were elected. The pany. The Council expresses its thanks Council thanks these gentlemen for to these gentlemen for their committed their long years of work. As of the work. same date, the shareholders elected Dr. Ulrich Cartellieri, Urs B. Rinder- knecht, and Hans Peter Stihl to mem- bership of the Council.

Photo at right: State-of-the-art automotive elec- tronics by Bosch: Automatic appli- cation of computer chips to micro- hybrids at the Reutlingen plant

6 Sales Breakdown of sales (billion DM) (as a percentage) Progress 1994–1998 by business sectors 1998 Management Automotive Equipment Report 1994 34.5 63.2 Communications Technology 1995 35.8 10.0 Consumer Goods 1996 41.1 22.5 Capital Goods 1997 46.9 4.3

1998 50.3 ______0102030405060 0102030405060708090100

Growth of the world economy weakened Business at the Bosch Group in 1998 Our diesel injection systems business The Communications Technology Busi- Stuttgart. GKR develops and sells elec- Joint venture for air brakes and in 1998 to approximately 2%. Of deci- was on the whole satisfactory. Targeted showed particularly strong growth. ness Sector was able to keep its sales tronic controls and control elements lighting technology sive influence for this was the worsen- sales were exceeded despite setbacks in The rising production of diesel-driven with 5.0 billion DM at the level of the for heating and air-conditioning of au- ing economic crisis in many countries in the crisis regions; financial results, how- vehicles in Western Europe and the previous year. Sales of the public net- tomobiles; the company was founded Our activities in the areas of air brakes East and Southeast Asia and its spread ever, did not meet our expectations. rapidly increasing proportion with works division fell primarily as the in 1989 as a joint venture of Bosch and ABS for commercial vehicles were to other countries, especially Brazil and high-pressure direct injection again result of the financial crisis in the Far and Behr GmbH & Co, Stuttgart. We contributed to Knorr-Bremse Systeme Russia. From the middle of 1998, this Stronger sales growth made itself felt in this area. In order to East, the sluggish release of frequencies acquired our partner’s interest as of für Nutzfahrzeuge GmbH, Munich. We also negatively affected the economies in the first half year satisfy the brisk demand for the new for the new radio-relay technologies in December 31, 1998. hold a 20 % interest in this company. in the western industrial nations; eco- injection systems which we introduced Western Europe and delays with major Other shareholders are Knorr-Bremse nomic growth in the USA was still at Consolidated sales of the Bosch Group in recent years, we were forced to put projects in the USA. This was compen- Commitment to the development AG, Munich, and AlliedSignal Inc, 3.5%, in the European Union 2.8%. increased in 1998 by 7.4 % to 50.3 bil- production into high gear earlier than sated for by the expansion of the of electronic steering systems Morristown, New Jersey (USA). lion DM. Growth took place primarily planned. That led to instances of mobile-telephone business. during the first half of the year. Al- strained employment and delivery Future steering systems require further In April of 1999 we founded a joint though we experienced a growth rate situations. Integration in integration of mechanical, hydraulic venture with Magneti Marelli SpA, of 8.9 % in the first six months, growth on-board electronics and electronic components and there- Milan, in which both companies have in the second half of the year fell by After starting mass production of high- fore close cooperation between a steer- combined their worldwide activities in nearly half of that. pressure distributor pumps in 1996 and In 1998, we continued the further ex- ing specialist and an expert electronics the area of automotive lighting tech- of Common Rail Systems CRS in 1997, pansion of areas of activity in automo- manufacturer. In addition, electroni- nology. Sales in Germany in 1998 rose by 9.6% in 1998 we commenced full production tive equipment. We took into account cally controlled steering opens the pos- to 17.8 billion DM. This increase was – of the Unit Injector System UIS and the increasing importance of conve- sibility for future integration with vehi- Vehicle proving grounds in contrast to prior years – significantly of the new electronically controlled nience and information electronics in cle dynamics control ESP (Electronic in Boxberg completed greater than outside Germany; there, radial-piston distributor pump for pas- the automobile and – as of July 1, 1998 Stability Program) in order to further sales grew only 6.3 % to 32.5 billion senger-car diesel engines with direct – concentrated our activities in body increase its effectiveness. After two years of construction we DM. The smaller growth in foreign fuel injection in 1998. electronics in a new division On-Board commenced operation in June 1998 sales was primarily the result of large Electronics. We thus created the condi- We established a 50–50 joint venture of the Boxberg (North Württemberg) sales declines in the crisis regions. How- In the Capital Goods Business Sector – tions necessary to be able to offer com- with ZF Friedrichshafen AG, Fried- testing center with its many test tracks. ever, we did well in our important mar- automation technology and packaging plete systems and software for state-of- richshafen, which started operations on The proving grounds, with an area of kets of Western Europe and North machinery – sales increased by 3.2% to the-art vehicle electrical system net- January 1, 1999. ZF is contributing its almost 95 hectares, in which we in- America with growth rates of 12 % and 2.2 billion DM. Reduced demands for works in the future. entire passenger car and commercial vested about 100 million DM, are of 8.0 % respectively. Foreign sales as a power tools in the Far East, and ag- vehicle steering activities to ZF Lenk- great importance for the development portion of total sales, which was 65 % in gressive price competition in West We combined the product groups for systeme GmbH, Schwäbisch Gmünd; and testing of new and visionary prod- 1997, remained unchanged. European thermotechnology markets, display systems, locking systems, cen- this company combines the know-how ucts in automotive technology. represented the primary reasons for tral electrics including relays, vehicle of both partners, and will supply the Strong increase in the Consumer Goods Business Sector sales security systems and convenience elec- automobile industry worldwide with The grounds consist of several track automotive equipment area increasing by only 2.7 % to 11.3 billion tronics. The On-Board Electronics conventional and electric steering sys- modules and are enclosed by a three- DM. Division, which will involve itself in- tems. lane oval, three kilometers long. The Our growth resulted primarily from creasingly with integrating compo- installation serves primarily the further the development of the Automotive nents into modules, also includes development of electronic steering and Equipment Business Sector; its sales Robert Bosch Multimedia-Systeme control systems – from ABS and ESP grew by 11 % to 31.8 billion DM. We GmbH & Co KG, Hildesheim, and via engine management to speed con- participated in the continuing boom in GKR Gesellschaft zur Fahrzeugklima- trol ACC (Adaptive Cruise Control). the automobile business in Western regelung mbH, near Europe, especially in Germany.

8 9 Investments in tangible fixed assets (million DM) Progress 1994–1998

1994 1,578

1995 2,056

1996 2,419

1997 2,905

1998 3,773 ______0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Further strengthening of presence In the United States we increased our Further globalization in world markets interests in Diesel Technology, L.P., of purchasing Wyoming, Michigan from 50 % to In Korea we operate in total with seven 85 %. This company manufactures The entire worldwide purchasing vol- companies at five locations. We pro- high-pressure diesel-injection systems ume of the Bosch Group, including duce components for diesel and gaso- for heavy-duty commercial vehicles. services, merchandise and capital line injection, antilock braking sys- We also started a significant expansion goods, climbed in 1998 to 26.7 (1997: tems, electronic controllers and small- of our Technical Center in Farmington 24.2) billion DM. About 56 % of what power motors. We have acquired the Hills near Detroit, Michigan, which we buy comes from outside Germany, shares previously held by our local we founded in 1983. The plan also half of it from America and Asia. partner and now own 100 % of Korea calls for a future concentration of Automotive Motor Corporation. application engineering and sales of Greater networking intensified the braking and antilock braking systems cooperation among our purchasing We established the wholly-owned sub- for the American automobile industry departments domestically and abroad. sidiary Robert Bosch India Limited in at this location. This allows us to concentrate our Bangalore, India. This company offers global purchasing still more and to uti- components for gasoline injection for In 1998 we founded Robert Bosch lize the most efficient procurement the India market and develops soft- Electronics Manufacturing Ltd, Hat- markets. In addition, we especially ware for use in the Bosch Group and van in and commenced support mid-sized suppliers who are for others. building a plant there for the produc- willing to establish production near tion of electronic control units for auto- our foreign plants. In China, we have produced and sold motive equipment. In Turkey we automotive equipment and consumer acquired the shares of our Turkish part- Earlier involvement of suppliers goods in several joint ventures since ner with whom we had operated in product development 1995. At the end of 1998 we acquired a 50–50 joint venture for the manufac- the shares of our former partner in ture of gas-fired heaters in Manisa near To lower manufacturing costs further, Guangdong Shenzhou Gas Appli- Izmir. we involve our suppliers in product ances Co Ltd, which manufactures development at an earlier stage. More gas-fired boilers near Guangdong. In Product partner at and more we set up simultaneous engi- addition, we set up a company for the World Exhibition EXPO 2000 neering teams with suppliers in the sale of aftermarket automotive equip- earliest phase of the process, allowing ment products in Pudong near Shang- We will participate in the World Exhi- them to contribute their development hai. bition EXPO 2000 in Hanover as prod- know-how and ideas for cost reduction. uct partner for traffic telematics and As of the beginning of 1999 we estab- mobile telephones. We also cooperate lished the holding company Bosch with the City of Hanover and its trans- (China) Investment Ltd, Peking. This portation departments in future pro- company will hold the shares in our jects: using the new digital radio trans- joint ventures and coordinate purchas- mission method DAB/DMB we cre- ing, sales and customer service in ated a passenger information system China. for mobile reception of timetables and other multi-media information in 144 urban trains, as well as a system for Photo at right: dynamic timetable data at bus stops. Demand for our injection sys- tems for direct-injection diesel engines grows rapidly. Produc- tion, as here in our main plant in Stuttgart-Feuerbach, requires the highest degree of precision.

10 Investments in tangible fixed assets Investments in tangible fixed assets (as a percentage) (as a percentage) by business sectors 1998 by regions 1998

Automotive Equipment Countries of the European Union 78.1 71.5 Communications Technology America 5.8 18.6 Consumer Goods Asia, Africa, Australia 10.2 4.7 Capital Goods Rest of Europe 1.7 5.2 Other 4.2 ______0102030405060708090100 0102030405060708090100

We also started a program which Measures the past ten years R & D expenditures In Germany, we started construction Still unsatisfactory should lead to further improvement in to improve quality as a percentage of sales rose from work in 1998 on a development facil- profitability the quality of purchased parts. To 5.9 % in 1989 to 6.9 % in 1998. ity for ABS in Immenstadt and a lab guarantee perfect performance on the In order to improve workflows and building with clean rooms for the pro- The profits of the Bosch Group in 1998 part of our suppliers, we developed processes, we conducted self-assess- The focus of our activities is on the duction of aerospace components in were unsatisfactory. They were nega- a uniform system providing for the ments of our methods and processes. electronic stability program ESP, high- Backnang. We also started many con- tively affected by high extra expendi- agreement on quality goals. The basis for this was the model of the pressure injection systems for gasoline struction projects outside Germany tures in the start-up of new products, European Foundation for Quality and diesel engines, and navigation sys- (see pages 32 to 35). especially in the diesel area, as well as Our rating system to encourage effi- Management, EFQM, of which we are tems. To cope with these challenges, we by sales losses in Asia, South America ciency in our suppliers was intensified a charter member. The emphasis was increased the number of newly hired The number of employees and Russia. The trend in results in the and expanded to include suppliers of placed on the reorganization of prod- engineers and scientists in Germany increased worldwide communications technology area was machinery and equipment, as well as uct and process development and pro- in 1998 to 1,588 (1997: 1,036). World- also unsatisfactory. shippers. ject management. wide, about 15,700 (1997: 14,700) scien- Increased sales had a positive effect tists, engineers and technicians work on employment. On annual average, Outlook Rightsizing Furthermore, we are working inten- to develop new products, systems and the number of employees worldwide for current year worldwide logistics sively on quality assurance in software methodology, and to improve the func- increased in 1998 by 8,298 to 188,017. for products and test equipment. With tionality and reliability of existing This increase results primarily from Bosch will further expand its technical We combined our more important in- the help of a model from Carnegie products. strong growth in automotive equip- excellence and its worldwide market ternational air and sea freight orders Mellon University, Pittsburgh, Penn- ment business. Thus employment in penetration in 1999. The economic and entrusted efficient logistics suppli- sylvania (USA), we improved our soft- Further increase in investments Germany grew for the second year in conditions are however worse than a ers with their performance. In Ger- ware development processes. in tangible fixed assets a row, in 1998 by 3,767 to 94,415; out- year ago, as a result of continuing many we now use local transportation side Germany employment rose by crises in foreign areas which are firms almost exclusively for the move- Extensive projects We continued our high level of invest- 4,531 to 93,602. important to the Group, and because ment of purchased parts. to reduce complexity ment activity in 1998. In total, invest- of uncertain and less favorable general ments in tangible fixed assets in- Two-phase plan conditions in Germany. With this in Preparation As part of our process of continuous creased by 30 % to 3.8 billion DM, for conversion to the euro mind, we expect sales to increase less for Y2K improvement (CIP) we expanded our equivalent to 148 % of depreciation. than in the year before. pilot program for the reduction of com- With the start of the European Mone- To deal with the changeover to the next plexity, which we initiated in 1997 with More than half, 51 % (1997: 47 %), of tary Union on January 1, 1999, our millennium we have introduced the four projects, to cover all divisions. these investments were made in Ger- company too adopted the single-cur- needed measures in our data process- Many projects work on the simplifica- many. This was essentially the result of rency euro, even if, for the time being, ing systems in all areas; they will be tion of work flows and products while the further expansion of production only in relation to outsiders. Bids and completed on time. In addition, we making them even more responsive to facilities for diesel and gasoline injec- invoices can be denominated in euro. have begun with extensive support for the needs of our customers. The focus tion systems and ESP. Especially large In the second phase from the begin- our suppliers; included is an assess- of these activities is on production, investments took place in Bamberg, ning of the year 2001 we will also use ment of the Y2K capabilities at ap- variant management and logistics. Homburg (Saar), Reutlingen, and the euro internally. Presuming the proximately 1,500 suppliers by third- Stuttgart-Feuerbach. legal ramifications have been resolv- party experts. Greater expenditures for research ed, we will then also change wage and and development The portion for machinery and equip- salary payments to the euro; until then ment was 93 % (1997: 93 %). In land we will only indicate the euro equiva- To further strengthen our innovative and buildings we invested 274 (1997: lent of such payments as additional forces we invested more in research 205) million DM. information. and development. The 1998 increase was 6.8 % to 3.5 billion DM. During

12 13 Automotive Equipment Business Sector

In 1998 motor vehicle production world- Continuing demand for vehicle In total in 1998 we built 9 million wide fell by 2.3% to 52.7 million units. dynamics control ESP ABS. We have thus supplied 45 mil- Western European growth in automobile lion systems since its introduction. production however continued, rising The demand for our electronic vehicle 8.1% in 1998. Production in North dynamics control ESP (Electronic Sta- Development of passenger- America on the other hand rose only bility Program), which we introduced compartment sensing systems slightly, and in Japan it continued to fall. in 1995 as a worldwide first, continues to grow briskly; in 1998 we equipped Using the yaw sensor as a base, we Our Automotive Equipment Business more than 400,000 vehicles with this developed a sensor which recognizes a Sector increased worldwide sales by system. threatened rollover of the vehicle. This 11% to 31.8 billion DM and expanded enables seat-belt tighteners and airbags its international production network By electronically influencing the brak- to be activated in time. In order to further. Mass production of many newly ing system and the drivetrain, ESP is further improve the effectiveness of developed products commenced. able to increase the driving stability of the airbag, we are intensively working motor vehicles, thus reducing the risk on several systems for passenger-com- of traffic accidents. Key component of partment sensors which allow for the the system is the yaw sensor which individual deployment of the airbag as reacts immediately the vehicle starts needed for each passenger. to swerve out of its track. In 1998 we began mass production of a second Reasonably priced components generation using micromechanics. for automatic transmissions This new technology made the sensor considerably smaller and lighter. For continuously variable transmis- sions CVT we developed new push- In 20 years Bosch has delivered belts with a long useful life and ex- 45 million ABS units tended torque range. We now expect a broad application to passenger cars in Bosch recognized the importance of the lower to middle-class areas. We active driving safety at an early stage, are working on pushbelts which can and as a result was able in 1998 to look handle even greater torque for luxury back at a remarkable milestone. After cars and light commercial vehicles. many years of development work we introduced in 1978 the first worldwide We started full production of a module production-ready ABS for passenger which combines the electrical and cars. Since then we have continually hydraulic functions for the control of expanded the system’s functionality, conventional automatic transmissions. reduced its size and weight and low- ered its cost. Further visionary devel- opments in the area of active safety resulting from the ABS system were traction control TCS and vehicle Photo at right: Key numbers dynamics control ESP. The yaw sensor is the key com- Automotive equipment ponent of the vehicle dynamics The latest version is the ABS 5.7, control ESP (Electronic Stabil- which went into full production in ity Program). In 1998, we 1998 1997 mid-1998. It was conceived in such a introduced a micromechanical Sales 31.8 28.7 billion DM fashion, that it can also serve at the version to the market. This new Investments 2.9 2.2 billion DM same time as the basic system for ESP. technology makes the sensor con- R&D Expense 2.4 2.3 billion DM siderably smaller and lighter.

14 Sales of automotive equipment Automotive market 1 Due to a detailed survey procedure, 1 the percentage figures cannot be (billion DM) Percentage of ABS-equipped vehicles as compared to passenger-car production compared with those prior to 1997. Progress 1994–1998 in selected markets 1997/1998

Germany 82 84 1994 19.6 Western Europe 47 1995 20.5 59 North America 1996 24.5 71 73 1997 28.7 Japan 50 1998 31.8 62 1997 ______1998 05 1015 2025 3035 025 50 75 100

It reduces the space needed for trans- they are generally operated with a new diesel engines with direct injec- Liquid-cooled alternator missions and increases their reliabil- significant surplus of air under actual tion are quieter than conventional in full production ity. driving conditions. Through faster ones and feature a driving experience control and better diagnosis, this so- which resembles that of gasoline As a world-first, our British plant in Increasing number of projects for called broadband sensor provides the engines. Cardiff commenced full production gasoline direct injection conditions for a further reduction in for two automobile manufacturers of a pollutant emission. As planned, we started full production liquid-cooled alternator for passenger- A fundamental change in the injection of two new injection systems for pas- car on-board electrical networks. The technology for gasoline engines is tak- Torque-driven engine control gains senger cars in 1998: an electronically- new type of alternator supplies up to ing place. Manifold injection will more acceptance controlled axial-piston distributor 150 amps at 14 volts and is extremely and more be replaced by direct injec- pump which meters fuel with a mag- quiet. The special construction allows tion. It offers the potential of further After having begun mass production netic valve, and the Unit Injector Sys- the elimination of slip rings and car- lowering fuel consumption by up to of the new engine management sys- tem UIS which allows injection pres- bon brushes, making for an especially 15% and thus contributes also to a tem ME7 in 1997, we introduced it to sures up to 2,000 bar and pre-injection long useful life.

reduction in CO2 emissions. a broad spectrum of markets in 1998. for quieter engine operation. Its electrically-operated throttle valve In order to lower fuel consumption in The number of projects for the devel- ETC (electronic throttle control) and In addition, the strong demand for the vehicles further, we are at work on opment and use of gasoline direct the principle – first introduced by us – high-pressure pump VP44, which we increasing the efficiency of the proven injection, which we pursue together of coupling the control functions to introduced in 1996 and for the Com- compact alternator. That will also makes Taking measurements of a diesel with car manufacturers all over the the torque of the engine, are being mon Rail System CRS which has been the use of smaller and lighter alterna- Innovative technology for engine in the Stuttgart-Feuer- world, is growing rapidly. As suppliers more and more generally accepted. in production since 1997 is further on tors possible. direct-injection diesel engines: bach plant. In this test room of complete systems, we are working The system contributes to significant the rise. In its second year of produc- injectors of the new high-pres- injection components are tested on all key components such as high- reductions in pollutant emissions and tion, we already supplied more than Efficient on-board sure injection systems Unit under actual engine operating pressure pumps, high-pressure injec- also enables self-diagnosis of emis- 200,000 CRS. energy networks Injector System UIS (left) and conditions. tors, control units, and fuel rails with sion-related components. Common Rail System CRS (right) pressure sensor. The Unit Injector System UIS and the In order to satisfy the rising need for Start-up of full production of Unit Pump System UPS, which pro- electrical power in motor vehicles, we Introduction of the planar further diesel injection systems vide each engine cylinder with its own are developing high-performance al- Lambda sensor injection unit, are developing into the ternators and starter-alternators. Com- Demand for vehicles with diesel preferred injection systems for heavy pared to conventional starter systems, We were the first manufacturer world- engines continues to increase strongly. commercial vehicles. They are more these units are better able to manage wide when we started production of In Western Europe, diesel-driven pas- and more replacing the former in-line the automatic engine shutoffs used as the Lambda sensor in 1976. This sen- senger cars continued to take market pumps. Our main plant for these a further fuel-saving measure when sor made the use of closed-loop-con- shares from vehicles with gasoline products is our factory in Wyoming, the vehicle stops (start–stop function). trolled catalytic converters in vehicles engines. This development was sup- Michigan (USA). Another plant is lo- We are also working on totally new possible. In 1998 we introduced a ported by the introduction of high- cated in Homburg (Saar). The number on-board network concepts, such as a basic new development in the form of pressure injection systems for direct- of new applications going into full 42 V network which will be required a flat and smaller sensor element injection diesel engines on a broad production rose further in 1998. for still broader use of electronic actu- made of multi-layer ceramics. It has scale. These allow closer adherence to ators in the vehicle. the advantage of still shorter start and tighter emission limits and contribute With the wide spectrum of diesel reaction times. In contrast to our to a further significant reduction in engine systems we offer, it is possible For electric drives we are developing conventional finger-type sensor – of fuel consumption. In addition, the to supply the optimum injection sys- electric motors with their respective which we have produced more than tem for each type of diesel engine. We control and performance electronics. 100 million – the new sensor can be are thus well prepared for the ever used also in lean mixtures. This is lower limits of allowed emissions. Photo on next double especially necessary for future gaso- page: line engines with direct injection, as The testing center at Boxberg (North-Württemberg), which opened in June, 1998.

16 17

Passenger-car market Automotive market Percentage of diesel-engine passenger cars in total new-car registrations Motor-vehicle production in selected markets 1997/1998 in selected markets 1997/1998 (in million units)

Germany 5.0 5.7 Germany Western Europe 14.8 16.4 17.5 16.5 USA 41.7 11.9 40.5 12.2 Western Europe Japan 21.7 11.1 1997 24.4 10.0 1997 ______1998 ______1998 020 40 60 80 05 1015 20

These electric motors provide flexibil- Brushless drive electronic displays, the driver can be world-radio. It automatically adapts to ity when integrated in the drivetrain for engine cooling fan offered additional information over country-specific reception conditions and can be used, for instance, in hybrid and above the conventional display and at the same time automatically drives to support the internal-combus- We developed a brushless direct-cur- data. Among the innovations we intro- adjusts the optimal sound quality to tion engine. rent motor for engine cooling fans to duced was a combination instrument each type of automobile. the point of production. Its distinc- with miniature fluorescent lighting for Lighter motors for tions are short axial installed length, a luxury car model. For many passengers, excellent sound wiper equipment long useful life, and high degree of quality is gaining in importance. To efficiency. It is available with a power First dynamic navigation system meet this need, we developed com- We completed development of a new up to 600 watts. The integrated elec- in Europe plete sound systems which we supply generation of electric motors for wind- tronics allow for continuous speed to car manufacturers for installation in shield wipers. They are considerably control. The cooling output is thus The demand for vehicle navigation new vehicles. lighter and include the control elec- best adjusted to the operating condi- systems based on digital street maps tronics. This makes it possible to tion of the vehicle engine. grows strongly. Our subsidiary Blau- Blaupunkt marketed the first car radio We developed the electronic driver achieve additional functions to im- punkt-Werke GmbH in 1998 expanded with functions for traffic telematics information system Comand prove safety and comfort without tak- Locking and security systems its product range with the first dynamic under the name Gemini. It can be used (Cockpit Management and Data ing up more space. On the basis of this for vehicles navigation system in Europe. As a unit for calls in case of breakdowns and System). It includes a dynamic power source we developed a dual- which integrates car radio, navigation emergencies and for personal traffic navigation system which changes motor wiper arrangement, in which We developed vehicle locking and assistance and telematic functions, it information in Germany, and can be the selected route to take traffic each wiper arm is powered separately. security systems which, in addition to calls in up-to-the-minute traffic data expanded with a function for voice- Display systems for the driver’s conditions into account, and The two drives are synchronized elec- the locks themselves, also include sen- from specialized servers or uses the activation. compartment are continuously also incorporates a number of tronically. As a result, the connecting sor systems and electronics which not traffic information aired by radio sta- becoming more efficient, even in operator functions. rods in the middle of the vehicle, only check access and driver autho- tions on the Traffic Message Channel Aftermarket business in Europe lower-priced cars. Electronic dis- needed for conventional wiper equip- rization, but also perform vehicle sur- (TMC). In this way it can reroute the and North America stronger plays provide the driver with still ment, become superfluous. This brings veillance. The driver uses a code card driver to avoid traffic jams and other more data from a combination weight and space benefits. or encoded key tag instead of a key. traffic obstacles. We were able to increase our Euro- instrument. When he approaches the vehicle, the pean aftermarket business in automo- Simplified control door is automatically unlocked (Pas- The Blaupunkt Travelpilot, a naviga- tive equipment, especially outside of convenience functions sive Entry) and the immobilizer – tion system marketed under our own Germany. In Asia, the economic and depending upon the system configura- name, was expanded in 1998 with fleet financial crisis hurt our business. In 1998 we started full production of a tion – is automatically cancelled (Pas- management functions and sold to pneumatic control unit. In addition to sive Go). manufacturers of commercial vehicles In the North American market we functions such as doorlocks and folding and buses. were able to further improve our posi- of rear headrests which already were a Display systems tion, especially in wiper blades and reality, it became possible to concen- become more efficient New car radios introduced spark plugs. Here we began introduc- trate on further convenience functions ing the new surface-gap spark plug such as a door-closing servomech- The display system business in 1998 During the summer of 1998 we intro- with platinum center electrode and anism or a massage device integrated was characterized by a considerable duced a new series of car radio models four ground electrodes. in the rear seat. The control logic is rise in production volumes of existing with fresh and colorful designs into the integrated with the pump housing to products and first full production runs European aftermarket. For use in new The worldwide service organization form an assembly. of new models. The functionality of automobiles (original equipment) we with about 10,000 Bosch service cen- our instruments also increased signifi- developed for the first time a so-called ters and 100,000 employees in 130 cantly. Since lower-priced automobiles countries supports the further expan- are also more and more equipped with sion of our aftermarket activities.

20 21 Communications Technology Business Sector

The world market for communications Change in the market in 1997, went into operation in its first technology products and systems grew for public networks large installations in 1998. An expan- further in 1998, especially in data and sion of this system to broadband appli- mobile communications. Development Fundamental change has taken place cations is under common development differed, however, according to regions worldwide in the market conditions for with our U.S. subsidiary Bosch Tele- and individual markets. European mar- public network technology. After com- com Inc. kets were stagnant. Some of the public pletion of the change-over of the tele- and private fixed network technology phone network of Deutsche Telekom The proceedings to regulate the fre- markets declined. AG to digital technology, demand for quency allocation for radio access net- EWSD exchange equipment (Elec- works in Europe which were com- Sales of the Communications Technol- tronic Digital Dial System) decreased pleted in the second half of 1998 ogy Business Sector in 1998 stayed considerably. In addition, unresolved increased the demand for our Digital even with the previous year at 5.0 billion regulatory questions led new network Multipoint System (DMS). Different DM. This amount includes for the first operators to postpone or even shelve frequency versions are available which time the sales of Bosch Telecom their purchasing decisions. have already been installed by several Danmark A/S (Dancall Telecom A/S new network operators both inside and acquired in 1997). The economic crises in important Far outside Germany. Unexpected delays Eastern countries as well as in Russia in the awarding of frequencies to net- and Brazil led to a decline in demand work operators in the U.S. led to the and the postponement of projects. The postponement of radio project orders. increasing number of internet users and the growing use of this medium Our radio-relay systems for short dis- cause data traffic to grow much more tances were supplemented with addi- rapidly than telephone traffic. This re- tional versions. In doing so we took quires greater transmission capacity of into account the growing application the data networks as well as efficient of synchronous technology (SDH) to and flexible solutions for access net- access connections in transmission works. networks as well.

Emphasis on transmission and Business with our network manage- access networks ment system NSÜ Open was contrib- uted to the Bosch Telecom Software- In view of these changes, which also Systeme GmbH & Co. KG, Backnang, open up new business perspectives, we which we established in April 1998. shifted the emphasis of our activities to This step also enables us to better reach the areas of transmission and access networks with outside hard and soft- network technology. To this end, we ware. not only introduced refinements to existing products, but also brought brand new products to the market.

Key numbers The access network system for optical Communications technology transmission, known as the Bosch Access Network, which we introduced Photo at right: 1998 1997 Our call center in Magdeburg Sales 5.0 5.0 billion DM has created an important posi- Investments 220 142 million DM tion for itself in the growing R&D Expense 600 560 million DM services market in Germany.

22 23 Sales of communications technology products (billion DM) Progress 1994–1998

1994 5.5

1995 5.4

1996 5.4

1997 5.0

1998 5.0 ______0246810

Growth for private Data network business is also growing. this in Europe more and more im- planned satellite services in these areas network systems Being a systems integrator, we plan and portant area. In the fall of 1998 we and delayed the construction of sat- install networks of various sizes all the started production of the GSM 908, a ellite-supported communication net- As the West European market for pri- way up to and including wide-ranging mobile telephone with a volume of works. This market weakness affected vate communication systems as a corporate networks using all currently only 99 cubic centimeters and a weight our business too, albeit in milder form. whole stagnated, demand in Germany available technologies. of a mere 99 grams, which also features In the medium term we continue to weakened. In contrast to this develop- an integrated data communications expect a better than average demand ment we were able to expand our Increasing use is being made of ser- interface. With this telephone we for satellite services for mobile and position further with the ISDN- vices for the setting up and operation expanded our product range into the data communications. exchange equipment Integral 3 and of private communication networks. higher-priced category. Integral 33. Business with industry- Our new Business Recovery Center is For our new generation of compact specific solutions for banks and stock- a good example of such services. It Increasing demand for security power supply units for traveling-wave brokers grew further; among other provides the banks in the Frankfurt tube amplifiers we received a large ini- things we received the order for area with a permanently up-to-date For several years now the demand for tial order from the satellite operator equipping the European Central Bank backup for their telecommunications overall solutions in the application of Intelsat. High-performance optical com- in Frankfurt. We were able to win over and data communications systems in security technology to building com- munication channels between satellites Telecom Italia and other resellers in case these break down. Demand for plexes and real estate units has been in space will play a decisive role in Europe outside Germany for our our Ecotarif software, which in a growing. We have adapted to this de- future world-encircling satellite net- small-scale system Integral 3 Duo. switching system allows the flexible velopment by offering complete sys- works. We have intensified our devel- In 1998 we introduced the new choice of the most economic network tems and operator models which in- opment to secure our technical posi- Bosch supplies the equipment for GSM 908 mobile phone, a product Integration of voice supplier and rates, also shows robust clude planning, erection, financing and tion in this area. state-of-the-art radio-relay systems for in the higher-priced range. It is and data communication growth. operation. We received several large the transmission of sound and pictures. especially small and lightweight. In orders in 1998. For example, we were Difficult environment for traffic Shown here: antennas on the Berlin addition, it has an interface for Development was brisk in the rela- Expansion of mobile telephone chosen to equip the main parliament management technology TV-tower. data communication. tively new market for systems which production in Denmark building and several ministries and support the integration of voice and parliament annexes in Berlin with se- Continuing scarce investment funds in data communication including infor- The market for GSM mobile tele- curity technology. public budgets for traffic guidance and mation processing. Demand in this phones keeps growing strongly and is management infrastructure, together area is concentrated in CTI-systems characterized by rapid innovation and The basis for our strong position in this with considerable price erosion as a (Computer Telephony Integration), in falling prices. After the acquisition of field is primarily the technical lead in result of idle capacity, characterize the which a telephone call automatically Dancall Telecom A/S in the spring of LSN bus technology (Local Security situation in the traffic management triggers a search for customer informa- 1997, we converted our Danish loca- Network). The miniaturization of LSN technology business. In addition, we tion from databases. Complementing tion Pandrup to become our center for technology to chip size makes it possi- foresee that future traffic telematics data communication with voice com- GSM mobile telephones. In October ble to electronically monitor even the systems will be based on GSM net- munication is also rapidly growing in 1998 we started operations there in a smallest magnetic contacts. As an inno- works instead of conventional traffic importance on the internet. In the CTI new plant. This allowed us to double vation, we introduced a fire-gas sensor guidance technology. Therefore, as of market we offer products for business our sales of GSM mobile telephones. which stands out due to its very short January 1, 1999, we sold our interest in call centers. For special applications we reaction time and high level of freedom Signalbau Huber AG, Munich, which can deliver complete solutions with Our new development World 718 re- from false alarms. operated primarily in the traffic-signal our Referenz 2000, which include cus- ceived international acclaim. It is the field. tomer-specific problem analysis, sys- first mobile telephone with which it is Growth in satellite technology tems planning and benefit documenta- possible to place calls both in the Euro- levels out tion. pean GSM 900 and the American PCS 1900 networks. Early investments in The difficult economic situation in the the GSM dual-band technology pro- Far East, South America and Russia pelled us to a significant position for adversely affected the use of earlier

24 25 Sales of consumer goods (billion DM) Progress 1994–1998 Consumer Goods

Business Sector 1994 7.5

1995 7.9

1996 9.2

1997 11.1

1998 11.3 ______02468101214

Invigorating demand in 1998 supported Expansion of international saws and hacksaws in cutting quality, – above all drilling, grinding and saw- conditions in Western Europe are get- the economic development in Western position in power tools stands out. This saw is ideally suited ing – sell an extensive accessory ting tougher. Business development in Europe. In contrast, domestic demand in for clean, splinter and rip-free saw- assortment. Our program includes Germany was thus negatively affected important markets such as Southeast After strong growth in previous years, work, as well as for precise mitercuts. more than 7,000 items and thus takes by weak construction activity and Asia and Latin America fell. Private con- the world market for power tools into account the regionally very increased competition from foreign sumption in North America continued to shrank in 1998. Both quantity and In the area of measurement technol- diverse requirements. In Europe we competitors. grow. value decreased by 6 % to 89 million ogy we introduced a digital distance manufacture in our German plant in units and 12 billion DM respectively. meter using laser technology for dis- Ravensburg and in St. Niklaus (Swit- We expanded our position in the Sales of our Consumer Goods Business An important reason was the economic tances up to 30 meters. zerland). In the largest market, the shrinking European market for gas- Sector increased by 2.7% to 11.3 billion crisis in Asia, where markets, as a result United States, we are well-positioned fired boilers. We consolidated our DM. This includes 50% of sales by BSH of declining construction activity, de- In Europe we produce power tools in with our joint venture, Vermont position in wall-mounted gas-fired Bosch und Siemens Hausgeräte GmbH. creased by half within the span of a Leinfelden, Murrhardt and Sebnitz in American Corporation. heaters. An important contribution year. Nevertheless, our power tools Germany, Solothurn and Derendin- was the introduction of a new equip- division was able to increase its sales gen in Switzerland and in Breda Motor-driven gardening tools are ment series of water-cooled ribbed further and to expand its world market (Netherlands). Outside Europe we offered by us in the U.K. under the burners for which we had completed standing. manufacture in Brazil, Mexico, the brand names Atco and Qualcast and in development in 1997. In the growing U.S., China, India and Malaysia. other European countries under the market for equipment maximizing Strong position with Bosch, name Bosch. They are produced in useful heat, which use the condensa- and brands Guaranteed repair Stowmarket, U.K. In North America tion of steam for the extraction of within five days we are represented with the brand additional heating energy and so pro- Despite declining markets, we In the market for commercial power Gilmour by way of Vermont American duce favorable utility and emission were able to expand our world- tools, the Bosch brand makes us one In June 1998 we introduced a unique Corporation. values, we also strengthened our posi- wide strong position in power of the worldwide most important pro- service in the industry: we guarantee tion by the introduction of new prod- tools with innovative new ducers. With the Skil brand we are repairs of power tools in Germany International presence in thermo- ucts. As an innovation we started mar- products. above all popular among craftsmen in within five workdays. Should we technology strengthened keting a flexible device for heating North America as a supplier of circu- renege on this promise, the repair is installers which is available in several lar saws. For do-it-yourselfers we offer made free of charge, even if the war- Our thermotechnology division con- performance classes and can also be a wide spectrum of products under the ranty period has expired. Active sup- tinued to increase its sales in 1998. used to heat multi-family buildings. Bosch and Skil brand names. This port of our trade partners is essential With a technically high-grade and product range is attuned to regional for this concept to increase customer environmentally friendly equipment In 1998 we continued expanding our preferences. In the European markets satisfaction. Already, 1,700 dealers program, it became possible for us to international presence pointing the we introduced Dremel-brand multi- participate in the program. expand our status as one of the largest way to further growth outside Europe. function tools with extensive acces- suppliers in the European heating By establishing our own sales com- sories. Universal supplier of accessories equipment market. The markets in pany in Chile we contributed to open- for power tools Central and Eastern Europe are grow- ing the South American market. The Our growth was again strongly char- ing in particular, while competitive acquisition of the interest of our part- acterized by new product introduc- In the accessory market, which with ner in the Turkish joint venture (see tions. Among these, a fine-cutting saw 13 billion DM exceeds that of power page 10) strengthens our position in which surpasses all known compass tools themselves, customers rely more the local market and makes further and more on suppliers who in addi- expansion of our international pro- tion to tools for a variety of purposes duction network possible. Key numbers Consumer Goods

1998 1997 Sales 11.3 11.1 billion DM Investments 385 379 million DM R&D Expense 294 268 million DM

26 27 Innovations involving heating motors and pumps in Michalovce, equipment Slovakia, and a center for control and sensor-engineering systems in Regens- Innovations in classic heating systems burg from Siemens AG. are still possible despite the mature state of the technology. For example, Domestic and foreign sales we designed a special burner with high continued to grow useful heating values which can be used with improved efficiency even The BSH Group continued its growth when connected to standard chimneys. in 1998 and increased its worldwide With the help of sensors and actuators sales by 7.2 % to 10.3 billion DM. A the introduction of adaptive heaters quarter of this growth is attributable to which automatically react to changing the initial consolidation of new com- gas quality and diverse installation panies. conditions becomes possible. The sales increase was primarily Worldwide presence in household achieved in foreign business, which appliances strengthened showed a dynamic development in the early months of the year, only to The BSH Bosch und Siemens Haus- be negatively affected in the further Production of gas-fired heaters geräte GmbH, Munich, in which both course of the year by the economic with Bosch Heatronic electronic Bosch and Siemens hold a 50 % interest slowdown in important sales markets. controls. They provide for continued in 1998 to strengthen its Total sales of BSH outside Germany optimal management, simple international presence. The company, grew by 10 %. Western European and operation and fast, trouble-free which manufactures at 30 locations in North American growth rates were service. Europe, North and South America and especially high. The share of sales Asia, acquired household appliance made abroad rose from 62 % to 64 %. producer Thermador Corporation, Huntington Beach, California, thus Sales in Germany grew by 2 %. Once expanding its position in the North again, BSH outperformed the other- American market. Thermador is an wise stagnant industry as a whole in the established supplier of built-in kitchen German market. Financial results were appliances in the upper price and qual- lower than the prior year. ity class, primarily ovens, ranges and range hoods. In addition, BSH ac- quired two producers of small house- hold appliances in Spain and Turkey.

The company strengthened its position in the area of motors for water-systems equipment. It acquired a plant for

Photo at left: In 1998 Bosch introduced a fine-cut saw for commercial use as a world innovation.

28 29 Sales of capital goods (billion DM) Progress 1994–1998 Capital Goods

Business Sector 1994 1.9

1995 2.0

1996 2.0

1997 2.1

1998 2.2 ______00.5 1.0 1.5 2.0 2.5

Against the backdrop of economic Growth in automation technology and by compact assemblies with grea- Our new, easily programmable robot The product program for the food and resurgence in Western Europe, the equipment ter performance. We expanded our controllers and control fields based on confectionery industries was enlarged willingness to invest increased in 1998. compact-cylinder module by adding this industrial PC expanded our prod- in the mid-range performance area. However, demand for capital goods In the area of automation technology further applications. uct line in the area of industrial con- For the packaging of bulk materials weakened in the second half of the year, we were able to compensate for ebbing trol technology. The range of products such as pasta or sugar we introduced particularly in the German mechanical- export demand with increasing domes- At the Homburg (Saar) location we is complemented by a stored program modular packing equipment with engineering industry. Sales of our tic business. In particular the German commenced operation of a warehouse control (SPC) which can also be run servo drives and industrial-PC con- Capital Goods Business Sector con- mechanical-engineering industry pro- for the distribution of pneumatic as a software program on the PC. trols. The machine distinguishes itself tinued to rise in 1998 by 3.2% to vided stimuli. Our Automation Tech- products. By rapid access to individual by rapid adaptation to new formats 2.2 billion DM. nology division continued to increase items and fast disposition, we are able We expanded our training center at and by low maintenance and repair order inflow and sales. A row of prod- to further increase our flexibility in Erbach (Hessen) further. For school- costs. uct innovations contributed thereto. reacting to customer wishes. ing and training we developed inter- net-capable learning software. A new The market responded favorably to We complemented our range of In the area of mechanical base ele- introduction in 1998 was our school- the first version of a new series of pumps for automotive hydraulics with ments and manual work systems we ing system for apprentices in the pouch-filling machines equipped with Our Brazilian production a version which is considerably qui- improved our market position. Many newly established apprentice course electronically controlled highly-dy- facility supplies the country’s eter than earlier models. In addition, new products and program supple- in mechatronics. namic servo drives and newly-devel- foodstuff industry with pouch- we took up full production of a gener- ments such as elements for equipping oped control technology. It is well filling machinery. ation of electrohydraulic directional clean rooms contributed to this im- Worldwide renown as supplier suited for diverse packaging materials control valves for agricultural and provement. of packaging machinery and types and sizes of pouches. materials-handling technology, which represents another step in their devel- We made significant progress in tight- As one of the largest producers of pack- Together with a well-known producer opment. It is well-suited for connec- ening technology for assembly work. aging machinery worldwide, we sup- of packaging materials we developed tion to the CAN bus for data commu- Our tightening system 300 can now be ply customers in the food, confec- pouch-filling machines which operate nication which is coming into in- operated via PC. In addition it is tionery, pharmaceutical and chemo- aseptically. In one hour, a single ma- creased use in vehicles. equipped with an interface to a data technical industries. In Europe, aside chine can fill and close 4,000 liters of bus. from three German plants, we also long-life milk in one-liter pouches We developed and in 1998 intro- In the area of industrial hydraulics we operate a factory in the Netherlands, made from tearproof, environmen- duced a completely new generation developed a digital controller for ra- More efficient and one in the Czech Republic. In tally friendly foil. of our proven robot series Turbo- dial-piston pumps. It is also equipped robots introduced addition we produce in the United scara. These swivel-arm robots are with an interface to the CAN bus, States, Brazil, India and Japan. In the area of sterile filling and pack- particularly robust and efficient. which has recently also come into use With the Turboscara SR6 and SR8 we aging of liquid pharmaceuticals we in industrial hydraulics. As a further introduced a completely new genera- Sales and order inflow of our Packag- again made progress. With large innovation, we introduced propor- tion of swivel-arm robots. They distin- ing Machinery division increased at a orders for filling and sealing machines tional valves with CAN bus interface guish themselves by extra high oper- stronger pace than the world market whose product handling element is which are also suitable for integration ating speed, long useful life and open as a whole. We thus continued in 1998 designed as an encapsulated sterile into safety circuits. control technology. Part of the prod- to expand our international position. chamber (insulator technology), we uct offering is a PC which is especially About 85 % of sales took place outside were able to gain acceptance for this Our valve-mount system for pneumat- adapted to industrial requirements Germany. technology in the West European and ics was complemented by decentral- and which enables better visualization Japanese pharmaceutical industries. ized controllers with stored programs, and data communication, for instance Key numbers in servicing. Capital Goods

1998 1997 Sales 2.2 2.1 billion DM Investments 65 41 million DM R&D Expense 143 133 million DM

30 31 International Business

Expansion of our business worldwide In Western Europe, our most impor- Strong growth continued again in 1998. This was espe- tant market, growth in 1998 strength- in France and Spain cially the case in the automotive equip- ened in most countries. Here and there, ment business in East European, Latin as in the U.K., the economy weakened France is our largest European market American and Asian countries. In these in the course of the year. In Central and outside Germany. There we manufac- regions we also offer automobile manu- Eastern Europe, economic develop- ture products for automotive equip- facturers application engineering, as ments were irregular. Our European ment, private communications tech- well as systems and components for sales in total continued to grow to 37.0 nology, thermotechnology and auto- automotive equipment from local pro- (1997: 33.4) billion DM. mation technology. duction. We continued expanding the international integration of our manufac- Centennial of our first We were able to increase our French turing in 1998. At several locations we foreign venture in the U.K. sales in 1998 by 16 %. The business broadened our production program. with the country’s car manufacturers Our foreign activities can look back grew disproportionally more. Contri- In total the Bosch Group has sub- on a long tradition, which we cele- butions to this trend were increasing sidiaries and associated companies in brated in 1998 with an anniversary. demand for diesel vehicles and the 48 countries. More than 185 manufac- Our first step onto world markets took growth in equipping new vehicles with turing sites, of which 142 are outside place in 1898, 100 years ago. Robert ABS. Because of the strong demand for Germany, testify to the international Bosch, the founder of the company, components of diesel injection equip- commitment of the company. Worldwide, that year set up a representation in the ment, our plants at Vénissieux and Bosch participates in 37 joint ventures. U.K. Rodez were working at full capacity. In Rodez we started the expansion of the With sales of 2.8 billion DM, the U.K. diesel production. Here we will invest today is our third-largest foreign mar- about 175 million DM by the year 2000 ket after the United States and France. in the production of the Unit Injector Our work force in the U.K. runs to System UIS. approximately 3,830 persons. They manufacture automotive alternators, In Spain we manufacture products for gas-fired boilers and motor-driven automotive equipment and for auto- gardening tools and sell Bosch Group mation technology. The strong growth products. in Spanish car production led to an increase in our sales of almost 20 %. Our Cardiff plant was again expanded. In 1998 we started here with full pro- duction of a liquid-cooled alternator (see page 17).

Photo at right: In China we established together Key numbers with national partners over the International business past few years several plants for the manufacture of automotive equipment and consumer goods. 1998 1997 In order to secure uniform Sales 32.5 30.7 billion DM quality standards worldwide Investments 1,843 1,529 million DM an international exchange of R&D Expense 946 827 million DM employees is essential.

32 33 Employees and production outside Germany Breakdown of sales Country Employees Automotive Communications Consumer Capital (as a percentage) equipment technology goods goods by regions 1998

USA 15,030 Brazil 11,430 Countries of the European Union India 10,950 68.7 France 10,080 America Spain 7,180 20.2 Mexico 4,560 Asia, Africa, Australia U.K. 3,830 6.2 Portugal 3,710 Rest of Europe Malaysia 3,190 4.9 Switzerland 2,210 ______0102030405060708090100

In Bursa, Turkey, we acquired another Continued progress weakened domestic demand consider- in the Korean market. We acquired parcel of land for the erection of a sec- in North America ably. The country’s automobile pro- the shares of our partner in a joint ond plant to accommodate the expan- duction dropped precipitously. In venture (see also page 10). sion of our production of automotive Strong economic growth in North Argentina we started production of equipment. America continued. The United States, Lambda sensors for the South Ameri- In the Chinese market we have been with sales of 6.8 billion DM, constitute can market. active since 1995 in several produc- Expansion of activities in Central the largest market of the Bosch Group tion joint ventures for automotive and Eastern Europe outside Germany. We manufacture at Weakness in Southeast Asia equipment and consumer goods. Dur- 20 locations primarily braking equip- ing the second half of 1996 produc- In the Central and East European ment, gasoline injection equipment After years of strong economic tion was started at United Automotive countries, in which we had established and power tools. In Anderson, South growth, there was a sharp economic Electronic Systems Co Ltd, Shanghai. our own sales companies during the Carolina, we began production of collapse in the countries of East and This company meanwhile produces all past seven years, business develop- miniature assemblies of electronic au- Southeast Asia. The Japanese econ- important components for the engine ment varied. In the countries with tomotive equipment. In Charleston, omy is in the longest recession since management of gasoline engines. In advanced economic reforms, strong South Carolina, we started operation of the second world war. Although the 1998, the company took up operation growth continued in Poland and Hun- a fourth assembly line for gasoline economy in Korea showed signs of of an application-engineering center. gary, but in the Czech Republic gross injection valves of the EV6 type in view stabilizing by year-end, the restructur- In Pudong, near Shanghai, we estab- domestic product decreased. The eco- of the strong demand for this product ing of industry made only slow pro- lished a company to sell aftermarket nomic and financial crisis in Russia in North America. In Palo Alto, Cali- gress. In many ASEAN countries, the products for automotive equipment. In all regions of the world, our also increasingly poses problems for its fornia, and in Pittsburgh, Pennsyl- political unrest in Indonesia added to For more than 40 years we have held internationally integrated manu- neighbors, Belorussia and the Ukraine. vania, we began setting up branches the weakening of the economic devel- Strong growth in Australia a strong position in India in diesel facturing is supported by a grow- for our research and development. opment. Private and public demand injection equipment. In 1998 we also ing network of application engi- The strong growth of our business in diminished strongly, vehicle produc- The Australian economy is growing at began application engineering of neering centers in which we refine Central and Eastern Europe slowed. In Mexico, we started with the produc- tion decreased considerably. Our sales a rapid pace. This favorable economic components for gasoline injection. the development of products and However, we see again middle and tion of headlamps at our Juarez site. At in this region fell by 46 %. In the development led to a further increase adapt them to the needs of vehicle long-term growth chances in these our Toluca plant, we expanded the middle and long term, however, we in vehicle production and new auto- manufacturers. countries. That is why we have in- facilities for production of electrome- continue to see good business oppor- mobile registrations. In the Clayton creased our activities in some parts of chanical products for automotive ap- tunities. plant we started production of EV6 this region. In the Bosch Saratov plications. gasoline injection valves. In addition, GmbH, Saratov, joint venture which Expansion of Japanese we began with the expansion of pro- we established with Russian partners in Our business in South America was application-engineering center duction for autobody electronics and 1996, we commenced production of negatively influenced by the economic antilock braking systems. control units for gasoline injection and crisis in Brazil. The measures taken by In Japan we have started the expan- ignition. the Brazilian government to reduce the sion of our application-engineering large budget deficit were ineffectual. center in Yokohama. As part of a cap- The attempt to stabilize the currency ital increase at the beginning of April exchange rate with high interest rates 1999 we increased our shareholding in Corp, Tokyo, to 50.04 %. We continued to strengthen our position

34 35 Total expenditures for research and development1 (million DM) Progress 1994–1998

1 Approximately 11% thereof is spent Research and Development for corporate research and advanced engineering; the rest for research and development in the business divisions and foreign subsidiaries for 1994 2,255 product development.

1995 2,474

1996 2,887

1997 3,257

1998 3,478 ______0 1,000 2,000 3,000 4,000

Innovative products and processes char- New structuring technology Mechatronics Cutting made marketed. We improved the DAB acterize the Bosch Group as the capa- for silicon sensors in the motor vehicle environmentally friendly functionality and reduced the power ble supplier of top-notch technology in input of the electronics to one-tenth. large quantities. We are continuously We developed a new high-frequency The functions in motor vehicles which Cutting in metalworking uses consid- All functions, from analog and digital expanding this position. etching method for exact manufacture at one time were mechanical or erable amounts of cooling lubricants. conversion, channel and audio encod- of micromechanical structures in sili- hydraulic, such as steering or braking, This is unavoidable with conventional ing, up to the processors and storage con and an under-etching technology will be replaced in the future by so- tools, but leads to substantial expense were integrated on a single eighty to produce flexible silicon structures. called “By Wire” systems, in which the in the handling, storing and disposal square millimeter chip. These key technologies form the basis connections are replaced by sensors of these materials. for new space-saving and economically and electrically controlled actuators. This high degree of integration permits priced yaw sensors. These innovative In this way, active safety can be in- In a broadly conceived, publicly sup- the manufacture of very compact re- sensors can be used not only in ESP, creased by improved electronic inte- ported project we were able to make ceivers for combined DAB/FM broad- but also for detecting the danger of gration of vehicle systems. The dis- considerable progress with dry ma- casts for use in car radios and home and vehicle roll-over, and for vehicle navi- placement of mechanical and hydrau- chining using wear-resistant coated portable radio sets. gation aids. lic components is especially favorable cutting materials. This method not Indispensable for our product in vehicle design. only allows greater cutting perfor- New electronics architecture development are computer simula- Rapid start-up assists mance compared to wet machining, it for motor vehicles tions. In this way, for instance, for diesel engines As part of a European project we tested also contributes substantially to protec- insight into flow behavior and the basic concepts of this system. They tion of the environment since it elimi- Well-equipped motor vehicles contain temperature dispersion of an The warm-up behavior of glow plugs have in common the fact that they rec- nates the use of machining oils and many functions of body and informa- exhaust-gas recirculation valve is in their role as start-assist devices ognize and correct errors in order to emulsifying concentrates. We started tion electronics, such as central power made possible. Bosch is intensively working on determines the time needed for start- foster safety. More than ever, it is the first pilot applications of this new locks, power windows, climate con- videosensorics for motor vehicles. ing diesel engines. In order to shorten important that the communication process. trols, navigation aids and telephones. One important use is the Traffic the starting time further, we devel- between various components be reli- For future generations of vehicles, we Signal Assistant, which by means of oped glow plugs which reach ignition able. This is especially the case for the Reception concept have developed a new electronic sys- visual or audible signals draws temperature so fast that the preheating exchange of information between sen- for DAB and FM radio tems architecture and demonstrated it attention to traffic regulations, such phase can be omitted. sors which register the driver’s wishes in a test vehicle. as speed limits. and the power actuators. The broadcasting system of the future This plug is made of new types of is called DAB (Digital Audio Broad- Its core is a central computer platform ceramic composites which can be For such systems we tested TTP/C casting). It will replace the current for the various functions of the body heated to more than 1,000 degrees (Time Triggered Protocol for Class C frequency-modulated ultrashort wave and information electronics. The plat- centigrade in less than two seconds. Applications). For safety reasons, it broadcasting (FM). At first, however, form is open for the installation of a Even at these high temperatures the transmits redundant, so to speak dou- both systems will exist simultaneously. variety of services such as route materials have a long useful life. ble, signals based on time and not on That is why we developed a reception searches with traffic-jam avoidance or cause. Using a prototype steering sys- concept which combines for the first radio and television reception. It is tem we were able to prove the suit- time both DAB and FM functions. adaptable with regard to computing ability of the protocol for a “Steer-By- power and storage capacity. Wire” system. In order to achieve this, we funda- mentally reworked our concept for DAB reception, which we had already

36 37 Number of employees (annual averages) Trend 1994–1998 Employees of the Bosch Group 1994 156,464

1995 158,372

1996 172,359

1997 179,719

1998 188,017 ______0 40,000 80,000 120,000 160,000 200,000 240,000

On January 1, 1999, the Bosch Group Labor costs Information provided on European works council basis of mandatory legal and contrac- employed a workforce of 189,537, continued to increase the internet established tual labor regulations. The arrange- 8,898 more than a year earlier. Employ- ment allows employees over 55 a grad- ment in Germany rose by 3,831 to The greater workforce and the con- Due to increasing competition for qual- On October 27, 1998, the so-called ual retirement. At the same time it gives 95,357, of which 3.7% were appren- tractually mandated raises in wages ified junior employees, we ventured Europa Committee was organized, young people a chance to start a career. tices. Employment outside Germany and salaries led to a further increase in into new directions. We redesigned functioning as the European works This agreement contributes to a bal- rose by 5,067 to 94,180. labor costs. They rose worldwide by our personnel wanted advertisements council of the company. This body at anced age and qualification structure of 8.5 % to approximately 15.6 (1997: and focused them better on different present consists of 26 employee repre- the workforce. We entered into about 14.4) billion DM, in Germany by groups of applicants. We expanded the sentatives from 14 countries. It will 400 individual employee retirement- 9.5 % to approximately 10.1 billion information provided on the internet meet annually with representatives of work-time agreements. DM. In the Bosch Group, the costs by current references to recruiting pro- management. per employee rose by 3.7 %. grams, training opportunities and open Innovation positions. Reform of and creativity Employee benefit costs in Germany company pension plan rose to 4.8 (1997: 4.6) billion DM; for In order to increasingly attract engi- In order to strengthen the innovative each 100 DM pay for work performed, neers in mechanical engineering and We reformed the company pension forces in the Bosch Group, a creativity there were 91 DM additional manda- electronics, as well as scientists for our plan for Bosch Group employees in program for the leadership cadre was tory, contractual and other social con- development departments, we demon- Germany as of January 1, 1999. In full started. We thus support our employ- tributions. strated the development, production agreement with the employee repre- ees in developing new approaches to and sale of our automotive equipment sentatives we transferred the approxi- solutions outside the traditional ways Love of music is the incentive for International deployment products to about 800 graduates of mately 70 different pension plans into a of thinking. many employees to participate in the of employees institutes of technology and universi- single uniform model. The contribu- Bosch music groups. Choir and orches- ties during a two-day special seminar at tion-oriented modular system which Expression of appreciation tra have a good reputation even Our worldwide activities lend impor- our new testing center in Boxberg. We was developed for this purpose guaran- to our employees among professionals. A traditional tance to cooperation across borders in subsequently took on about 10 % of the tees a better method of calculation and event is the Quempas singing in the all areas of business. That is why we participants as employees. also offers the employees considerably Our employees continued to face con- Stuttgarter Stiftskirche prior to increasingly support the exchange of more transparency. As a basic pension, siderable challenges in 1998. Great Christmas. employees within the Bosch Group on More apprentices hired the company provides contributions demand for our products and services the basis of our guidelines for interna- in Germany for the establishment of individual pen- and the start of full production of new Bosch was one of the first German tional personnel policies. Every em- sion capital accounts. In a further pen- products led to strained employment companies to offer an apprentice- ployee is encouraged to be open to During 1998, the Bosch Group in Ger- sion provision, employees are given situations at many locations. Only ship in mechatronics. In this new other cultures and to learn from them. many enrolled 1,115 young people in the opportunity to expand on the basic with a high degree of readiness to per- career, which unites the knowl- courses preparing them for technical or plan by making additional voluntary form and flexibility of our employees edge and skill to deal with The number of internationally active commercial careers, or 6 % more than contributions. was it possible to meet customer mechanics and electronics, 44 employees in the Bosch Group contin- the year before. Thus, on January 1, needs. We want to thank all employ- young people in 1998 started ued to grow in 1998. At the end of the 1999, there were 3,538 ( January 1, With this reform we proved the com- ees for their commitment. We also their apprenticeship courses year we employed approximately 1998: 3,355) apprentices in training. pany’s ability to innovate, also in the want to express our appreciation to with us. 1,200 (end of 1997: 1,100) outside their As in prior years, in many plants we case of an instrument which is impor- the labor representatives who in the home country. Most of these came trained more apprentices than we tant from a socio-political and person- true spirit of cooperation supported from Germany and nearly one-third needed ourselves, again making a com- nel-policy viewpoint. the measures needed to secure the from other countries. munity contribution. We hired 93 % of competitiveness of the company. This the apprentices after they completed Labor contract to provide for part- applies especially to the flexible oper- their training. time work for seniors ational work-time arrangements at the plants. As of August 1, 1998, the Bosch parent company agreed to provide part-time work for its senior employees on the

38 39 Financial Statements of the Bosch Group Worldwide Consolidated Balance Sheet as of December 31,1998

Assets Liabilities

Appendix December 31,1998 December 31,1997 Appendix December 31, 1998 December 31, 1997 million DM million DM million DM million DM Fixed assets (6) Equity capital (9)

Intangible fixed assets 1,657 1,872 Capital stock 1,800 1,500 Tangible fixed assets 9,975 8,861 Capital surplus 4,630 2,895 Financial investments 1,071 1,280 Earned surplus 4,797 4,228 12,703 12,013 Unappropriated earnings 80 2,209 Minority interests 562 545 11,869 11,377 Current assets

Leased products 449 492 Accruals with valuation reserve portion (10) 67 55 Inventories (7) 5,989 5,639 Accounts receivable and other assets (8) Accounts receivable 7,968 7,522 Accruals Other receivables and assets 2,106 1,876 Marketable securities 5,822 5,828 Accruals for pensions and similar obligations 6,917 6,227 Liquid assets 1,260 1,484 Other accruals (11) 9,315 9,596 23,594 22,841 16,232 15,823

Deferred expenses 46 52 Liabilities (12)

Liabilities with banks 1,979 1,713 Accounts payable 3,557 3,419 Other liabilities 2,575 2,476 8,111 7,608

Deferred income 64 43

36,343 34,906 36,343 34,906

40 41 Financial Statements of the Bosch Group Worldwide Financial Statements of the Bosch Group Worldwide Consolidated Statement of Income Capital Flow Statement for the period from January1to December 31,1998

Appendix 1998 1997 1998 1997 million DM million DM million DM million DM

Sales (15) 50,333 46,851 Net income for the year 850 1,659 Changes in finished goods and work-in-progress Depreciation of fixed assets 3,570 3,351 inventories and other capitalized costs (16) 551 653 Increase in long-term accruals and accruals with valuation reserve portion 484 209 Total operating performance 50,884 47,504 Cash flow 4,904 5,219 Increase in inventories and leased products –307 –802 Other operating income (17) 2,753 3,349 Increase in receivables –670 –872 Decrease in short-term accruals –63 –129 Costs of materials (18) –23,697 –21,835 Increase in liabilities 258 612 Personnel costs (19) –15,575 –14,359 Additions to funds from business activities (1) 4,122 4,028 Depreciation of intangible and tangible fixed assets –3,265 –2,927 Other operating expenses (17) –9,366 –8,926 Additions to fixed assets –4,488 –4,076 Retirements of fixed assets 242 126 Income (– loss) from investments (20) 22 –70 Application of funds to investment activities (2) –4,246 –3,950 Amortization of financial investments and securities included with current assets –262 –186 Dividends 1997/1996 –2,209 –68 Interest income, net of expenses (21) 306 245 Increase in capital stock 300 Income from ordinary business activities 1,800 2,795 Increase in capital surplus 1,735 Increase in liabilities with banks 266 91 Taxes on income (22) –950 –1,136 Other changes in balance-sheet items –198 –208 Change in funds from financial activities (3) –106 –185 Net income for the year 850 1,659 Change in liquidity (1) + (2) + (3) –230 –107 Including profit and loss of minority shareholders (23) 66 105 Liquidity at the beginning of the year 7,312 7,582 Reclassifications of financial investments –163 Liquidity at the end of the year 7,082 7,312

42 43 Financial Statements of the Bosch Group Worldwide 1998 Development of Fixed Assets

Cost of acquisition or manufacture Jan.1,1998 Changes in the Additions Transfers Retirements Dec.31, 1998 Depreciation Net book Net book Depreciation consolidated cumulative value as of value as of current year group to Dec.31, 1998 Dec.31, 1998 Dec.31, 1997 million DM million DM million DM million DM million DM million DM million DM million DM million DM million DM Intangible fixed assets

Concessions, patents, trademarks and similar rights and assets as well as licenses to such rights and assets 638 2 244 1 158 727 525 202 371 379 Goodwill 2,375 336 3 51 2,663 1,209 1,454 1,500 339 Advance payments 1 2–1 2 1 1 1 1 3,014 338 249 209 3,392 1,735 1,657 1,872 719

Tangible fixed assets

Land, leasehold rights and buildings, including buildings on land owned by others 5,932 87 169 54 89 6,153 3,364 2,789 2,771 216 Production equipment and machinery 12,104 190 1,977 454 605 14,120 9,678 4,442 3,581 1,547 Other equipment, fixtures and furniture 8,844 39 939 163 739 9,246 7,340 1,906 1,634 781 Advance payments and construction in progress 8621 688 –671 30 850 12838 875 2 27,742 317 3,773 1,463 30,369 20,394 9,975 8,861 2,546

Financial investments

Investments in affiliated companies 543 –276 232 74 2 571 453 118 321 204 Loans to affiliated companies 78 70 148 5 143 89 4 Investments in associated companies 1,105 –23 58 –10 62 1,068 509 559 636 64 Other financial investments 373 85 –64 4 390 225 165 153 33 Other loans 80 21 14 87 1 86 81 2,179 –299 466 82 2,264 1,193 1,071 1,280 305

Total fixed assets 32,935 356 4,488 1,754 36,025 23,322 12,703 12,013 3,570

44 45 Financial Statements of the Bosch Group Worldwide Balance Sheet Structure 1994–1998

Assets 36,343 34,906 32,273 12,703 28,504 12,013 27,373 35% Total assets 10,784 34% 6,957 33% 6,650 24% Fixed assets 24% 6,131 6,438 5,173 4,971 5,329 18% 18% 18% Inventories, leased products 18% 17%

6,790 6,780 8,578 9,450 10,120 Receivables 24% 25% 27% 27% 28%

Marketable securities, liquid assets 8,972 9,584 7,582 7,312 7,082 33% 34% 23% 21% 19%

1994 1995 1996 1997 1998

Liabilities 36,343 34,906 32,273 11,869 28,504 11,377 33% 27,373 Total liabilities and equity 9,527 33% 30% 9,038 8,563 32% Equity capital 31%

13,149 13,870 12,928 37% 38% 40% 11,385 11,388 Long-term liabilities 42% 40%

9,818 10,380 10,604 8,078 Current liabilities 7,425 30% 30% 29% 27% 28%

1994 1995 1996 1997 1998 Values in million DM

46 Financial Statements of the Bosch Group Worldwide Appendix 1998

(1) General remarks The consolidated statements of the Bosch Group Worldwide conform to the regulations of the Commercial Code. In order to ensure better understanding of these financial statements, we com- bined a number of individual balance sheet and statement of income items into key groupings. These items are stated separately in this Appendix. Required comments for individual items are also contained in this Appendix. The con- solidated statement of income follows the format of the total cost method.

(2) Consolidated group The consolidated statements include Robert Bosch GmbH and 23 domestic as well as 109 foreign subsidiaries. For the first time, we consolidated the follow- ing newly-established companies: – Bosch Telecom Sicherheitstechnik-Montage und -Service GmbH, Weimar – Bosch Telecom Software-Systeme GmbH & Co KG, Backnang as well as the following previously treated as affiliated companies: – Bosch Telecom Danmark A/S, Pandrup (Denmark) – Bosch Ukl/ady Hamulcowe Sp. z. oo., Twardogóra (Poland) – Diesel Technology Company, L.P., Wyoming, Michigan (USA). Several businesses were integrated into other companies in the consolidated group by way of legal restructuring. These were primarily, MotoMeter GmbH, ; Robert Bosch Máquinas de Embalagem Ltda, Osasco (Brazil); Bosch Braking Systems Corporation, South Bend, Indiana (USA); Robert Bosch Fluid Power Corporation, Racine, Wisconsin (USA); and Weldun International, Inc, Bridgman, Michigan (USA). The consolidated statements of BSH Bosch und Siemens Hausgeräte GmbH were included pro rata pursuant to Section 310 of the Commercial Code. In accordance with Section 296, Paragraph 2 of the Commercial Code, com- panies lacking operations or having insignificant business volume, were not included with the consolidated financial statements. The equity valuation of specific interests in associated companies was applied in accordance with the book-value method. This valuation pertained to three domestic and seven foreign companies.

(3) Principles of classification The financial statements of Bosch Group Worldwide include the individual and valuation statements of our subsidiaries which conform to uniform principles of classifi- cation and valuation. We adhered to the valuation at lower of cost or market and imparity of gain or loss recognition. Financial statements of foreign associated companies were not modified to comply with the uniform accounting principles of the consolidated group. Intangible assets including goodwill resulting from first-time consolidations as well as tangible and financial assets were valued at acquisition cost or cost of manufacture subject to depreciation. We applied straight-line as well as accelerated depreciation methods. Items of minor value were fully depreciated during the year of acquisition. We applied special depreciation allowances according to tax regulations in all countries. Interest-free and low-interest loans were adjusted to reflect present values by application of a uniform discount rate domestically, and prevailing rates in foreign countries.

46 47 Additions to interests in associated companies include shares purchased as well Profits from sales to the consolidated group by associated companies were not as capital contributions and prorated profits. Retirements include prorated eliminated since they were insignificant. losses, dividends paid and shares sold. Deferred tax assets resulting from consolidation measures in the amount of 81 We valued inventories at the lower of average purchase or manufacturing cost or million DM were included with other assets. market. Manufacturing costs include direct costs and reasonable overhead. At domestic companies, the Lifo valuation method was used in principle. We used this method also at foreign subsidiaries when accepted by the taxing authorities. (6) Fixed assets Extraordinary depreciation amounting to 384 million DM pertained mostly to We provided for risks inherent in warehousing and distribution through appropri- goodwill and to financial investments. ate deductions. Additional write-downs were taken in cases of unfavorable returns. In accordance with tax regulations, we deducted an extra 41 million DM Accounts receivable and other current assets were stated at face values less directly from the acquisition costs of tangible fixed assets. The depreciation was write-downs for individual risks and for general credit risks. Interest-free or taken pursuant to Section 6b of the Income Tax Law, Section 4 of the Devel- low-interest receivables with maturities of more than one year were discounted. opment Area Law, and pursuant to local tax laws at our foreign subsidiaries. We valued marketable securities included in current assets at the lower of acqui- The development of fixed assets is presented on pages 44 and 45 of this report. sition cost or market. Special write-downs of marketable securities of 7 million DM were taken on account of expected price fluctuations. (7) Inventories Included with the stated value of inventories, in the amount of 5,989 million In determining the size of accruals we provided for all identifiable risks. DM, are our advance payments of 45 million DM (1997: 41 million DM). On Pension accruals and similar liabilities were determined by the application of the other hand, advance payments received in the amount of 201 million DM actuarial principles and were discounted to reflect present values. For domestic (1997: 302 million DM) were deducted. companies, we used a 6 % discount rate in accordance with the 1998 guideline tables, while foreign subsidiaries used discount rates prevailing in their respec- tive countries. (8) Accounts receivable Million DM 1998 1997 In determining the amounts accrued for pending transactions with expected and other assets Accounts receivable 7,968 7,522 losses, we basically took account of prices and costs expected at the time these including maturities of more than one year 17 30 transactions would close. Other receivables and assets Liabilities were stated at the amounts owed. Receivables from affiliated companies 269 247 including maturities of more than one year 15 Receivables from companies in which (4) Currency translation Accounts receivable and accounts payable stated in foreign currencies were interests are held 112 95 translated to DM equivalents at the less favorable of the exchange rate at the including maturities of more than one year 9 date of origin, or at the balance-sheet date. Other assets 1,725 1,534 For the translation to DM of the financial statements in foreign currencies and including maturities of more than one year 182 166 the related profits and losses, we applied, in principle, average exchange rates 2,106 1,876 at the balance-sheet date. Transactions pertaining to fixed assets were translated at average annual DM equivalents. Resulting differences were included with Receivables and other assets 10,074 9,398 beginning balances of cost of acquisition or manufacture as well as in cumula- tive depreciation. Tangible fixed assets of our subsidiaries in Brazil were valued at their original (9) Equity capital The subscribed capital stock of 1,800 million DM and the capital surplus of carried-forward DM equivalents of cost of acquisition or manufacture. Depre- 4,630 million DM correspond to the respective balance-sheet items of Robert ciation was based on historic values. Bosch GmbH. Capital stock and capital surplus at Robert Bosch GmbH were Income and expenses were translated at average exchange rates. Differences increased in 1998 by 300 million and 1,735 million DM respectively by appli- resulting from the application of average exchange rates versus year-end cation of the “pay-out-and-reinvest” method. exchange rates were included with other operating expenses. Revenue surplus accounts consist of the following:

(5) Consolidation principles For capital consolidation of companies or for newly acquired capital shares, we Million DM 1998 1997 applied the book-value method at the date of acquisition or at the date of first- Earned surplus of Robert Bosch GmbH 670 150 time consolidation. As far as possible, we allocated amounts subject to capital- Other earned surplus 4,127 4,078 ization to the respective assets. Remaining amounts were included with good- 4,797 4,228 will. Negative goodwill resulting from capital consolidation was included with earned surplus. Unappropriated earnings of the consolidated group are identical to those of Receivables and payables, sales, expenses, and income, as well as results within Robert Bosch GmbH. the consolidated group were eliminated.

48 49 (10) Accruals with Accruals with valuation reserve portion were formed pursuant to Section 6b of (13) Contingent liabilities Million DM valuation reserve portion the Income Tax Law, Section R 34 of the Income Tax Regulations, Section 12 Contingent liabilities from the issuance or transfer of notes 180 of the Reorganization Tax Law and Section 1 of the DDR Investment Law. Our including affiliated companies 20 foreign subsidiaries followed local regulations with respect to such items. Contingent liabilities from guarantees 250 including affiliated companies 20 Contingent liabilities from warranties 87 (11) Other accruals Million DM 1998 1997 including affiliated companies 6 Accrued taxes 296 410 Contingent liabilities from collateral given for third-party liabilities 15 Other accruals 9,019 9,186 including mortgages 7 9,315 9,596 As a partner in two foreign private companies, we are jointly and severally liable in accordance with legal requirements. (12) Liabilities Including Including maturities maturities up to one up to one (14) Other financial obligations Other financial obligations of significance for an opinion on the financial Million DM 1998 year 1997 year condition of the company did not exist. Liabilities with banks 1,979 564 1,713 548

Accounts payable 3,557 3,557 3,419 3,418 (15) Breakdown of sales Million DM 1998 % 1997 % Sales by business sectors Other liabilities Automotive equipment 31,797 63.2 28,736 61.3 Liabilities from acceptances Communications technology 5,014 10.0 4,964 10.6 and drafts 216 216 190190 Consumer goods 11,357 22.5 11,054 23.6 Liabilities with affiliated companies 45 45 53 53 Capital goods 2,165 4.3 2,097 4.5 Liabilities with companies in which 50,333 100.0 46,851 100.0 interests are held 114 114 154 154 Other liabilities 2,200 1,885 2,079 1,752 Sales by regions 2,575 2,260 2,476 2,149 Countries of the European Union 34,589 68.7 31,109 66.4 Rest of Europe 2,449 4.9 2,241 4.8 Total liabilities 8,111 6,381 7,608 6,115 America 10,183 20.2 9,791 20.9 Asia, Africa, Australia 3,112 6.2 3,7107.9 Of the liabilities with banks, 58 million DM were secured by mortgages and 50,333 100.0 46,851 100.0 another 49 million DM by other liens. Of other liabilities, 9 million DM were secured by mortgages. Other liabilities contain tax liabilities in the amount of 465 million DM (1997: (16) Changes in finished goods and Million DM 1998 1997 515 million DM) and liabilities pertaining to social obligations in the amount of work-in-progress inventories Change in finished goods and 352 million DM (1997: 373 million DM). Liabilities with shareholders in the and other capitalized costs work-in-progress inventories 184 334 amount of 8 million DM pertain to Robert Bosch Stiftung GmbH. Other capitalized costs 367 319 Liabilities with maturities of more than 5 years amounting to 1,179 million DM 551 653 included 1,159 million DM of liabilities with banks and 20 million DM of other liabilities. (17) Other operating Expenses resulting from additions to accruals with valuation reserve portion in expenses and income the amount of 20 million DM are included in other operating expenses. Income from the reversal of accruals with valuation reserve portion in the amount of 7 million DM are included in other operating income.

(18) Costs of materials Million DM 1998 1997 Cost of raw materials, supplies and merchandise 21,940 20,350 Purchased services 1,757 1,485 23,697 21,835

50 51 (19) Personnel costs Million DM 1998 1997 (23) Profit and loss of Million DM 1998 1997 Wages and salaries 12,125 11,279 minority shareholders Profits 84 111 Social security, pension plans, and support payments 3,450 3,080 Losses –18 –6 of which pension plans 1,141 877 66 105 15,575 14,359

(24) Compensation of the During 1998, the aggregate compensation of the members of the Board of Average numbers of employees during the year, by region: members of the Board of Management of Robert Bosch GmbH amounted to 8 million DM. Former Management and of the members of the Board of Management and their dependents received 9 million 1998 Including 1997 Including Supervisory Council DM, and the members of the Supervisory Council one million DM. Total BS H Tot al B S H Accruals at Robert Bosch GmbH for pension liabilities for former members of (prorated) (prorated) the Board of Management and their dependents amounted to 95 million DM. Countries of the The members of the Supervisory Council and the Board of Management of European Union 127,568 11,778 121,69011,360 Robert Bosch GmbH are listed on pages 4 and 5. Rest of Europe 9,369 2,574 8,076 2,563 America 32,082 2,598 30,702 2,218 Asia, Africa, Australia 18,998 33 19,251 17 (25) Shareholdings of A listing of the shareholdings of the consolidated Bosch Group will be depos- 188,017 16,983 179,719 16,158 Bosch Group Worldwide ited with the commercial registry of the Stuttgart Court.

Stuttgart, March 9, 1999 Robert Bosch GmbH (20) Income (– loss) Million DM 1998 1997 The Board of Management from investments Income from investments 23 22 including affiliated companies 10 6 Result from associated companies –1 –92 Auditor’s opinion The accounting and the consolidated financial statements of Robert Bosch 22 –70 GmbH as of December 31, 1998, which we have audited in accordance with professional standards, comply with legal provisions. With due regard to gen- erally accepted accounting principles the consolidated financial statements give (21) Interest income, Million DM 1998 1997 a true and fair view of the company’s assets, liabilities, financial position and net of expenses Interest from loans included profit and loss. The management report to the consolidated financial statements with financial investments 10 9 is consistent with the contents thereof. including affiliated companies 8 6 Other interest and similar income 584 515 Stuttgart, March 9, 1999 Schitag Ernst & Young including affiliated companies 6 6 Deutsche Allgemeine Treuhand AG Interest and similar expenses – 288 – 279 Wirtschaftsprüfungsgesellschaft including affiliated companies – 1 – 2 306 245 Dörner Dr. Pfitzer Wirtschaftsprüfer Wirtschaftsprüfer

(22) Tax expenses Million DM 1998 1997 Taxes on income 950 1,136 Other taxes 226 288 1,176 1,424

Other taxes are included in other operating expenses. The impact of tax allowances on the profit for the fiscal year as well as in former years, and the size of future burdens from the resulting valuations are of secondary significance.

52 53 Major Companies of the Bosch Group Worldwide (as of December 31,1998)

Name Location Equity Equity Sales 2 Profit Name Location Equity Equity Sales 2 Profit Capital Capital 2 or loss 2 Capital Capital 2 or loss 2 % owned1 million DM million DM million DM % owned1 million DM million DM million DM Germany America Blaupunkt-Werke GmbH Hildesheim 100 183 1,561 PLT 3 Robert Bosch Ltda4 Campinas/Brazil 100 500 1,821 37 BSH Bosch und Siemens Hausgeräte GmbH4 Munich 50 1,193 10,283 17 Robert Bosch SA de CV Toluca/Mexico 100 144 583 –17 Bosch Telecom GmbH Stuttgart 100 539 4,180 PLT 3 Robert Bosch Corporation4 Broadview (Chicago)/USA 100 1,700 6,353 –22 Bosch Telecom Leipzig GmbH Leipzig 100 44 203 PLT 3 S-B Power Tool Company4 Chicago/USA 100 338 1,376 113 BT Magnet-Technologie GmbH Herne 50 52 142 11 Vermont American Corporation4 Louisville/USA 50 327 733 30 Hawera Probst GmbH Ravensburg 100 40 121 9 Robert Bosch Fahrzeugelektrik Eisenach GmbH Eisenach 100 76 737 13 Asia, Australia VB Autobatterie GmbH Hanover 35 97 407 – 2 Motor Industries Co Ltd Bangalore/India 51 162 554 28 Bosch KK Yokohama/Japan 100 114 536 1 Nippon ABS Ltd Yokosuka-shi/Japan 50 224 518 11 Foreign Countries Nippon Injector Corporation Odawara-shi/Japan 35 62 157 5 Europe Zexel Corporation Shibuya-ku (Tokyo)/Japan 32 1,195 3,241 25 NV Robert Bosch SA Anderlecht/Belgium 100 44 344 4 Doowon Precision Industry Co Ltd Seoul/Korea 20 22 153 –12 Robert Bosch Produktie NV Tienen/Belgium 100 111 428 34 KEFICO Corporation Kunpo-Si/Korea 25 79 148 1 Robert Bosch A/S Ballerup/Denmark100 50 200 11 Robert Bosch (Malaysia) Sdn Bhd Penang/Malaysia 100 37 170 11 Bosch Telecom Danmark A/S Pandrup/Denmark 100 24 483 19 Robert Bosch (South East Asia) Pte Ltd Singapore/Singapore 100 37 197 2 Robert Bosch (France) SA4 Saint-Ouen (Paris)/France 100 629 3,305 33 Robert Bosch (Australia) Pty Ltd4 Clayton (Melbourne)/Australia 100 116 631 12 Robert Bosch Ltd Denham/U.K. 100 209 1,118 57 Worcester Group plc4 Worcester/U.K. 100 59 350 18 Robert Bosch SpA4 Milan/Italy 100 96 649 –23 Robert Bosch Sistemi Frenanti SpA Crema/Italy 100 76 395 –24 Robert Bosch BV Hoofddorp/Netherlands 100 42 222 15 Van Doorne’s Transmissie BV Tilburg/Netherlands 100 25 66 1 Robert Bosch A/S Trollaasen (Oslo)/Norway 100 23 108 2 Robert Bosch AG Vienna/Austria 100 110 604 24 Blaupunkt Auto-Rádio Portugal Lda Braga/Portugal 100 54 450 8 Vulcano Termo-Domésticos SA Aveiro/Portugal 100 126 276 28 Robert Bosch AB Kista (Stockholm)/Sweden 100 15 151 5 Robert Bosch Internationale Beteiligungen AG Zurich/Switzerland 90 708 73 Robert Bosch AG Zurich/Switzerland 100 25 239 5 Scintilla AG Solothurn/Switzerland 85 543 1,093 62 Robert Bosch España SA4 Madrid/Spain 100 387 2,200 18 Robert Bosch spol. s r.o. Cˇ eské Budeˇjovice/Czech Republic 100 63 224 12 Bosch Diesel spol. s r.o. Jihlava/Czech Republic 100 39 162 16 Bosch Sanayi ve Ticaret AS Bursa/Turkey 100 111 317 47

1 Shares held directly and indirectly by Robert Bosch GmbH 2 Translation of foreign currencies pertaining to equity capital and profit and loss stated at average exchange rates at the balance-sheet date; sales stated at average exchange rates of the year 3 Profit and loss transfer agreement (PLT) 4 Represents a consolidated sub-group

54 55 Financial Statements of Robert Bosch GmbH Financial Statements of Robert Bosch GmbH Balance Sheet as of December 31, 1998 Statement of Income for the period from January1 to December 31,1998

Assets December 31,1998 December 31,1997 1998 1997 million DM million DM million DM million DM

Fixed assets Sales 26,473 23,174 Intangible fixed assets ––Changes in finished goods and work-in-progress inventories Tangible fixed assets 3,112 2,497 and other capitalized costs 209 185 Financial investments 4,076 4,233 Total operating performance 26,682 23,359 7,188 6,730 Other operating income 1,841 2,278

Current assets Costs of materials –15,737 –13,215 Inventories 2,035 1,890 Personnel costs –6,351 –5,800 Accounts receivable and other assets Depreciation of intangible and tangible fixed assets –1,249 –871 Accounts receivable 2,999 2,547 Other operating expenses –4,432 –3,978 Other receivables and assets 2,635 2,189 Marketable securities 4,786 5,072 Income from investments 300 398 Liquid assets 318 659 Amortization of financial investments and securities included 12,773 12,357 with current assets –316 –363 Interest income, net of expenses 374 280 Deferred expenses 8 7 Income from ordinary business activities 1,112 2,088

19,969 19,094 Taxes on income – 512 –679

Liabilities Net income for the year 600 1,409

Equity capital Removals from surplus accounts 800 Capital stock 1,800 1,500 Capital surplus 4,630 2,895 Additions to surplus accounts –520 Earned surplus 670 150 Unappropriated earnings 80 2,209 Unappropriated earnings 80 2,209 7,180 6,754

Accruals with valuation reserve portion 16 1

Accruals Accruals for pensions and similar obligations 4,333 4,100 Other accruals 5,296 5,472 9,629 9,572

Liabilities Liabilities with banks 4 7 Accounts payable 994 849 Other liabilities 2,146 1,911 3,144 2,767

Deferred income

19,969 19,094

56 57 Ten Year Statistics Bosch Group Worldwide

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Sales 30,588 31,824 33,600 34,432 32,469 34,478 35,844 41,146 46,851 50,333 Foreign share as a percentage of sales 52 51 48 47 49 54 56 61 65 65

Research and development expense 1,803 2,042 2,144 2,302 2,215 2,255 2,474 2,887 3,257 3,478 as a percentage of sales 5.9 6.4 6.4 6.7 6.8 6.5 6.9 7.0 7.0 6.9

Investments in tangible fixed assets 2,064 2,790 2,273 2,038 1,552 1,578 2,056 2,419 2,905 3,773 including domestic 1,259 1,708 1,464 1,347 990 960 1,255 1,270 1,376 1,930 including foreign 805 1,082 809 691 562 618 801 1,149 1,529 1,843 as a percentage of sales 6.7 8.8 6.8 5.9 4.8 4.6 5.7 5.9 6.2 7.5 as a percentage of depreciation 128 162 126 103 85 90 117 117 125 148

Depreciation on tangible fixed assets 1,607 1,725 1,799 1,976 1,836 1,747 1,757 2,059 2,321 2,546

Employees – annual average – (000 omitted) 175 180 181 177 165 156 158 172 180 188 including domestic 117 118 117 113 104 95 92 91 91 94 including foreign 58626464616166818994 as of January 1 of following year 178 181 177 170 157 154 157 176 181 190

Personnel costs 10,202 10,718 11,403 11,838 11,692 11,439 11,476 13,017 14,359 15,575

Total assets 22,205 23,544 24,247 24,452 25,447 27,373 28,504 32,273 34,906 36,343 Fixed assets 6,064 7,147 7,467 7,769 7,003 6,650 6,957 10,784 12,013 12,703 as a percentage of total assets 27 30 31 32 27 24 24 33 34 35 Equity capital 6,668 7,050 7,471 7,859 8,304 8,563 9,038 9,527 11,377 11,869 as a percentage of total assets 30 30 31 32 33 31 32 30 33 33 Cash flow 3,433 3,104 3,267 3,501 3,717 3,765 3,245 3,539 5,219 4,904 as a percentage of sales 11.2 9.8 9.7 10.2 11.4 10.9 9.1 8.6 11.1 9.7 Net income for the year 626 560 540 512 426 512 550 500 1,659 850 Unappropriated earnings (Dividends of Robert Bosch GmbH) 43 43 43 60 60 60 68 68 2,209 80

Values in million DM

58