Supervisory Board

HERMANN J. ABS DIPL.-ING. RICHARD BOLLMANN *) DR. RER. POL. WOLFGANG ROLLER Frankfurt am Main Mannheim Frankfurt am Main Honorary Chairman, Senior Manager , Deputy Chairman Speaker for the Deutsche Bank AG of the Senior Managers' Committee, Board of Management, Dresdner Bank AG Honorary Chairman Mercedes-Benz AG

PROF. DR.-lNG. E.H. SIEGFRIED SAUTER *) HILMAR KOPPER WERNER BREITSCHWERDT Frankfurt am Main Frankfurt am Main Stuttgart Deputy Chairman of the Corporate Member of the Board of Labor Council, Daimler-Benz AG Management, DR. RER. POL. HORST I. BURGARD Chairman of the Joint Labor Council, Deutsche Bank AG Frankfurt am Main AEG Aktiengesellschaft Chairman Member of the Board of Management, DR. JUR. ROLAND SCHELLING KARL FEUERSTEIN *) Deutsche Bank AG Stuttgart Mannheim Attorney at Law Chairman of the Corporate Labor HELMUT FUNK *) Council, Daimler-Benz AG Stuttgart PETER SCHONFELDER *) Chairman of the Joint Labor Council, Chairman of the Labor Council, Augsburg Mercedes-Benz AG Untertlirkheim Plant and Main Member of the Labor Council, Deputy Chairman Office, Deutsche Aerospace AG Mercedes-Benz AG PROF. DR. JUR. JOHANNES SEMLER PROF. DR. RER. NAT. GERD BINNIG Munich ERICH KLEMM *) Kronberg/Taunus Head of IBM Physics Group Calw Member of the Board of Member of the Labor Council, Management, Sindelfingen Plant, Mercedes Aktiengesellschaft Mercedes-Benz AG Holding

MARTIN KOHLHAUSSEN FRANZ STEINKUHLER *) Frankfurt am Main Frankfurt am Main Speaker for the First Chairman, Board of Management, Metal-Workers' Union Commerzbank AG HERMANN-JOSEF STRENGER RUDOLF KUDA *) Leverkusen Frankfurt am Main Chairman of the Departmental Manager within the Board of Management, Board of Management, Bayer AG Metal-Workers' Union BERNHARD WURL *) HUGO LOTZE *) Mainz Reinhardshagen Departmental Manager within the Chairman of the Labor Council, Board of Management, Kassel Plant, Mercedes-Benz AG Metal-Workers' Union

DIPL.-ING. HANS-GEORG POHL Hamburg Deutsche Shell AG *) Elected by the employees. Board of Management

EDZARD REUTER DR. RER. POL. GERHARD LIENER Stuttgart Stuttgart Finance and Materials Chairman JURGEN E. SCHREMPP PROF. DR.-ING. E.H. DR. H.C. Munich WERNER NIEFER Deutsche Aerospace (DASA) Stuttgart Mercedes-Benz ERNST G. STOCKL Deputy Chairman Frankfurt am Main AEG DR. JUR. MANFRED GENTZ Berlin/Stuttgart HELMUT WERNER Daimler-Benz InterServices Stuttgart (debis) Mercedes-Benz

DR. JUR. HANS-WOLFGANG PROF. DR.-ING. HARTMUT WEULE HIRSCHBRUNN Stuttgart Stuttgart Research and Technology Personnel The Corporate Principles of Daimler-Benz

Our work at Daimler-Benz Our customers are the focus serves people and their en­ of our efforts. We must strive vironment. We aim to offer the not just to meet their expecta­ world's most advanced products, tions, but to exceed them. Co­ systems and services. operation and the open exchange This requires a continual com­ of know-how throughout all areas mittment to technical, business, of our companies are central to and social innovation as well as meeting this goal. a corporate culture characterized Just as we are accountable not by complacency, but by to our customers, we are equally creative unrest. responsible to the companies' In a world increasingly com­ owners as well as to the public. plex, with promising opportunities This means we must be willing to - but also risks - even minor provide feedback to others and to events can take on consequences assess ourselves openly and hon­ of major proportions. Therefore, estly. we must carefully weigh our every action. We aim to learn better and We owe it to future genera­ faster than our competitors. tions to use our natural resources To achieve this, we need not prudently and sparingly. This sense only flexible organizational struc­ of responsibility must be reflected tures but also employees who in all our thoughts and activities think entrepreneurial^. throughout the Group. Key to our success are em­ ployees with a sense of respon­ sibility, independence, creativity, drive, teamwork, and openness to new ideas. We therefore promote every employee's personal devel­ opment to the best of our abilities. Daimler-Benz does business Furthermore, we are active in in all corners of the globe. certain specialized areas, such as We are convinced of the advan­ applied microelectronics, domestic tages to everyone of open trade appliances, selected financial ser­ borders throughout the world. vices, and countertrading, where Therefore, we view competition as we aim to be highly competitive. a welcome proving ground. The To a great extent, these activities measure of our success is the re­ interlink our core business areas. cognition our work receives, and Each of our business areas economic success is an undenia­ falls under the responsibility of one ble part of this recognition. of our four corporate units. Thus, Inherent to our philosophy is Mercedes-Benz, AEG, DASA, and respect for other cultures. As an Daimler-Benz InterServices (debis) international company, we reject work together under the umbrella all forms of discrimination. This of Daimler-Benz, the managing principle applies, moreover, to the holding company of our group. filling of management positions, where we will extend equal oppor­ Our cooperation tunities to every employee regard­ aims to: less of nationality. Combine know-how and experience to create new Daimler-Benz is an integrated dimensions - Responsibly technology group. This means promoting progress for that our various business areas are everyone linked by cross cutting technolo­ gies and system structures. We We are proud to continue a place a special emphasis on our distinguished tradition guided know-how and experience in traffic by these principles. management systems and trans­ portation technologies. Our core businesses include vehicles for passenger and freight transportation, rail systems, aero­ space, propulsion systems, de­ fense systems, automation, power transmission and distribution, and information-technology services. In these areas, Daimler-Benz strives to be a world leader. Executive Management and Daimler-Benz Group Representatives

Executive Management and Daimler-Benz Group Daimler-Benz Group Representatives Representatives Berlin DR. JUR. BOY-JURGEN ANDRESEN PETER-HANS KEILBACH Personnel and Social Policy Englerallee 40 D-1000 Berlin 33 HANSJORG BAUMGART Daimler-Benz Art Possessions Bonn

MARTIN BERGER ALFONS PAWELCZYK Annual Accounts and Disclosure Friedrich-Ebert-Allee 26 D-5300 Bonn 1 DR. RER. POL. ROLF A. HANSSEN *) Corporate Planning and Controlling Brussels DR. IUR. HANNS R. GLATZ MATTHIAS KLEINERT *) 133, Rue Froissart - Bte 29 Public Relations and Economic B-l 040 Brussels Policy Hong Kong DR.-ING. MICHAEL KRAMER (until December 31, 1992) Research 1 KLAUS B. BEHRENDT DR. RER. NAT. VOLKER LEHMANN 6th Floor Ruttonjee House Research 2 11 Duddell Street, Central Hong Kong WERNER POLLMANN Technology, Environmental Officer Tokyo Daimler-Benz RAINER JAHN SVAX TT Building JORG SEIZER 3-11-15 Toranomon Subsidiaries and Affiliated Minato-ku, Tokyo 105 Companies Japan

KONRAD STRAUB Washington D.C. Corporate Auditing RICHARD H. IMUS DR. OEC. PUBL. PAUL WICK *) Suite 800, 1350 I Street, N. W. Finance and Taxes Washington D. C. 20005 U.S.A. DR. IUR. SOLMS WITTIG *) Staff Lawyer

GERD WORIESCHECK Personnel Development for Senior Executives

*) With general power of procurement. To the Stockholders and Friends of our Company

for the international business cycle 1993 will also bring far more to recover from its slump and once trials and tribulations than we could again spur export opportunities. As have foreseen at the start of 1992. a result, we find that almost all our For the way things stand now, an West European trade partners are upturn in the economy will not come also suffering from this economic about as quickly as had been hoped. downturn. Moreover, public con­ We can expect exports to pick up in tracts and orders have dropped off the second half of the year at the sharply, while politicians respon­ earliest, but even then it will be too sible seem unsure about which basic soon to hope for an increase in do­ future sourcing policies to pursue. mestic demand. In addition, recon­ Finally, the turmoil the European struction of the new Eastern German Monetary System is undergoing has states is making demands on all of Up until the middle of the 1992 dramatically worsened the situation us that are greatly above and beyond financial year, we were firmly con­ of the German economy. that which has already been pro­ vinced that our corporate approach The key fields of activity of your vided. On the whole, it looks as if would again lead to strong growth in company have not been spared by much of what German business and our operating results. But things these upheavals. In particular, the industry could just manage to mas­ have turned out much differently demand for passenger cars and com­ ter in the past few years now simply than anyone could have expected. mercial vehicles has plunged, hurt­ overstrains its capacities. What happened, and why? ing us seriously. In every respect, therefore, 1993 A number of unforeseeable With the inclusion of Deutsche will not be easy. But even given to­ events occurred in 1992; a constella­ Aerospace Airbus, now consolidated day's much more difficult scenario, tion of circumstances that affected for the first time, Group turnover we still have reason to be confident. not only us, but nearly all of German was projected for more than DM We have made excellent progress to­ industry. 105,000,000,000. As it was, we just wards reaching our strategic goals of One of the major incidents here missed reaching the magic number internationalization, of honing our has been the drastic decline, since of DM 100 billion. It was expected competitive edge on the European mid-1992, in domestic demand in that consolidated net income of the home market, of refurbishing and the Federal Republic of Germany. At Group, as well as operating results, supplementing our product ranges. the same time, we are still waiting would rise strongly, but instead they Then there are the many measures - fell by 25%. One sign of this is that whether planned or already imple­ Group income and revenue tax ex­ mented - to reduce costs and render penditures did not increase, but de­ our processes, procedures and or­ creased by more than DM 450 mil­ ganizational structures more flexible. lion. But what is especially disheart­ ening is that in the course of the 1992 fiscal year, we had to reduce our workforce in Germany by over 18,000 people. We were among the first to fore­ To maintain these overall A further major component of see coming trends and to adapt our positive income trends, we have our corporate culture is working in strategies and structures accor­ been working very hard since the small groups. For example, by 1995, dingly. Since then, others have also mid-1980's to cut costs and improve group work will be extended to in­ realized that the present short-term efficiency. In the motor-vehicle divi­ corporate about half of those work­ downswing merely reflects phenom­ sion alone, these comprehensive ef­ ing in production at Mercedes-Benz. ena long in the making; namely, the forts have meant annual savings of Naturally, we expect this manufac­ sweeping changes in the structure of several billion marks. Similar pro­ turing method to also reduce costs the automotive industry. Your com­ grams have been initiated in every significantly, especially since it will pany is aware of these transforma­ division of the Group, and include be subject to constant, painstaking tions and is prepared for them. exploiting productivity reserves to cost-benefit analyses. Against the backdrop of today's the fullest. Given present economic These processes entail major al­ critical situation, the advantages of stagnation, cost-efficient procedures terations in long-standing structures our new structure are thrown into and processes must and will be con­ and conventional behavior. But since high relief. For example, fully con­ tinued and intensified. we had decided to undertake these solidating Deutsche Aerospace Where corresponding staff re­ steps years ago voluntarily, and not Airbus has had a very positive effect duction has been unavoidable, we because a changed economic reality on the operating results for the have been able to do so in a manner forced us to, we are certain that we Group as a whole. This is only one acceptable to all parties. Unfor­ will harvest the fruits of our labors example, albeit the most important tunately, future interests of the ahead of others. But even more im­ one, of how your company's new Group as a whole may at some time portant, the men and women work­ structure can balance out and com­ necessitate active measures above ing for your company are helping pensate for economic swings. and beyond this. implement these occasionally pain­ We believe this justifies our pro­ In addition, we have launched ful changes - an attitude that is not posal that dividends be maintained broad-based measures to make our part and parcel of every company. at last year's level. It is our belief organizational structures more flex­ One of our primary strategic that you, the shareholders, should ible. Consequently, your company is goals is to globalize your company. continue to enjoy the benefits of already benefitting from leaner cen­ Only thus can we benefit from the your company's long-term earnings tral offices, fewer levels of hierarchy, advantages of specific business and trends, regardless of the occasional higher performance, profit centers industry locations; only thus can we setback. with decentralized decision-making strengthen our products' compet­ authority, a heightened sense of the itiveness. Moreover, the global ap­ individual's responsibility, and more proach prevents us from becoming room for entrepreneurial creativity. too dependent on haphazard fluctua­ These policies are not empty tions in currency exchange rates. phrases, but are quickly becoming For although our hedging measures the reality of our day-to-day opera­ to stabilize exchange rates made up tions. They are key components of a for some of the loss, in the closing corporate culture characterized by months of 1992 such movements creative unrest and intradivisional, lowered our sales proceeds by about intrahierarchical cooperation. one billion Deutschmarks. As noted, we have made good However, we are expanding our 1992 also saw the collaboration progress in internationalizing pro­ worldwide activities not only in pro­ of debis and Cap Gemini Sogeti bear duction structures. We have inten­ duction and supply. Global sourcing, fruit; in fact, this cooperation will sified our collaboration with Ssang design centers, and research field of­ soon enable us to provide compre­ Yong, the South Korean automobile fices are part of the picture, as is the hensive information processing manufacturer, and have stepped up strategic extension of our worldwide services Europe-wide. our operations in Mexico by opening communications networks to im­ Of course, we can continue im­ our first passenger-car assembly prove our public relations work. plementing our strategies only if we plant on the North American conti­ The annual report also reflects have internationally-experienced nent and by establishing a new pro­ the growing internationalization of managers and co-workers. To ensure duction plant for city and regional your company, for we are now in­ that the men and women working in buses. International activities like cluding the same kind of supplemen­ our integrated high-technology these give us solid footing on growth tary information found in U.S. an­ group understand and identify with markets of the future. nual reports. For this reason, we are our global perspective, we have A completely different kind of concentrating on the consolidated drawn up a set of guidelines entitled business opportunity is our joint financial statements, instead of pub­ "New, Productive Syntheses of venture between debis and Gas- lishing both that and the complete Knowledge and Experience: For Con­ prom, the Russian natural-gas sup­ annual statement of accounts of scientious Progress for Everyone". plier. Our strategic alliances also Daimler-Benz AG as well. Of course, These guidelines set high standards serve to help internationalize you may also obtain the annual for our integrated high-technology Daimler-Benz; just a few examples statement of accounts on request, Group. But they also outline exciting include our active cooperation with and it will be available for your per­ perspectives for shaping the future Mitsubishi, as well as DASA and usal at the Annual General Meeting of our company, and for all those Tupolev's joint study on hydrogen as well. who think in global dimensions and propulsion systems for aircraft. Much progress has been made are ready and willing to work to­ in Europe. Along these lines, by gether to find answers to today's and acquiring the majority interest in tomorrow's problems. And given the Fokker, the Dutch aircraft firm, men and women who work in your DASA will be able to offer a full company, we are sure that we can range of products and services in the meet the challenges facing us in the promising field of regional aircraft. current financial year as well. By This acquisition also makes DASA maintaining our strength and conti­ Europe's largest aeronautics and nuity in difficult times, we can pre­ aerospace company. At the same pare for a later upswing and take time, we have completed our re­ part in its prosperity even more structuring, including the integra­ fully. tion under company law of Messerschmitt-Bolkow-Blohm and Telefunken Systemtechnik with DASA. This marks an important step towards restructuring Germany's aeronautics and aerospace industry into an internationally competitive entity. Disappointing World Daimler-Benz: trations fell to 130,300 vehicles Economic Trends Sales of over DM 98 Billion (-10%). New registrations of our S-class in its first full year of avail­ In many industrial countries, Consolidated sales of Daimler- ability increased by 12% to 22,400 economic activity was influenced by Benz totaled DM 98.5 billion (+ 2%) vehicles. Our SL convertible, with the continued low level of demand in the 1992 financial year. Sales in 11,900 (1991: 7,500) registrations, for consumer and capital goods. the European Community totaled remained highly popular. Only in the U.S. did a long-awaited DM 65 billion as in the previous Exports of Mercedes-Benz cars, economic recovery take place during year, of which DM 42.6 billion at 288,500, were 2% up on those of the year under review. In the West (1991: DM 42.7 billion) was gener­ 1991. Exports to European Commu­ European countries, the economic ated in the German market. We re­ nity countries almost matched those indicators for the most part showed corded sharp increases, 8% in each of the previous year. While substan­ a downturn in the second half of the case, in the U.S. (DM 13 billion) and tial increases were achieved in the year, with capacity underutilization in other exports markets (DM 21 bil­ United Kingdom, Spain and above all and a rise in unemployment in al­ lion). Excluding intragroup business, Portugal, declines were recorded in most all countries. The Japanese Mercedes-Benz accounted for about Italy, France and other EC countries, economy too declined in 1992. two thirds, AEG for 11%, Deutsche due to prevailing economic condi­ In Germany, the economic slow­ Aerospace for 17% and debis for 6% tions. down in the middle of the year came of consolidated sales. Business in the U.S. showed a about surprisingly suddenly and was gratifying increase; despite the diffi­ unexpectedly fierce. High interest Mercedes-Benz: cult general market situation we levels played a considerable part in Worldwide Sales of 527,500 Cars sold 63,300 cars (+ 8 %). The 1992 this. In contrast to past economic cy­ award of the U.S. Environmental Pro­ cles, it was not possible to compen­ In the absence of stimuli at the tection Agency went to our S-class; sate for the reduced domestic de­ wider economic level, the expected this series increased its share of mand by means of increased foreign increase in sales in major car mar­ the "high luxury segment" to 41% trade. Furthermore, the rise in the kets in 1992 largely failed to come (1991:37.5%). value of the Deutschmark within the about. In Western Europe and the Mercedes sales were among European Monetary System made U.S., the markets remained static, those to suffer from the slowdown in the price of German products in EC while Japan experienced a substan­ the Japanese car market. With markets considerably less competi­ tial decline. With the end of the 29,600 new registrations (- 13%) tive. In the face of rising unit labor post-reunification boom, market- however, the company remained the costs and dwindling profit margins, depressing factors won the upper leading import marque. Our busi­ many companies were forced to hand in the German car market too. ness in the Far East outside Japan modify their investment plans, with Demand in Germany slowed up con­ made extremely positive progress. consequences also for projects in the siderably, particularly in the second Due to the sharp fall in car de­ new Federal States. Despite the con­ half of the year. mand in Germany, which intensified tinuing difficulties and a further fall At Mercedes-Benz too, car considerably during the course of in employment, the gross domestic business did not meet expectations. the year and, in contrast to earlier product of East Germany rose in Worldwide sales fell by 5% to cycles, was also felt in the luxury 1992 for the first time following 527,500 units. car segment, Mercedes-Benz cut sharp declines. In Germany 239,000 (1991: back its car production to 529,400 270,400) Mercedes-Benz cars were units (1991: 578,000). newly registered, 10,100 (1991: 7,700) or 4% of these in the new Federal states. Business on the die- sel side remained relatively stable, with 83,300 registrations (1991: 89,200). In the last year prior to the model change in the compact series, 74,000 of these cars were newly reg­ istered in Germany, the most popu­ Note: The Business Review is combined for lar cars being the entry-level 190 D Daimler-Benz AG and for the Group. and the 190 E 1.8. Mid-series regis­

Mercedes-Benz: Due to this generally unsatisfac­ Incoming orders totaled DM 12.1 Commercial Vehicle Business tory market situation, production billion in the year under review, an Becomes More Difficult Still at our German factories had to be increase of 6% on the comparable reduced by 13% from the extremely figure for 1991. This increase was In the commercial vehicle mar­ high level of the previous year, to achieved only in the German mar­ kets too, conditions were generally 164,600 vehicles. ket, where demand increased by difficult in the year under review. At 112,800 commercial vehicles 16% to DM 7.4 billion. New export The downward trend in demand for (+ 5%), the production volume of the orders fell by 6%. commercial vehicles continued in foreign companies of the group was The Rail Systems field of activity almost all the West European coun­ higher than ever before. In the U.S., recorded a particularly large in­ tries. The U.S. market however saw Freightliner increased its production crease of more than 60% in orders. the start of a recovery, while in by 33% to 33,300 trucks and in the Numerous large orders received by Mexico and Argentina the volume fiercely contested market for heavy MAN GHH Schienenverkehrstechnik of business increased further. Category 8 trucks (upwards of 15 t GmbH for low-floor streetcars and an Due to the unfavorable condi­ gvw), moved into the lead for the order for 90 locomotives by the tions in the West European commer­ first time, with a market share of Deutsche Bundesbahn/Deutsche cial vehicle markets, Mercedes-Benz 23%. Our companies in Mexico, Reichsbahn placed with the newly was unable to maintain the positive Argentina and Turkey also in­ acquired AEG Schienenfahrzeuge business trend of 1991. New regis­ creased their production and sales. GmbH contributed in large measure trations of Mercedes-Benz commer­ Mercedes-Benz do Brasil on the to this. In the automated manufac­ cial vehicles in Germany fell by 10% other hand was forced to cut back its turing, process engineering, environ­ to 109,800. Vans from 2 to 6 t and production schedules substantially mental technology and postal auto­ trucks over 6 t were both affected by due to difficult conditions in the mation markets, the Automation this. The trend in buses however domestic market. The general weak­ field of activity received numerous was positive. 2,800 new Mercedes- ness of the West European market orders despite the unfavorable mar­ Benz buses were registered, 35% was not without consequences for ket conditions in the plant and engi­ more than in the previous year. At Mercedes-Benz Espana; production, neering industry. In the Electro- 31%, the company maintained its which had increased in the previous technical Systems and Components share of the West European market year by 26%, had to be reduced by field of activity, orders did not quite for trucks over 6 t at last year's high 6% to 26,500 vans. match the high level of 1991, level, despite the intensified compe­ In the group as a whole, 277,300 since the economic trend led to a tition. However, our total new regis­ commercial vehicles were produced pronounced decline in orders for trations in Western Europe were during the year under review. motors. In Microelectronics, TEMIC 9% down on 1991. The share of foreign production TELEFUNKEN microelectronic companies in this increased to GmbH, a joint venture formed by 41% (1991: 36%). AEG and Deutsche Aerospace AG, was included on a 50% basis in the AEG: financial statements of AEG as of Concentration of Forces as a luly 1, 1992; comparably calculated, Result of Structural Adjustments incoming orders showed an increase. The difficult economic conditions caused output in the West German electrical engineering industry to fall by almost 5%. Nevertheless, business of the AEG corporate unit increased in important areas of ac­ tivity, particularly Rail Systems and Power Transmission and Distribu­ tion. Deutsche Aerospace Concludes inclusion of Deutsche Aerospace Integration Process Airbus and TEMIC (comparably cal­ culated), Deutsche Aerospace Despite more difficult In the year under review, the slightly increased its consolidated conditions, consolidated activities of Messerschmitt-Bolkow- sales during the year under review. sales rose by 2% to over Blohm (MBB) and Telefunken Sys- The increase was chiefly due to the DM 98 billion. temtechnik (TST) were combined invoicing of large satellite projects. with those of the old Deutsche Aero­ The trend in incoming orders The largest increases, space. The newly created Deutsche was heavily influenced by the 8% in each case, were Aerospace will form the core com­ Airbus programs; however, the com­ recorded in the U.S. and pany for the operative business of parable figure for the group, at DM the aerospace corporate unit of the 12.5 billion, was down on the 1991 other foreign markets Daimler-Benz group. With this step, level of DM 15.1 billion. outside the EC. the company will substantially im­ prove its capacity for action and co­ debis: Further Increase operation on the international mar­ in Total Output kets and will also achieve greater clarity and efficiency of operation. debis again achieved a sharp Due to a decision of the GATT increase in total output in the year panel, Daimler-Benz AG decided in under review. The divisions System- negotitations with the German gov­ haus, Financial Services and Trading ernment to forego exchange rate made above average contributions to support for Deutsche Airbus GmbH. growth. The Financial Services divi­ In return it was agreed, in addition sion remained the mainstay of busi­ to other considerations, that DASA ness with a share of 72%. should acquire the 20% stake held debis obtained 48% of its total by Kreditanstalt fur Wiederaufbau business in Germany, 12% in the EC earlier than originally planned. This partner countries, 31% in the U.S. transfer allowed the subsidiary market and 9% in other markets. Deutsche Airbus GmbH, Hamburg, 79% (1991: 77%) of total output in the which was previously not fully con­ year under review related to customers solidated, to be integrated fully into outside the Daimler-Benz group. the group retroactively from January In addition to further growth 1, 1992. Since October 1, this com­ from within, the inclusion of the for­ pany has been operating under the mer German Cap Gemini SCS com­ name Deutsche Aerospace Airbus panies had a positive effect at debis GmbH. Systemhaus. In parallel with this restructur­ Dynamic growth in the Financial ing, the process of organizational Services division continued in 1992. streamlining and cost reduction con­ Particularly the companies in Ger­ tinued, particularly in the central many, the U.S., the United Kingdom, administrative departments. the Netherlands and Italy contrib­ In mid 1992, DASA transferred uted to this gratifying trend. The fi­ its microsystems and vehicle safety nancing and leasing of Mercedes- activities to TEMIC TELEFUNKEN Benz vehicles was the unchanged microelectronic GmbH, a joint ven­ focus of activities. The newly formed ture in which Deutsche Aerospace companies debis Leasing GmbH and AEG each have a 50% stake. In in Germany and debis Financial this new company, all the activities Services Inc. in the U.S. began oper­ of the Daimler-Benz group in the ation in the year under review, pro­ fields of semiconductors, micro­ viding financing for products other systems and vehicle equipment have than motor vehicles, debis Aviation been grouped together. After the Leasing GmbH, Stuttgart, will do business with customers beginning in 1993. The organizational restructuring Employment Increased International of insurance activities in the in the Daimler-Benz Group Purchasing Activities Daimler-Benz group and in the ex­ ternal industrial client sector under At the year-end, the Daimler- The Daimler-Benz group pur­ the roof of debis Assekuranz Ver- Benz group employed 376,467 chased goods and services from mittlungs GmbH was concluded in people (1991: 388,696), 302,464 around the world to the value of DM the year under review. (1991: 317,461) of them in Ger­ 55.7 billion (1991: DM 55.4 billion). The Trading division, with its many. Mercedes-Benz accounted for almost companies debis International Trad­ At the end of December, three quarters of this, AEG for ing GmbH and debis Industriehandel Mercedes-Benz employed 222,482 10.7%, Deutsche Aerospace for GmbH, substantially improved its people, AEG 60,784, DASA 81,872 14.8% and debis for 4%. market position. The development of and debis 8,258. Daimler-Benz AG Our purchasing activities were the Marketing Services division was (Holding) had 3,071 employees, affected to a large degree by the dif­ impaired by the economic downturn some 555 of them in corporate man­ ficult economic situation. Overall, in Germany in the year under agement functions, 1,287 in central prices of goods and services pur­ review. The pleasing growth of busi­ research activities and 1,229 in chased remained virtually static. ness with customers outside the service sectors working for the cor­ With our global sourcing strat­ Daimler-Benz group continued, how­ porate units and for the Mohringen egy, we continued to further interna­ ever. offices. tionalize our purchasing. Our pur­ Since the start of trial service In Germany, employment at the chasing departments in Germany for the Dl and D2 networks in the corporate units was generally unsat­ are assisted in important procure­ second half of 1992, debitel, as a isfactory due to the downturn in the ment markets by corporate co­ private telephone company, has economy. At our foreign companies ordinating offices. We expect to find provided access to these mobile however, capacity was for the most new opportunities in the East Asia communications services coupled part fully utilized. region and particularly in South with competent, individual advice to Due to the unsatisfactory level of China, with its extremely rapid pace customers. orders in the vehicle sector, there of economic development. was an increasing need for adjust­ The new structure of Daimler- ments at the domestic plants of Benz, based on performance centres Mercedes-Benz AG. At AEG, employ­ and leaner management, promotes ment in 1992 was generally satisfac­ and intensifies the integration of the tory. During the last months of the suppliers into our planning and year however, production had to be permits further progress to be made adjusted to the poor trend, partic­ towards ensuring the complete- ularly in Germany, in demand. The systems capability of suppliers. With employee numbers of Deutsche these competent partners who Aerospace reflect the inclusion for contribute their know-how from the the first time, on a pro rata basis, of earliest evolution of the product, Eurocopter and TEMIC and the full and also through low costs and high consolidation of Deutsche Aerospace quality, we shall together be able to Airbus. Changes in government keep pace with the demands of the budgets however resulted in capac­ market. In these activities we give ity of Deutsche Aerospace being the highest priority to meeting our inadequately utilized in the year environmental responsibilities. We under review. The increase, compar­ also, along with other West German ably calculated, in employee num­ companies, support the idea of a bers at Daimler-Benz InterServices (debis), was due to the inclusion of the German subsidiaries of CAP Gemini. purchasing drive for the new Federal Additions to fixed assets States, as instigated by the German amounted to DM 1.1 billion at DASA government. By helping East German (excluding the first time contribution suppliers to become fully competi­ of DM 1.4 billion by Deutsche Aero­ tive and by increasing the volume of space Airbus), DM 0.8 billion at AEG goods and services we obtain from and DM 0.2 billion each at both the new Federal States substantially debis and the holding company. At in the coming years, we intend to the operative level, the funds were make our contribution to the eco­ chiefly used in order to develop new nomic upturn in that part of Ger­ products and to further increase many. productivity. Additions to leased equipment Investment Remains increased from DM 4.2 to DM 5.2 at a High Level billion. The leasing business is fi­ nanced by depreciation and disposal During the year under review, charges and by sequential additions we again invested substantial sums to liabilities. Borrowing to finance to safeguard the future of the the leasing and sales financing Daimler-Benz group of companies. companies totaled DM 11 billion Additions to fixed assets totaled (1991: DM 8.1 billion). DM 7.8 billion (1991: DM 6.5 billion) and intangible assets rose by DM 0.2 DM 9.3 Billion Spent billion; the net additions to financial on Research and Development assets amounted to DM 0.3 billion (1991: DM 2.3 billion), depreciation The spending of the Daimler- and disposals of fixed and intangible Benz group on research and develop­ assets to DM 5.5 billion. ment in 1992 totaled DM 9.3 billion Mercedes-Benz again accounted (1991: DM 9.0 billion). Contract for DM 4.2 billion of the investment research, almost exclusively at in fixed assets; DM 3.6 billion (1991: Deutsche Aerospace, accounted for DM 3.3 billion) of this sum was de­ DM 4.4 billion. More than 36,000 ployed in Germany. As in past years, people are employed worldwide in the emphasis was on the Passenger the research, development and Car division. DM 2.7 billion was in­ testing sectors of Daimler-Benz. vested in efficient, modern manufac­ The central division "Research turing facilities, in new products and and Technology" is engaged in a in preparations for future tasks. The permanent dialogue with the four car assembly plant in Rastatt, along corporate units of the Daimler-Benz with preparations for the new com­ group, in order to assess and an­ pact series, were at the forefront of alyse their requirements for new these activities. Investment in the technologies. Following this, recom­ Commercial Vehicle division totaled mendations are made or specific DM 1.1 billion, of which DM 0.6 bil­ innovation projects launched. Focal lion, around half, was spent at the points of group-wide research are plants in Germany and was directed propulsion technology, vehicle towards additions and renewals in design, transport technology, devel­ the product ranges, modernization of opment of new materials and mate­ manufacturing plant and the intro­ rials technologies, information tech­ duction of new technologies. nology and the environment. Mercedes-Benz spent DM 3.1 the "O 100 City" minibus. This Fighter Aircraft; the most notable billion (1991: DM 3.2 billion) on lowfloor bus with a fiber-glass rein­ event on the helicopter side was the research and development in its forced synthetic body is tailored to completion of development work on Passenger Car and Commercial future trends in urban line-service the German-French Tiger anti-tank Vehicle divisions in 1992. operation. A further addition to the and escort helicopter. In the Space At the Detroit Auto Show in Jan­ bus range for Europe was the 0 340 Systems group, research and uary, 1992, the Passenger Car divi­ built by our Turkish subsidiary. development work concentrated on sion presented the new 600 SEC top- In the Unimog product sector, the various ESA programs and the of-the-range model. With this coupe, the new light and medium model se­ Ariane program. In the Defense and which combines advanced design ries were introduced on the market. Civil Systems group, work on the with the highest levels of comfort The completely new U 90 to U 140 L Trigat anti-tank system continued. and safety, Mercedes-Benz now of­ models replace the most successful In the civilian sector, increased em­ fers the largest range of any manu­ Unimog series to date, the U 600 to phasis was placed on radio and tele­ facturer catering to the luxury car U 1150 L, in the 4.8 to 8.5 t perm. vision transmitters and on traffic market. Our co-operation with AMG GVW category. management systems. In the Propul­ resulted in the course of the year in In the Commercial Vehicle divi­ sion Systems group, major efforts further individualization of the pas­ sion, design plays an important role were undertaken to ensure a senger car range and led to AMG in sales and as an instrument of further expansion of non-military versions being offered for almost all competition. The commercial vehicle aero-engine business in the long our model series. In June 1992, our study "EXT", which was shown in term; on the diesel engine side, the sales organization presented the May 1992 at the Hanover Commer­ focus was on development of a new new Mercedes-Benz 600 SL to the cial Vehicle Show, is intended for product generation. In the field of public. With the new generation of long-haul operation and features a medical systems, work centered on 4-valve gasoline engines and an design which is highly innovative further development of existing extended range of standard and op­ for this sector. lithotripters and on new ultrasound tional appointments, our mid-series AEG spent DM 754 million on systems. models now offer even greater value. research and development in 1992; Further innovations were presented this was 12% more than in the pre­ Consolidated Net Income: at the Paris Motor Show in October, vious year (DM 672 million) and was DM 1.45 Billion 1992, with the gasoline-driven equivalent to more than 6% of AEG 300 SE 2.8 and, new to Europe, the sales. Focal areas of research during The consolidated income state­ highly economical 300 SD diesel. the year under review were decen­ ment of the Daimler-Benz group for During the year under review, tralized automation equipment, run­ 1992 shows a net income of DM new products joined the Mercedes- ning gear and drive systems, trans­ 1.45 billion. The fall of DM 0.5 bil­ Benz commercial vehicle range and port systems, systems and software lion from the previous year's figure product improvements were intro­ technology, pattern recognition, very resulted primarily from the onset of duced. One of the outstanding events high frequency microelectronic com­ unexpectedly difficult conditions for of the year was the start of produc­ ponents and high-temperature su­ vehicle business in the third quarter tion of all the models in the new perconductors. of the year and from the changed op­ 0 404 generation of touring coaches. At DASA, DM 5.2 billion (1991: erating environment for major areas At the beginning of 1992, the low- 5.0 billion), equivalent to 30% of of the aerospace industry. Results floor articulated O 405 GN also went sales, was spent on research and from ordinary business activities fell into production. The Hanover Inter­ development; DM 4.3 billion of this by one third to DM 2.5 billion. national Commercial Vehicle Show was spent on externally commis­ saw the presentation of an innova­ sioned projects. Projects financed by tion with a most promising future, DASA itself again totaled DM 0.9 bil­ lion. In the Aircraft group, the main activities relevant to the aircraft business were the Airbus A 330/ A 340 programs, the Dornier 328 and the European As in previous years, the largest The interest expense of our leas­ contribution - albeit a substantially ing and sales financing companies lower one in 1992 - to consolidated was slightly below last years' level earnings was made by the vehicle at DM 0.4 billion. Excluding the this sector. The abrupt fall in demand for interest expense our net interest in­ both cars and commercial vehicles come amounted to DM 1.0 billion in Germany and the absence of the (1991: DM 1.1 billion); the decline expected recovery in major foreign was due to reduced liquidity. The markets had a substantial influence monetary adjustments made by our on this decline. The situation was subsidiaries in high-inflation coun­ further aggravated by the fall in the tries in their financial statements value of currencies of major Euro­ have been retained in the Daimler- pean partner countries which signifi­ Benz financial statements, effec­ cantly impaired the competitiveness tively preventing the reflection of of our product prices. inflationary profits. Following the extremely high ex­ penses of the previous year in prepa­ Sound Balance Sheet Structures ration for the withdrawal from office and communication systems, AEG The balance sheet total rose by achieved break-even group results in DM 10.5 billion to DM 86.2 billion. 1992, whereas operating results re­ This was mainly attributable to the mained negative and did not reach fact that Deutsche Aerospace Airbus last years' level. Here too, business was fully consolidated for the first was handicapped by static or down­ time. On the assets side of the con­ ward economic trends in important solidated balance sheet, both non- sales markets, particularly in the current and current assets increased second half of the year. in roughly the same proportion as Deutsche Aerospace has made the balance sheet total. extensive preparations for the ad­ On the liabilities side, the equity justments which will be necessary ratio fell from 30 % to 28 %; the pro­ due to the fall in orders already evi­ portion of non-current assets cov­ dent in the year under review, par­ ered by stockholders' equity fell ticularly in the defense sector. Pre­ from 89 % to 81 %. Neither of these liminary outlay relating to future figures include the financial services business also depressed results. The business, which is largely financed high positive contribution of by borrowings. Taking into account Deutsche Aerospace Airbus, which medium and long-term provisions, was fully consolidated for the first particularly pension provisions, long time, was not able to compensate and medium-term capital amount to completely for the negative factors. 61% of the consolidated balance The contribution of debis to the sheet total. This is sufficient to fully consolidated result was similar to cover both non-current assets and that of the previous year. This was inventories. due above all to the again favorable trend in earnings of the Financial Services division. Earnings of the Systemhaus division were nega­ tively influenced by intensified com­ petition in the information technol­ ogy sector. Allocation of Earnings From the net income of Daimler- exchange rate factors, we must be Benz AG, DM 101 million will be prepared to have to reduce output at The net income of Daimler-Benz transferred to the retained earnings our German plants. The slightly bet­ AG totaled DM 5,193 million. This of the holding company, in accord­ ter conditions in overseas markets figure includes extraordinary in­ ance with Paragraph 58 of the on the other hand will make it possi­ come of DM 4,490 million resulting Companies Act. At our Annual Gen­ ble to increase our foreign commer­ from valuation adjustments of pen­ eral Meeting on May 26, 1993, we cial vehicle production, but not suffi­ sion provisions and inventories at shall propose that an unchanged div­ ciently to compensate for the down­ Daimler-Benz AG and Mercedes- idend of DM 13 be paid per share of turn in domestic output. Benz to bring them into line with the DM 50 par value. The total dividend In order to keep pace with in­ practice which has been followed in amount will increase, due to the re­ creasingly fierce competition, the Daimler-Benz consolidated state­ duction in treasury stock, to DM 604 Mercedes-Benz will be redoubling ments since 1989. million. the efforts already underway to re­ This means that the same ac­ duce costs and improve productivity. counting and valuation methods are Outlook This will include a further reduction on the whole now used at the differ­ in workforce numbers. ent levels and within each area of At the start of 1993, the eco­ For the current year, AEG ex­ the Daimler-Benz group. This in­ nomic outlook in most industrialized pects a slight increase in its volume creases "transparency" and ensures countries is uncertain. In the U.S., of business; business in foreign mar­ comparability. At the same time, a further upturn in demand is ex­ kets will grow somewhat more than segmental reporting as required for pected, while in Japan recovery is that in Germany. An increase in the future listing of our shares on not likely before the end of the year. business is expected particularly in the New York Stock Exchange is Economic trends in the West Euro­ the Power Transmission and Distri­ also facilitated. pean countries will differ widely, the bution and Microelectronics fields of At our Annual General Meeting, strongest chance of an economic re­ activity. Research and development we shall propose that the profits covery being in the United Kingdom work will be stepped up, as will in­ arising from the valuation adjust­ and France. In Germany, an upturn vestment in fixed assets. In addition, ment be transferred in their entirety cannot be expected before the se­ further co-operation and acquisitions to retained earnings and so remain cond half of the year at the earliest. are planned, with a view to an all- in the company. In the first two months of 1993 round strengthening in the position Calculated excluding income sales in some areas of both commer­ of AEG. from valuation adjustments, net in­ cial vehicles and cars were signifi­ Deutsche Aerospace expects to come fell from DM 1,194 to DM 703 cantly below expectations. Thus achieve a sales volume similar to million. As in previous years, short-time working could not be that of 1992. Higher revenue can be Mercedes-Benz AG made by far the avoided. The increase in value added expected in the Aircraft group largest contribution. While debis tax in 1993 as well as the increase with the deliveries of the first Airbus also contributed a positive result and in the tax-relevant usefull life of cars A 340 aircraft to customers. Also, AEG broke even, a loss had to be as­ led to many purchases in the Ger­ the joint venture TEMIC will make a sumed from Daimler-Benz Luft-und man market being brought forward substantially larger contribution to Raumfahrt Holding AG. to 1992. For the remainder of 1993 the volume of business of DASA. In we expect positive stimuli for the the Space Systems group, we ex­ entire car range from the introduc­ pect a sharp sales rise in the Ariane tion of the new compact class in the program. No other major projects middle of the year. are due to be invoiced in the near In the European Community, future however, so that sales will there will be a decline not only in fall considerably short of the excep­ our car sales but also in sales of tionally high level of 1992. In the commercial vehicles from our Ger­ man factories. Against the back­ ground of continued depressed mar­ kets and increased prices of our products in foreign markets due to Defense and Civil Systems group solutions. The Insurance division, too, it is likely that business will fall debis Assekuranz, will increasingly substantially as a result of the con­ be establishing offices of its own in tinuing unfavorable trend in orders. the coming years not only in West­ In the Propulsion Systems group, ern Europe but also in the American sales of civilian aero-engines will not and South East Asian regions, debis yet be able to compensate for the Risk Consult and debis Marketing substantial fall in military business. Services GmbH also plan to expand An important aim of DASA in their business, debis Handel will in­ the current year is to adapt capacity crease its activities, particularly in as quickly as possible to the ex­ the area of barter trade, through the pected fall in orders, a trend which establishment of additional foreign is likely to be considerably more offices in important counter-trade pronounced in the coming years, markets, debis expects to substan­ particularly in the defense sector, tially increase its total output in than was originally expected. Since 1993. production schedules in the Aircraft With the help of the joint ven­ and Space Systems groups are also tures which were formed in 1992, declining and are beset by consider­ it is our intention to improve our able uncertainties, appropriate ad­ performance, to reduce costs and to justment of employee numbers in all offer new products on the market. areas will be unavoidable. We expect these joint ventures to Following lengthy negotiations, exhibit a high level of growth in the we concluded an agreement with the coming years. This applies partic­ Dutch government in February, ularly to the field of transport and 1993, allowing us to acquire a 51% traffic management systems, where majority holding in aircraft manufac­ intelligent, future-oriented solutions turers Fokker. are increasingly in demand. Daimler-Benz InterServices will We shall continue the cost- further increase its business with cutting programs already underway; customers outside the Daimler-Benz the high wage levels in Germany group, a focal area being the System- compel us to introduce leaner pro­ haus division, where software activ­ duction structures. The expansion of ities will be stepped up, for the most production capacity abroad will part in collaboration with CAP therefore assume increasing impor­ Gemini. The Financial Services divi­ tance. sion is aiming to assume a leading The number of hierarchical role as a supplier of integrated levels within the companies of the group is being reduced, with the aim of shortening decision-making pro­ cesses and increasing the motivation of our employees. Overall, we expect sales to remain static in the 1993 financial year, with a further decline in earnings. Corporate Unit Mercedes-Benz

At Mercedes-Benz, as through­ In the Commercial Vehicle division, out the automotive industry, adjust our worldwide investment again ments in employment numbers had to totaled more than DM 1 billion. DM be made, in response to the eco­ 0.6 billion, over half the total, was nomic and structural difficulties fac­ invested at the factories in Germany. ing the world automotive industry at Here we concentrated on additions the present time. At the year-end, the to our product range and on the in­ number of employees in the group troduction of new technologies. Out­ had fallen to 222,482 (1991: side Germany, the emphasis was on 237,442), 10,752(1991: 11,104) of renewal of the vehicle ranges and on *) 1992 figure comparable. whom were apprentices and a modernisation and expension of Due to the unfavorable business trainees. The workforce of Mercedes- our production plants. environment, Mercedes-Benz was Benz AG declined by 14,981 to A total of DM 3.1 billion (1991: unable to maintain its positive trend 169,080 employees. The car plants, DM 3.2 billion) was spent on re­ of the previous years. Consolidated the commercial vehicle plants, the search and development in the Pas­ sales were 1% below those of the sales division and the administrative senger Car and Commercial Vehicle previous year, at DM 66.5 billion. headquarters all saw a fall in divisions, much of this, as in the Sales revenue of the Commercial employee numbers. past, in the environmental and Vehicle division fell by 3% to DM In order to respond more quickly safety fields. 26.9 billion, whereas that of the and more flexibly to changes in the Due to the difficult conditions in Passenger Car division matched its company's operating environment the most important markets, a slight high level of the previous year at and to more intensive competition, recovery is the most that can be ex­ DM 39.6 billion. Mercedes-Benz produced plans for a pected for sales of the Mercedes- Sales of Mercedes-Benz in the revised management structure, Benz cars in the second half of 1993. European Community fell by 5% to implementation of which began in For commercial vehicles, we expect a DM 41.5 billion. This result was in­ January 1993. With the creation of further decline in demand in Western fluenced by the unfavorable trend in product and service centres, each of Europe, while the growth in our the German market, where sales fell which is accountable for its own overseas sales and production will by 5% to DM 29.2 billion. In coun­ results, all areas of the company are probably continue. tries outside the EC, the volume of being geared more closely to the business increased by 6% to DM market and to the needs of the 24.9 billion. Large increases were customers. recorded in South East Asia, the Mercedes-Benz invested DM 4.2 United States and Central America. billion (1991: DM 4.1 billion) in fixed assets in 1992; DM 3.6 billion (1991: DM 3.3 billion) of this spend­ ing took place at locations in Germany. As in past years, the emphasis was on the Passenger Car division, where at DM 2.7 billion the substan­ tial investment volume of the previous year was maintained.

Federal Republic of Germany: Increased Foreign Sales Fall in Demand Accelerates During the Year Export sales of Mercedes-Benz increased by 2% to 288,500 cars; in After record volumes in 1991, Germany's partner countries of the swollen by exceptional factors, the European Community, they almost German car market rapidly lost mo­ matched those of 1991. Although mentum during the year under re­ our sales in Italy fell by 8%, 1992 view. New registrations nevertheless was our second best year for busi­ totaled approximately 3.9 million ness in this market. Our sales in cars (- 6%), the fall being attributable France were 5% below the previous Depressed World Car Markets exclusively to the West German year's level, while in the United States. This volume, which was still Kingdom we achieved an increase of The recovery in important car high on a long-term comparison, was more than 8% despite the continuing markets which had been expected overshadowed however by a plunge recession. In Spain too, our car sales for 1992 did not come about, due to in domestic orders from the early were gratifying, continuing the up­ the low level of world economic summer onwards and by a build-up ward trend which has been main­ activity. In Western Europe and the of stocks of new and used vehicles. tained ever since 1985. U.S., sales were static, while in With sales of 63,300 Mercedes- Japan new registrations fell. The post- Mercedes-Benz: Benz cars (+ 8%), the trend in our reunification boom in the German Slight Increase in Car Sales U.S. business was generally pleasing. market came to an end and the mar­ Our S-class was awarded the 1992 ket has returned to a normal level. Despite the unfavorable overall U.S. Environment Prize by the Although world production of conditions, car sales of Mercedes- Environmental Protection Agency; passenger cars matched the volume Benz increased slightly in 1992 to this series increased its share of the of the previous year, plant utilization DM 39.6 billion. Growth momentum "high luxury" segment to 41% declined further, due to the con­ came chiefly from overseas markets, (1991:37.5%). tinued build-up of manufacturing the volume of business in the EC capacity. Increasing employment being 2% below the level of the problems, falling profits and fiercer previous year. worldwide competition in all market Mercedes-Benz was unable to segments set the tone for the world escape the general downward trend car industry. in the German vehicle market. New registrations of Mercedes-Benz cars fell to 239,000 units (1991: 270,400 units); the new Federal States accounted for 4% of this total, or 10,100 units (1991: 7,700 units). 74,000 (1991: 96,100) Mercedes compact models were newly regis­ tered in Germany. New registrations of the mid-series fell to 130,300 ve­ hicles (-10%). New registrations of our S-class increased by 12% to 22,400 vehicles. Our SL models too continued to enjoy high popularity in Germany, with 11,900(1991: 7,500) cars sold. The new S-class coupes only became available on the market towards the end of the year under review. We too were affected by the Also in Paris, our S-class was voted downturn in the Japanese car mar­ "The World Car 1992" by an inter­ ket, although we nonetheless main­ national jury of motoring journalists tained our position as the leading from Western Europe, Japan and imported marque. Our business in the U.S. the Far East outside Japan showed a very positive trend. We also Highest Safety Levels achieved relatively high growth in as Standard Specification the Middle East and Australia. Due to the low overall level of The high active and passive demand, Mercedes-Benz cut back its safety standards of our vehicles car production to 529,400 units were raised still further by a number (1991: 578,000 units). The reduced of measures during the year under production particularly affected the review. Since autumn, 1992, all compact series (- 17%), where a Mercedes-Benz passenger cars have model change was imminent. 7% been fitted as standard with the fewer mid-series vehicles were driver's airbag. On account of the produced, while production of the considerably superior protection it S-class, the coupes and the SL provides, we fit a "full-size" airbag models increased by 6%. in our vehicles and not the smaller "Euro-airbag". On various models, Additions to the Model Range the front passenger's airbag too is included in the standard specifica­ The outstanding newcomers to tion. Further improvements in safety the Passenger Car division were the are being developed as a matter of 500 SEC and 600 SEC S-class utmost priority. coupes, which made their world de­ but at the Detroit Auto Show in Janu­ DM 2.7 Billion Invested ary 1992. At the 77th Paris Motor to Safeguard the Future Show, the 300 SE 2.8 and 300 SD S-class models, the 600 SL, the 400 In 1992, we invested DM 2.7 bil­ E and the enhanced mid-series lion in the Passenger Car division to models with new 4-valve engines secure the company's future opera­ were presented to the public. tions in the long term, the highest spending level in the history of the company. Principal objects of invest­ ment were the car assembly plant in Rastatt, preparations for production of the new compact series and the 4-valve gasoline and diesel engines and introduction of water-based paints in further areas of our manu­ facturing. On May 25, 1992, the Rastatt Strong Performance plant, third car assembly plant of in the German Touring Car Mercedes-Benz AG was inaugurated. Championships This forward-looking move will safe­ guard the long-term competitiveness 1992 was a year of records in of our German-based operations. In the German Touring Car champion­ terms of productivity, flexibility, ship. More spectators and wider re­ product quality and environmental porting than ever before were proof compatibility, the Rastatt plant will of the popularity of this series. serve as a model for all the other Mercedes-Benz played a leading role Mercedes-Benz plants. in the 1992 season, winning 16 of 24 races. Klaus Ludwig, in the AMG Weak Commercial Vehicle Markets Further Progress Towards Shorter Mercedes-Benz 190 E took the in Western Europe Development Cycles Championship title, followed by Kurt Thiim and Bernd Schneider, a suc­ In addition to price and quality, cess unrivalled by any other compet­ Conditions were generally diffi­ the traditional components of com­ itor in this fiercely contested series. cult in the most important commer­ petition, questions of time-scale and cial vehicle markets in 1992. The markets in Italy, the United Kingdom, innovation are now also acquiring Outlook ever greater importance. Using France and Scandinavia were partic­ ularly weak; competition on prices modern development management Given the difficult conditions in and terms again intensified. In con­ methods with a strong emphasis on almost all major car markets, we ex­ trast to the generally declining trend an interdisciplinary approach we are pect at the most a slightly more posi­ in Europe, a recovery took place in in a position to face these chal­ tive trend in sales of Mercedes-Benz commercial vehicle business in the lenges. cars in the second half of 1993. The US, particularly in the heavy-duty Close coordination takes place first two months of 1993 were sub­ segments. The markets in Mexico between the research, development, stantially below our expectations for and Argentina continued to grow. In sales, marketing, production engi­ car sales in Germany. The introduc­ Brazil however, continuing political neering, materials management and tion of our new compact series and economic uncertainty led to a business management sectors when should lend sustained impetus to considerable fall in demand. Al­ new products are designed. In the our sales. development phase, teams are set though the worldwide production of up for the various components of the the commercial vehicle industry in­ vehicle, in which development and creased by 3% to 12.5 million vehi­ production engineering staff work cles, production in Western Europe side by side. The result is shorter of trucks over 6 t fell by 10% to development times compared with 299,000 units. the previous sequential ordering of the development and production End of Post-Reunification engineering processes. Boom in Germany The post-reunification boom in Germany which continued into the first part of 1992 came to an abrupt end in the middle of the year. Due to the buoyancy of the first half of the year however, the market showed an increase for the eighth consecutive year, with new registrations of com­ mercial vehicles totaling 337,100 units (+ 1%). The growth was largely fuelled by the market for vans and trucks up to 6 t. In the truck seg­ Due to the unsatisfactory situa­ Group commercial vehicle ment over 6 t, however, 98,700 vehi­ tion in the West European markets production of Mercedes-Benz fell in cles were newly registered, 6% fewer and the fall in demand in Germany, 1992 by 6% to 277,300 units from than in 1991. we had to reduce production at our the high level of the previous year. German factories by 13% from the Our foreign companies increased Mercedes-Benz Maintains Market exceptionally high level of the pre­ their share of production from 36% Position in Western Europe vious year, to 164,600 vehicles. The to 41%. adjustments in production levels Due to the unfavorable condi­ affected particularly the Worth and Leading Manufacturer tions in important markets, Diisseldorf assembly plants but also, of Buses Over 8 t Mercedes-Benz was unable to main­ after a time-lag, Mannheim, tain its positive trend of 1991. Gaggenau and Kassel, which build In 1992, group production of Sales of the Commercial Vehicle major assemblies for commercial Mercedes-Benz buses and bus division fell by 3% during the year vehicles. chassis totaled 29,000 units (1991: under review to DM 26.9 billion. 28,600 units). We thus maintained Business in the German market fell Increased Production our position as the world's leading by 10% to somewhat below DM 11 at Foreign Companies manufacturer of buses over 8 t billion, while business abroad rose permissible gross vehicle weight. to DM 15.9 billion (1991: DM 15.5 With an increase of 5% to Mercedes-Benz buses in this cate­ billion). With worldwide sales of 112,800 units, production at the gory set a new record in 1992 for 94,000 trucks (1991: 109,400 foreign companies in the Mercedes- registrations in Germany, at 2,500 trucks) over 6 t, we maintained our Benz group reached its highest level units (+ 40%). At our Mannheim position as world market leader in ever. Our American company plant, the last O 303 model left the this segment. Freightliner, whose production in­ assembly line after a production run Due to the low level of demand creased by 33% to 33,300 trucks, lasting 18 years. 38,000 O 303's in the second half of the year, new made a substantial contribution to were sold, making this the world's Mercedes-Benz registrations in this. In the fiercely contested U.S. most successful touring coach. Pro­ Germany fell to 109,800 commercial market for heavy Category 8 trucks duction of the new O 404 coaches vehicles, 10% below the record (upwards of 15 t gvw), Freightliner started at the beginning of 1992. volume of 1991. moved into the lead for the first Exports from our German facto­ time, with a market share of 23%. Increased Unimog Sales ries fell by 2% to 78,200 units. Nev­ A pleasing trend in business ertheless, we held our West European was also recorded at our companies Our Unimog sales rose during market share for trucks over 6 t in Mexico, Argentina and Turkey. the year under review to 4,600 units at the previous year's high level Due to the unfavorable situation in (1991: 4,100 units). Major orders, of 31%. its home market, Mercedes-Benz do notably from China and Greece, Brasil had to cut back production more than compensated for the fall substantially, despite increased in sales in Germany and important exports. world markets due to economic con­ Mercedes-Benz Espafia was hit ditions. 650 (1991: 550) of the 2,300 by the weakness of the West (- 5%) vehicles sold in Germany were European markets; following an supplied to customers in the new increase of 26% in the previous year, Federal states. production had to be cut back by 6% to 26,500 vans. New Products and Increased Collaboration with Product Improvements SsangYong Motor Company

During the year under review, Mercedes-Benz AG and South new products joined the Mercedes- Korea's fourth-largest vehicle manu­ Benz commercial vehicle range and facturer, the SsangYong Motor Com­ product improvements were intro­ pany (SYMC) concluded an agree­ duced. The overall philosophy is to ment on co-operation in October, offer at all times the very latest state 1992. This means that in addition to of the art in environmentally com­ license production of diesel engines patible, economical and individually- and vans as provided for in an earlier tailored transport solutions. agreement, SYMC will as of 1994 be The outstanding event of the able to produce Mercedes-Benz gaso­ year in the bus sector was the start line engines under license. By this of production of all the models in the long-term cooperation, which was new 0 404 generation of touring initiated in 1991, it is our intention coaches, which was presented at the to create an improved position from end of 1991. Reactions from cus­ which to serve the South East Asian tomers have been universally posi­ market. To reinforce the partnership, tive. At the beginning of 1992, the Daimler-Benz AG has acquired a 5% low-floor articulated 0 405 GN also holding in the capital stock of SYMC. went into production. The Hanover From 1994, more than 100,000 International Commercial Vehicle Mercedes-Benz gasoline and diesel Show saw the presentation of an in­ engines will be produced annually novation with a most promising fu­ on jointly designed production facili­ ture, the "0 100 City" minibus. This ties at the Changwon plant. completely new low-floor bus, devel­ oped in cooperation with a Dutch Outlook design and development center, is tailored to future trends in urban The prospects for the commer­ line-service operation. A further cial vehicle markets at the begin­ addition to the bus range for Europe ning of 1993 are not good. Only a was the 0 340 built by our Turkish substantial recovery in the West subsidiary. European volume markets and over­ In the Unimog sector, the 1992 seas markets would be capable of financial year saw the production compensating for the continuing and market launch of the new light slowdown in the German economy, and medium Unimog series. From where we experienced marked sales the outside, these models are distin­ declines in the first two months of guished by the new spacious safety- 1993. design driver's cab, with an engine The Mercedes-Benz Commercial hood which slopes more sharply on Vehicle division faces still fiercer the driver's side to give a better competition due to the Single view when working. European Market. In the coming years, we shall therefore have to exploit all possible means of pre­ serving and strengthening the competitiveness of our German- based operations. We hope to improve on the record 112,800 units produced by the foreign commercial vehicle com­ panies of the Mercedes-Benz group in 1992 and further strengthen our position as the world market leader for trucks over 6 t. Corporate Unit AEG

activity improved on the profits of in Nuremberg. Large-scale invest­ the previous year. In Industrial ment also took place at TEMIC for Automation, the motors sector and the production of integrated circuits Microelectronics, earnings remained in Heilbronn and airbag production negative or worsened, due in part, in Aschau. to considerable burdens. The AEG group spent DM 754 Provisions contained in the 1991 million on research and develop­ financial statements for the with­ ment in 1992, a rise of 12% on the drawal from office and communica­ comparably calaculated figure for tion systems could in part be cred­ the previous year. Focal areas of ited to income, thus contributing to research in the year under review an increase of DM 63 million in the were decentralized automation result from ordinary business activ­ equipment, running gear and drive Despite the weakness of the ity, which stood at DM + 8 million. systems, transport systems, systems West German electrical engineering Incoming orders of the AEG and software technology, pattern market, the AEG group recorded an group totaled DM 12.1 billion in the recognition, very high frequency increase in the volume of business year under review, an increase of microelectronic components and in important areas of operation, par­ over 6% on the comparable figure for high-temperature superconductors. ticularly Rail Systems and Power 1991. This increase was achieved On July 1, 1992, AEG's subsid­ Transmission and Distribution. solely in the German market, where iary TELEFUNKEN electronic GmbH, Sales of the AEG group rose by demand increased by 16% to DM 7.4 Heilbronn, and its affiliated com­ 8% on the comparable figure for the billion. Export orders fell by 6%. panies were brought into TEMIC previous year to DM 11.6 billion. At the end of 1992, AEG TELEFUNKEN microelectronic Revenue from sales in Germany rose employed 60,784 people around the GmbH together with the micro­ by 11% to DM 6.8 billion, while for­ world, 46,559 of them in Germany. electronics activities of Deutsche eign business increased by only 3%. 50% of the employees of TEMIC Aerospace AG (DASA). AEG and The earnings trend of the AEG TELEFUNKEN microelectronic DASA each have a half share in this group did not come up to expecta­ GmbH are included in this figure. company, which they are consolidat­ tions. This was due to static or reces­ As in 1991, AEG invested a total ing on a pro rata basis in their sive economic conditions in impor­ of some DM 1.8 billion in intangible financial statements. tant sales markets, particularly in assets, fixed and financial assets, For the current year, 1993, AEG the second half of the year. Overall research and development and expects to slightly increase its vol­ therefore, operating results did not training, equivalent to 15% (1991: ume of business, particularly in the match the level of 1991. Postal 13%) of total output. Power Transmission and Distribu­ Automation made a substantial Including the non-current assets tion and Microelectronics fields of profit; the Electrotechnical Systems taken over from newly acquired activity. and Components field of activity companies, investment by AEG in improved on its good position and 1992 totaled DM 916 million (1991: achieved positive results; Rail Sys­ DM 943 million). The additions to tems improved its earnings substan­ fixed assets, which totaled DM 765 tially and almost broke even, while million (1991: DM 872 million), the Domestic Appliances field of include DM 113 million (1991: DM 270 million) of additions outside Germany. DM 98 million (1991: DM 43 million) was invested in related companies. Investment activity fo­ cused on factory renewal at AEG Starkstromanlagen Dresden and AEG Schienenfahrzeuge in Hennigs- dorf, modernization of the Sickin- genstraBe site in Berlin and the completion of rehabilitation work at MAN GHH Schienenverkehrstechnik

"National Institute of Standards and Schaltgerate GmbH, Berlin, and the Technology". In a competition in Polish company MEFTA sp.z.o.o., which all the major suppliers of sys­ Mikolow, the transformers sector tems for the automatic reading of was strengthened substantially. In handwriting were represented, AEG the Components division, increases won two first prizes for upper and were achieved in the area of power lower case characters. supplies for data processing and In the current financial year, we telecommunications, emergency The Automation field of activity expect the Automation field of activ­ power supply systems and unit-type comprises Industrial Automation - ity to achieve a similar volume of heating power stations, power me­ with the three divisions Products business to that of 1992. ters and lighting systems. On the and Basic Systems, Systems Tech­ other hand, the difficult market af­ nology and Support, Industrial Electrotechnical Systems fected sales of electrical machinery. Systems - and Postal Automation. and Components: With effect from July 1, 1992, AEG Business volume matched the high Substantial Increase in Sales acquired Starkstrom-Anlagenbau level of the previous year. Magdeburg GmbH. In October 1992, the new AEG The Electrotechnical Systems Automation Centre, the "Geamatics and Components field of activity House", was opened in Frankfurt- expects the level of business to in­ Niederrad. The Geamatics House crease slightly in 1993. serves as a know-how focus for the entire field of activity and as a co­ The Electrotechnical Systems Rail Systems: ordinating center for international and Components field of activity Sharp Rise in Business Volume activities. comprises the divisions Power Trans­ In Industrial Automation, MODI- mission and Distribution and Compo­ CON, based in Andover/U.S. and nents. Once again, the volume of Seligenstadt, further increased its business increased, although some business in the field of programm­ important markets remained able logic control (PLC) systems. In depressed. the US, MODICON received the Sales of the Power Transmission The Rail Systems division com­ "NEMA Renewal Award" for the and Distribution division exceeded prises the divisions Integrated Rail most successful innovation in PLC those of 1991 substantially, while Systems, Mainline Railroads, Mass technology and for its modern, rati­ incoming orders matched the high Transit and Railcars and Mass Transit onal manufacturing. In the Industrial level of that year. In high-voltage and Railcars America. Business vol­ Systems division, AEG presented the systems, activity focused on enlarge­ ume increased by 48% during the "Geamatics P/E/N" control system ment of the product range. As busi­ year under review. This sharp rise is for the automation of processes, ness became increasingly interna­ partly a reflection of successful per­ power supply systems and networks, tionalized, the new plant of AEG's formance in an expanding market, along with the corresponding "View- affiliate E.I.B. in Dison, Belgium, was while the acquisition of AEG Schie- star 750" operating and viewing sta­ opened in May. Investment in the nenfahrzeuge GmbH in Hennigsdorf tion. The new system met with a new plant totaled some DM 40 mil­ on January 1, 1992, has also re­ good response from the market. In lion. Besides medium-voltage sys­ sulted in a strengthening of busi­ Postal Automation, AEG Electrocom tems, the company produces high- ness. AEG played a large part in the GmbH (AEC) further strengthened voltage switchgear and circuit further expansion of the ICE high­ its leading market position in the breakers. With the acquisition of speed system introduced in Germany US, Canada and Western Europe in AEG TRO Transformatoren und in 1991, supplying products 1992 and expanded its position in and systems both for the trains and the Far East and Latin America. Tes­ for track installations. For the new timony to the outstanding status of Shanghai metro, a German consor­ AEC technology is provided by two tium headed by AEG supplied the awards conferred by the American first of an ordered 16 metro trains, each consisting of six parts, along with traction contact systems and Microelectronics Activities power substations. Low-floor street­ Transferred to TEMIC car business continued to flourish. In the field of automated people mover systems, the group was able to improve on its leading world position once again. Business in the Rail Systems field of activity is expected to remain The Microelectronics field of at the previous years' level in 1993. activity comprises TEMIC TELE- EUNKEN microelectronic GmbH, a Domestic Appliances: joint venture between AEG and Slowdown in Growth Deutsche Aerospace AG, and the Opto- and Vacuum Electronics divi­ sion. Sales showed a slight rise on the previous year. More information about TEMIC is contained in the chapter "Joint Ventures". Business in the Opto- and Vac­ AEG Domestic Appliances in­ uum Electronics division was unsat­ creased its sales by 2% to DM 2,653 isfactory. This was mainly due to the million in the year under review. In considerable decline in demand for Germany, further growth in business defense technology. In response to Sales by Regions was recorded, assisted particularly this, activity was stepped up in new AEG Group by the newly launched range of floor fields of work, including large- DM 11.6 Billion (1991: DM 10.8 Billion) vacuum cleaners and microwave format liquid-crystal displays, identi­ equipment and also the high-quality fication systems for the registering front-loader washing machine series. and recognition of masses and a AEG increased its market share in high-performance battery, at present these product areas. In line with the intended primarily for use in the general market trend, export sales automotive sector. fell slightly short of their 1991 level. In June, 1992, AEG Aktiengesellschaft and the Swedish group Electrolux AB approved plans for long-term co­ operation in the field of electrical do­ mestic appliances. With this cooper­ ation, the partners are aiming above all to substantially improve their cost structures and thus strengthen their competitive position. For 1993, the division is aiming to increase sales on the basis of innovative products such as energy- saving washing machines and refrig­ erators and a floor vacuum cleaner made of recycled materials. Corporate Unit Deutsche Aerospace (DASA)

In mid 1992 we transferred our Substantial Decrease microsystems and vehicle safety ac­ in Sales and Orders Received tivities to TEMIC TELEFUNKEN mi­ in the Aircraft Group croelectronic GmbH, a joint venture in which Deutsche Aerospace and AEG each have a 50% stake. We con­ tinued during the year under review to pursue intensively our aim of in­ creased collaboration with the CIS *) 1991 including the employees of the countries in the field of aviation and Eurocopter Group (626 people). of participation in the ESA's planned space programs. Sales in the Aircraft group at In February 1993 we reached an DM 7.5 billion, nearly reached the agreement with the Dutch govern­ volume of the previous year. At DM ment to acquire a 51 % majority 5.0 billion orders received, however, In the year under review, the were substantially below last year's activities of Messerschmitt-Bolkow- stake in the aircraft manufacturing company Fokker. As an integral part level. Blohm (MBB) and Telefunken Sys- The Deutsche Aerospace Airbus temtechnik (TST) were combined of the Aircraft group of Deutsche Aerospace, Fokker will take over produces and delivers assemblies with those of the old Deutsche Aero­ within the framework of the European space. The newly created Deutsche the systems management for the segment of the 65 to 120 seater Airbus program. In the year under Aerospace AG (DASA) will form the review, the Airbus consortium core company for the operative busi­ regional jets. At DM 17.3 billion, consolidated chalked up orders for 136 aircraft; ness of the aerospace corporate unit on the other hand there were also of the Daimler-Benz group. Further­ sales of Deutsche Aerospace in­ creased by 3 % in the year under cancellations of orders. The order more, we acquired the 20% stake backlog of 836 aircraft, however, is held by the Kreditanstalt fur Wie- review. The group results for the year declined to DM -341 billion. At still satisfactory. deraufbau in Deutsche Aerospace The final assembly start-up for Airbus GmbH earlier than originally DM 12.5 billion, orders received were substantially below last year's the first Airbus A321 on June 15, planned and were able to integrate 1992 in Hamburg represents a this company, which was previously value of DM 15.1 billion. In 1992 we invested DM 1.1 major milestone in expanding the consolidated at equity, fully into the Deutsche Aerospace Airbus capa­ group, retroactively as of January 1, billion (1991: DM 1.0 billion) in fixed assets. DM 5.2 billion (1991: bilities. The Airbus A330, the 1992. world's largest twin-engine medium/ In parallel with this restructur­ DM 5.0 billion), representing 30 % of sales, was spent on research and de­ long-haul airliner, performed its ing, we also continued the process of maiden flight on November 2, 1992. organizational streamlining and cost velopment work, of which externally commissioned projects accounted for The four-engine A340 is designed reduction. In the civilian energy and for extreme long hauls with ranges industrial systems division similar DM 4.3 billion. At the end of the year, the DASA group employed from 12,500 to 14,000 km. Subse­ activities of Dornier, MBB and TST quent to type certification, the first were combined; the structural con­ 81,872 people (1991: 83,605). The fall largely reflects the unfavorable A340 was delivered to the German cept for the Space Systems group airline Lufthansa in early February was fully implemented. trend in business in virtually all areas. of 1993. In the current financial year, we It was a good business year for expect the DASA group to achieve a the Aircraft Service Center (ASC) in sales volume similar to that of 1992. Lemwerder, where the focus was on Higher revenue can be expected product support for the Airbus particularly in the Aircraft group. In family. the Space Systems as well as the Defense and Civil Systems groups, sales will be considerably lower. An important aim in the current year is to adapt capacity as quickly as possible to the expected further fall in orders.

The military aircraft division Strong Increase in Sales Defense and Civil Systems focused once again on the EFA and at the Space Group Group: Further Decline Tornado programs. The first Euro­ of Orders Received pean Fighter Aircraft body prototype 1992 was completed in Manching in the Sales (Millions of DM) 3,624 first half of 1992. Technical develop­ ment and logistics support is the main focus in the Tornado program. Further progress was made in the German-American Experimental Sales proceeds from the year In 1992, the entire group Program X-31A. Another future- under review were up 27 % from the was marked by a substantial oriented project is the development comparatively low value of the pre­ decrease in orders; compared to the of the Fan Ranger, a light jet trainer vious year to DM 1.9 billion. Orders previous year's level a reduction of designed to train future pilots. received reached a level of DM 1.7 14 % to DM 2.4 billion (1991: DM The regional aircraft division de­ billion. 2.8 billion) was recorded. Sales, on livered 10 (1991: 18) Dornier 228's The outstanding scientific pro­ the other hand, increased by 6 % to in the year under review. Prepara­ grams are currently the ERS-2 and DM 3.6 billion. tion for the series-production start­ Cluster satellite projects. In both Major impulses were rendered up of the Dornier 328 in early 1993 programs Dornier, functioning as by the Stinger program, for which has been for the most part con­ systems manager, is responsible for the preparatory phase was con­ cluded. The aircraft product support the development and construction of cluded and settled, and by the Ro­ focussed on the service-life- subsystems for the scientific payload land anti-aircraft systems, of which prolongation program for the Bell as well as for satellite integration. we produced further units for the UH ID helicopter. In the year under The European Infrared Space Ob­ German Air Force and Navy. Major review, 37 helicopters were retro­ servatory ISO is designed to meas­ sales revenues were also recorded fitted. ure the infrared radiation of cosmic by the Milan and Hot as well as The product line of the Eurocop- objects. We are responsible for the Trigat anti-tank systems. ter group ranges from single-engine German share in this ESA project We received an order from light helicopters through twin- and have developed the focal instru­ British Aerospace for a fiber gyro engine light and medium-weight ment Isophot. we developed. It was the first order helicopters on to heavy transport In the Polar Platform ESA pro­ placed for the series-production of helicopters. ject we are participating in the de­ such a product worldwide. One outstanding event in 1992 velopment of the Payload Equipment In the field of Broadcasting and was the signing of the development Bay (PEB), which comprises systems Television Transmitters a number of contract for the tactical transport that are important to the operation of long-term projects in Spain and the and naval helicopter NH90. Larger the accompanying payloads. Near East are underway. We again orders were under way in the pro­ In the European Ariane 4 manufactured and delivered a large grams AS 355 Fennec and PAH-1. launcher program we manufacture number of mobile HF/VHF commu­ Test flights were continued on liquid fuel supplementary.rockets, nications intelligence systems for schedule with the first prototype of the second stage engine as well as the German and Dutch armed forces. the Tiger, a Franco-German escort the thrust chambers in the HM7 en­ Thanks to a contract concluded with helicopter currently in the develop­ gine for the launcher's third-stage the Ministry of the Interior of Baden- ment phase. engine. Wlirttemberg in 1992, we managed Eureca (European Retrievable to become a participant in the prom­ Carrier), Europe's first free-flying, ising civil sector of official communi­ retrievable experiment platform, cations with the fast adaptive radio was prepared for launch in the year communications system Farcos. under review and transported into The most significant sales in the space in late July by the space shut­ Command and Information Systems tle Atlantis. Integration work for the division were once again made by Spacelab-D2 mission was concluded the series-deliveries of the drone CL on schedule, so that it will be 289 reconnaissance system to the equipped for launch in the first French and German armies. quarter of 1993. In the area of Environmental MTU Maintenance GmbH main­ Technology we continued to expand tains and repairs large civil engines our activities in regional and envi­ as well as stationary gas turbines. ronmental planning, environmen­ Parts repairs are also effectuated. tal monitoring and information sys­ MTU Friedrichshafen is a lead­ tems, waste-water technology and ing supplier of complete propulsion the disposal of hazardous military systems, primarily for ships, rail ve­ materials from the past. hicles, electrical generation systems We renewed the lighting and and heavy trucks and construction power supply for the main runway equipment. at the Berlin-Schonefeld airport, and A focal point in engine sales was it was under our systems manage­ once again the universal Series 396 ment that the world's largest diesel engine. In the field of propul­ runway-lighting system was in­ sion systems for ships we are, for stalled at the new Munich 2 airport. example, currently outfitting ships from the Australian, New Zealand, Positive Development in Sales Norwegian and German navies. In in the Propulsion Systems the railroad sector we modernized Group twenty ex-GDR locomotives, each ve­ hicle receiving two twelve-cylinder Series 396 diesel engines. Sales by Regions In 1992Kuhnle, Koppund DASA Group Kausch Aktiengesellschaft sold con­ DM 17.3 Billion (1991: DM 16.8 Billion) siderably more turbochargers than in the preceding year. Also matching At DM 3.6 billion, sales in the high level of the previous year's the Propulsion Systems group business results were the injection were slightly above the level systems for medium- and high-speed of 1991. The DM 2.8 billion level of diesel engines produced by L'Orange orders received was considerably GmbH. lower than that of the previous year. In the PW305 program a jet en­ Medical Systems as the Focus gine for business airplanes, MTU of Other Activities Munchen already delivered over 130 low-pressure turbine modules to At DM 256 million (1991: DM Pratt & Whitney Canada by the end 267 million) sales in medical sys­ of 1992. tems remained below last year's An important contributor to level. A declining trend for lithotrip- sales in 1992 was the engine family ters was contrasted by an increase CF6 from General Electric, for whom in our ultrasonic and laser business. we manufacture parts of the high- Towards the end of the year we in­ pressure turbine and the com­ troduced a new ultrasonic color im­ pressor. These engines are used in aging device into the market. aircraft from Airbus Industrie, The activities of TEMIC are cov­ Boeing and McDonnell Douglas. ered in the chapter "joint Ventures". Series-production of the Tornado engine RBI 99 was phased out in late 1991, resulting in a substantial decrease in sales in this program in comparison to the previous year. United Airlines ordered 100 Airbus A320's with V2500 jet en­ gines during the year under review. All in all, this major contract encom­ passes 222 jet engines. Corporate Unit Daimler-Benz InterServices (debis)

The positive trend in earnings of the The strategic alliance with the Financial Services division was French software group Cap Gemini largely responsible for this; inten­ Sogeti which entered into effect in sified competition in the information the year under review lent strong technology sector exerted a negative impetus to the internationalization influence. of our business activities. With the Our investment in fixed assets, amalgamation of the software pro­ largely data processing equipment, ject and product activities of System­ fell during the year under review by haus and the German Cap Gemini 35% to DM 173 million; some of the SCS at the turn of 1991/1992, the hardware was financed by leasing. spectrum of services has been The additions to leased equipment, extended and our proximity to the at DM 5,939 million, were 21% customer and ability to provide debis increased its total output higher than in 1991. The sharp integrated system solutions further in the year under review by 33% to increase in financial assets to DM improved. DM 7.9 billion. This figure com­ 1,434 million was chiefly due to the With the start of the 1992 finan­ prised sales revenue of DM 7.3 bil­ 34% holding acquired in the French cial year, the full spectrum of infor­ lion and interest income from sales company Sogeti S.A. mation technology (IT) services was financing of DM 0.6 billion. The debis group employed a to­ grouped into three subdivisions; The growth was generated above tal of 8,258 people at the 1992 year- debis Systemhaus CCS Computer- all by the Systemhaus, Financial Ser­ end, 7,343 of these in Germany and Communication-Services contains vices and Trading divisions; at 72%, 915 in other countries. the non sector-specific, horizontal IT the largest contribution to business The services industry will con­ services. These include computer was once again made by the Finan­ tinue to grow in 1993 and as a sup­ center and network operation, instal­ cial Services division. plier of integrated systems solutions, lation and support of distributed sys­ debis generated 48% of its total debis therefore expects that it will tems, backup or business continuity business volume in Germany, 12% in continue to enjoy good opportunities services and maintenance services. other EC countries, 31% in the U.S. for developing its business and for a In the Cap debis Software und Sys­ market and 9% in other markets. further growth in total output. tems subdivision, the software activ­ Business with external customers ities of debis Systemhaus and the accounted for 79% (1991: 77%) of Market Position of the former German Cap Gemini SCS are total business in the year under Systemhaus Division Strengthened grouped together. The third subdivi­ review. In addition to the Financial sion, Diebold management and tech­ Services division, which is tradi­ debis Systemhaus increased its nology consultancy, completes the tionally involved to a great extent on total output from DM 1.2 billion to spectrum with strategic, organiza­ the external market, the other divi­ DM 1.5 billion. In addition to growth tional and informatics consultancy. sions too increased their turnover from within, the inclusion of the From 1993, Computer-Commu­ with companies outside the Daimler- former German Cap Gemini SCS nication-Services will also be active Benz group. companies played a role in this. in major European markets. In order At DM 122 million (1991: DM The contraction in world mar­ to gear our activities more closely 123 million), the consolidated net in­ kets and the worsening economic still to customer requirements, come of debis for 1992 approached climate in Germany had perceptible sector-specific centres were formed the high level of the previous year. consequences for debis Systemhaus in the CAP debis Software und and its subsidiaries, whose growth Systeme subdivision to coordinate slowed particularly from the middle our services for major customers and of the year onwards. Nevertheless, the various sectors. business with customers outside the Daimler-Benz group showed a further increase. The share of total output accounted for by these cus­ tomers grew particularly sharply in 1992 to 41% (1991: 27%). At the same time, the volume of services supplied internally within the Daimler-Benz group also increased.

International Growth The newly formed companies Trading: Accelerated Growth for debis Financial Services debis Leasing GmbH in Germany and debis Financial Services Inc. in The debis Trading division has The dynamic development of the the US, which finance products taken over the task for the Daimler- Financial Services division con­ other than motor vehicles, com­ Benz group of concentrating and tinued in 1992. This was due partic­ menced operation in the year under coordinating the know-how for barter ularly to sharp growth in Germany, review. In their first financial year, trading with countries short on for­ the US, the United Kingdom, the they have already financed or leased eign exchange. In addition to that, Netherlands and Italy. New business products to a total value of DM 221 we want to make these markets increased by more than 20% to over million. more transparent for the Daimler- 160,000 units, with a volume of DM Benz group and other companies in 10.6 billion. Reasons for this gratify­ Insurance: National Expansion order to develop them, for example, ing growth were the improved and and International Presence as alternative procurement sources. more extensive range of services Despite strong fluctuation in the offered by our leasing and financing The centralization of all the political sphere, the Trading division companies, changed buying habits, group's insurance activities in the was able to sustain the steady precisely in the above-mentioned Insurance division and the concen­ upward trend of the preceding years countries (financing instead of cash tration of know-how produce by flexibly responding to current payment) and also the introduction synergy effects which we pass on to market requirements. Our supporting of new Mercedes-Benz products, par­ our commercial customers in the services underpinned export busi­ ticularly the new S-class. The focus form of intelligent, sound risk ness totaling DM 546 million to of our financing activities is still the management concepts and to our countries weak in foreign exchange. motor vehicle business. With the private customers through broker­ Total output rose in the year under conclusion of some 98,000 contracts age of individualized insurance review to DM 436 (1991: 105) mil­ for new passenger cars and 36,000 programs. lion. for new trucks, financing makes an We established our own office in Further markets were opened up increasingly large contribution to Japan in 1992 from which to look in the Middle and Far East and in supporting the sale of Mercedes- after the companies of the Daimler- Central and South America, so that Benz vehicles. The total number of Benz group operating there. the number of countries with which contracts outstanding rose accord­ Owing to the growing impor­ counter-trading is possible was con­ ingly to 381,000 units of a value of tance of risk engineering - the pro­ siderably enlarged and made a sta­ DM 18.5 billion (+29%). vision of advice concerning control ble basis. In addition, we expanded Total output, including interest and reduction of risk through techni­ in particular the joint venture agreed income from sales financing, in­ cal analysis - the significance of to in 1991 between the Russian creased to DM 5.7 billion, a rise of debis Risk Consult, a unit of debis natural gas supplier Gasprom and 28%. Assekuranz (the Insurance division), debis International Trading. Business of our Japanese leasing is also growing, debis Risk Consult The 50% share acquired in MG and financing company got off to a provides risk analysis and evalua­ NE-Produkthandel GmbH in the year successful start in the year under tion as well as consultancy in reduc­ under review represents another review. ing and managing risk in matters of milestone in the development of the the environment, fire protection, debis Trading division. MG NE, product liability, quality assurance which before we acquired this inter­ and income loss risk. est was a wholly owned subsidiary With 273 employees we bro­ kered a worldwide total premium volume of over DM 500 million in the 1992 financial year and generated total output of some DM 44 million. With an expansion of the prod­ uct range, we see good growth pros­ pects for the Insurance division in 1993. of Metallgesellschaft, will increas­ debitel: Promising Entry into ingly allow us the use of its interna­ Mobile Communications Services tional service network and barter trade for the market activities of In the second half of 1992, the debis Trading. two operators of the new digital mo­ bile communications networks in Marketing Services: Germany, Deutsche Bundespost A Year of Consolidation Telekom and Mannesmann Mo- bilfunk, opened their Dl and D 2 The difficult economic environ­ networks for trial service. Normal ment in the Federal Republic of public service of the D2 network be­ Germany also influenced business of gan in December, 1992; of the Dl debis Marketing Services GmbH network, at the beginning of Janu­ (dMS). In spite of this, the total out­ ary, 1993. As a private telephone put of DM 205 million (1991: DM company, debitel has since then of­ 214 million) was only slightly below fered user-oriented access to these the level of the previous year, which mobile communications networks was one of strong growth. and competent individual profession­ Our complete spectrum of al advice to customers. During trial services extends from customer- service we already acquired more specific marketing consulting, media than 10,000 customers. Despite the planning and marketing communi­ delay in the original plans for entry cation to the organization of trade into service of the mobile communi­ fairs and exhibitions, debis Market­ cations networks, total output of deb­ ing Services division is thus a itel in the year under review company with a range of services amounted to DM 16 million. which far exceeds the usual. In the 1992 financial year, we A focal point in the year under expanded our sales organization and review was the further development the existing distribution channels of the Media subdivision, whose task and integrated important partners is the placing of advertisements for into our marketing network, espe­ customers in the printed media and cially from the mobile communica­ in the electronic media. With the tions trade. Since the end of 1992, interest acquired in the Hamburg- our customers can avail themselves based G.F.M.O. Gesellschaft fur of more than 1,000 debitel sales Media-Optimierung mbH in the outlets throughout Germany. In the year under review, by the beginning current financial year, we shall of 1993 debis Marketing Services be expanding this service network had become one of Germany's six further. largest media agencies. This partner­ ship will round off the existing range of services of dMS in the fields of television and radio, the printed media and poster advertising. The Marketing Services division will purposefully continue to expand its activities in the four subdivisions. Qualitative growth will take priority over purely quantitative growth. Joint Venture Companies

TEMICTELEFUNKEN Heilbronn concerning flexible, auto­ With Mercedes-Benz Charter- microelectronic GmbH founded mated production of 6-inch wafers Way, we are the first leading manu­ proceeded according to schedule. facturer of commercial vehicles to On July 1, 1992, AEG and Also, the setting up of a worldwide avail ourselves systematically of the Deutsche Aerospace combined their semiconductor sales organization opportunities afforded by the microelectronics and vehicle was concluded. contract hire market. equipment activities in TEMIC TELE- In the microsystems and vehicle FUNKEN microelectronic GmbH, equipments fields, the activities of Traffic Management by Intertraffic which is based in Heilbronn. AEG AEG and DASA were rapidly inte­ and DASA each have a 50% holding grated. The market has already During the year under review, in this company. By combining these reacted positively to the expanded ITF Intertraffic Gesellschaft fur two companies' know-how, TEMIC is capabilities of TEMIC* as is shown integrierte Verkehrsmanage- able to offer the entire spectrum of for example by the increased orders mentsysteme was formed, in which the microelectronics processing of ABS systems. In Mexico, TEMIC all corporate units of the Daimler- chain, from semiconductor chips and carried out its first orders for vehicle Benz group hold an interest; microsystems technologies to subassemblies; in the Czech Repub­ Daimler-Benz Luft- und Raumfahrt complete-system solutions such as lic and Hungary, there was an Holding AG has a stake of 50.2%, ABS and the airbag. The company overall expansion in production Mercedes-Benz 25.2%, AEG 14.6% comprises the following areas: activities. At the same time, new and debis 10.0%. The new company, semiconductors, microsystems and customers were acquired, so that the under the managerial control of vehicle equipment. company now has business relations DASA, encompasses the know-how Sales of TEMIC in the first with around half of the world's 30 of the Daimler-Benz group in the incomplete financial year totaled leading vehicle manufacturers. fields of traffic management sys­ DM 0.7 billion; foreign business tems, transport systems and infor­ accounted for 50% of this. At the Mercedes-Benz CharterWay - mation technology. Intertraffic's ac­ year-end, the company employed A New Concept in Transport tivities will comprise planning, con­ 11,179 people. sultancy, design and implementation In the semiconductors field, it In the 1992 business year, of integrated traffic management was possible to compensate only Daimler-Benz InterServices (debis) systems. These will be offered world­ partially for the weakness of the AG and Mercedes-Benz AG estab­ wide for solving problems in the entertainment electronics market, lished Mercedes-Benz CharterWay field of transport by land, water and which has been depressed since companies in Germany, Belgium, air. 1991. The situation was aggravated France, the United Kingdom and the The new company also took over by the migration of customers for Netherlands as joint ventures, each the leading role in the implementa­ these semiconductor products from with a 50% holding, for the purpose tion of the traffic management sys­ Europe to the Far East, as well as by of long-term leasing of commercial tem "STORM". Interdisciplinary re­ falling prices, the unfavorable dollar vehicles at prices which remain un­ search into resolving traffic prob­ exchange rate and high domestic changed over the life of the contract. lems in the Stuttgart conurbation production costs. To safeguard The price includes the financing of along with trials of new technology TEMIC's semiconductor activities in the chassis with all superstructures have been taking place for a number the long term, more and more pro­ and attachments, service and repairs of years now in the framework of duction activities are being trans­ for the complete vehicle, including this pilot project, which was in­ ferred to the Far East, especially the necessary vehicle management, itiated by Daimler-Benz AG in con­ the Phillipines. the provision of substitute vehicles, junction with the Federal state of With its power MOS technology, plus all vehicle-dependent expenses Baden-Wlirttemberg and the City of which leads the market, the subsid­ such as taxes, insurance, registra­ Stuttgart. iary Siliconix Inc., Santa Clara/U.S.A., tion and inspection fees. achieved above-average successes; good business was also recorded by the affiliates Matra-MHS, Nantes/ France, and Dialog Semiconductor, Swindon/United Kingdom. The research activities grouped in

Research and Technology

New Impetus I The gasoline engine. Even after nent libraries. In order to evaluate in Strategy Development one hundred years of develop­ significant product characteristics ment, the causes of noxious such as levels of safety, fuel con­ The continuing development of emission formation have not yet sumption and comfort along with the central division Research and been adequately determined. In driving characteristics, ease of oper­ Technology was accompanied addition to analysing the com­ ation and costs, the various calcula­ throughout the year under review by bustion process, research is also tion systems must be integrated and a systematic, comprehensive pro­ providing new approaches, supplemented by data banks. In fu­ cess of strategy development. This developing tools for optimisation ture, the as yet insufficiently devel­ involved employees from every sec­ and producing improved compo­ oped linkage of individual methods tor and from all levels of manage­ nents and processes in the form and process stages will considerably ment. We regard such an intensive of prototypes. reduce the time and costs incurred form of internal strategy communi­ i The diesel engine. This drive prior to the definitive choice of design. cation as the expression of a com­ system's nitrogen oxide and par­ pany culture characterised by cre­ ticulate emission levels are to be The Objectives ativity, ambition, cooperative team­ further reduced, with no compro­ of Vehicle Systems Technology work and an entrepreneurial spirit. mise regarding its favorable fuel Within this strategy development consumption. It is only the integration of indi­ scheme, • The two-stroke engine. The vidual components as a system development potential of various which provides benefits for the cus­ the long-term orientation of two-stroke designs is being tomer. The "Vehicle Systems Tech­ research activities has been demonstrated in the form of nology" research field is therefore determined, prototypes. pursuing such aims as the following: a technology strategy was devel­ Electric traction. Electrically oped for the entire group, and The establishment of systems powered vehicles can help re­ numerous management-related concepts for future vehicle duce levels of noxious emission processes within the division functions, and noise on urban roads. To­ have been promoted. The retention of integrated gether with Mercedes-Benz AG's system capability for electronic In addition to refining our Advanced Design sector, re­ functions relevant to competi­ methods, we have extended our dia­ search is being carried out into tion, logue with the four corporate units existing maintenance-free bat­ The development of safety of the Daimler-Benz group in order teries along with direct-current functions for complex systems, to analyse and assess their require­ and three-phase drive systems The production of hardware/ ments for new technologies. The regarding their suitability for software technology for the rapid results have been transformed into use in an electrically powered conversion of ideas into systems recommendations and specific inno­ vehicle. suitable for vehicular applica­ vation schedules. & Hydrogen: As part of the "Hy- tion. passe" project subsidized by the Improvements Federal Ministry of Research, The Human and the Automobile to Drive Technology investigations are being carried out into the feasibility of a low- High cognitive and emotional de­ The reduction of fuel consump­ pollutant local transport system mands are placed on today's driver. tion and of noxious emission levels free of C0 . 2 Safe driving does not simply mean are the principal objectives being accident-free driving: it also extends pursued in the continued improve­ Vehicle Design: to the subjective perception of safety ment of drive technology and in the Methods and Tools and comfort. The driver's physiologi­ search for alternative solutions. The cal reactions, his behaviour and per­ research sector has divided the The market-orientated design of sonal experience of driving are be­ topics into five "strategic projects": vehicles starts with basic product ing investigated by an inter-discipli­ ideas, which are followed by a series nary research team comprising of design variants. Computer simula­ engineers and behavioral scientists tion is indispensable here. With using state-of-the-art methods and modifications to only a few parame­ instruments. The findings can be put ters, new variants can be rapidly to use in even better adapting tech­ produced from model and compo­ nologies to the driver's requirements.

Transport Technology ments throughout the various prod­ Environmentally Compatible Development Continuing uct divisions provides considerable Energy Technology on Target synergy potential, which is being reinforced through the transfer of The research being carried out With increasing densities, trans­ DASA materials laboratories to the into new rational, environmentally port must be increasingly organized Research and Technology division of compatible technologies for energy as an integrated system. This calls Daimler-Benz AG. The activities are conversion and storage touches for an appropriate distribution of re­ concentrated on interdisciplinary upon many areas of the group's sponsibilities amongst the different technological projects such as the activities. At the centre of attention types of transport, their optimal in­ following: are electro-chemical processes which terconnection and an overall trans­ promise particularly high efficiency port management. To this end, sce­ factors and low levels of pollutant narios for transport in densely popu­ emission. lated areas, conducted jointly within Together with the Anglo Ameri­ an interdisciplinary work group can Corporation, AEG is developing involving the corporate units and the "Zebra" battery for electrically Corporate Planning, have been powered vehicles, on the basis of developed and consequences for the sodium/nickel chloride. In order fur­ group derived. ther to increase the efficiency and In the European PROMETHEUS These research projects are typ­ service life of such batteries, re­ program, Daimler-Benz's Research ically concerned with such matters search is concentrated on improving sector is concerned with retaining as the use of ceramics and graphite the electro-chemical components mobility on European roads while in the engine, with new, highly rigid and on new design concepts and increasing not only safety and effi­ aluminium alloys, the weaving and materials. ciency, but also the environmental braiding of composite fibre struc­ The high-temperature fuel cell is compatibility of transport. The cur­ tures and the manufacture of dia­ particularly well suited for independ­ rent phase is primarily concerned mond layers as heat conductors or - ent power supply. The energy from with the further development of in the more distant future - as elec­ combustion gases such as hydrogen promising technologies and the uni­ tronic materials. or natural gas is converted in the fication of individual systems and fuel cells directly into electrical components into an integrated trans­ Automation energy in a highly efficient process. port system. This is being realised in and Drive Technology We have succeeded in producing such projects as STORM (Stuttgart very compact flat-cell batteries on a Transport Operation by Regional Decentralised automation laboratory scale. Management) and IFMS (Integrated systems are being adapted for the Fleet Management Systems). optimal implementation of complex, Successful Work spatially distributed processes. Inter­ in Components and Microsystems Interdisciplinary Development connected via fibre-optic cables, the of Materials and automation apparatus stores the In the sector of very high fre­ Material Technologies transmitted processing data in a uni­ quency components and circuits, we form manner, so that all automation have been continuing concentrated In addition to exercising a deci­ equipment can refer to the one data research into so-called heterostruc- sive influence on the efficiency, model. This provides efficient sup­ tures based on the semiconductor quality and cost of our products, port for project planning, installation materials gallium arsenide and materials and material technologies and maintenance. silicon. In the course of this work, provide the basis of numerous inno­ In the sector of rail-bound vehi­ we have succeeded in realising the vations. A certain degree of uniform­ cles, intensified competition is in­ world's most rapid silicon-based ity regarding material require­ creasingly focusing on ride comfort transistor. and wear resistance. Single-wheel running gears with intelligent drive and regulating systems promise de­ cisive advantages over previous sys­ tems incorporating wheels rigidly connected via a common axle. The zero-loss conductance of Together with AEG Electrocom, For the detection of indentations electricity in high-temperature Daimler-Benz's Research division and other irregularities in the sur­ superconductors paves the way for participated in a competition staged face of bodywork components, new even more powerful, smaller compo­ by the US National Institute of sensors and algorithms have been nents suited for application espe­ Standards and Technology for the developed which optically recognise cially in very high frequency appli­ automatic reading of handwriting. and describe shape faults even at cations. The feasibility of new types Against some forty competitors from the pressed part stage, prior to of system solutions is currently be­ throughout the world, the intelligent painting. A further objective of re­ ing demonstrated, for example in the systems from our institutes in Ulm search in this area is the integration form of EHF spectrometers for re­ won two first prizes for upper and of optical measurement data into mote sensing satellites. Applications lower case characters and third CAD systems. in energy technology are also being prize for numerals. Along with considerations of investigated. Research being carried out into economy, production technology The principal activity of the "Interaction between Man and the must also address ecological require­ "Microsystems Technology" strategic Machine" is investigating the oppor­ ments to an increasing extent. How­ research field is silicon technology, tunities provided by new interaction ever, methods and instruments pro­ in particular micro-mechanics; this and visualisation techniques in such viding a holistic evaluation of prod­ extends to processes for develop­ fields as rail systems and automa­ ucts and their environmental impact ment, simulation and system design. tion. Technological applications such throughout their life cycle are yet to A family of acceleration sensors de­ as speech input or the integration of be developed. The sector "Production veloped in conjunction with Tele- mobile communication are being Research and the Environment" is funken Microelectronic GmbH has tested and analysed for an individual currently drawing up the necessary already been introduced in the prod­ work station and its entire scope of fundamentals. uct sector, and we have put the first activities. functioning microlaser prototypes The procedures developed by The Urban Living Environment - into operation in the laboratory. the Ulm "Software Quality" research An Interdisciplinary group for the evaluation of already Research Project New Software Technologies installed software has proved suc­ cessful in practical application at Under the auspices of the "Tech­ The complexity of technical sys­ Mercedes-Benz AG and Cap debis. nology and Society" research group tems is increasing, while develop­ We are currently developing in Berlin, scientists from various ment cycles are becoming shorter. methods of assessing the quality of disciplines are working together in This calls for high-performance software in the early stages of its the research association "The Urban development tools and innovative development. Living Environment" on the future- information processing systems. orientated development of expertise "Fuzzy logic" and "neuronal net­ Environmental Protection - for solving a key problem of all in­ works" are examples of such pro­ Right From Product Development dustrial societies, namely the con­ jects; on the basis of specific applica­ flict of aims between quality of life tions they have been investigated, The shortening of product devel­ and the efficient functioning of a further developed and incorporated opment and manufacturing cycles large city. This research association into the Automation field of activity. will be the decisive developments of is sponsored by the Gottlieb Daimler In the area of expert systems, the years to come. A significant role and Karl-Benz Foundation. We are we have produced a so-called "ex­ is being assumed by the continuous, uniting the necessary scientific pert system shell", a development integrated flow of information en­ skills of engineers, administrative tool for configuration tasks which compassing all development and experts, planners and sociologists. has been tested in four pilot projects manufacturing processes relating to The development and assessment of for the preparation of tenders and a product. With five pilot projects, the options available is of strategic for project planning. exemplary approaches are being significance to the integrated tested in all corporate units, using technology group. innovative information technologies and "simultaneous engineering" concepts. Environmental Protection

Integrated environmental environmental regulations, the as­ To keep air pollution from our protection as a corporate principle sessment of draft legislation and the production facilities below critical preparation of reports on environ­ levels, we have devised an emission The Daimler-Benz group is com­ mental matters. level network for Mercedes-Benz mitted to integrated environmental The Environmental Officers, AG's Untertiirkheim plant in which protection, whereby pollution is whose activities within the group particulate and gaseous emission addressed at the root of the problem are conditioned by legal require­ readings from 28 different measur­ and all environmental effects of ments, ensure compliance with all ing points are continuously evalu­ manufacturing and of the products environment-related legislation in ated and documented. themselves are incorporated into the addition to monitoring the group's group's decision-making process. own environmental guidelines. They Environmentally We have formulated our basic are directly responsible to the plant Relevant Information principles in the form of environ­ managements of the respective mental protection guidelines which corporate units. In addition to technological de­ are binding for all employees. The Through the functions of velopments, active environmental core of this philosophy is summed "Chief Environmental Officer" protection calls for comprehensive up in the statement "Environmental and "Environmental Officer", the documentation of the primary and protection and efficiency are not mu­ Daimler-Benz group is setting auxiliary materials used throughout tually exclusive; they condition each standards far more stringent than the group and of their whereabouts. other." These guidelines are geared those prescribed by legislation. To this end, an environmental infor­ towards maintaining our natural mation system is currently being basis of life and minimizing the Interdisciplinary Projects developed which can call up the burden on the environment. We are relevant data for the plant concerned, pursuing a policy of comprehensive, With interdisciplinary projects the corporate unit or the entire open information which enables all in the field of environmental protec­ group. This information is also of employees to play an active role in tion engineering, the Daimler-Benz assistance in the maintenance of an our endeavors. group has devised technologies and "environmental balance sheet". planning concepts which go far The diversity of activities con­ Environmental officers beyond mere compliance with ducted throughout the Daimler-Benz currently valid legislation. group provides the basis for highly In order to ensure implementa­ Projects already initiated include efficient material usage; this also tion of our "Environmental Protec­ an exhaust treatment unit for sta­ applies to waste materials. Investiga­ tion Guidelines", Chief Environmen­ tionary diesel engines, by means of tions are currently being carried out tal Officers for the group's four cor­ which particulate and nitrogen oxide as to which production waste mate­ porate units and for the executive emissions can be reduced to a level rials can be reused at different loca­ holding company were appointed in far below the more stringent limits tions within the group. A corporate 1991. They report directly to the likely to be introduced in Europe in materials exchange is being estab­ Chief Executive Officers of their the future. lished to provide systematic access respective corporate units and Together with Mercedes-Benz, to these materials. co-ordinate their activities within AEG and DASA, a schedule has been It is of utmost importance to us the corporate "Environment" work drawn up for the development of a that each and every employee bears group. factory free of waste water. This responsibility for the environment. The Chief Environmental project is being implemented in the Our second Corporate Forum was Officers promote environmentally various construction phases of the therefore staged under the title of compatible processes and products, new passenger car manufacturing "Environmental Protection". At this advise the various corporate units plant in Rastatt. forum, speakers from within and and motivate all employees towards outside the company discussed the integrated environmental protection. political and technological conditions The activities of the corporate "Envi­ applying to environmental protec­ ronment" work group include the tion. By means of specific programs, planning, approval and implementa­ we shall convey these findings to all tion of measures for the drafting of employees within the framework of the continuous training scheme.

Employees

Focal Points of Personnel Policy In Germany, the employment At Deutsche Aerospace, the situation in the individual corporate worldwide workforce numbered Development, implementation units was on the whole unsatisfac­ 81,872 (1991: 83,605) at the end of and follow-up of new work and man­ tory. Particularly due to declining 1992, including 75,404 (1991: agement structures in the individual economic activity in the second half 80,191) people in Germany. Behind corporate units and in the Daimler- of 1992, the situation in Germany this change are some contradictory Benz holding company were the took a substantial turn for the worse. tendencies. A rise in personnel focuses of group personnel policy By contrast, outside Germany the resulted from the pro rata inclusion in 1992. Restructuring and adjust­ employment situation in the of Eurocopter S.A. and TEMIC, and ments, establishment of perfor­ Daimler-Benz group was largely from full consolidation of Deutsche mance centers, corporate integration stable. Aerospace Airbus GmbH. On the and the further internationalization Mercedes-Benz had an overall other hand, the changed interna­ of business required the review of workforce of 222,482 at the end of tional security situation and the organization and personnel policy. 1992, including 170,137 (1991: shrinking budgets of government In a year which was further charac­ 185,154) employees in Germany. At agencies had the consequence that terized by employment problems as 52,345, employment at the foreign Deutsche Aerospace capacity utiliza­ a consequence of structural changes production and sales companies was tion in the year under review was on in the markets, as well as by grow­ on the previous year's level. Scaled- the whole unsatisfactory. In all divi­ ing economic difficulties, the person­ down production schedules necessi­ sions of the company, manpower nel departments were faced with the tated a reduction of the workforce in was adjusted by making use of natu­ frequently difficult task of striking a all German plants with the exception ral attrition and early retirement balance between the different expec­ of Rastatt. This was achieved by na­ plans. Moreover, in the second half tations of the workforce and the tural attrition and non-renewal of lim­ of 1992 short-time work became economic exigencies confronting ited employment contracts. Excess necessary. the company. staff then remaining was trimmed Daimler-Benz InterServices by increased granting of leave, non- (debis) had a total of 8,258 (1991: Employment Situation work shifts, and early retirement. 6,203) employees at the end of Deteriorates Short-time work is planned for the 1992. The primary reason for the first half of 1993 in all German car larger workforce was the inclusion At the end of the year, the and commercial vehicle factories. of CAP Gemini in the group. Daimler-Benz group employed a At AEG, the employment situa­ Daimler-Benz AG (holding com­ workforce of 376,467 (1991: tion in 1992 was satisfactory on the pany) had a total of 3,071 employees 388,696), including 302,464 (1991: whole, although activity in the latter at year-end, of whom some 555 held 317,461) employees in Germany. half of the year in some areas of the group management functions, 1,287 Automation field of activity, in Com­ were involved in group research ponents and in Microelectronics was activities, and 1,229 worked in affected, in some cases sharply, by services for the various corporate the economic slowdown. At the end units and for the Mohringen location. of 1992, the AEG group had a world In the new Federal German workforce of 60,784(1991: 58,642), states, at the end of the year 1992 including 46,559 (1991:43,975) some 10,300 persons were employees in Germany. The number employed by companies of the of employees in Germany increased, Daimler-Benz group. above all due to inclusion of the units acquired in the new Federal states. The inclusion of TEMIC TELE- FUNKEN microelectronic GmbH only on a pro rata basis caused a re­ duction in the number of employees - particularly outside Germany.

New Work and Management will take independent responsibility of 1993, was agreed. This special Structures in the Group for their business in future. The remuneration can be set off against group's headquarters will concen­ equivalent voluntary company pay­ In all corporate units and in the trate on managerial planning and ments. As agreed in a phased plan, Daimler-Benz holding company control as a steering unit, with about in the new German states the stand­ greater efforts are being undertaken 200 employees. Tasks formerly per­ ard wages and salaries were raised to meet future requirements in inter­ formed by head office will be trans­ to 70% of the amounts which were national competition through mod­ ferred to the fields of activity or con­ paid in 1991 in the metal-working ern, integrated forms of work organi­ centrated in service units. This will and electrical industries of the old zation. Shorter communication chan­ be supplemented by development of Federal German states. nels and speedier decision-making a management concept for the AEG processes will raise efficiency. group which includes organization Personnel and Mercedes-Benz is facing up to in the operative units. Social Welfare Expenditure the challenges of competition with The previous Deutsche Aero­ all-around further development of its space was merged with the MBB and Group personnel expenditure organizational structures. The TST companies in the year under rose by 9% to DM 32 billion. In planned reorganization into product review. The administrative depart­ Germany, the increase was due pri­ and service centers has the purpose ments of the various headquarters marily to rises in standard wages of gearing organization in all areas were streamlined by combining the and salaries and a renewed rise in of the enterprise more strongly to previous staff functions of the social welfare contributions. the needs of the market and the cus­ divisions Aircraft, Space Systems, A central element of the social tomers. The heart of this new man­ Defense and Civil Systems as well as benefits provided by the Daimler- agement structure is a large-scale Propulsion Systems with those of the Benz group are the company pen­ decentralization of responsibility new DASA. These measures are sions. In 1992 it was decided to and decision-making power. This not intended to improve the capacity for increase the pension tables for only strengthens personal respon­ action and cooperation and to in­ employees of Daimler-Benz AG and sibility, but in logical consequence crease transparency and efficiency. Mercedes-Benz AG by 6% with effect also reduces the number of hier­ In the Daimler-Benz holding from January 1, 1993. Daimler-Benz archical levels. company a new management struc­ AG and Mercedes-Benz AG paid a Introduction of group work in ture was approved which will be put total of DM 318 million to some the plants and performance centers into practice beginning in 1993. Its 49,400 pensioners, widows and chil­ of the company is designed to im­ essential elements are short commu­ dren in the year under review. A to­ prove the basis for employees to be­ nication channels, fewer manage­ tal of DM 623 million was allocated come more actively involved in and ment levels, and appreciably en­ to pension provisions at Daimler- to assume greater responsibility for larged spans of control for top-level Benz AG and Mercedes-Benz AG. company operations and to make executives. These expenses are calculated - work more interesting and more bringing them into line with the efficient. Collective Bargaining practice used in the Daimler-Benz 1991 having been a year in Agreements for 1992 consolidated statements since 1989 which fundamental decisions were - on the basis of the fiscal stipula­ made concerning the future strategic In the old Federal German tions of Section 6a of the Income Tax orientation of the AEG group, in the states, the accords for the metal- Law, that is to say using a notional year under review further steps working and electrical industries interest rate of 6% instead of the pre­ were initiated to change the man­ brought an increase in wages and vious 3.5%. AEG disbursed DM 107 agement structure and improve the salaries of 5.4% effective April 1, million and DASA DM 96 million to cost structure. The operative units 1992, and a further 3% increase recipients in the year under review. effective April 1, 1993. The contract A total of DM 1.5 billion was allo­ runs for 21 months, ending on cated in the group to company December 31, 1993. In addition, an pension schemes. increase in contractually guaranteed special remuneration to 55% of monthly pay for 1992, and to 60% as Private Capital Formation supplemented by 15 special pro­ grams for school leavers, above all at Assistance in forming private the professional academy. As in the capital was also provided in 1992. years before, these programs enjoy Employees of the domestic plants rising popularity. had the opportunity to purchase Advanced training has great sig­ shares of Daimler-Benz AG and Mer­ nificance in the Daimler-Benz group, cedes Aktiengesellschaft Holding at also in times of economic troubles. a preferential price. In all, about All the corporate units offer a com­ 120,500 employees took advantage prehensive program consistent with of this offer, subscribing to some the individual areas of activity. The 146,000 Daimler-Benz shares and senior managerial staff training 15,200 MAH shares. scheme was further extended in 1992. Expenditure for basic voca­ Managerial Development tional training and advanced train­ and Planning ing came to some DM 834 million in the year under review. A difficult business environment creates new situations for manage­ Preventive Health Care ment. Demands grow on managers and Occupational Safety to deal with complex, fast-changing tasks. The available human re­ Medical care for our employees sources in the company must be op­ is traditionally an essential facet of timally utilized through systematic our personnel and social policies. personnel development. Serving this The medical services of the various purpose are also the uniform guide­ corporate units employ a staff of lines for filling senior-level manage­ 250, including 50 doctors. ment positions, which have been Throughout the group in Ger­ adopted in all corporate units, and many, 200 full-time safety experts which aim, amongst other things, were responsible for on-the-job at greater internationalization of safety. The success of their work is management. reflected in the further reduction in A particular concern in the year the number of accidents in all corpo­ under review was the integration of rate units. newly added companies in manag­ erial development and planning Thanks to Our Workforce programs. We would like to express our Company Training Activities gratitude to all our employees for their commitment and hard work in At the end of 1992, 13,314 a year in which reorganization of the young people were undergoing voca­ group was continued and which was tional training within the domestic also characterized by special chal­ group. 3,850 young men and women lenges and in some cases greatly commenced training in the year changed market conditions. We also under review. Of the 3,835 who suc­ appreciate the trust and cooperation cessfully completed their courses, demonstrated by the representatives 82% were given jobs within the on the various labor councils and group. Training is offered in almost committees at all levels of our group. 60 technical trades and 10 business professions in all. This training is Finance

Group Valuation Methods Sales revenues in 1992 rose 4 % As in prior years, we have re­ Standardized Extensively to DM 98.5 million; on a comparable duced the interest income earned in basis, the increase amounted to 2 %. the high-inflation countries by the With the changes in valuation The positive trend in the domestic inflation portion. methods made in 1989, Daimler- marketplace during the first six The results of operations from Benz adapted its accounting policies months was nearly compensated for ordinary business activities dropped more closely to internally accepted in all markets during the following by 37 % to DM 2.5 billion. Operating accounting policies because capital period because of the difficult eco­ results (results from ordinary busi­ markets only rely on financial state­ nomic situation. With DM 101 bil­ ness activities less financial results ments thus prepared. The valuation lion, total output exceeded the DM less other taxes), declined to an even methods traditionally applied in the 100 billion mark. Since the cost of greater extent, namely by 59% to automobile business has been con­ materials remained nearly un­ DM 1.0 billion. Of decisive influence tinued in the individual accounts of changed, its share in terms of total here was the unexpected deteriora­ both Daimler-Benz AG and output declined to 48.7 % (1991: tion of the automobile business be­ Mercedes-Benz. 50.2 %). In contrast, the ratio of per­ ginning in the third quarter, the In 1992, we have adapted the sonnel expenses noticeably rose to changing climate for important sec­ valuation methods for pension provi­ 31.7 % (1991: 29.8 %) as a result of tors of the aero- and space travel in­ sions and for inventories to the prac­ the first-time inclusion of companies dustry and the burdens resulting tices used in the consolidated ac­ with labor-intensive manufacturing. from the devaluation of several Euro­ counts. We are thus applying the Union-negotiated wage and salary pean currencies. Net income fell dis- same accounting principles and val­ increases effective April 1, 1992, proportionally by 25 % to DM 1.45 uation methods at the different further increased expenses; offset­ billion, while income taxes, on ac­ levels and within each area of the ting this were generally lower an­ count of substantial losses incurred Daimler-Benz group. This will in­ nual average employment figures. by consolidated companies, notice­ crease comparability of the individ­ Depreciation allowances climbed ably declined also. ual corporate sectors among them­ 18 % to DM 7.2 billion on account of selves and of other companies with higher investments in fixed assets Balance Sheet Picture of the the Daimler-Benz group as a whole. and in leased equipment. Group Characterized by Financial At the same time, we thus improve Services Business our information by segments, which is an important part of U.S. publica­ The consolidated balance sheet tion requirements. is more influenced by the strongly expanding leasing and financing Net Income Declined business than is apparent in the to DM 1.45 Billion statement of income. Our leasing contracts are ordinarily designed in The financial statements were such a way that the assets are impacted, sometimes substantially, shown in the books of the lessor; by changes in the circle of consoli­ leased items are valued at acquisi­ dated companies. While some com­ tion or manufacturing costs reduced panies of the AEG group were re­ by scheduled depreciation al­ moved, Deutsche Aerospace Airbus lowances. They are shown sep­ GmbH - on account of the uniform Net interest expense of our leas­ arately under fixed assets. Deferred control existing now - was fully ing and sales financing companies taxes resulting from the elimination consolidated for the first time. remained nearly unchanged at DM of intercompany profits are shown 0.4 billion, just slightly below the on the asset side of the balance previous year's level. The offset sheet under deferred taxes. amount to the interest expenses that The sales financing business is a are necessary for the financing of pure credit business; it increases the leasing business are the reve­ both sides of the balance sheet nues which are included in the leas­ ing rates and thus in total sales. Ex­ cluding the interest expense from the leasing and sales financing, consoli­ dated interest income amounted to DM 1.0 billion (1991: DM 1.1 billion). because receivables from customers Group Balance-Sheet Total and liabilities from refinancing are Noticeably Increased simultaneously shown. Moreover, deferred leasing income and special The group's balance sheet total lease payments are shown under (assets/stockholders' equity and lia­ deferred credits on the liability side bilities) rose 14 % to DM 86.2 billion of the balance sheet. on account of the larger business Within the Daimler-Benz group volume and the first-time inclusion we use the financial services in consolidation of Deutsche Aero­ business as a flexible tool to support space Airbus GmbH. Long-term as­ our global sales strategy. The effect sets, including leased vehicles and that the financial services business equipment, climbed by 15 % to DM has on the consolidated balance 33.6 billion. Fixed asset additions of sheet is illustrated by the table DM 7.8 billion were offset by depre­ below. Here it was assumed that the ciation allowances of DM 4.7 billion funds bound by the financial sevices and disposals of DM 0.4 billion. Also business are available for the un­ in 1992, leased vehicles and equip­ scheduled repayment of liabilities. ment increased disproportionately The changes in stockholders' equity by 21 %; their share in terms of total result, in particular, from consolida­ assets rose to 11.3 %. Excluding tion methods. leased vehicles and equipment, the ratio of fixed assets to total assets remained nearly unchanged at 27.7 %. Receivables from sales financing activities climbed 45 % to DM 6.2 billion. Inventories, which strongly increased over the previous year, were financed to the Statement of Cash Flow tune of 25 % through advance payments received from customers. In the course of a further inter­ Liquidity declined to 11.4 % (19 91: nationalization of our account pre­ 13.9%) of total assets. sentation, our statement of cash flow On the liability side of the bal­ has been closely geared to the U.S. ance sheet, shareholders' equity - Financial Accounting Standard excluding the amount set aside for (SFAS) No. 95. dividend payments (unappropriated The basic difference between profit) - rose by DM 0.3 billion to SFAS 95 and the method heretofore DM 19.1 billion. Because of the no­ applied consists in the unequivocal ticeably higher business volume, the attribution of the payment streams ratio of net equity to total capitaliza­ to the three segments (business tion fell to 22.2 % (1991: 24.9 %). Ex­ activities, investment activities and cluding the financial services com­ financing activities). In contrast, panies, the net equity ratio in terms our presentation hitherto has only of total capitalization amounted to shown sources of funds and applica­ 27,9 % (1991: 29.9 %). The coverage tion funds separately. Besides this Expense Structure in Terms of long-term assets (excluding the cash flow figure currently shown of Total Output from business activities is purely a Daimler-Benz Group leased vehicles and equipment) fell DM 100.9 Billion (1991: DM 98.6 Billion) to 81 % (1991: 89%). financial indicator. The liabilities attributable to our In comparision to the previous financial services companies year this figure decreased by 25% to amounted to DM 11.0 billion (1991: DM 5.9 billion. This resulted from a DM 8.1 billion). Their change ac­ decline in operating liabilities of counted for about 75 % of the in­ DM 1.6 billion against an increase of crease in total liabilities. Also, provi­ DM 1.7 billion in 1991. The cash sions increased far above average, flow from investment activities was i.e. by 24 % to DM 34.7 billion; the also below that of the previous year main cause for this was the change at DM 9.0 billion; this was affected in the circle of companies included mainly by the first-time consolida­ in consolidation; provisions ac­ tion of Deutsche Aerospace Airbus counted for 40.3 % (1991: 37 %) of GmbH. As the internally generated total capitalization. Long-term assets liquidity did not suffice to finance (excluding leased vehicles and various investments and we took on equipment) and net inventories are less debt as in 1991, our liquidity fully covered by net equity and long- declined to DM 9.8 billion (1991: and medium-term provisions. DM 10.6 billion). Also in the years to come we expect investments of the Daimler-Benz Group to be at a high level. The leasing and sales financ­ ing business in particular require the injection of additional capital. Depending on favorable stock mar­ ket condition we intend to secure for corporate growth also through tak­ ing on new equity. Activities of the Group Treasury As in prior years, the task of the approval practices for credit insur­ foreign exchange management con­ ance. In contrast, the financing During the year under review, sisted in limiting the currency risks opportunities available in Latin we have continued to further de­ of the operating sectors, particularly America have improved depending velop, both objectively and instru- with regard to the USD, JPY, GBP, on the economic improvement of mentally, our "cash-management" in CHF and ESP, through suitable for­ some countries. connection with the inclusion of eign exchange hedging measures. The newly-developing and Deutsche Aerospace Airbus GmbH Also in the future, we will be guided developed countries of Africa, Asia and the establishment of a foreign- by continually updated currency rate and Latin America are only able to currency based domestic "cash- expectations and then employ the finance capital investments if funds pooling". We were able to increase financial instruments individually from subsidized programs of public the flexibility and efficiency of our depending on the currency and institutions are available. This is treasury activities through more in­ business field. particularly true for East European tensive use of the commercial-paper- Within the scope of the above- countries and CIS. With respect to programs, particularly in Germany mentioned treasury activities, we future project financing, systems for and the U.S.A. also avail ourselves of derivative aid and rehabilitation programs are Through active portfolio manage­ capital market instruments. They already in place. Making use of such ment we have again invested long- serve the purpose of limiting the systems will become of considerable term funds - depending on interest group's financial risks overall and of importance in financing our rate and interest income expecta­ optimizing results of operations. products. tions - primarily in fixed-interest In the solution of these tasks, instruments of first-class issuers. Sales and Project Financing the company will, also in the future, Investments in stocks represent a minimize financing risk inherent in small portion of our portfolio. The worldwide sales of our prod­ sales activities. The company will, at The continued growth of our ucts is increasingly supported by the same time, keep open its financ­ leasing and sales financing business standardized financing programs ing options. has further increased the demands and individually-tailored financing placed on our centrally managed solutions. refinancing tasks. It is becoming more and more In order to enlarge our investor necessary to find new solutions for In 1992, our business policy at basis, we floated a Euro-Medium- our companies that carry on busi­ home and abroad again conformed Term-Note-Program in 1992, with a ness in the infrastructure sector. In with the "OECD-Guidelines for Multi­ volume objective of two billion U.S. this area, private financing models national Companies". Our intercom­ dollars. This instrument, which can must increasingly be offered. In or­ pany pricing policy is based on the be used by Daimler-Benz Interna­ der for the private sector to be able "dealing-at-arms-length" principle. tional Finance B.V., Daimler-Benz of to take over these tasks, the public North America and Daimler-Benz sector in the buyer country must ful­ United Kingdom pic - companies al­ fill certain yield and risk standards. ready well known and active in the Moreover, the burden of risk must Euromarket - allows us to use the not - as is frequently requested by capital markets to the fullest extent. public contractors - be limited to the producer of capital equipment. In the traditional export financ­ ing field, we have again in 1992 fully utilized all opportunities of ex­ isting financing and hedging instru­ ments. The sometimes dramatic de­ terioration of economic conditions in some African countries and in east­ ern Europe resulted in restrictive Key Figures of Major Subsidiaries of Daimler-Benz AG The Daimler-Benz Share

Statistics per Common Share By the end of February 1993, Investor Relations-Activities the price of the Daimler-Benz stock jumped 11 %, while the DAX index With our investor relations activ­ only increased 9 %. ities, both at home and abroad, we Again in 1992, our stock be­ are trying to respond to the increas­ longed to the most frequently traded ing interest in the Daimler-Benz shares on German stock exchanges; technology group. We not only talk a total of 228 million shares were to financial analysts and institu­ traded, amounting to DM 153.5 bil­ tional investors, but also quite con­ lion. This amount represented 11 % sciously to individual investors. We of all domestically traded stocks. regularly inform all our shareholders On the German futures exchanges, by means of the annual shareholders Stock Exchange Development Daimler-Benz options again be­ meeting, the annual report and peri­ longed to the most actively traded odical interim reports. In Stuttgart, After an overall satisfactory issues. in May of 1992, we informed the development during the first six members of the German Financial months, German stock exchanges Market Price of the Daimler-Benz Analysts Society (DVFA) about our suffered a severe backlash following Share actual economic situation. Further­ the surprise increase in the discount more, we gave presentations in rate. Particularly the stocks of auto­ Zurich, Vienna, Paris, Milan, Boston, mobile manufacturers, favored up to New York, Tokyo, London and that point, often had to accept heavy Edinburgh. losses. The Daimler-Benz share dropped from a yearly high of DM Second International 815.50 at the beginning of June to Stockholders' Fair in Dusseldorf DM588.50. Trade on Foreign Stock During the following period, Exchanges The second international stock­ profit expectations for most German holders' fair (IAM) took place in companies had to be noticeably low­ Other than the German stock Dusseldorf from August 27, to Au­ ered as domestic business activities exchanges, the Daimler-Benz stock gust 30. More than 13,000 visitors weakened dramatically and the is traded on seven foreign stock ex­ informed themselves in the booths D-mark's value rose within the Euro­ changes (Basel, Geneva, Zurich, Lon­ of 105 exhibitors, and in roughly pean currency system. The German don, Paris, Tokyo and Vienna): With 150 presentations about all aspects stock index (DAX) reached a yearly the listing on these exchanges, we of investments in stocks. low of 1,420 points in October. also show in financial markets the We have made use of the IAM to While the DAX index rose 9 % by the international orientation of our com­ show what the Daimler-Benz share end of the year, the Daimler-Benz pany. Long-term, moreover, we wish stands for. We met with a good re­ share dropped further to DM 538.50. to be less dependent on the develop­ sponse both during our daily special ment of a single capital market. events and our "contest", in which Trading in London in 1992 was more than 10,000 visitors partici­ particularly active. Total turnover pated. amounted to 16.5 million Daimler- Benz shares. At the beginning of the year we continued talks with the Securities and Exchange Commission (SEC) with the aim of introducing our shares to the New York Stock Exchange. The results to date have made us very confident that Daimler-Benz shares can already be traded in the course of this year on the worlds' most important stock exchange. Investment in Daimler-Benz Shares; Investment Amount DM 10,000 Dividend" DM

Dividend unchanged Daimler-Benz Shares Are a Good at DM 13 Long-Term Investment

For the business year 1992, a The past year has shown that an dividend of DM 13 for each eligible investment in stocks offers both op­ share of DM 50 per value, will be portunity and risk. A six-year invest­ Total Divident Amount proposed to the annual general ment and a three-year investment In Millions of DM meeting taking place on May 26, both show negative results, due to 1993. For shareholders subject to in­ the high prices at the time of pur­ come taxes in Germany, the gross chase and the share price decline dividend thus amounts to DM 20.31. during last year. Investments made Total dividend payout of DM 604 in currencies other than the D-mark million (1991: DM 603 million) is increase the risk further. Longer slightly higher because of lower term, however, stocks offer returns inventories in treasury stock. that cannot be achieved with fixedin- The net income of Daimler-Benz come securities. A twelve-year increased solely on account of the investment in Daimler-Benz shares, revaluation recorded on the books in as is typical for our shareholders, 1992. Even though the income por­ shows a positive return of 12.8 %. tion derived from ordinary business In this calculation we have as­ Share Price Development activities is noticeably lower in sumed that the proceeds from rights Allowing for the 1989 Increase in Capital comparison to the previous year, we issues and cash dividends (excl. tax have maintained the dividend rate. credit) were reinvested in Daimler- Continuity in serving our stock­ Benz stocks and that no additional holder will remain our long-term payments were made by share­ policy. holders. Financial Statements Consolidated Balance Sheet Consolidated Statement of Income Consolidated Statement of Non-Current Assets

Notes to the Consolidated Financial Statements

Principles and Methods

The consolidated financial state­ over the relevant useful life, the one Investments in related com­ ments have been prepared in accord­ relating to the restructuring is panies, and in other long-term finan­ ance with regulations set forth in the charged to retained earnings. cial assets are valued at the lower of Commercial Code; the amounts are Fixed assets are valued at acqui­ cost or market; non-interest bearing shown in millions of D-marks. The sition or manufacturing costs. The or low-interest bearing receivables items, which are summarized in the self-constructed facilities comprise are shown at their present value. balance sheet and the statement of direct costs and applicable materials Major investments in associated com­ income, are separately shown in the and manufacturing overheads, in­ panies are valued according to the notes and, where necessary, cluding depreciation allowances. book value method at equity. explained. The acquisition/manufacturing Leased equipment is valued at ac­ Deviating from the previous costs for fixed assets are reduced by quisition or manufacturing costs, year, we additionally show in the scheduled depreciation charges. The and is depreciated using the consolidated financial statements - opportunities for special tax- declining-balance method. We apart from the caption "leased vehi­ deductible depreciation allowances change from the declining-balance cles and equipment" - the captions were fully utilized, i.e. in connection method to the straight-line method "receivables from sales financing" with Section 7d of the Income Tax of calculating depreciation al­ and "liabilities from leasing and Act (environmental protection in­ lowances when the equal distribu­ sales financing", in order to accomo­ vestment), Section 6 b of the Income tion of the remaining net book value date the pecularities of the financial Tax Act, Section 4 of the Regional over the remaining useful life leads services business. Development Law and Subsection 35 to higher depreciation amounts. of the Income Tax Guidelines. The opportunities for tax-deductible Accounting Principles and Scheduled fixed asset deprecia­ depreciation allowances were fully Valuation Methods tion allowances are calculated gener­ utilized, i.e. in connection with ally using the following useful lives: Subsection 35 of the Income Tax During the year under review, 17 to 50 years for buildings, 8 to 20 Guidelines. we have continued to apply the years for site improvements, 3 to 20 Raw materials and supplies as same accounting principles and val­ years for technical facilities and ma­ well as goods purchased for resale uation methods. Assets and lia­ chinery, and 2 to 10 years for other are valued at the lower of cost or bilities presented in the consolidated facilities and factory and office market. Finished goods are valued at balance sheet - in identical group equipment. Facilities used for multi- manufacturing costs which com­ circumstances - are uniformly val­ shift operations are depreciated prise, apart from direct material and ued. In 1992, as in previous years, using correspondingly lower useful direct labor, applicable material and provisions for approved conversion, lives. Buildings are depreciated manufacturing overheads including reconstruction and maintenance pro­ using straight-line depreciation rates depreciation charges. jects have been set up, or have been - and where allowable under the To the extent that inventory systematically updated. Tax Codes - declining rates. Mov­ risks are determinable, i.e. for Intangible assets are valued at able property with a useful life of reduced usability after prolonged acquisition costs and are written off four years or more is depreciated storage or after design changes, rea­ over the respective useful lives. using the declining-balance method. sonable deductions are made, which Goodwill resulting from the capital For movable property, we change are calculated based on a loss-free consolidation, if derived from the ex­ from the declining-balance method valuation. tension of the group, is in principle to the straight-line method of calcu­ Receivables and other assets - if amortized over five years; goodwill lating depreciation allowances when non-interest bearing - are reduced relating to the restructuring of the the equal distribution of the remain­ to their present vaue at the balance group is charged to retained earn­ ing net book value over the remain­ sheet date, and are valued taking ings. Goodwill which arose from the ing useful life leads to higher depre­ into account all known risks. A creation of strategic alliances, ciation amounts. Depreciation lump-sum allowance for doubtful is split. The portion relating to allowances on additions during the accounts on a country-specific scale the group's expansion is written off first and second half of the year are is deducted from the receivables in calculated using the full year or half- recognition of the general risk inher­ year rates, respectively. Low-value ent in receivables. items are expensed in the year of acquisition. Treasury stock is valued at the Deutsche Aerospace Airbus Principles of Consolidation expected selling price to employees GmbH and its subsidiaries were of the Daimler-Benz group. Securities fully consolidated in the consoli­ Capital consolidation was ef­ are valued at the lower of cost or dated accounts effective January 1, fected according to the book value market value at the balance sheet 1992. Up to 1991, Deutsche Aero­ method where the parent's acquisi­ date. space Airbus GmbH was only con­ tion costs are eliminated against the Provisions for old-age pensions solidated at equity in conformity relevant share capital and retained and similar obligations are actu­ with Section 296, Subsection 1, earnings at the time of acquisition or arially determined on the basis of an Paragraph 1 of the Commercial first-time inclusion in consolidation. assumed interest rate of 6 % using Code. After the transfer by the This applies analogously to the joint the Entry Age Actuarial Cost Kreditanstalt fur Wiederaufbau of its venture companies that were in­ Method. The regulations of the 1992 20 % stake in Deutsche Aerospace cluded pro rata. Pension Reform Act have been taken Airbus GmbH to DASA, this limita­ The differences resulting from into account in calculating the provi­ tion with respect to excercising its the capital consolidation (debit sion amount. rights no longer applies, which, on balance) are, as far as possible, allo­ Provisions for taxes and other pro­ account of agreements with the cated to the relevant balance sheet visions are determined on the basis Federal Republic of Germany and of items and are written off to income of fair and reasonable business judge­ rules in the bylaws, had existed up over their useful lives. For the treat­ ments. The obligations in the per­ to that point. ment of the remaining differences sonnel and social area are reflected The first-time consolidation of (goodwill), see explanations under in the financial statements at non- the Deutsche Aerospace Airbus "accounting principles and valuation discounted values expected to be group effected both the consolidated methods". The remaining goodwill paid in the future as benefits are balance sheet and the consolidated resulting from the addition of the vested. statement of income. These effects joint venture companies of the Euro- Liabilities are shown at their are explained under the relevant bal copter group is shown under "intan­ repayment amounts. ance sheet and statement of income gible assets"; the portion applicable captions. to the group's expansion will be Companies Included in In 1991, only the balance sheet amortized over a useful life of 10 Consolidation items of the Eurocopter companies years. The other portion was were proportionally included in con­ charged to retained earnings in The companies included in con­ solidation because of their relatively 1992, without affecting income. solidation encompass, apart from short affiliation with the group; in Daimler-Benz AG, 271 (1991: 255) 1992, they were included in the domestic and foreign subsidiaries statement of income as well. and 7 joint venture companies. Because income and expense During the year under review, items relative to the German heli­ 26 companies have, for the first copter activities were still included time, been added to consolidation. in the 1991 accounts, comparability Moreover, one joint venture com­ of group financial statements with pany was included pro rata, for the the previous year is not materially first time, pursuant to Section 310 of affected. the Commercial Code. A total of 10 Not included are 248 subsid­ subsidiaries and one joint venture iaries, whose effect on the assets, company were deleted from consol­ liabilities, financial position and re­ idation. sults of operations of the group is not material (their total sales volume is less than 1 % of consolidated sales), and 11 companies adminis­ tering pension funds whose assets are subject to restrictions. A difference (credit balance) Intercompany receivables and uity in D-marks is the remaining dif­ resulting from the capital consolida­ payables have been eliminated; the ference between translated assets tion is shown under the balance differences resulting from debt less translated liabilities and unap­ sheet caption "other provisions" ear­ consolidation have been charged or propriated profit. The difference marked as "difference from capital credited to income. resulting from the translation of consolidation with reserve charac­ All material intercompany profits balance sheet items is recorded teristics". resulting from the intercompany in consolidated retained earnings. Profits earned by subsidiaries sales of goods and services have Expense and income items are after the date of acquisition are been eliminated, except items of essentially translated at average an­ added to consolidated retained earn­ minor importance. This also applies nual exchange rates. To the extent ings. The unappropriated profit to sales of goods and services by that they relate to fixed assets (fixed shown in the financial statements associated companies to companies asset depreciation, profit or loss corresponds to the dividend payout included in consolidation. from disposal of fixed assets), they proposed by Daimler-Benz AG. For Intercompany sales and other are translated at historical costs. Net this reason we have charged the intercompany earnings have been income, additions to retained earn­ income-affecting consolidation eliminated against the relevant ings, and the unappropriated profit adjustments and the profits earned costs, or reclassified to "capitalized are translated at year-end rates. The by our subsidiaries to consolidated in-house output" or to "increase in difference resulting from the transla­ retained earnings. inventories", respectively. tion of annual net income, between The consolidated financial state­ Deferred taxes (debit balance) annual average rates and the ments include 127 associated com­ shown in the consolidated balance exchange rates at the balance sheet panies. sheet result from income-affecting date, is reflected in other operating At year-end, 13 associated com­ consolidation adjustments. income (1991: other operating ex­ panies have been included in our penses). consolidated financial statements ac­ Curreny Translation The adjustments made in the in­ cording to the book value method at come statements by our subsidiaries equity. Foreign currency receivables are in Brazil for monetary devaluations The remaining associated com­ translated in the individual financial have been retained in the consoli­ panies are shown under investments statements at the bid price on the dated statement of income without in affiliated companies at acquisition day they are recorded or at the spot change, effectively preventing reflec­ costs - in some instances less write­ rate on the balance sheet date if tion of inflationary profits. The downs - as they are not material to lower. Foreign currency payables income taxes, which were already the consolidated assets, liabilities, fi­ are translated at the asked price on geared to the balance sheet date in nancial position and results of opera­ the day they are recorded or at the the national financial statements, tions. spot rate on the balance sheet date if have been translated at year-end The 34 % stake in Sogeti S. A., higher. rates. Grenoble, which was acquired by The accounts of all foreign com­ Items from inflation-adjusted in­ Daimler-Benz AG in December of panies are translated to D-marks on come statements of our Argentinian 1991, was transferred to debis AG in the basis of historical exchange companies are translated at year-end October 1992. As of December 31, rates for non-current assets, and at exchange rates. Fictitious profits/ 1992, Sogeti was included in consol­ year-end exchange rates for current losses resulting from the divergence idation at equity according to the assets, borrowed capital, and unap­ between the inflationary trend and book value method. However, only propriated profit. Stockholders' eq­ the changes in the currency's value the 1991 accounts were used be­ have been eliminated. cause Sogeti's 1992 financials had not been available at the time the Daimler-Benz consolidated financial statements were prepared. The good­ will of DM 355 million will be amor­ tized over 15 years. Notes to the Consolidated Balance Sheet

1 Intangible Assets Intangible assets, amounting to payments made. The decrease DM 611 million (1991: DM 774 mil­ against the previous year is largely lion) comprise goodwill arising from due to amortizations of goodwill the capital consolidation and from charged to income and to the write­ individual company financial state­ off of Eurocopter's goodwill to ments, acquired EDP software, pat­ retained earnings. ents and, to a lesser extent, advance

2 Fixed Assets The increase in property, plant re-classifications of DM 17 million, and equipment by DM 2,680 million disposals of DM 433 million, and to DM 19,254 million is derived depreciation allowances of DM 4,699 from additions of DM 7,829 million, million. Special tax-deductible of which DM 1,410 million represent depreciation allowances amount to net book values that are to be in­ DM 163 million (1991: DM 77 cluded within the scope of the first- million); depreciation allowances in time full consolidation of the Deut­ excess of scheduled depreciation sche Aerospace Airbus group. These amount to DM 21 million (1991: additions are reduced by DM 39 million).

3 Financial Assets A complete listing of our stock Investments in non-current as­ ownership will be filed with the sets should have been written up by commercial registry office at the DM 7 million in accordance with the county court house in Stuttgart un­ value appreciation doctrine (rein­ der the number HRB 15,350. statement of original values, Section Unscheduled write-downs, 280 of the Commercial Code). How­ largely of investments in associated ever, such a write-up was omitted companies and of other long-term for tax reasons. receivables totaling DM 83 million (1991: DM 115 million) had to be made.

4 Leased Equipment The increase in leased equip­ Benz Leasing GmbH, Stuttgart. ment - almost exclusively vehicles - About 85 % of the balance sheet total by DM 1,685 million to DM 9,777 pertains to these two companies. million, pertains largely to Special tax-deductible depreciation Mercedes-Benz Credit Corporation, allowances amount to DM 3 million Norwalk, U.S.A., and to Mercedes- (1991: DM 10 million). 5 Inventories

Mercedes-Benz and Deutsche Benz AG and its foreign sales com­ Aerospace account for the majority panies and with about DM 1,250 of consolidated inventories. The in­ million from the DASA corporate crease over last year is, with rough­ division and DM 1,650 million as a ly DM 1,150 million, derived from result of the first-time, full consolida­ the Mercedes-Benz corporate divi­ tion of the Deutsche Aerospace sion, particularly from Mercedes- Airbus group.

6 Advance Payments Received Advance payments received long-term contracts at AEG, DASA amounting to DM 5,549 million AG, Dornier, Eurocopter and MTU; (1991: DM 5,827 million) were al­ they were deducted from inven­ most exclusively for projects and tories.

7 Receivables from Sales This caption pertains to accounts million), of which DM 2,804 million Financing receivable from customers totaling (1991: DM 2,699 million) mature DM 6,166 million (1991: DM 4,255 after more than one year.

8 Receivables 9 Other Assets

Approx. DM 0.4 billion (1991: Other assets include invest­ DM 0.3 billion) of the receivables ments of liquid funds in debt instru­ from related companies pertain ments not traded on stock ex­ mainly to fixed-interest debt instru­ changes. They amount to DM 437 ments and securities. million (1991: DM 2,564 million). 10 Securities

During the year under review, We owned 122,287 common we purchased 225,511 common shares on the balance sheet date shares (par value DM 11.3 million = (par value DM 6.1 million = 0.26 % 0.48 % of the total outstanding share of the total outstanding share capi­ capital) at an average price of DM tal). 709 a share. Other securities pertain mainly In November of 1992, we sold to fixed interest securities. 145,990 shares to our employees Within "current assets" there (par value DM 7.3 million = 0.31 % would have been a revaluation of of the total outstanding share capi­ DM 26 million necessary under the tal) at a preferential price of DM 469 revaluation obligation. This did not for each share (in the event that one take place due to tax law. share was purchased) or DM 520 for each share (in the event that two shares were purchased).

11 Cash Cash amounting to DM 2,968 Liquid funds, shown among million (1991: DM 2,010 million) various balance sheet captions, total consists of deposits in financial insti­ DM 9.8 billion (1991: DM 10.6 tutions, cash on hand, deposits at billion). the Bundesbank (German Federal Bank), in post office accounts, and checks on hand.

12 Prepaid Expenses and Deferred taxes on income- a debit balance overall - as shown Deferred Taxes affecting elimination entries amount in the consolidated individual to DM 1,329 million (1991: DM balance sheets are not included. 1,596 million). Deferred taxes -

13 Stockholders' Equity

14 Capital Stock and Paid-in Capital stock and paid-in capital Capital pertain to Daimler-Benz AG. 15 Retained-Earnings Retained earnings comprise re­ insofar as they have been earned by tained earnings allocated under stat­ them since their affiliation with the ute of DM 160 million, retained group. Additionally, this caption earnings allocated for treasury stock takes into account the cumulative of DM 33 million, and other retained results from the elimination of inter­ earnings of Daimler-Benz AG of DM company earnings and from debt 8,534 million. Also reflected here consolidation, as well as the differ­ are the company's share in the re­ ence arising from currency transla­ tained earnings and results of opera­ tions. tions of consolidated subsidiaries,

16 Minority Interests The stock ownership of outside Raumfahrt Holding AG, AEG, third parties in the subsidiaries in­ Mercedes-Benz of South Africa, cluded in consolidation pertain Dornier, MTU and Eurocopter. mostly to Daimler-Benz Luft- und

17 Provisions for Old-Age Pen­ Pension provisions rose to DM When the assets of the provident sions and Similar Obligations 12,217 million (1991: DM 10,790 funds are added to the provisions million). DM 499 million of the for old-age pensions, the company's DM 1,427 increase pertains to the pension obligations are fully change in the circle of consolidated covered. companies.

The provisions for taxes include Additional provisions exist for DM 764 million (1991: 645 million) expenditures which are based on ap­ which pertain, to a large extent, to proved change-over, alteration and Daimler-Benz AG for open years some development projects, for pos­ awaiting final assessment. sible additional costs in connection The difference amount with re­ with completed contracts, and for serve characteristics resulting from maintenance which had been the capital consolidation originates planned for the year under review from the first-time consolidation of but had to be deferred until the fol­ one subsidiary; this amount will be lowing year. In addition, provisions available to offset potential extraor­ have been recorded for future obliga­ dinary expenses during the start-up tions in connection with restructur­ years. ing activities. Apart from existing warranty The DM 5,239 million increase obligations, other provisions take pertains with DM 4,028 to the into account, above all, obligations in Deutsche Aerospace Airbus Group the personnel and social area, risks which was consolidated via DASA. for losses inherent in pending busi­ ness transactions, and risks arising from contractual liabilities and pend­ ing litigation. 19 Liabilities From Leasing and Sales Financing

The liabilities from leasing and Miscellaneous liabilities com­ sales financing serve the refinancing prise loans payable, and interest ac­ of leased vehicles and equipment cruals in connection with sales and of receivables derived from financing. sales financing. The caption deben­ The liabilities due to leasing and tures comprises commercial paper Sales financing are secured by denominated in U.S. dollars; they are pledging redeemable bonds in the shown at the issue price plus ac­ order of DM 45 million (1991: DM crued interest. 11 million). 20 Accounts Payable Trade 21 Other Liabilities

Of the liabilities to related com­ Miscellaneous liabilities largely panies, about DM 130 million (1991: comprise December 1992 accruals DM 370 million) pertain to liabilities for wages and salaries as well as tax to financial institutions. Excluding liabilities. those, they pertain mainly to obliga­ Liabilities to financial institu­ tions by Deutsche Aerospace Airbus tions, notes payable, liabilities to af­ GmbH to Airbus Industrie G.I.E., filiated and related companies and Toulouse, as well as to liabilities at miscellaneous liabilities are largely DASA relating to project companies. secured by mortgage conveyance, Debentures pertain to commer­ liens and assignment of receivables cial paper issued in D-marks; they in the order of DM 1,091 million are shown at the issue price plus ac­ (1991: DM 1,231 million). crued interest. Contingent Liabilities

In addition, we are liable for Holding AG, there exist claims for non-estimable compensatory pay­ non-estimable compensatory pay­ ments, guaranteed by Deutsche ments. Aerospace AG for 1993 and future Moreover, there exist contrac­ years. For outside shareholders of tual performance guarantees that AEG Aktiengesellschaft and of could not reasonably be estimated. Daimler-Benz Luft- und Raumfahrt

Other Financial Obligations Other financial obligations aris­ Executive (government office in ing from rental, property lease and charge of Airbus); this guarantee was leasing contracts average approx. taken over by Deutsche Aerospace DM 748 million annually; the aver­ Airbus GmbH - to the extent of its age contract duration is 8 years. share interest - without restriction. For companies not included in Deutsche Aerospace Airbus GmbH consolidation, we have other finan­ considers the obligation arising cial obligations amounting to therefrom fully covered by the rele­ DM 102 million; the average con­ vant agreements for the financing tract duration is 9 years. and execution of the development In connection with the fiduciary work. settlement by Deutsche Aerospace Beginning in 2002, the profit Airbus GmbH of the federally guar­ sharing agreement provides that the anteed serial credits, the effective federal government will share in the amount cannot be determined until profits of Deutsche Aerospace the beginning of 1995 when the fed­ Airbus GmbH to the tune of 40 %. eral government's last tranche of This rule, in its economic effect, DM 1 billion is due; this also applies stipulates the sequence of the to the reorganization profit received government's repayment demands. in 1989. The remaining financial obliga­ Within the scope of the tions, particularly purchase order government-supported Airbus- commitments for capital invest­ Development-Program, Deutsche ments, are within the scope of nor­ Aerospace Airbus GmbH has agreed mal business activities. to assume performance portions The obligation arising from stock itself. DM 331 million thereof relate subscriptions and from capital sub­ to the time after the balance sheet scriptions in close corporations pur­ date, to the extent that they are not suant to Section 24 of the GmbH already reflected in the annual ac­ Act, amount to DM 14 million. counts. We are jointly and severally lia­ All assets acquired by Deutsche ble for certain non-incorporated com­ Aerospace Airbus GmbH with sub­ panies, partnerships and joint ven­ sidy funds have been conveyed to ture work groups. In addition, there the Federal Republic of Germany as exist performance contracts and security. miscellaneous guarantees in connec­ With reference to the develop­ tion with ongoing business transac­ ment work for the Airbus program, tions. Airbus Industrie G.I.E. has given a performance guarantee to Agence Notes to the Consolidated Statement of Income

22 Sales

23 Increase in Inventories and Other Capitalized In-House Output 24 Other Operating Income The income amount included in shown under other operating this caption for the reversal of provi­ expenses. In addition, income is sions totals DM 1,519 million. derived from costs charged to third (1991: DM 893 million). Additional parties, from security sales, and income is derived from exchange from rentals and leases. profits in connection with ongoing Altogether, DM 2,226 million of purchase and payment transactions, other operating income is attributa­ mostly earned abroad; exchange ble to prior years. losses against such income are

25 Cost of Materials

in relation to a total output of DM 100,879 million (1991: DM 98,566 million), the ratio of cost of materials amounted to 49 % (1991: 50 %).

26 Personnel Expenses/ Employment

The 1992 employment figures In addition, 12,072 people are for the first time include the em­ employed in the joint venture com­ ployees of Deutsche Aerospace pany Eurocopter. Airbus GmbH and its subsidiary. 27 Amortization of Intangible Assets, Depreciation of Fixed Assets and of Leased Equip­ ment

The depreciation of fixed assets results from the growth of the pertains with more than 50 % to leasing business of our domestic and Mercedes-Benz AG. The increase in foreign finance companies. depreciation of leasing equipment

28 Other Operating Expenses This caption comprises additions out, packaging, and the expenses in to provisions, maintenance ex­ connection with the currency re­ penses, administrative and selling valuation at our Brazilian subsidiary expenses including sales commi- companies. sions, rental and lease expenses, for­ Overall, DM 161 million is appli­ eign exchange losses incurred in the cable to prior years. normal course of business, freight-

29 Income from Affiliated, Asso­ ciated and Related Companies

30 Net Interest Income

The net interest expense balance at the leasing and financing com­ from leasing and sales financing be­ panies amounts to DM -421 million fore the elimination of group inter­ (1991: DM -446 million). nal interest income and expenses 31 Write-Downs of Financial Assets and of Securities

32 Extraordinary Results

33 Taxes

The decline in tax expenses is largely due to a decline in income in the domestic circle of companies in­ cluded in the interlocking relation­ ship with respect to taxes.

34 Net Income Consolidated net income of DM allowable write-downs of current 1,451 million has predominantely assets have reduced net income only been earned by the Mercedes-Benz slightly. Also, future charges in corporate unit. Special tax depre­ connection with such write-offs will ciation of fixed assets and tax- not be material. Other Information/Boards Under the presumption that the Benz AG for pension obligations to proposed dividend is ratified by the former members of the Board of shareholders at the Annual Meeting Management and their survivors. As on May 26, 1993, the remuneration of December 31, 1992, advances and paid by the group companies to the loans to members of the Board of members of the Board of Manage­ Management of Daimler-Benz AG ment and the Supervisory Board of amounted to DM 220,741. Home Daimler-Benz AG amounts to DM loans included herein are not subject 17,002,148 and DM 2,157,079, re­ to interest; other loans and advances spectively. Disbursements to former bear interest averaging 5.5 %. Dur­ members of the Board of Manage­ ing the year, DM 71,468 was repaid. ment of Daimler-Benz AG and their The stipulated maturities amounted survivors amount to DM 10,247,694. to ten years for home loans; they did An amount of DM 75,954,745 has not exceed one year for other loans been provided for on the books of and advances. Daimler-Benz AG and of Mercedes- Independent Auditors' Report

The accounting records and the consolidated accounts, which have been audited in accordance with professional standards, comply with the legal provisions. With due regard to the generally accepted accounting principles, the consolidated accounts give a true and fair view of the assets, liabilities, financial position and results of operations of the Daimler-Benz group. The business review report, which summarizes the state of affairs of Daimler- Benz Aktiengesellschaft and that of the group, is consistent with the finan­ cial statements of Daimler-Benz Aktiengesellschaft and the consolidated fi­ nancial statements.

Frankfurt am Main, March 24, 1993

KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Zielke Dr. Koschinsky Wirtschaftsprüfer Wirtschaftsprüfer (Certified Public Accountant) (Certified Public Accountant)

The annual financial statements of Daimler-Benz AG as of December 31, 1992, show an unappropriated profit of DM 5,094,165,653. It will be proposed to the Annual General Meeting that this amount be applied as follows:

Stuttgart-Mohringen, March, 9, 1993

The Board of Management Report of the Supervisory Board

In the four Supervisory Board meet­ The result of the examinations ings held last year and by means of made by the Supervisory Board and written and verbal reports, we were the auditors showed no cause for informed in detail about the state questioning. We approved the finan­ of the corporation and principal cial statements of Daimler-Benz AG matters of corporate policy, and dis­ as prepared by the Board of Manage­ cussed these issues with the Board ment; they are hereby ratified. of Management. In particular, dis­ We concur with the proposal of the cussions centered on questions in Board of Management regarding the connection with the development of application of the unappropriated the company into an integrated tech­ profit. The financial statements, the nology group. We also concerned business review and the external ourselves with the trend in employ­ auditors' report were available to ment and earnings and with corpo­ the Supervisory Board. rate planning, including investment policy. In addition, we discussed im­ portant individual business transac­ Stuttgart-Mohringen tions and made business decisions April 1993 which, by law or company bylaws, had to be submitted to us for The Supervisory Board approval. We examined the financial state­ ments and the business review com­ piled for both Daimler-Benz AG and the group, as well as the proposal for Chairman the application of unappropriated profit. The financial statements of Daimler-Benz AG and of the group as at December 31, 1992, including the business review and the accounting principles used, were verified by KPMG Deutsche Treu- hand-Gesellschaft AG, Wirtschafts- prüfungsgesellschaft, Frankfurt am Main, and found to be in accordance with the books and with the pertinent legal requirements. The Supervisory Board, in a joint meeting with the Board of Manage­ ment on April 2, 1993, approved the result of the audit. From the Daimler-Benz Collection

Günter Scharein *1949

Sehnsuchtstriptychon, 1987/88 Oil on hard foam panel 124 x 330 cm The paintings of Günter Scharein, with their living, vibrant, "breath­ ing" colors which appear to bathe in an unreal light, hinting at unfathom­ able depths, evoke a mystic, medita­ tive mood strongly reminiscent of modern altar pictures. Light and dark graduations of the same color, honed with meticulous care, are the objective foundation for a highly emotional color "experience" which transcends empirical dimensions.

Annual General Meeting May 26, 1993 10.00 o'clock Hanns-Martin-Schleyer-Halle Mercedesstraße 69 7000 Stuttgart 50 (Bad Cannstatt)

Daimler-Benz AG BPA Postfach 80 02 30 D-7000 Stuttgart 80 (as of July, 1, 1993: 70546 Stuttgart) Phone number 0711-1 79 22 87 Telefax number 0711-1 79 41 16

This report has been printed on environment-friendly paper bleached without the use of chlorine.