Annual Report1999

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Robert Bosch GmbHRobert-Bosch-Platz 1D-70839 Gerlingen-Schillerhöhe

Mailing address:Postfach 10 60 50D-70049 Stuttgart

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

www.bosch.com KH

/DLD

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778

212

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Front-page illustration:In 1999, we introduced a gasoline direct-injectionsystem. It is used on stratified-charge engines. This requiresan injector with an extremelyaccurate spray pattern. Thebenefits of direct injection,especially substantial savingsin fuel consumption, are thusmaximized.

Bosch Group Worldwide 1999 1998

Sales 54,579 50,333percentage change from prior year + 8.4 + 7.4

Foreign salesas a percentage of sales 66 65

Research and development expense 3,757 3,478as a percentage of sales 6.9 6.9

Investments in tangible fixed assets 3,806 3,773as a percentage of depreciation 128 148

Number of employeesaverage for the year 194,335 188,017as of January 1, 2000/1999 194,889 189,537

Total assets 40,743 36,343

Equity capital 12,998 11,869as a percentage of total assets 32 33

Net income for the year 900 850

Unappropriated earnings(Dividends of Robert Bosch GmbH) 80 80

Key Figures(million DM)

Bosch GroupBusiness Sectors and Divisions

1 Including ZF Lenksysteme GmbH (50% Bosch)2 Blaupunkt-Werke GmbH (100% Bosch)3 BSH Bosch und Siemens Hausgeräte GmbH (50% Bosch)4 Bosch Telecom GmbH (100% Bosch) and product groups Status as of May 1, 2000

ABS and braking systems Engine-management systems – gasoline

Bodywork electrics

Fuel-injection technology – diesel Body electronics Mobile communications2

Semiconductors and control units Starters and alternators Aftermarket products, after-sales service,test equipment and technology

Broadband networks Aerospace engineering Security systems

Power tools Thermotechnology Household appliances3

Automation technology Packaging machinery

Communications Technology4

Consumer Goods

Capital Goods

Automotive Equipment1

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Table of Contents

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Until June 30, 1999

Board of Management

Hermann SchollChairman

Rainer Hahn

Claus Dieter Hoffmann

Robert S. Oswald

Tilman Todenhöfer

Hubert Zimmerer

Associate Members of theBoard of Management

Siegfried Dais

Stephan Rojahn

Gotthard Romberg

Effective July 1, 1999

Board of Management

Hermann SchollChairman

Tilman TodenhöferDeputy Chairman

Rainer Hahn

Claus Dieter Hoffmann

Robert S. Oswald

Stephan Rojahn

Gotthard Romberg

Deputy Members of theBoard of Management

Bernd Bohr

Wolfgang Chur

Siegfried Dais

Franz Fehrenbach

5

Dr. phil. Dr. rer. oec. h.c.Marcus Bierich, StuttgartChairmanFormer Chairman of the Board ofManagement of Robert Bosch GmbH

Walter Bauer, KohlbergDeputy ChairmanChairman of the Joint Shop Councilof Robert Bosch GmbH as well as ofthe Combined Shop Council, and Chairman of the Shop Council of theReutlingen Plant

Dr. jur. Peter Adolff, Stuttgart,former Member of the Board ofManagement of Allianz Versicherungs-Aktiengesellschaft

Knut Angstenberger, StuttgartDepartment Manager in the DieselFuel-Injection Technology Division, andChairman of the Joint Speaker Groupof Robert Bosch GmbH and of theGroup Speaker Committee

Dr. h.c. Bo Erik Berggren, Stockholm, former Chairman of the Board of Directors and Chief Executive Officer of STORA Kopparbergs Bergslags AB

Dr. jur. Ulrich Cartellieri, FrankfurtMember of the Supervisory Council of Deutsche Bank AG

Dr.-Ing. Wolfgang Eychmüller,Ulm/DonauChairman of the Supervisory Council of Wieland-Werke AG

Ruth Fischer-Pusch, StuttgartTrade Unions of the Metal Industry, District Management Baden-Württemberg

Hans-Henning Funk, HildesheimChairman of the Shop Council of the Hildesheim Plant and Member of the Joint Shop Council of Robert Bosch GmbH

Dr. jur. Karl Gutbrod, StuttgartFormer Member of the Board of Management of Robert Bosch GmbH,Chairman of the Board of Trustees ofRobert Bosch Stiftung GmbH

Gudrun Hamacher, FrankfurtFormer Managing Member of theBoard of Directors of the Trade Unionsof the Metal Industry

Hans-Joachim Jaquet,Mörfelden-WalldorfChairman of the Joint Shop Council ofBosch Telecom GmbH and Chairmanof the Shop Council of Bosch TelecomGmbH at Frankfurtuntil March 31, 2000

Dieter Klein, WolfersheimChairman of the Shop Council of theHomburg Plant of Robert Bosch GmbHand Member of the Joint Shop Councilof Robert Bosch GmbHas of April 1, 1999

Dieter Krause, HildesheimChairman of the Shop Councilof Blaupunkt-Werke GmbH, Hildesheimas of April 3, 2000

Olaf Kunz, FrankfurtManaging Director of the Trade Unionsof the Metal Industry, Department forUnion Policy

Prof. Gero Madelung, MunichFormerly Technical University MunichChair of Aviation Technology

Prof. Dr. rer. nat. Hans-Joachim Queisser, StuttgartFormerly Director at the Max-Planck-Institute for Solid-State Research

Urs B. Rinderknecht, EnnetbadenChief Executive of UBS AG

Gerhard Sautter, ErdmannhausenChairman of the Shop Council of theFeuerbach Plant, and Deputy Chairmanof the Joint Shop Council of RobertBosch GmbH and the Combined ShopCouncil

Hans Peter Stihl, RemseckChairman of the Board of Managementof Andreas Stihl AG & Co

Manfred Wenkemann, HomburgChairman of the Shop Council of theHomburg Plant of Robert Bosch GmbHand Member of the Joint Shop Councilof Robert Bosch GmbHuntil March 31, 1999

Hans Wolff, BambergChairman of the Shop Council of the Bamberg Plant and Member of the Joint Shop Council of Robert Bosch GmbH

4

Supervisory Council Until April 11, 2000 Board of Management

7

In its sessions, and using writtenmonthly reports, the SupervisoryCouncil of Robert Bosch GmbH keptitself regularly informed about theprogress of business and the com-pany’s situation. Business develop-ments, financial situation, investmentplans, as well as new technical devel-opments were presented and dis-cussed in detail. Reporting and dis-cussion included all important com-panies of the Bosch Group. Writtenmonthly reports brought the Supervi-sory Council up to date on currentbusiness developments. Specialevents were covered in newsletters.

Ernst & Young Deutsche AllgemeineTreuhand AG, Stuttgart, audited theaccounting and financial statements ofRobert Bosch GmbH and the consoli-dated financial statements of theBosch Group. The auditors in allcases gave their unqualified opinion.The Supervisory Council concurs

with the audit findings, and recom-mends that the shareholders approvethe financial statements of RobertBosch GmbH and follow the proposalof the Board of Management for thedisposition of net income.

As of March 31, 1999, ManfredWenkemann retired and as a resultleft the Supervisory Council. DieterKlein was appointed as his successorby the Stuttgart court effective April 1, 1999. The Council expressesits appreciation to Manfred Wenke-mann for his constructive teamwork.

As of June 30, 1999, Hubert Zim-merer, a member of the Board ofManagement, retired. The Supervi-sory Council expresses its thanks tohim for his many successful years ofwork in the company.

Tilman Todenhöfer was electedDeputy Chairman of the Board ofManagement effective July 1, 1999.

At its meeting on April 13, 1999, theSupervisory Council of Robert BoschGmbH, acting on the recommenda-tion of the shareholders, appointedthe former associate members of the

Board of Management StephanRojahn and Gotthard Romberg as fullmembers of the Board of Manage-ment, and Dr. Siegfried Dais asdeputy member, all effective as ofJuly 1, 1999. In addition, the Council,following the recommendation of theshareholders, named Dr. BernhardBohr, previously in charge of devel-opment at the ABS and braking sys-tems division, Wolfgang Chur, previ-ously speaker for the management ofthe mobile communications division,and Franz Fehrenbach, previouslyspeaker for the management of thediesel fuel-injection technology divi-sion, as deputy members of the Boardof Management, all effective as ofJuly 1, 1999.

Stuttgart, April 2000For the Supervisory CouncilDr. Marcus BierichChairman

6

SupervisoryCouncil Report

Our customers are verydemanding when it comes tothe quality and reliability ofour products. We utilize thehighest-precision testingmethods as shown here inlaser-measurement of discbrakes.

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Nearly all our areas of activity con-tributed to the growth in automotiveequipment. Especially large were theincreases we achieved with new prod-ucts for vehicle navigation and injec-tion technology, and with the elec-tronic stability program (ESP).

Direct injection continues to becomemore important in injection technol-ogy. In 1999 we introduced a gasolinedirect-injection system which will beinstalled in a number of vehicle mod-els. The attractiveness of passengerautomobiles with diesel engines isenhanced by the high-pressure dieselinjection systems, which we havebeen producing since 1997 in growingvolumes.

Our sales of consumer goods – powertools, thermotechnology and house-hold appliances – increased a modest3.5% to a total of 11.7 billion DM. As in the year before, this businesssuffered from the weak consumptionclimate and declining constructionactivity, especially in Germany.

The sales to third parties by the Capi-tal Goods Business Sector – automa-tion technology and packagingmachinery – fell 3.4% to 2.1 billionDM as a result of the weak invest-ment climate, especially in Germany.If the deliveries of production equip-ment for our own plants are takeninto account, sales increased by 6.1%.

In communications technology, our1999 sales increased by 4.9% to 5.3billion DM. This growth was primar-ily attributable to significant increasesin the mobile-telephone business. Incontrast, the negative development inthe public-networks division contin-ued, as sizable new infrastructure pro-jects are not being carried out.

Number of employees continues to growOn annual average, the number ofemployees increased in 1999 by 6,300 to about 194,300, or 3.4% morethan in 1998. Employment outsideGermany amounted to 97,500 or3,900 more than the year before. Thenumber of employees in Germany onannual average increased in 1999 by2,400 to around 96,800. This meansthat the number of employees in Germany rose by a total of 5,800 inthe last three years.

Still unsatisfactory profitabilityAlthough the profits of the BoschGroup in 1999 improved comparedto the previous year, they still contin-ued to be unsatisfactory in light ofgenerally positive sales trends. Eventhough losses in communicationstechnology could be reduced signifi-cantly and those at Blaupunkt elimi-nated, they were offset by continuedhigh expenditures in the start-up ofnew products and undiminished pricing pressure especially in the corearea of automotive-equipment busi-ness. New general taxation measuresin Germany also dampened profits.

Investments in line with 1998In order to expand and modernizemanufacturing and development facil-ities we invested – as in 1998 – 3.8 billion DM in tangible fixedassets, of which 54% were investedabroad. The majority of investmentswere for the expansion of capacity forthe new diesel-injection systems. Themost important construction projectwas a plant for electronic controlunits (ECUs) in Hatvan (Hungary).

9

Business upswing during thesecond half of the yearConsolidated sales of the BoschGroup increased in 1999 by 8.4% to54.6 billion DM. The consolidatedgroup was primarily affected by theinclusion of our pro rata share of the 50-50 joint venture ZF LenksystemeGmbH, Schwäbisch Gmünd, and theelimination of the lighting technologydivision which was contributed to ajoint venture with Magneti MarelliSpA, Milan. These changes increasedsales by 300 million DM net.

During the first half of 1999, growth,at only 5.9%, was somewhatrestrained, primarily because of weakdemand in Germany for consumerand capital goods. Influenced bybuoyant North American and non-German European economies, growthin the second half of the yearincreased to 11%.

Foreign sales grew by approximately11%. Sales in Germany, however,grew a below-average 4.7% to 18.6billion DM. As a result, foreign salesas a percentage of total salesincreased from 65% to 66%.

In our most important foreign mar-kets, Western Europe (without Ger-many) and North America, sales

increased 12% and 16% respectively.The higher North American sales inDM were influenced by a muchstronger dollar.

We achieved our strongest growthrate in Asia with 23%. However, thisdid not yet make up for the 1998decline. In contrast, our sales in SouthAmerica fell by 30% from the prioryear, reflecting the declining eco-nomic activity there and the massivedevaluation of the Brazilian real.

High capacity utilization in automotive equipmentThe growth of the Bosch Group is, asin the year before, primarily the resultof the positive development in theAutomotive Equipment Business Sec-tor whose worldwide sales increasedin 1999 by 12% to 35.5 billion DM.We thus participated in the unexpect-edly robust automobile boom, pri-marily in Western Europe and NorthAmerica. In addition, we again bene-fitted from the large number of inno-vations in automobile technology, towhich we made important contribu-tions.

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Management Report

The year 1999 was generally posi-tive for the Bosch Group. Growthexceeded our expectations and wasparticularly influenced by the posi-tive developments in the Auto-motive Equipment Business Sector.As the year progressed, we initiatedsignificant changes in the organiza-tional structure of the Bosch Group.Some of the most important stepswe took were the majority acquisi-tion of the Japanese automotiveequipment manufacturer ZexelCorporation, Tokyo, and the sale ofour telecommunications productdivisions for public networks, privatenetworks, and terminals. This allowsus to concentrate our resources onimportant core activities.

Sales(billion DM) Progress 1995–1999

1995

1996

1997

1998

10 20 30 40 50 60 70

1999

41.1

46.9

50.3

54.6

35.8

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We consider the contribution of soft-ware in achieving quality in our prod-ucts to be very important. Our effortsto improve software quality alsoinclude projects which we carry outtogether with our customers. Thisallows us to achieve teamwork, whichalso contributes to quality assuranceas early as the development phase.

In 1999, we once again honored ourbest suppliers for good quality ofproducts and services. Of a total of 53 awards, 20 went to foreign com-panies. As a first, in addition to suppliers for production material, fourcapital-goods suppliers and two logis-tics service providers were awardrecipients.

With BeQIK to greater efficiencyIn order to meet the high standardsset by our customers, emphasisthroughout the company will be onmore individual initiative, increasedteamwork, and more pronounced cus-tomer orientation. These changes areincorporated in our new motto“BeQIK”, in which Q stands for quality, I for innovation, and K forthe German word for customer orientation.

Under the motto BeQIK we havestarted two initiatives which fit into our continuous improvementprocess CIP:

– With the “Time to Market” project,we will improve and speed up theinternal processes in the productinitiation phase. This will lead to afurther shortening of developmenttimes, secure control over newstart-ups, and generally better andfaster fulfillment of customerwishes. This will also contribute tocost reduction.

– The “Customer Focus” initiative isdesigned to further increase Boschcustomer satisfaction. Using closecustomer relations in all functionalareas and at all management levels,we aim to fulfill customer needsand to increase customer benefitsstill more. The highest principle isreliable fulfillment of all agreedupon work and services. For ourcustomers, working with us shouldbe easy, quick and problem-free:we want to be “easy to work with”.

Special events

In addition to the regular businessactivities, far-reaching decisions weremade affecting the future structure of the Bosch Group.

Changes in the automotive-equipment areasAs of January 1, 1999, together withZF Friedrichshafen AG, we estab-lished a 50-50 joint venture, ZF Lenksysteme GmbH, SchwäbischGmünd. This company supplies steer-ing systems for passenger and com-mercial vehicles to the worldwideautomobile industry, and had 1999sales of 2.5 billion DM. Of this, 50%is included in the Bosch financialstatements.

As of the same date we contributedour headlight activities to AutomotiveLighting Holding GmbH, Innsbruck,which is owned equally by MagnetiMarelli SpA and ourselves. Total salesof the venture are 1.5 billion DM, avolume which gives it a good chanceto be successful in the very competi-tive automotive lighting market.

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Research and development a high priorityIn order to continue to offer our cus-tomers innovative products, weincreased research and developmentexpenditures in 1999 by 8.0% to 3.8 billion DM. As in 1998, thatamounted to nearly 7% of sales.Worldwide, about 16,300 (1998:15,700) scientists, engineers and tech-nicians work on the development ofnew products and systems, theimprovement of existing products andnew production methodology.

More than two-thirds of R&D expen-ditures were made in the automotive-equipment area. Key efforts wereexpended in high-pressure injectionsystems for gasoline and dieselengines, as well as in vehicle naviga-tion systems, and the electronic stabil-ity program (ESP).

Global purchasing program startedThe worldwide purchasing volume ofthe Bosch Group, including services,merchandise and capital goods

climbed in 1999 to 28.8 (1998: 26.7)billion DM, corresponding to 53% ofour sales. About 57% (1998: 56%) ofwhat we buy comes from outside Germany.

This purchasing volume means thatour suppliers have a significant influence on the global competi-tiveness of the Bosch Group. Tostrengthen our position, we havestarted a company-wide programwhich, in the next two years, will con-centrate total purchases in all materialareas on the most efficient suppliers.We intend to start cooperation withthese suppliers at a much earlier pointin the development of new products,giving them the opportunity to partici-pate in the design of our products.

Purchasing and logistics on the internetWe are using the internet increasinglyin purchasing and logistics to inte-grate our suppliers in our processesand to reduce transaction costs. Weintroduced an E-commerce solutionwhich allows departments to purchaseexpendable and standard materialsdirectly via the internet. Smaller sup-pliers will also be able to networkdirectly with our logistics systems.

New electronic marketing systemsThe market structure in the after-market is changing because of globaltrading groups and because of theincreased use of new media tools suchas the internet. Our sales organizationhas adapted to these challenges. Byprocess simplification we have short-ened order and delivery times. Inaddition, with our customers we haveincreased the use of electronic mediain sales. We are adjusting the market-ing structures for our entire productprogram to meet the requirements ofE-commerce. As the use of electronicmedia increases, enhancement of ourBosch brands becomes even moreimportant than in the past.

Improved quality together with customers and suppliers We participated in the harmonizationof several national quality standards inthe automobile industry, culminatingin the international ISO/TS 16949standard.

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Breakdown of sales(as a percentage) by business sectors 1999

10 20 30 40 50 60 70 80 90 100

Automotive Equipment

Consumer Goods

Communications Technology

Capital Goods

65.0

21.6

9.6

3.8

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13

Strengthening our position in JapanAt the beginning of April 1999 wetook over the majority of the automo-tive supplier, Zexel Corporation,Tokyo, a longtime partner of ours par-ticularly in the diesel area. It was thefirst time an important Japanese auto-motive supplier became majority-heldby a foreign company. Zexel Group,with about 10,000 employees, hadsales of 3.1 billion DM in the businessyear which ended March 31, 1999.

This transaction is the core of a basicnew structuring of our activities in theJapanese automotive-equipment area.The diesel and gasoline injection andtransmission technologies are beingconcentrated at Zexel. Together withZexel we also want to take increasedadvantage of the growth potential inautomotive air conditioning. Toachieve this, a joint venture is plan-ned between Zexel and Valeo SA,Paris.

At the beginning of October 1999, wefounded Bosch Braking Systems CoLtd in Tokyo together with Zexel.

This venture incorporates our brakingand ABS activities in Japan, whichwere previously dispersed among sev-eral joint ventures, such as the Zexelcompany, Jidosha Kiki Co Ltd. Thenew company has sales of about 1 billion DM.

Disposal of core areas in communi-cations technologyAnother important strategic move isthe disposal of the divisions responsi-ble for telecommunications productsand equipment, which will take effectin the first half of the year 2000. Wehad suffered considerable losses inthis area during the last few years.

The public-networks division wassold to Marconi plc, London, and theprivate-networks division to KohlbergKravis Roberts & Co, New York. Wealso reached an agreement withSiemens AG on the sale of themobile-telephone business. Theselines have a total sales volume ofapproximately 4 billion DM. Thethree other product divisions, that is,broadband networks, aerospace engi-neering, and security systems willcontinue to be operated by Bosch.

These disposals are the consequenceof a radical change in communica-tions technology which is acceleratingand requires large commitments,

which can only be made by verylarge global suppliers. The industry istherefore in the process of global con-centration, which also affected Boschas a medium-sized supplier.

Takeover of Vermont American CorporationIn the other business areas we willcontinue to expand our position inthe most important regions of theworld. One step in this process is ourcomplete takeover of Vermont Ameri-can Corporation, Louisville, Kentucky(USA), effective December 31, 2000.Until now, Bosch and Emerson Elec-tric Co, St. Louis, Missouri (USA),held equal shares in this venturewhich, with 3,200 employees, pro-duces accessories for power tools. It had 1999 sales of about 750 millionDM. Our power tools division, with1999 sales of 4.5 billion DM,enhances its position in the world-wide accessories market with thisacquisition.

12

Our new high-pressure injec-tion systems for direct-injec-tion diesel engines requiremanufacturing processeswith a precision in micro-meters. We accomplish thiswith a very precise laser cutting process.

Investments in tangible fixed assets(as a percentage) by business sectors 1999

10 20 30 40 50 60 70 80 90 100

Automotive Equipment

Consumer Goods

Communications Technology

Capital Goods

Other

80.2

9.9

4.1

2.0

3.8

Countries of the European Union

America

Asia, Africa, Australia

Rest of Europe

Investments in tangible fixed assets(as a percentage) by regions 1999

10 20 30 40 50 60 70 80 90 100

67.3

20.1

4.2

8.4

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In order to limit risks, we will concen-trate on the following points in ourfuture strategy and actions:

– We will take into account theuncertainty in the worldwide auto-mobile industry climate by meansof cautious investment planning,allowing for capacity expansionespecially in areas which by theirstructure can expect to experienceincreased demand.

– To protect ourselves from theeffects of exchange-rate fluctua-tions such as those between theeuro, US-dollar and yen, we haveto a large extent matched salesand production in each of themajor regions of the world. Infinancing, we utilize the availablehedge possibilities to cover risksfrom open positions.

– For more than 25 years now, wehave met the technical challenges,especially those posed by environ-mental laws, with our 3-S program:three German words starting with“S”– safe, clean, economical. Usingthis motto we are making largeinvestments in further innovationswhich will contribute to a highdegree of acceptance for the auto-mobile, even though it is subject toever stricter conditions.

– Customer demands on our effi-ciency continue to increase as aresult of transnational cooperationsand mergers. We are responding tothis trend first and foremost withnew technical concepts, permanentimprovement of our internalprocesses, and an uncompromisingfocus on the customer.

– We are meeting the challenge of E-commerce for our various inter-national distribution channels byactivities of our own, which include

our customers, aftermarket part-ners and suppliers. In order tostrengthen our position in the evermore transparent market place, wewill implement appropriate meas-ures to further improve the imageof our brand names.

All in all, we are confident that wewill always be able to cope with thefuture’s changing challenges.

15

Outlook for the current yearThe year 2000 started with continuedpositive business development for the Bosch Group. Sales increased vigorously, compared, however, to a relatively weak sales base at thebeginning of the prior year.

The automobile industry, however,has weakened in Western Europe,and particularly in Germany. Wetherefore expect that our growth inthe automotive-equipment businesswill falter as the year progresses. Oursales will, however, continue to besupported by the introduction andramp-up to full production of newproducts.

The other business sectors are profit-ing from the economic upswing,which we currently expect to con-tinue throughout the year, even if the

economic development in NorthAmerica should flatten out. Our Consumer Goods and Capital GoodsBusiness Sectors and the remainingproduct divisions of the Communica-tions Technology Business Sectorhave introduced a series of new prod-ucts, which will benefit our growthregardless of the overall economic climate.

Given these market trends, we expecta sales growth for the Bosch Group in2000 of about 5%. Based on furtherinnovations, the high quality of ourproducts, and good customer rela-tions, our business focus will be oninternal growth. That does not pre-clude acquisitions which complementour core business activities and whichallow us to be represented in all geo-graphical areas.

Risks inherent in future developmentOur group-wide risk-managementsystem is organized to detect threatsto assets, profits and liquidity at suchan early stage so that appropriate andeffective risk-containment measurescan be taken at any time.

The core of our risk managementconstitutes an internal reporting system which enables comprehen-sive monitoring of all relevant keybusiness data. It is complemented bya constant review of all monetarymovements and an independentinternal audit department.

The risks which we must deal with lieforemost in the uncertainties of theworld economic climate, worldwidetightening of environmental-protec-tion regulations, high demand for reli-ability and safety in new products,constant price pressure by our cus-tomers, and tougher competitionfrom new globally active suppliers inour product areas. These risks arealso matched by opportunities whichwe want to take advantage of by evenmore intensive efforts.

14

Investments in tangible fixed assets(million DM) Progress 1995–1999

1995

1996

1997

1998

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

19993,806

3,773

2,905

2,419

2,056

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production. ABS, therefore, becamecontinually easier and more economi-cal to integrate in braking equipment.The Bosch know-how in ABS tech-nology is also reflected in severalthousand patents.

Every workday 40,000 of these safetysystems leave our six ABS productionplants in Germany and abroad. That constitutes more than a third ofall units produced worldwide. In 1999 we manufactured approximately10 million ABS units.

ESP in all vehicle classesDemand for our electronic stabilityprogram (ESP) continues to grow. Weintroduced ESP in 1995 long beforethe competition. The system is now available in nearly all classes ofvehicles.

A prerequisite for the rapid accep-tance by car makers was the continu-ous further development and refine-ment of the product, making ESPeven more efficient, smaller, lighterand more economical, all within ashort period of time. As examples, wenow use much-simplified hydraulicsand we have combined the ECU andthe hydraulics into one module.

ESP makes it easier to control thevehicle’s handling in critical situa-tions, and is thus an important systemfor vehicle safety. Accident investiga-tors are emphatic in their recommen-dation of the system as statisticallyvalid results are now available.

New trigger device for airbagsDuring 1999 we introduced a newgeneration of airbag triggers, whichfeature expanded functionality. Thesystem considerably improves theprotection of passengers. It can evalu-ate more sensors, process more sig-nals and activate up to 20 protectiondevices, such as seat-belt tightenersand side or frontal airbags. It can alsodetect incipient vehicle rollover.

High-pressure injection systems for diesel engines Passenger cars equipped with dieselengines are increasingly in demand.The diesel share of West Europeanpassenger-vehicle production grew in1999 to nearly 29% from 25% theyear before. This increased demandresulted primarily from the introduc-tion of new direct-injection engines.Of the new diesel-engine passengercars sold in 1999, 75% already haddirect-injection engines. These con-sume even less fuel, emit less exhaustgas, and through smoother engineoperation and improved accelerationincrease driving enjoyment.

We developed several high-pressuredirect-injection systems to the mass-production stage and brought thesegradually to the market. Since we canoffer the appropriate injection equip-ment for each engine concept, oursystems were very successful on themarket in an even broader range ofapplications.

Bosch automotive technology: safe, clean, economicalState-of-the-art motor vehicles arefaced with increasingly severe chal-lenges with respect to safety, environ-mental compatibility, and improvedfuel economy. It was more than 25 years ago that Bosch summarizedits development and production goalsunder the motto of its 3-S program:safe, clean, economical. This programis reflected in the majority of our newproducts, and their market success isconfirmed by the high product vol-umes. The year 1999 was distin-guished by important product mile-stones. We produced:– The 100 millionth Blaupunkt radio– the 50 millionth antilock braking

system (ABS)– the 25 millionth Motronic engine-

management system– the 10 millionth ECU for electronic

diesel injection (EDC)– the millionth electronic stability

program (ESP)– the millionth Common Rail high-

pressure injection system for dieselengines

– the millionth VP 44 radial-pistondistributor pump for diesel engines

– the 500,000th route-finding vehiclenavigation system

New development center in the AllgäuTo be able to develop new brakingsystems to the mass-production stagemore quickly, while at the same timemaintaining their superior quality andcost-effectiveness, we inaugurated inOctober 1999 a specialized devel-opment center in Immenstadt/Allgäu(Germany). Here, experts fromdomestic and foreign locations whoare employed in the developmentand production planning for ABS,ESP, and ignition, are broughttogether to create the conditions foran optimal development process.

Soon as natural as the safety belt: ABSMore than half of all vehicles pro-duced worldwide in 1999 wereequipped with an antilock brakingsystem. In that year more than 90%of vehicles produced in Germany,74% of those manufactured in NorthAmerica, 67% of those in the remain-der of Western Europe and 62% inJapan were equipped with this safetysystem which we pioneered andbrought to market in 1978.

Although initially ABS was foundmostly in luxury passenger cars, 86%of compact cars and 30% of smallcars in Western Europe are now ABS-equipped. We have made major contributions so that there would be no letup in the further develop-ment of the system’s technology and

16 17

Automotive Equipment Business Sector

Motor-vehicle production in 1999increased by 5.1% to 55.2 millionunits worldwide. Production in Ger-many stayed more or less at theextremely high level of the prioryear. Western European productionof 16.8 million vehicles exceededthat of the year before by 1.5%. US automobile productionincreased by 8.3% to 13.0 millionunits, while the Japanese marketcontinued to shrink.

We increased our worldwide salesof automotive equipment by 12% to 35.5 billion DM and furtherexpanded our international presence.

Automotive Equipment

Key numbers

1999 1998Sales 35.5 31.8 billion DMInvestments 3.1 2.9 billion DMR&D Expense 2.7 2.4 billion DM

Sales of automotive equipment(billion DM) Progress 1995–1999

1995

1996

1997

1998

5 10 15 20 25 30 35 40

1999

Working closely with theautomobile industry, Boschdevelops and produces theright spark plug for practi-cally every engine. The top-of-the-line Platinum+4 isrenowned for its low ignitionvoltage requirement, long lifeand increased ignition relia-bility.

35.5

31.8

28.7

20.5

24.5

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19

During 1999 the first small car featur-ing a fuel-economy figure of 3 litersper 100 kilometers went into massproduction. It is powered by a direct-injection diesel engine (Unit InjectorSystem). In addition, the first luxurycar with an eight-cylinder dieselengine using the Bosch Common RailSystem came onto market.

We improved the efficiency of theelectronic controls of our diesel injec-tion systems. Since its introduction in1987, the memory capacity of ourelectronic control units has beenincreased by a factor of 15 and theprocessor performance has increased40-fold. One of the priorities in oursoftware development is the program-ming of new, complex control algo-rithms for still more exact injection.This is necessary to meet the future,tougher emission limits.

During 1999 we prepared for the fullproduction ramp-up of the CommonRail System for heavy commercialvehicles. The first installations weredelivered in February, 2000.

Gasoline direct-injection with stratified charge goes into seriesproductionIn 1999, as a world premiere, we pre-sented our new gasoline direct-injec-tion system at the International AutoShow in Frankfurt. We have producedan innovative engine control fordirect-injection gasoline engines usingthe stratified-charge principle. This

technology not only results in flexibleand highly dynamic gasoline enginesbut also reduces fuel consumption byup to 15% compared to conventionalmanifold injection, while at the sametime increasing performance by 5%.The system already meets emissionlimits (Euro IV) which come intoeffect in 2005.

Components for fuel-cell propulsionResearch, development and divisionsare working together on systemswhich will contribute to traffic solu-tions which further reduce the loadon the environment and on availableresources. Automobile manufacturersare placing high hopes on the devel-opment of alternative propulsionmethods, such as those on the basis offuel cells. We have started developingthe appropriate actuators, sensors,control units and drive mechanismsfor these methods.

Pushbelts and modules for automatic transmissions For several years now we have pro-duced increasing volumes of push-belts in the Netherlands. This is a keycomponent of CVT (ContinuouslyVariable Transmission) for passengercars. In the meantime nearly all pro-ducers of passenger cars and lightcommercial vehicles, as well as trans-mission specialists, are working on abroader-based use of such transmis-sions in series production, not just forsmall cars, but also for mid-size vehicles.

18

Automotive Equipment

71

Passenger-car marketABS-equipped vehicles as a percentage of passenger-car production in selected markets 1998/1999

North America

Western Europe

Germany

Japan

25 50 75 100

19991998

Innovation for the windshieldwiper. Our new hingelesswiper blade presses thewiper rubber against thewindshield by means of twotension strips. The uniformdistribution of pressureimproves wiping quality,especially at high drivingspeeds.

8892

6757

7471

6258

We commenced operations in1999 at a new developmentcenter in Immenstadt/Allgäu(Germany), teaming upexperts employed in ourABS, ESP and ignition activi-ties from German and foreignlocations. This creates theconditions for an optimaldevelopment process.

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Multimedia equipment is taking onmore and more importance in luxuryvehicles. We developed a sound sys-tem for multimedia installationswhich has aroused considerable inter-est on the part of a number of vehiclemanufacturers. Because of its unusu-ally good spatial tone quality it isalready in use in luxury coaches andlarge-capacity vehicles.

New equipment for vehicle navigationOur line of navigation systems wasexpanded with an innovative after-market device. Since incoming trafficinformation is processed withoutdriver input and taken into account indetermining the recommended route,it is the only system on the marketwhich provides far-sighted, automaticdynamic destination guidance.

With a compact device the size of acar radio, which combines radio,navigation and CD-audio functions inone, we have also contributed to thedevelopment of a new market. Boththese innovative accessories havegiven strong impetus to the aftermar-ket business as they are being offeredat attractive prices and are easy tomount.

Computer platform for display instrumentsThe display instrument is developingmore and more into an informationcenter which must deal with a largenumber of data from various vehiclesystems. To meet this requirement wehave developed a new electronicplatform based on a 32-bit microcon-troller. New display systems withadditional information functions canthus be designed and implementedfaster than before.

New developments for wipersystems and seat adjustment During 1999 we were the first manu-facturer to introduce a new hingelesswiper blade to the market. It pressesthe wiper rubber to the windshieldusing only a pre-tensioned stripinstead of the usual system whichemploys several hinges. The newwiper blade cleans better and pro-vides a clear view even at highspeeds. Its flat structure also reducesairflow noise considerably, and inwinter this blade stands out due to itslack of joints where snow and ice canaccumulate.

We also developed a new wiper sys-tem in which each wiper arm has itsown electric drive. Using electronicsynchronization of both electricmotors, the conventional connectingrods are eliminated. This makes theequipment lighter and more compact,and the driver has a maximum fieldof vision.

21

To this purpose we are working onnew versions which can transmit par-ticularly high levels of torque.

For many years now we have beenproducing electronic control units,magnetic valves and pressure regula-tors for automatic transmissions. Wehave now combined the previouslyseparate components into one mod-ule, which is integrated into the trans-mission as a compact assembly. Theelectronics are constructed in temper-ature-resistant micro-hybrid technol-ogy with oil-proof connections.

New series of alternatorsOur new series of compact alternatorsmakes a significant contribution tothe reduction in fuel consumption.Although equal in size, these alter-nators distinguish themselves fromtheir predecessors by an efficiencylevel raised to 74% and a perfor-mance increase of 25%. Dependingon the type of alternator and the vehicle, between 0.1 and 0.5 liters offuel can be saved for every 100 kilo-meters driven.

The on-board electric network of the futureThe growing number of accessories intoday’s automobile demands con-stantly more from batteries, alterna-tors and electric networks. So that wecan continue to provide a low-cost,lightweight on-board electric systemfor the energy requirements of tomor-row’s vehicles, we are developing a

42V on-board network, in whichpowerful high-output alternatorsdirectly supply 42V to those loadswith particularly high input needs.These loads include radiator fans,electro-magnetic valve controls, orwindshield heaters. A DC convertersupplies the still existent 14V networkfor ECUs, sensors, and low-loadusers. We are developing starter-alter-nators which will make silent startingand automatic start-stop operationpossible. An on-board network man-ager coordinates and controls thesmooth interplay of alternators, batteries, converters and loads. Ourlong-term goal is to convert the entire on-board network and all end-users to 42V.

Strong growthat BlaupunktHigher demand for car radios andespecially for vehicle navigation sys-tems on the part of automobile manu-facturers led to robust sales growth atour Blaupunkt subsidiary.

During the summer of 1999, we suc-cessfully marketed the new series ofSkyline car radios which combinesattractive design with state-of-the-artuser-friendly technology. These fea-tures make a significant contributionto the redesigning of our product lineand to the enhancement of ourBlaupunkt trade name.

20

Automotive Equipment Automotive marketDiesel-engine passenger cars as a percentage of new-car registrations in selected markets1997–1999

20 40 60

1999

France

Western Europe

Germany

19981997

In 1999 we produced the 50 millionth antilock brakingsystem. We started its devel-opment in 1967 and produc-tion began in 1978. Everythird ABS produced world-wide today comes fromBosch.

The Unit Injector System(UIS) from Bosch – a high-pressure system for direct-injection diesel engines –considerably reduces fuelconsumption and pollutantemissions. In 1999, it wasinstalled in the first mass-produced passenger car touse less than three liters offuel per 100 kilometers.

Automotive marketMotor-vehicle production in selected markets1998/1999 (in million units)

5 10 15 20

Western Europe

North America

Japan

Germany

19991998

22.417.6

14.9

40.241.8

44.1

24.828.4

5.75.7

16.816.6

17.616.0

9.910.022.3

23

In 1999, we introduced a compact,lightweight spindle drive for seat-adjustment use. This assemblyenables linear adjustments withoutadditional gears. Accident-causedforces are absorbed by the gear hous-ing via the spindle.

Increased use of brushless electric motorsWe are constantly using more andmore brushless, electronically com-mutated electric motors. We devel-oped a new auxiliary water pump onthis basis. Without involving higherproduction costs, the motor’s elec-tronic commutation reduces thepump’s weight and the space it needs,as well as increasing its useful life. Weare also working on an electricallypowered main water pump which willlead to fuel savings.

Increased sales of closing systemsThe positive business trend in closingsystems continued in 1999 with a fur-ther strong jump in sales. New devel-opments have considerably improvedour standing in the market. OurNAFTA-area activities were expandedby commencing operations at anotherproduction line for vehicle locks atthe San Luis Potosí, Mexico, plant.

Efficient transistors for interior heatingAs modern internal-combustionengines optimize fuel consumption,the residual heat available for heatingthe car interior goes down.

To counter this, we employ electroni-cally controlled booster heaters. Forthis purpose we developed a powertransistor, which is protected againstthermal overload.

Aftermarket business expands furtherWe were able to increase aftermarketsales further. Especially our businessin the Asian and Latin Americanregions, which are recovering fromeconomical and financial crises,improved again. We continued theexpansion of our distribution organi-zation in Europe.

We introduced a new generation ofsheathed-element glow plugs withdouble the useful life of their prede-cessors. The product range wasexpanded with a universal adapter foreasy and fast installation of wiperblades.

Our worldwide service organizationconsists of about 9,100 service centerswith more than 90,000 employees in132 countries. In 1999 we startedredesigning the outward appearanceof the Bosch service centers.

22

Automotive Equipment

The subsequent installationof a navigation system isconsiderably simplified withour compact Travelpilot. Itcombines radio, navigationand CD-player and fits in the normal car-radio installation bay.

New external design forBosch service centers. Itemphasizes the change fromthe vehicle electric specialistto the customer-orientedauto workshop.

25

Strong position in power toolsWe develop, produce and sell powertools, accessories and gardeningequipment. Each of these three busi-ness areas had a 1999 world marketof approximately 13 billion DM.

In the core business of power toolswe are one of the three largest suppli-ers, who together share about 60% ofthe market. The remainder is coveredby smaller producers ranging fromspecialists for professional powertools of high quality to Asian manu-facturers of unbranded products.

Fragmented markets for accessoriesand gardening equipment The accessories market is severelyfragmented. In many countries wecompete with our brands against sup-pliers of strong regional importance.In 1999, to strengthen our position asa universal supplier, we purchased60% of Aresi SpA, Brembate/Ber-gamo (Italy), a producer of chisels,hammer drills, and drill bits. As ofthe end of 2000 we will complete thetakeover of our current joint-venture

Vermont American Corporation, Louisville, Kentucky (USA). Previ-ously, Emerson Electric Co, St. Louis,Missouri (USA), and Bosch each helda 50% interest in this company.

The market for gardening equipment,too, is covered by a large number ofgenerally national suppliers. Morethan half the market volume is madeup by lawn mowers.

Our subsidiary Atco-Qualcast Ltd,Stowmarket (UK), concentrates itsmarketing in Europe; Vermont Amer-ican Corporation is active in the US market with watering systems.

The worldwide market for power tools grows againAfter the decline in the prior year, the1999 worldwide market for powertools increased by 3% to 95 millionunits. We continued to increase oursales and were able to strengthen our position in important markets,especially in North America and the Far East.

24

Consumer GoodsBusiness Sector

After a temporary weakening duringthe first half of 1999, the economicdevelopment in the European Unionagain picked up speed, supportedsubstantially by robust domesticdemand. Even so, there were con-siderable differences among variouscountries in their rates of growth,with consumer demand in Germanyremaining weak for example. NorthAmerican private consumption onthe other hand increased, and theeconomies of Latin America andSoutheast Asia recovered duringthe course of the year.

Our sales of consumer goodsincreased by 3.5% to 11.7 billionDM. This includes 50% of sales byBSH Bosch und Siemens Haus-geräte GmbH.

Consumer Goods

Key numbers

1999 1998Sales 11.7 11.3 billion DMInvestments 378 385 million DMR&D Expense 314 294 million DM

Production line for compasssaws. We are one of the threelargest manufacturers of high-quality branded products.

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Extranet offerings expandedNew media, such as the extranet, anarea of the internet with access limited to a certain group of sub-scribers only, allow for more efficientteamwork in the aftermarket. Weexpanded the successful extranetofferings in Germany to Belgium, theNetherlands, Luxemburg, France, andPortugal. Other countries will follow.

Our extranet is completely cus-tomized for the aftermarket. It is herethat our trade partners can obtaininformation about products, prices,delivery capabilities, promotions andspecial offers, and persons to contact.It also lists our customer services andour complete training program for theaftermarket. In Germany, more than700 dealers already use this service.

Position in thermotechnology maintained We were able to raise the sales in thethermotechnology area in 1999. Byuncompromising further developmentand renewal of our product range wesecured our position as an importantsupplier to the European heating-equipment market.

Growth in the Central and East Euro-pean markets continued, while com-petitive conditions in West European

markets which suffered from over-capacity, became increasingly diffi-cult. In 1999, the continued weaknessin the construction industry againimpeded business development inGermany.

We expanded our good market posi-tion for wall-mounted gas heaters in the European market. We investedin the development of modular gas-heating units in order to shorten theproduct creation process and to beable to react more quickly to customer wishes.

In the still rapidly growing marketsegment of energy-saving equipmentmaximizing useful heat, we supple-mented our broad product range withadditional models, thereby improvingour market position in Germany. Wewere able to strengthen our positionin the shrinking European market forgas-fired boilers by the introductionof innovative products.

2726

Consumer Goods

Demand in Europe remained at prior year levels. Although most non-German Western European marketsshowed some growth in 1999, theGerman market declined for the thirdyear in a row. This was the result ofthe continuing recession in the construction industry and the onceagain increasing competition fromunbranded products in the lowerprice ranges in home-improvementand discount-store chains. In ourmost important market, WesternEurope, we traditionally maintain astrong market position in most coun-tries. Eastern European market volume declined because of the eco-nomic crisis in Russia. Our brandsare well-known there and our qualityis appreciated.

Brisk demand in North America,recovery in AsiaThe North American market grew bya real 6% in 1999. A constructionboom and the growing concentrationinto large home-improvement chains,coupled with the opening of manynew branches, are key causes behindthis growth. The distribution channelprovided by the large home-improve-ment markets offers considerablegrowth potential for our Bosch, Skiland Dremel brands.

The power-tool market in Asia alsogrew by a real 6%. Demand in 1999recovered primarily in Korea and

Southeast Asia. The Chinese market,however, showed but little growthand the largest single market in theregion, Japan, shrank considerably.We manufacture power tools on theAsian continent in Malaysia, Indiaand in our joint venture in China,making us one of the most importantnon-Asian producers in this region.

Good brand image and a high degree of innovativenessBesides our internationalization, it isthe good image of our Bosch, Skil,Dremel, Atco, Qualcast and Hawerabrands which constitutes the essentialstrength of our business. This imageowes its good reputation to the pro-nounced customer orientation andhigh degree of innovativeness of thisbusiness sector. As in prior years, in1999 we again introduced a totallynew product: the electric grindingbrush which is offered both to com-mercial users and the do-it-yourselfmarket. At the September 1999Cologne Garden Show, we presented22 new gardening tools, making usthe exhibitor with the largest numberof innovations.

Highly practical innovationsfor both professionals anddo-it-yourselfers: our newelectric grinding brushes with extensive systemsaccessories.

Sales of consumer goods (billion DM) Progress 1995–1999

1995

1996

1997

1998

2 4 6 8 10 12 14

199911.7

11.3

11.1

9.2

7.9

29

Our development activities center onthe enhancement of customer utility.With this in mind, we developed aspecial device for use in a standardchimney, and a new gas-fired boilerwhich is not dependent on an electricnetwork or battery. Both new prod-ucts will be marketed in the year2000.

The complete takeover of our formerjoint venture Shenzhou Gas Appli-ances Co Ltd in Shunde (China) sim-plified incorporation of the plant intoour international production network.We supply the European market fromour plants in Germany, U.K., France,Portugal, and Turkey.

Foreign sales of household appliances increaseAfter robust expansion of its interna-tional presence in the past few years,BSH Bosch und Siemens HausgeräteGmbH, Munich – a 50-50 Bosch andSiemens joint venture – entered aconsolidation phase in 1999. In NorthAmerica and in Spain business activi-ties were combined. In Austria a com-pany was established in which allsales activities in the country wereunited.

BSH increased its sales in 1999 by4.3% to 10.7 billion DM. This devel-opment was supported by an increasein foreign sales of 11%. The share ofsales abroad rose from 64% to 68%.Double-digit growth rates marked theexpansion in European markets, especially in the U.K., France, Italy,and Scandinavia. But above-averageincreases were also noted in the USand China. The good sales develop-ment abroad was negatively influ-enced by the continued difficult situa-tion in Latin America and Russia.

In the largest single European market,Germany, BSH sales declined. Thedecisive factors here were the nega-tive trend in the household-appliancemarket and the start-up difficulties inthe conversion to a new distributionsystem.

28

Consumer Goods

Production of sawblades.Bosch maintains a widerange of accessories forpower tools. This businesscontinues to expand.

Production of gas-fired boil-ers in China. We furtherexpanded our position in thelargest Asian growth market.

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Services in the security systems area expandedWe have further expanded the rangeof services of our Magdeburg callcenter. Here, more than 100 employ-ees take up to 15,000 calls daily,process them, supply the callers withinformation or enter data directly on-line into the client’s computer system.During 1999 we received orders forservices in the traffic information,route-planning, and emergency-alarmareas from two large suppliers of traffic telematics.

Decreasing market development in satellite technologyThe continuing investment restraintsin satellite-supported communicationssystems in Asia and South Americaand the unsolved financing problemsof global systems led to decliningmarket trends. Despite this, we wereable to expand our strong position intraveling-wave tube amplifiers for allfrequencies. We obtained orders fromwell-known European satellite manu-facturers and were able to gain newcustomers in Asia.

For the ISS (International Space Sta-tion) which is to succeed the Mirspace station, we received an orderfor the delivery of high-reliabilitycomponents. We expect furthergrowth opportunities from our signifi-cant participation in the internationalComed (Constellation and MediaDevelopment and Demonstration

Program) project. The project is cen-tered on basic development efforts forfuture satellite communications sys-tems for multimedia uses.

New perspectives for state-of-the-art broadband networksAs the third-largest operator of broad-band networks in Germany, by farthe most important European market,we supply more than a million house-holds with cable television and radioreception. Working closely with apart-ment building management compa-nies and by the installation and pur-chase of additional networks, we wereable to expand our market position in1999 as in the years before, and tosecure it by long-term contracts withour customers.

Deregulation, new competitors andtechnical developments are causingconsiderable market changes whichcreate growth. As a result, additionalbusiness opportunities are opening upfor private cable-network operators.

Aside from being able to offer a con-siderably wider choice of televisionprograms as a result of future digitaltransmission, the use of broadbandnetworks makes interactive communi-cations services a distinct possibility.Because of their wide bandwidth,they are especially suitable for fasttransmission of internet signals to private end-users. We are preparingourselves thoroughly, for example bymodernization of our networks, totake advantage of this new business.

Disposal of activities in telecommunicationsThe strategically most important stepis the disposal of activities in telecom-munications equipment and installa-tions, which will become effective during the first half of 2000. The product groups for public networksand for private networks were sold.We reached an agreement withSiemens AG, Munich, on the sale ofthe mobile-telephone business. Theseareas have a total sales volume ofabout 4 billion DM.

We continue to operate the threeother product groups for broadbandnetworks, aerospace engineering, andsecurity systems.

Product range in security systems expandedThe European market for electronicsecurity systems recovered in 1999with growth of approximately 4%.The market is increasingly character-ized by competitive concentrationand globalization of the industry. Wewere able to further strengthen ouralready strong position in this chang-ing environment with above-averagegrowth in Germany and by the intro-duction of innovative products.

Video-monitoring technology grewdisproportionally more, primarily as aresult of the increased use of digitalimage processing. We introduced anew digital imaging system. It func-

tions with a special compressionprocess and records images onlywhen movements take place in thecamera monitoring field. As a result,it only needs 40% of the memorycapacity of current solutions. Thissystem has given us an even greatertechnical lead in complex video-monitoring systems.

For the digital bus technology LSN(Local Security Network) we devel-oped a chip which allows sensors andactuators to be integrated into secu-rity networks quickly and economi-cally. Apart from an interface with thefield bus, the chip contains the elec-tronics for the complete communica-tions management, and the necessaryoverload protection. It can even beintegrated into the smallest detectorsuch as the magnetic contacts for win-dow monitoring. We have gainedadditional customers and licensees forthis solution.

With regard to detection speed andfreedom from false alarms, the newgeneration of fire alarms which weintroduced a year earlier has set newstandards in the market. This is thefirst detector of this type in the mar-ket which detects not only smoke andheat, but also fire-gases. Detection istherefore much faster and more reli-able than with conventional detectors.

30 31

CommunicationsTechnologyBusiness Sector

The world market for equipment inthe communications-technologyarea grew more strongly in 1999than in the prior year, especially inprivate communications technologyand mobile and data communica-tion. Regional growth was againfocused on the non-German Euro-pean and overseas markets.

Our sales in communications tech-nology in 1999 increased by 4.9% to5.3 billion DM.

Communications technology

Key numbers

1999 1998Sales 5.3 5.0 billion DMInvestments 154 220 million DMR&D Expense 591 600 million DM

Security management fromBosch: All data converge atthe security-managementcenters of large buildingcomplexes and compoundssuch as airports and fair-grounds. This means thatsecurity measures can betaken in good time.

Sales of communications technology products (billion DM) Progress 1995–1999

1995

1996

1997

1998

2 4 6 8

1999

Bosch is a highly reliable supplier of aerospace engineering components.Photo: Multiplexer for communication satelliteequipment.

5.3

5.0

5.0

5.4

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In the area of drive and control tech-nology we developed a monitoringsystem which, as an innovation, isintegrated in the electric drive. Itmakes for safe machine set-upsalthough mechanical protectiondevices are open. We expanded ourmemory-programmable controls witha low-cost minicontrol for the lowerpower range.

New seminars and learning tools weredeveloped for the schooling and train-ing of dealers and customers. Weexpanded the successful series oftechnical manuals in fluid technologyand mechatronics and translatedthem into several languages. Theinteractive training programs in fluidtechnology were well received andnow constitute benchmarks for suchinstruction tools.

Worldwide production of packaging machineryOur packaging-machinery sales in1999 exceeded those of the prior yearand grew faster than the overall worldmarket. The export share of 86% mirrors the global focus of our activities.

One of our strengths is our foreignpresence. By offering local applicationengineering, we adapt our products tothe country-specific requirements ofour customers. In addition, we offerservice close to the customer’s loca-tion. Besides at three German plants,we develop and produce packaging

machinery in Brazil, India, Japan, the Netherlands, the Czech Republic,and the United States. Customer service branches exist also in China,Russia, Singapore, and Mexico.

Complete packaging solutions suppliedIncreasingly, our customers in thefood, confectionery and pharmaceuti-cal industries expect complete packag-ing solutions. We meet these require-ments with the appropriate productinnovations and program comple-ments.

As part of a large project, we delivered56 pouch-filling machines to a UnitedStates customer for the packaging ofpotato products in new reclosableupright bags.

We expanded our market positionwith new equipment for filling andclosing ampules, injection vials andpreproduced one-way syringes, inwhich the product handling element isdesigned as an encapsulated sterilechamber (insulator technology).

Our product range of blister-packag-ing machines for tablets and capsuleswas enlarged with a high-performanceline. It consists of a deep-drawing andcartoning machine with highlydynamic servo drives and industrial-PC controls. The equipment offers ahigh degree of flexibility and availabil-ity. Our range of production and pack-aging machines for the confectioneryindustry was increased by high-perfor-mance boiling, cutting and folding

Weakness in automation technologyWe experienced a decline in auto-mation-technology sales, primarily asa result of weak domestic business. Incontrast, sales abroad increased.Including company-internal deliveriesof manufacturing equipment, oursales of automation technologyincreased. After weathering the eco-nomic crisis, orders from Asiaincreased in the second half of theyear.

In a difficult economic environment,our mobile-hydraulics product linewas able to maintain its position inagricultural and materials-handlingtechnology. We introduced an innova-tive extra-quiet gear pump to themarket. We were able to gain impor-tant new customers for our electro-hydraulic directional-control valveswith CAN bus interface for data com-munication. The product range of our DC hydro-assemblies wasexpanded with a new series whichpermits very sensitive lifting by fork-lift trucks.

Increased use of electronics in hydraulic componentsThe part played by electronics in ourindustrial-hydraulics products contin-ues to grow. We met the demands ofour mechanical-engineering cus-tomers by expanding our productrange with digital-control hydraulicscomponents. As an example, we

equipped the medium-pressure low-noise vane pump with electrohy-draulic controls.

Our pneumatic compact cylinder andvalve mount were well accepted bythe market. Additions to the productrange contributed considerably to thissuccess. We introduced two newpneumatic valve series, including boxvalves which have a markedly higherflow-rate capacity.

New double-belt conveyor systems introducedOur accessories program of mechani-cal base elements for assembly tech-nologies was expanded further in1999. On the basis of our modularprofile system, we developed a low-cost system for manually connectingworkstations. We introduced a dou-ble-belt conveyor system which offersour customers clear cost benefits.Compared to single-belt systems, italso allows for the movement of heavier workpieces.

Our swivel-arm robots with PC-basedcontrols, which we first marketed theyear before, were favorably acceptedby our customers. We opened up newapplications by introducing furthervariants for use in dirty environments.Remote diagnostics and programmingincrease the flexibility of our cus-tomer service.

32 33

Capital Goods Business Sector

The economic upswing in WesternEurope during the second half of1999 led to a slight rise in capitalinvestments. Demand for capitalgoods in Germany also recovered.Large declines in German mechani-cal engineering exports caused pro-duction in this industry to fall.

Our sales of capital goods in 1999declined 3.4% to 2.1 billion DM.

Capital Goods

Key numbers

1999 1998Sales 2.1 2.2 billion DMInvestments 74 65 million DMR&D Expense 158 143 million DM

equipment for hard and soft caramelcandy mixtures. We also introducedmachines for producing chewing gum and spherical confectionery products.

Highly demanding insulatortechnology for the pharma-ceutical industry from Bosch:equipment for cleaning, sterilizing, filling and closingof ampules.

Bosch pneumatics for plasticsprocessing: units consisting ofpneumatic cylinder, solenoidvalve and cylinder mount guar-antee fully automatic materialflow.

Sales of capital goods (billion DM) Progress 1995–1999

1995

1996

1997

1998

0.5 1.0 1.5 2.0 2.5

19992.1

2.2

2.1

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Strong growth in ChinaIn China we are preparing ourselvesfor China’s membership in the World Trade Organization. We haveexpanded our marketing activities andincreased the range of our production,especially in the area of engine con-trols. For application engineering, pro-duction and sales of diesel injectionsystems, we established a new com-pany jointly held by Bosch and Zexel.It started production of injectionpumps for the Chinese market inMarch, 2000. We also establishedBosch (China) Investment Ltd, Beijing, as a holding company, which,as a wholly-owned subsidiary, willhold the shares in our Chinese companies.

Our volume of business in China grewagain in 1999. The introduction ofstricter emission regulations and theincreased use of diesel engines in lightand heavy commercial vehicles led tohigher sales in gasoline and diesel-injection technology.

Aside from the holding company andtwo aftermarket companies, we alsoproduce automotive equipment in fiveventures with Chinese partners, andgas-fired boilers and power tools intwo other companies. In two joint ventures, BSH Bosch und SiemensHausgeräte GmbH produces refrigera-tors, freezers and washing machines.

Our pro rata, until now only partiallyconsolidated, sales in China increasedin 1999 to 275 million DM.

Further expansion in North AmericaIn 1999, in the United States, Canadaand Mexico, we combined importantactivities in automotive equipmentunder one roof, i.e. our U.S. subsidiaryRobert Bosch Corporation, Broadview(Chicago), Illinois. This enables us tobetter meet the requirements of ourNorth American automobile industrycustomers. In total, at 18 locationswithin NAFTA, we produce electroniccontrol units, components for brakingequipment, diesel and gasoline-injec-tion equipment as well as starters,alternators and electric motors for seatadjustment, fans and wipers.

North America, with a sales volume of9.4 billion DM, is our largest foreignmarket. We participated in 1999 in thestrong U.S. economy and the full orderbooks of the automobile industry, andexpanded our production programfurther. We commenced production ofa new Lambda sensor and of the elec-tronic stability program (ESP), andprepared for the production start-up ofinjectors for diesel and gasoline directinjection. We are gearing up for furtherstrong growth in North America, as we see great potential for our efficientand high-quality components, systemsand modules.

35

More openness on the part of Far Eastern vehicle producersThe manufacturers in this region areworking vigorously on the improve-ment of their competitiveness. Thefocus is on organizational restructur-ing and the development of innova-tive vehicles which can competeworldwide. The manufacturers areincreasingly open to cooperation withefficient and technologically leadingforeign suppliers who have a highdegree of systems competence. Exist-ing traditional relations between pro-ducers and national suppliers areincreasingly losing their importance.

For many years now, we have beenactive in Japan and Korea where weacquired the reputation of a compe-tent, innovative and efficient supplierwith local manufacturing and applica-tion-engineering capacities. This trustis an essential prerequisite for the fur-ther expansion of our business inthese countries.

Reorganization in JapanAfter acquiring the majority interestin Zexel Corporation, Tokyo, we areconcentrating our activities there inthe fields of gasoline and diesel injec-tion and transmission technology. We also combined our passenger-carbraking-systems business in BoschBraking Systems, a new companyjointly held by Bosch and Zexel. Thismakes us the first supplier in the

Japanese market able to offer a com-plete program of braking componentsand braking systems. Our customers were highly positive in their reactionsto the new organization. ImportantAsian automobile producers haveengaged us more strongly in theirprojects.

Bosch is represented in Japan with atotal of five companies, and in addi-tion has three minority interests. Oursales in Japan, which previously wereonly partially consolidated, reachedabout 4.5 billion DM in 1999.

Restructuring of our Korean activitiesWe also restructured our activities inKorea. In agreement with our part-ners, we took over complete owner-ship of four of our former six jointventures. We combined our OEMautomotive equipment business underone roof, the Bosch Korea Mechanicsand Electronics Ltd, so that integra-tion with our international productionorganization became possible. Afurther company conducts the after-market business. As a result, Bosch isnow active with only two companiesand two minority holdings. The prorata, previously only partially con-solidated, sales in Korea reached 800 million DM in 1999.

34

International Business

During 1999 we strengthened ourinternational presence further and inparticular expanded our activities inAsia. This is above all the case forour automotive-equipment busi-ness. We continue to see goodgrowth potential in the Asian mar-ket, since the economic recessionof 1997/98 has meanwhile beenovercome in most of the countriesin this region. We also see strongergrowth primarily in the NAFTA area.

In total, the Bosch Group has subsidiaries and associated compa-nies in 48 countries. More than 190 manufacturing sites, of which145 are outside Germany, testify tothe international commitment of thecompany. Worldwide, Bosch partici-pates in 32 joint ventures.

Key numbers

1999 1998Sales 36.0 32.5 billion DMInvestments 2,060 1,843 million DMR&D Expense 1,085 946 million DM

Breakdown of sales (as a percentage) by regions 1999

10 20 30 40 50 60 70 80 90 100

Countries of the European Union

America

Asia, Africa, Australia

Rest of Europe4.4

6.7

19.9

69.0

37

In order to be able to meet futurerequirements still better, we have con-siderably expanded our technical cen-ter at Farmington Hills near Detroit,Michigan. The plan is to concentrateapplication engineering and sales ofautomotive equipment there.

In order to gain direct access toresearch and development in theUnited States, we established theBosch Research and Technology Cen-ter North America. Located in PaloAlto, California, it deals with sensorsystems which exchange informationin a wire-less mode and which cancombine into networks. At its Pitts-burgh, Pennsylvania location, workprogresses on development methodsfor systems and software.

Stagnation in BrazilThe economic development in SouthAmerica is influenced especially byBrazil. Following the economic stag-nation of 1999, we expect this coun-try to again show growth in thefuture. In the automotive-equipmentarea we intend to participate in theexpected increase in Brazilian auto-mobile output. Our total sales inSouth America amount to 1.5 billionDM. Approximately 1.2 billionthereof pertains to our most impor-tant market, Brazil.

Strong growth in France and the U.K.France is our largest European mar-ket outside Germany with a sales vol-ume of about 5.2 billion DM. InFrance, we manufacture products forautomotive equipment, thermotech-nology and automation technology.

During 1999 we were able to increaseour sales in the French market by21%. Business with the country’s auto-mobile producers grew at an above-average pace, major contributorsbeing the increased use of ABS invehicles as standard equipment andthe steep increase in production ofdiesel-powered vehicles.

Because of the strong demand fordiesel-injection equipment compo-nents, our plants at Rodez andVénissieux were working at fullcapacity. We are expanding dieselproduction at Rodez, where we willinvest about 175 million DM by theend of the year 2000 for the produc-tion of a new high-pressure injectionsystem, the Unit Injector System(UIS).

In the U.K., the second most impor-tant non-German European marketafter France, with sales of 3.2 billionDM, we produce automotive equip-ment, power tools and products in thethermotechnology area. The unex-pectedly strong growth in Britishautomobile production had a signifi-cant impact on the development ofour business. Our sales in the U.K.increased by 14%.

Weakness in Central and Eastern EuropeDuring the past eight years we estab-lished 12 sales companies in the coun-tries of Central and Eastern Europe.In addition, we built plants in Poland,Russia, the Czech Republic, and Hungary for the production of auto-motive equipment.

Our business in Central and EasternEurope was marked by a pronounceddownward trend in 1999. While wewere able to achieve generally double-digit aftermarket-businessgrowth during the past seven years,aftermarket-sales growth slowed in1999 and in some markets actuallystagnated or declined. In the mediumand long term we again see growthpotential in these countries.

36

North America is our largestforeign market. We manufac-ture automotive equipment at18 locations. Photo: Disc-brake assembly in theClarksville, Tennessee (USA),plant.

Illuminated sign in the Hongkong skyline:Bosch is also well-known in Asian markets.

The most important 1999 markets outside Germany

Sales (billion DM)USA 8.3France 5.2U.K. 3.2Italy 3.0Spain 2.6Brazil 1.2Austria 1.2Japan 1.0Netherlands 0.9Sweden 0.9

USA

Brazil

India

France

Spain

Mexico

U.K.

Portugal

Malaysia

Switzerland

Employees and production outside Germany (1999)

EmployeesCountry Automotive Consumer Communications Capital equipment goods technology goods

15,150

11,360

11,250

10,750

7,450

4,570

3,860

3,730

2,630

2,120

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include precrash sensors, blind-spotsensors, and sensors to assist in back-ing up and adaptive speed control.

For vehicle-speed control under stop-and-go driving conditions we devel-oped a process which, with the aid ofonly two sensors, allows registrationof the area directly in front of thevehicle with adequate local resolu-tion. With this process it is possible todrive even in dense traffic with anautomatic distance safety margin andcontrolled speed adapted to surround-ing traffic.

Interaction between human andmachine in the automobileIn state-of-the-art vehicles, many infor-mation systems are used, such as radio,mobile telephone and navigationdevice. Future systems will providedriver assistance with adaptive speedcontrol and tracking control toincrease the ease and safety of driving.

In order for these systems to exchangeinformation with the driver reliablyand unequivocably, uniform and easyto understand operation is necessary,as is clear information about the condi-tion of individual systems. In doing so,it is necessary to synchronize thehuman ability to process informationwith the technical possibilities of mod-ern input and output technologies.

For simple and efficient communica-tion between driver and systems, wehave developed components for voice-activated operation as well as hapticoperational elements. In a simulatorand in actual traffic, we are using driv-ers with different levels of skill to testtheir interactions with a range of assis-tance and communications systems. Infuture, driver actions must be priori-tized based on the demands of theactual traffic situation and the effects ofthe assistance and communicationssystems must be adapted to these samedemands.

Ensuring electromagnetic compatibilityOur products are distinguished bytheir high degree of electromagneticcompatibility (EMC). This guaranteesthat they will function reliably evenwhen subject to external electromag-netic interference. In addition, wekeep the electromagnetic interferenceoutput of our products well inside thelegal limits.

Both requirements are increasinglybeing met with the help of computer-aided methods. To this end we areexamining and developing state-of-the-art modeling and simulationprocesses which are employed, forinstance, in the design of electricmotors and electronic control devices.Necessary protective steps can thenbe planned into an early stage of thedevelopment.

39

The divisions develop the products intheir own area independently. On theother hand, our Corporate Researchand Advanced Engineering Depart-ment is responsible for basic, applica-tion-oriented research, for productiontechnology, and for advanced engi-neering throughout the whole com-pany.

Sensors for state-of-the-art emission-control systems We are working on selective sensorsfor the measurement of exhaust-gascomponents, such as oxygen andnitric oxides. The sensors are used forthe engine management and for theon-board diagnosis of catalytic con-verters. Together with a mathematicalmodel of the catalytic converter, thevalues are evaluated by the engine-management ECU which controlsfuel quantity and A/F mixture com-position (Lambda value). In this man-ner, exhaust gas from gasoline direct-injection vehicles can also be cleanedoptimally.

In the production we utilize planarsensor technology. We construct amulti-layer composite of electrochem-ical cells from ceramic and metallicmaterials. Our aim is to create moresensitive sensors with shorterresponse times. This is especiallyimportant for exhaust-gas controlwith cold engine starts.

New method for fine-structuringMiniaturization is more and more indemand also when it applies toceramic exhaust-gas sensors in planartechnology. Until now, silk-screeningprocesses were generally used tostructure conductor paths, electrodes,heaters and sensor elements ontoceramic film. Their resolution is limited to structure widths of around0.1 millimeter.

We developed a new, economicalprocess of photographic imaging.Among other things, this process per-mits the generation of high-resistancestructures on minimal surfaces.

Quality control in injection molding processesProcess and material variations, aswell as wear in tools and fittings, canlead to quality fluctuations in theinjection molding of plastic compo-nents. In order to reduce these, werely in our production on statisticalprocess models into which we con-stantly merge the results of periodicsampling in the production process.In particular, this adaptation to actualprocess conditions helps us toimprove the quality of highlydemanding plastic elements.

Close-up sensorics to support the driverWe were successful in the economicalintegration into a single unit of thefunctions of microwave sensors usedfor distance and speed measurementin close-range situations. These

38

Research andDevelopment

The Bosch Group is characterizedby its high degree of innovation.That is reflected especially in thenumber of patents it holds. In 1999,Bosch in Germany applied for 2,050patents, 14% more than the yearbefore.

Mixture formation in thegasoline direct-injectionengine takes place in thecombustion chamber. Weanalyze the process withlaser spectroscopy in anengine.

Drivers can be unequivocally identified by means of biometricprocesses such as finger-printdetection based on physiologicalfeatures. A fingerprint detector inte-grated in the gear selection leverreplaces the ignition key. As soonas the driver’s thumb print identifieshim as an authorized user, the sensor’s surround lights up and theengine can be started.

1 Approximately 11 % there-of is spent on corporateresearch and advancedengineering; the rest onresearch and developmentin the business divisionsand foreign subsidiaries forproduct development.

Total expenditures for research and development1

(million DM) Progress 1995–1999

1995

1996

1997

1998

1,000 2,000 3,000 4,000 5,000

19993,757

3,478

3,257

2,887

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These consist primarily of mechatron-ics apprentices, who receive a combi-nation of mechanical and electronicstraining, microtechnologists foremployment in semiconductor pro-duction, and trainees in informationand telecommunications technologies.

Training abroadAs far as permitted by country-specificconditions, we also train apprentices atforeign locations using the Germandual (classroom and workstation)training model. For instance, during1999, we began training industrialmechanics at our Turkish plant atBursa using this model. In 2000 wewill also start training electronic tech-nicians there. A course for administra-tive personnel is also in preparation.

All in all, we train apprentices inmore than 20 countries. In order toguarantee the highest level of qualityinstruction at both domestic and for-eign locations, we have formulatedguidelines which are in effect world-wide.

Knowledge-management measuresKnowledge is increasingly an impor-tant factor for company success. TheRobert Bosch Kolleg, an internalinstitution for continuing education,began a series of seminars in knowl-edge management. In these seminars,managers and specialists are informedabout the many ways in which tomore effectively exploit and utilizeknowledge.

Pilot project for the promotion of skilled employeesDuring 1999 we started a pilot projectin Germany to enhance the attrac-tiveness of skilled work. About 100 skilled workers began a ten-month part-time training programwhich in special areas should enablethem to take over activities from engi-neers. This applies particularly totechnically skilled jobs in develop-ment, work and production planning,quality assurance and productionequipment construction, which for-merly were performed primarily byacademically trained employees. Thismeasure is also a response to theshortage of available engineers in thejob market.

Employee surveyA high degree of satisfaction on thepart of our employees with their workenvironment is an important prere-quisite for their willingness to performand for successful cooperation withexternal and internal customers. Inorder to ascertain the degree ofemployee satisfaction, we have startedto conduct regular surveys with theemployees at our various locations.We will apply the results of these sur-veys to determine the appropriatemeasures for improvement.

Appreciation for readiness to performAs in the year before, the employ-ment situation in 1999 was extremelystrained at many locations of theBosch Group. Only with a highdegree of readiness to perform and

41

Labor costs continue to increaseOur labor costs worldwide increasedby 4.2% to approximately 16.2 (1998:15.6) billion DM. The increase inGermany by 4.2% to 10.6 billion DMwas mainly the result of significantraises in new union contracts and therise in the number of employees.Domestic employee-benefit costsincreased by 1.0%. For each 100 DMpay for work performed, there were86 DM additional mandatory, con-tractual and other social contribu-tions.

New year-end bonuses for managerial staffIn order to further encourage entre-preneurial activities of our managerialemployees, we developed our com-pensation structure further, expand-ing the portions which are profit andperformance based. In addition totaking into account the profits of theworldwide Bosch Group and individ-ual performance in determining thevariable year-end bonuses, we will infuture also take into consideration thedegree by which the results of therespective business unit meet itsgoals. This provision, which as a startonly pertained to the top manage-ment echelon, was expanded toinclude all department heads in theyear 2000.

Future executives will bemore and more internationalDuring 1999 we hired 2,000 univer-sity graduates in Germany, of which80% were engineers. Because of anincreasing lack of engineers in Ger-

many, and with an eye on the grow-ing global nature of our activities, weare hiring ever more foreign univer-sity graduates. We are also giving ourtrainee programs a still more interna-tional orientation. Each trainee isrequired to participate in a six-monthproject at a foreign location. In fillingpositions requiring qualified skills andleadership characteristics, we are rely-ing increasingly on the potential ofpromising employees in our foreigncompanies.

Using the know-how of older employeesIn order to continue to benefit fromthe experience and knowledge ofretired employees, we have estab-lished the Bosch Management Support GmbH. This organizationemploys former Bosch Groupemployees, typically long-time execu-tives, and offers their services to ourdivisions and foreign companies. This assistance enables us to bridgetemporary capacity bottlenecks andtake care of special assignments andprojects.

More apprenticeshired in GermanyDuring 1999, 1,236 young peoplestarted their apprenticeship in ourGerman plants. That is 8% more thanthe previous year. Thus, on January 1,2000, there were a total of 3,839 ( January 1, 1999: 3,538) apprenticesin training. Approximately 30% ofthese are being trained in jobs whichhave come into being since 1997.

40

Employees of the Bosch Group

On January 1, 2000, the Bosch Groupemployed a workforce of 194,889worldwide, 5,352 more than a yearearlier. Of this increase, about 1,000 resulted from changes in thegroup of consolidated companies.Employment in Germany rose by2,562 to 97,919, while employmentabroad increased by 2,790 to 96,970. About 58% of our domesticemployees were hourly-paid workers– of which 41% were skilled –, 38%were salaried employees, and 4%apprentices.

The employees in our plantsmeet regularly in CIP andquality discussions.

We are treading new paths inrecruiting university gradu-ates. In order to attract moreengineers for our developmentactivities, we organize recruitingdays at which prospectiveemployees get an idea of thedevelopment, manufacture andsale of our products.

Number of employees (annual averages) Trend 1995–1999

1995

1996

1997

1998

40,000 80,000 120,000 160,000 200,000 240,000

1999

flexibility of our employees was itpossible to meet customer needs, andguarantee the ability of the companyto deliver. We want to thank ouremployees for their commitment. Wealso want to express our appreciationto the labor representatives whoreacted to the demands in an under-standing and cooperative manner andwho, especially with regard to worktime, made flexible, work-relatedarrangements possible.

194,335

188,017

179,719

172,359

158,372

42 43

Appendix December 31, 1999 December 31, 1998

Fixed assets (6)

Intangible fixed assets 1,643 1,657

Tangible fixed assets 10,909 9,975

Financial investments 1,552 1,071

14,104 12,703

Current assets

Leased products 419 449

Inventories (7) 6,525 5,989

Accounts receivable and other assets (8)

Accounts receivable 9,337 7,968

Other receivables and assets 2,910 2,106

Marketable securities 5,216 5,822

Liquid assets 2,178 1,260

26,585 23,594

Deferred expenses 54 46

40,743 36,343

Assets

Financial Statements of the Bosch Group WorldwideConsolidated Balance Sheet as of December 31,1999

(million DM)

Appendix December 31, 1999 December 31, 1998

Equity capital (9)

Capital stock 1,800 1,800

Capital surplus 4,630 4,630

Earned surplus 5,842 4,797

Unappropriated earnings 80 80

Minority interests 646 562

12,998 11,869

Accruals with valuation reserve portion (10) 533 67

Accruals

Accruals for pensions and similar obligations 7,256 6,917

Other accruals (11) 10,782 9,315

18,038 16,232

Liabilities (12)

Liabilities with banks 2,356 1,979

Accounts payable 4,064 3,557

Other liabilities 2,690 2,575

9,110 8,111

Deferred income 64 64

40,743 36,343

Liabilities

44

Financial Statements of the Bosch Group WorldwideConsolidated Statement of Income for the period from January1to December 31,1999(million DM)

Appendix 1999 1998

Sales (15) 54,579 50,333

Changes in finished goods and work-in-progress inventoriesand other capitalized costs (16) 743 551

Total operating performance 55,322 50,884

Other operating income (17) 2,822 2,753

Costs of materials (18) –25,734 –23,697

Personnel costs (19) –16,229 –15,575

Depreciation of intangible and tangible fixed assets –3,749 –3,265

Other operating expenses (17) –10,854 –9,366

Net income from investments (20) 95 22

Amortization of financial investments and securities included

with current assets –221 –262

Interest income, net of expenses (21) 251 306

Income from ordinary business activities 1,703 1,800

Taxes on income (22) –803 –950

Net income for the year 900 850

Including profit and loss of minority shareholders (23) 115 66

Financial Statements of the Bosch Group WorldwideCapital Flow Statement

(million DM)

1999 1998

Net income for the year 900 850

Depreciation of fixed assets*) 3,884 3,570

Increase in long-term accruals and accruals with valuation reserve portion 1,588 484

Cash flow 6,372 4,904

Increase in inventories and leased products –506 –307

Increase in receivables –2,181 –670

Change in short-term accruals 684 –63

Increase in liabilities 622 258

Additions to funds from business activities (1) 4,991 4,122

Additions to fixed assets –4,832 –4,488

Retirements of fixed assets 576 242

Application of funds to investment activities (2) –4,256 –4,246

Dividends 1998/1997 –80 –2,209

Increase in capital stock 300

Increase in capital surplus 1,735

Increase in liabilities with banks 377 266

Other changes in balance-sheet items –720 –198

Application of funds to financial activities (3) –423 –106

Change in liquidity (1) + (2) + (3) 312 –230

Liquidity at the beginning of the year 7,082 7,312

Liquidity at the end of the year 7,394 7,082

45

*) including 19 million DM write-ups in 1999

46 47

Cost of acquisition or manufacture

Intangible fixed assets

Concessions, patents, trademarks and similar rights

and assets as well as licenses to such rights and assets 765 27 184 1 403 574 380 194 202 209

Goodwill 2,804 463 17 47 3,237 1,788 1,449 1,454 561

Advance payments 2 –1 1 –1 1 1 1

3,571 489 202 451 3,811 2,168 1,643 1,657 771

Tangible fixed assets

Land, leasehold rights and buildings,

including buildings on land owned by others 6,307 42 231 55 62 6,573 3,627 2,946 2,789 242

Production equipment and machinery 14,355 209 2,032 538 710 16,424 11,283 5,141 4,442 1,913

Other equipment, fixtures and furniture 9,327 64 783 24 980 9,218 7,353 1,865 1,906 822

Advance payments and construction in progress 857 12 760 –617 44 968 11 957 838 1

30,846 327 3,806 1,796 33,183 22,274 10,909 9,975 2,978

Financial investments

Investments in affiliated companies 602 –79 494 713 78 1,652 806 846 118 37

Loans to affiliated companies 148 –42 90 16 1 15 143

Investments in associated companies 1,075 57 –589 91 452 98 354 559

Other financial investments 382 2 265 –124 12 513 259 254 165 117

Other loans 89 5 8 18 84 1 83 86

2,296 –114 824 289 2,717 1,165 1,552 1,071 154

Total fixed assets 36,713 702 4,832 2,536 39,711 25,607 14,104 12,703 3,903

Jan.1,1999 Changes in the Additions Transfers Retirements Dec.31,1999 Depreciation Net book Net book Depreciationconsolidated cumulative value as of value as of current year

group to Dec.31,1999 Dec.31,1999 Dec.31,1998

Financial Statements of the Bosch Group Worldwide1999 Development of Fixed Assets

(million DM)

48

Financial Statements of the B

osch Group W

orldwide

Balance Sheet Structure 1995

–1999

(million D

M)

Assets

Fixed assets

Inventories, leased products

Receivables

Marketable securities, liquid assets

Total assets

Liabilities

Equity capital

Long-term liabilities

Current liabilities

Total liab

ilities and

equ

ity

1995

28,504

28,504

1996

32,273

32,273

1997

34,906

34,906

1998

36,343

36,343

1999

40,743

40,743

14,10435

%12,70335

%12,01334

%10,78433

%6,95724

%

5,32917

%

8,57827

%

7,58223

%

6,13118

%

9,45027

%

7,31221

%

6,43818

%

10,12028

%

7,08219

%

6,94417

%

12,30130

%

7,39418

%

5,17318

%

6,79024

%

9,58434

%

12,99832

%11,86933

%11,37733

%9,52730

%9,03832

%

11,38840

%

8,07828

%

12,92840

%

9,81830

%

13,14937

%

10,38030

%

13,87038

%

10,60429

%

15,70338

%

12,04230

%

49

Financial Statements of the Bosch Group WorldwideAppendix 1999

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

(2) Consolidated group

The financial statements of Bosch Group Worldwide include the individual state-ments of our subsidiaries which conform to uniform principles of classificationand valuation.We adhered to the valuation at lower of cost or market and imparity of gain orloss recognition. Financial statements of foreign associated companies were not modified to com-ply with the uniform accounting principles of the consolidated group.

(3) Principles of classificationand valuation

The consolidated statements include Robert Bosch GmbH and 20 domestic aswell as 103 foreign subsidiaries. For the first time, we consolidated the newly-established Robert Bosch Finance Corporation, Broadview (Chicago), and thepartially consolidated financial statements of ZF Lenksysteme GmbH,Schwäbisch Gmünd, a joint venture with ZF Friedrichshafen AG.During the year we sold Fr. Hesser AG, Waiblingen, and Signalbau Huber AG,Munich, together with its subsidiary Robot Foto und Electronic GmbH, Düssel-dorf.Several businesses were integrated into other companies both within and outsidethe consolidated group by way of legal restructuring. These were primarily,Robert Bosch Componenti per Veicoli Spa, Milan; Robert Bosch Industriale eCommerciale SpA, Milan; Nippon ABS Ltd, Yokosuka; Bosch Korea Ltd, Seoul;and Malaysian German Automotive Equipment Sdn Bhd, Penang.The consolidated statements of BSH Bosch und Siemens Hausgeräte GmbH,Munich and ZF Lenksysteme GmbH (ZFLS), Schwäbisch Gmünd, were includedpro rata pursuant to Section 310 of the Commercial Code.In accordance with Section 296, Paragraph 2 of the Commercial Code, com-panies lacking operations or having insignificant business volume, were notincluded with the consolidated financial statements. In addition, we did notinclude in the consolidation the financial statements of Zexel Corporation, Tokyo,and Bosch Braking Systems Co Ltd, Tokyo, in which we did not acquire major-ity ownership until 1999 (see Section 296, Paragraph 1, Sub 2 of the CommercialCode).The equity valuation of specific interests in associated companies was applied inaccordance with the book-value method. This valuation pertained to threedomestic and six foreign companies. An investment which was reclassified dur-ing the year from associated to affiliated companies continued to be accountedfor by the equity method.

5150

Intangible assets including goodwill resulting from first-time consolidations aswell as tangible and financial assets were valued at acquisition cost or cost ofmanufacture subject to depreciation. We applied straight-line as well as accelerated depreciation methods. Items ofminor value were fully depreciated during the year of acquisition. We applied spe-cial depreciation allowances according to tax regulations in all countries.Interest-free and low-interest loans were adjusted to reflect present values byapplication of a uniform discount rate domestically, and prevailing rates inforeign countries.Additions to interests in associated companies include shares purchased as wellas capital contributions and prorated profits. Retirements include prorated losses,dividends paid and shares sold.We valued inventories at the lower of average purchase or manufacturing costor market. Manufacturing costs include direct costs and reasonable overhead.At domestic companies, the Lifo valuation method was used in principle. Weused this method also at foreign subsidiaries when accepted by the taxing author-ities. We provided for risks inherent in warehousing and distribution through appro-priate deductions. Additional write-downs were taken in cases of unfavorablereturns. Accounts receivable and other current assets were stated at face values less write-downs for individual risks and for general credit risks. Interest-free or low-inter-est receivables with maturities of more than one year were discounted.We valued marketable securities included in current assets at the lower of acqui-sition cost or market.Special write-downs among current assets of 7 million DM were taken on accountof expected price fluctuations.In determining the size of accruals we provided for all identifiable risks. Pension accruals and similar liabilities were determined by the application ofactuarial principles and were discounted to reflect present values. For domesticcompanies, we used a 6% discount rate in accordance with the 1998 guidelinetables, while foreign subsidiaries used discount rates prevailing in their respectivecountries.In determining the amounts accrued for pending transactions with expectedlosses, we basically took account of prices and costs expected at the time thesetransactions would close.Liabilities were stated at the amounts owed.

(4) Currency translation Accounts receivable and accounts payable stated in foreign currencies were trans-lated to DM equivalents at the less favorable of the exchange rate at the date oforigin, or at the balance-sheet date.

(5) Consolidation principles For capital consolidation of companies or for newly acquired capital shares, weapplied the book-value method at the date of acquisition or at the date of first-time consolidation. As far as possible, we allocated amounts subject to capital-ization to the respective assets. Remaining amounts were included with goodwill.Negative goodwill resulting from capital consolidation was included with earnedsurplus. Receivables and payables, sales, expenses, and income, as well as results withinthe consolidated group were eliminated.Profits from sales to the consolidated group by associated companies were noteliminated since they were insignificant.Deferred tax assets resulting from consolidation measures in the amount of 60 (prior year 81) million DM were included with other assets.

(6) Fixed assets Extraordinary depreciation amounting to 330 million DM pertained mostly togoodwill and to financial investments. In accordance with tax regulations, we deducted an extra 26 million DM directlyfrom the acquisition costs of tangible fixed assets. The depreciation was takenpursuant to Section 6b of the Income Tax Law, Section 4 of the DevelopmentArea Law, Section 82a of the Income Tax Implementation Regulations and pur-suant to local tax laws at our foreign subsidiaries.Land and investments in associated companies were written up by 3 million DMand 16 million DM, respectively.The development of fixed assets is presented on pages 46 and 47 of this report.

(7) Inventories Included with the stated value of inventories, in the amount of 6,525 million DM,are our advance payments of 50 million DM (1998: 45 million DM). On theother hand, advance payments received in the amount of 218 million DM (1998:201 million DM) were deducted.

For the translation to DM of the financial statements in foreign currencies and therelated profits and losses, we applied, in principle, average exchange rates at thebalance-sheet date. Transactions pertaining to fixed assets were translated at aver-age annual DM equivalents. Resulting differences were included with beginningbalances of cost of acquisition or manufacture as well as in cumulative deprecia-tion. Income and expenses were translated at average exchange rates. Differencesresulting from the application of average exchange rates versus year-endexchange rates were included with other operating expenses.

5352

(10) Accruals withvaluation reserve portion

Accruals with valuation reserve portion were formed pursuant to Sections 6b and52 Paragraph 16 of the Income Tax Law, Section 12 of the Reorganization TaxLaw and Section 1 of the DDR Investment Law. Our foreign subsidiaries fol-lowed local regulations with respect to such items.

(11) Other accruals Million DM 1999 1998

Accrued taxes 330 296Other accruals 10,452 9,019

10,782 9,315

(12) Liabilities Million DM 1999 Including 1998 Includingmaturities maturitiesup to one up to one

year yearLiabilities with banks 2,356 467 1,979 564

Accounts payable 4,064 4,064 3,557 3,557

Other liabilitiesLiabilities from acceptances

and drafts 118 118 216 216

Liabilities with affiliated companies 104 104 45 45

Liabilities with companies in whichinterests are held 155 155 114 114

Other liabilities 2,313 2,227 2,200 1,8852,690 2,604 2,575 2,260

Total liabilities 9,110 7,135 8,111 6,381

Revenue surplus accounts consist of the following:

Million DM 1999 1998

Earned surplus of Robert Bosch GmbH 1,240 670Other earned surplus 4,602 4,127

5,842 4,797

Unappropriated earnings of the consolidated group are identical to those ofRobert Bosch GmbH.

The subscribed capital stock of 1,800 million DM and the capital surplus of 4,630million DM correspond to the respective balance-sheet items of Robert BoschGmbH.

(9) Equity capital

(8) Accounts receivableand other assets

Million DM 1999 1998

Accounts receivable 9,337 7,968including maturities of more than one year 13 17

Other receivables and assetsReceivables from affiliated companies 655 269

including maturities of more than one year 154Receivables from companies in which

interests are held 150 112including maturities of more than one year – 9

Other assets 2,105 1,725including maturities of more than one year 252 182

2,910 2,106

Receivables and other assets 12,247 10,074

(13) Contingent liabilities Million DMContingent liabilities from the issuance or transfer of notes 213

including on behalf of affiliated companies 19Contingent liabilities from guarantees 328

including on behalf of affiliated companies 20Contingent liabilities from warranties 29Contingent liabilities from collateral given for third-party liabilities 13

including mortgages 6

As a partner in two foreign private companies, we are jointly and severally liablein accordance with legal requirements.

Of the liabilities with banks, 42 million DM were secured by mortgages andanother 28 million DM by other liens. Of other liabilities, 10 million DM weresecured by mortgages.Other liabilities contain tax liabilities in the amount of 475 million DM (1998: 465million DM) and liabilities pertaining to social obligations in the amount of 420million DM (1998: 352 million DM). Liabilities with shareholders in the amountof 42 million DM pertain to Robert Bosch Stiftung GmbH. Total liabilities with maturities of more than 5 years amounting to 1,318 millionDM included 1,295 million DM of liabilities with banks and 23 million DM ofother liabilities.

5554

(18) Costs of materials Million DM 1999 1998

Cost of raw materials, supplies and merchandise 23,910 21,940Purchased services 1,824 1,757

25,734 23,697

(19) Personnel costs Million DM 1999 1998

Wages and salaries 13,069 12,125Social security, pension plans, and support payments 3,160 3,450

of which pension plans 806 1,14116,229 15,575

Average numbers of employeesduring the year, by region:

1999 Including 1998 IncludingTotal BSH, Total BSH

ZFLS(prorated) (prorated)

Countries of the European Union 132,749 15,423 127,568 11,778Rest of Europe 10,527 3,112 9,369 2,574America 31,592 2,812 32,082 2,598Asia, Africa, Australia 19,467 1,648 18,998 33

194,335 22,995 188,017 16,983

(20) Net incomefrom investments

Million DM 1999 1998

Income from investments 35 23including affiliated companies 11 10

Result from associated companies 60 –195 22

(21) Interest income,net of expenses

Million DM 1999 1998

Interest from loans includedwith financial investments 6 10including affiliated companies 4 8

Other interest and similar income 497 584including affiliated companies 11 6

Interest and similar expenses – 252 – 288including affiliated companies – 1 – 1

251 306

(17) Other operatingexpenses and income

Expenses resulting from additions to accruals with valuation reserve portion inthe amount of 490 million DM are included in other operating expenses. Incomefrom the reversal of accruals with valuation reserve portion in the amount of 26 million DM are included in other operating income.

(16) Changes in finished goods andwork-in-progress inventoriesand other capitalized costs

Million DM 1999 1998

Change in finished goods andwork-in-progress inventories 341 184

Other capitalized costs 402 367743 551

(15) Breakdown of sales Million DM 1999 % 1998 %

Sales by business sectors

Automotive equipment 35,470 65.0 31,797 63.2Consumer goods 11,757 21.6 11,357 22.5Communications technology 5,260 9.6 5,014 10.0Capital goods 2,092 3.8 2,165 4.3

54,579 100.0 50,333 100.0

Million DM 1999 % 1998 %

Sales by regions

Countries of the European Union 37,641 69.0 34,589 68.7Rest of Europe 2,392 4.4 2,449 4.9America 10,852 19.9 10,183 20.2Asia, Africa, Australia 3,694 6.7 3,112 6.2

54,579 100.0 50,333 100.0

(14) Other financial obligations Other financial obligations of significance for an opinion on the financialcondition of the company did not exist.

56

Auditors’ report We have audited the consolidated financial statements and the group manage-ment report prepared by Robert Bosch GmbH, Stuttgart, for the business yearfrom January 1 to December 31, 1999. The preparation of the consolidated finan-cial statements and group management report in accordance with German com-mercial law is the responsibility of the Company’s management. Our responsi-bility is to express an opinion on the consolidated financial statements and thegroup management report based on our audit.We conducted our audit of the consolidated annual financial statements in accor-dance with §317 HGB (German Commercial Code) and the generally acceptedstandards for the audit of financial statements promulgated by the Institut derWirtschaftsprüfer (IDW). The applied standards are also in accordance with theInternational Standards on Auditing. Those standards require that we plan andperform the audit such that misstatements materially affecting the presentation ofthe net assets, financial position and results of operations in the consolidatedfinancial statements in accordance with German principles of proper accountingand in the group management report are detected with reasonable assurance.Knowledge of the business activities and the economic and legal environment ofthe Company and evaluations of possible misstatements are taken into accountin the determination of audit procedures. The effectiveness of the internal con-trol system and the evidence supporting the disclosures in the consolidated finan-cial statements and the group management report are examined primarily on atest basis within the framework of the audit. The audit includes assessing theannual financial statements of the companies included in consolidation, the deter-mination of the companies to be included in consolidation, the accounting andconsolidation principles used and significant estimates made by management, aswell as evaluating the overall presentation of the consolidated financial state-ments and the group management report. We believe that our audit provides a reasonable basis for our opinion.Our audit has not led to any reservations.In our opinion, the consolidated financial statements give a true and fair view ofthe net assets, financial position and results of operations of the Group in accor-dance with German principles of proper accounting. On the whole the groupmanagement report provides a suitable understanding of the Group’s positionand suitably presents the risks of future development.

Stuttgart, March 3, 2000 Ernst & YoungDeutsche Allgemeine Treuhand AGWirtschaftsprüfungsgesellschaft

Dörner Dr. PfitzerWirtschaftsprüfer Wirtschaftsprüfer

(25) Shareholdings ofBosch Group Worldwide

A listing of the shareholdings of the consolidated Bosch Group will be depositedwith the commercial registry of the Stuttgart Court.

Stuttgart, March 3, 2000 Robert Bosch GmbHThe Board of Management

(24) Compensation of themembers of the Board ofManagement and of theSupervisory Council

During 1999, the aggregate compensation of the members of the Board ofManagement of Robert Bosch GmbH amounted to 11 million DM. Former mem-bers of the Board of Management and their dependents received 11 million DM,and the members of the Supervisory Council one million DM.Accruals at Robert Bosch GmbH for pension liabilities for former members of theBoard of Management and their dependents amounted to 96 million DM.The members of the Supervisory Council and the Board of Management ofRobert Bosch GmbH are listed on pages 4 and 5.

(23) Profit and loss ofminority shareholders

Million DM 1999 1998

Profits 131 84Losses –16 –18

115 66

(22) Tax expenses

57

Million DM 1999 1998

Taxes on income 803 950Other taxes 241 226

1,044 1,176

Other taxes are included in other operating expenses. Utilizing the Tax Relief Act for 1999/2000/2002, we set up an accrual with valuation reserve portiontotalling 469 million DM which reduced the after-tax profit by approximately225 million DM.

The impact of other tax allowances on the profit for the fiscal year as well as informer years, and the size of future burdens from the resulting valuations are ofsecondary significance.

58 59

Major Companies of the Bosch Group Worldwide(as of December 31, 1999)

Name Location Equity Equity Sales 2 ProfitCapital Capital 2 or loss 2

% owned1 million DM million DM million DMGermany

Blaupunkt-Werke GmbH Hildesheim 100 186 1,841 PLT 3

BSH Bosch und Siemens Hausgeräte GmbH4 Munich 50 1,235 10,725 55Bosch Telecom GmbH Stuttgart 100 539 4,712 PLT 3

Bosch Telecom Leipzig GmbH Leipzig 100 44 212 PLT 3

BT Magnet-Technologie GmbH Herne 50 60 141 10Hawera Probst GmbH Ravensburg 100 39 131 6Knorr-Bremse Systeme für Nutzfahrzeuge GmbH4 Munich 20 187 1,268 29Robert Bosch Fahrzeugelektrik Eisenach GmbH Eisenach 100 64 570 23VB Autobatterie GmbH Hanover 20 120 405 22ZF Lenksysteme GmbH4 Schwäbisch Gmünd 50 547 2,483 31

Foreign Countries

EuropeNV Robert Bosch SA Anderlecht/Belgium 100 44 388 5Robert Bosch Produktie NV Tienen/Belgium 100 135 437 29Robert Bosch A/S Ballerup/Denmark 100 42 194 4Bosch Telecom Danmark A/S Pandrup/Denmark 100 68 827 45Robert Bosch (France) SA4 Saint-Ouen (Paris)/

France 100 592 3,757 –37Atco-Qualcast Limited Stowmarket, Suffolk/U.K. 100 26 156 1Robert Bosch Ltd Denham/U.K. 100 231 1,230 61Worcester Group plc4 Worcester/U.K. 100 56 370 24Robert Bosch SpA4 Milan/Italy 100 85 1,274 –11Robert Bosch BV Hoofddorp/Netherlands 100 43 300 12Van Doorne’s Transmissie BV Tilburg/Netherlands 100 19 83 –6Robert Bosch A/S Trollaasen (Oslo)/

Norway 100 22 110 2Robert Bosch AG Vienna/Austria 100 132 580 22Blaupunkt Auto-Rádio Portugal Lda Braga/Portugal 100 54 600 –3Vulcano Termo-Domésticos SA Aveiro/Portugal 100 161 308 35Robert Bosch AB Kista (Stockholm)/

Sweden 100 19 157 8Robert Bosch Internationale Beteiligungen AG Zurich/Switzerland 90 719 73Robert Bosch AG Zurich/Switzerland 100 27 249 7Scintilla AG Solothurn/Switzerland 85 690 1,081 162Robert Bosch España SA4 Madrid/Spain 100 437 2,379 48Robert Bosch spol. s r.o. Ceské Budejovice/

Czech Republic 100 74 290 13Bosch Diesel spol. s r.o. Jihlava/Czech Republic 100 45 166 8Bosch Sanayi ve Ticaret AS Bursa/Turkey 100 131 343 35

Name Location Equity Equity Sales 2 ProfitCapital Capital 2 or loss 2

% owned1 million DM million DM million DMAmericaRobert Bosch Ltda Campinas/Brazil 100 389 1,401 16Associated Fuel Pump Systems Corporation Anderson, SC/USA 50 210 309 56Automotive Electronic Control Systems Inc Anderson, SC/USA 51 65 157 11Robert Bosch Corporation4 Broadview (Chicago)/USA 100 2,025 7,850 17S-B Power Tool Company4 Chicago/USA 100 388 1,563 129Vermont American Corporation4 Louisville/USA 50 390 735 28

Asia, AustraliaMotor Industries Co Ltd Bangalore/India 51 226 644 47Bosch KK Yokohama/Japan 100 157 661 7Zexel Corporation Shibuya-ku (Tokyo)/Japan 505 1,259 2,641 –43Nippon Injector Corporation Odawara-shi/Japan 35 71 126 6KEFICO Corporation Kunpo-Si/Korea 35 130 349 9Robert Bosch Korea Mechanics and Electronics Ltd Chonan/Korea 100 42 138 10Robert Bosch (Malaysia) Sdn Bhd Penang/Malaysia 100 56 191 20Robert Bosch (South East Asia) Pte Ltd Singapore/Singapore 100 43 265 7Robert Bosch (Australia) Pty Ltd4 Clayton (Melbourne)/

Australia 100 145 787 21

1 Shares held directly and indirectlyby Robert Bosch GmbH

2 Translation of foreign currenciespertaining to equity capital and profitand loss stated at averageexchange rates at the balance-sheet date;sales stated at averageexchange rates of the year

3 Profit and loss transfer agreement (PLT)4 Represents a consolidated sub-group5 Exact equity capital ownership 50.04%

60 61

Financial Statements of Robert Bosch GmbHBalance Sheet as of December 31,1999

(million DM)

Financial Statements of Robert Bosch GmbHStatement of Incomefor the period from January1to December 31,1999(million DM)

Assets December 31, 1999 December 31, 1998

Fixed assetsIntangible fixed assets – –Tangible fixed assets 3,279 3,112Financial investments 6,222 4,076

9,501 7,188

Current assetsInventories 2,175 2,035Accounts receivable and other assets

Accounts receivable 3,579 2,999Other receivables and assets 2,752 2,635

Marketable securities 4,394 4,786Liquid assets 803 318

13,703 12,773

Deferred expenses 4 8

23,208 19,969

Liabilities

Equity capitalCapital stock 1,800 1,800Capital surplus 4,630 4,630Earned surplus 1,240 670Unappropriated earnings 80 80

7,750 7,180

Accruals with valuation reserve portion 400 16

AccrualsAccruals for pensions and similar obligations 4,449 4,333Other accruals 5,985 5,296

10,434 9,629

LiabilitiesLiabilities with banks 384 4Accounts payable 1,093 994Other liabilities 3,144 2,146

4,621 3,144

Deferred income 3 –

23,208 19,969

1999 1998

Sales 29,061 26,473Changes in finished goods and work-in-progress inventories

and other capitalized costs 185 209Total operating performance 29,246 26,682

Other operating income 2,172 1,841Costs of materials –17,632 –15,737Personnel costs –6,670 –6,351Depreciation of intangible and tangible fixed assets –1,203 –1,249Other operating expenses –5,144 –4,432

Net income from investments 110 300Amortization of financial investments and securities included

with current assets –356 –316Interest income, net of expenses 308 374Income from ordinary business activities 831 1,112

Taxes on income –181 –512

Net income for the year 650 600

Additions to surplus accounts –570 –520

Unappropriated earnings 80 80

62

Ten Year Statistics Bosch G

roup Worldw

ide

(million D

M)

19901991

19921993

19941995

19961997

19981999

Sales

31,82433,600

34,43232,469

34,47835,844

41,14646,851

50,33354,579

Foreign share as a percentage of sales51

4847

4954

5661

6565

66

Research and developm

ent expense2,042

2,1442,302

2,2152,255

2,4742,887

3,2573,478

3,757as a percentage of sales

6.46.4

6.76.8

6.56.9

7.07.0

6.96.9

Investments in tangible fixed assets

2,7902,273

2,0381,552

1,5782,056

2,4192,905

3,7733,806

including domestic

1,7081,464

1,347990

9601,255

1,2701,376

1,9301,746

including foreign1,082

809691

562618

8011,149

1,5291,843

2,060as a percentage of sales

8.86.8

5.94.8

4.65.7

5.96.2

7.57.0

as a percentage of depreciation162

126103

8590

117117

125148

128

Depreciation on tangible fixed assets

1,7251,799

1,9761,836

1,7471,757

2,0592,321

2,5462,978

Em

ployees – annual average –(000 om

itted)180

181177

165156

158172

180188

194including dom

estic118

117113

10495

9291

9194

97including foreign

6264

6461

6166

8189

9497

as of January 1 of following year

181177

170157

154157

176181

190195

Personnel costs

10,71811,403

11,83811,692

11,43911,476

13,01714,359

15,57516,229

Total assets23,544

24,24724,452

25,44727,373

28,50432,273

34,90636,343

40,743

Fixed assets7,147

7,4677,769

7,0036,650

6,95710,784

12,01312,703

14,104as a percentage of total assets

3031

3227

2424

3334

3535

Equity capital

7,0507,471

7,8598,304

8,5639,038

9,52711,377

11,86912,998

as a percentage of total assets30

3132

3331

3230

3333

32C

ash flow3,104

3,2673,501

3,7173,765

3,2453,539

5,2194,904

6,372as a percentage of sales

9.89.7

10.211.4

10.99.1

8.611.1

9.711.7

Net incom

e for the year560

540512

426512

550500

1,659850

900

Unappropriated earnings(D

ividends of Robert B

osch Gm

bH)

4343

6060

6068

682,209

8080