DAIMLERBENZ
Annual Report
1990
Members of the Supervisory Board
and the Board of Management
Directors and Daimler-Benz
Group Representatives
To the Stockholders and Friends of our Company
Report of the Board of Management
Business Review
The Group's Corporate Units and Divisions
Mercedes-Benz
Passenger Car Division
Commercial Vehicle Division
AEG
Deutsche Aerospace
debis
Research and Technology
Employees
Finance
Financial Statements
Proposal for the Allocation of Unappropriated Profit
Report of the Supervisory Board
Daimler-Benz in Figures
Principle Subsidiaries and Affiliated Companies
The Daimler-Benz Share
HERMANN J. ABS
Frankfurt am Main
Honorary Chairman,
Deutsche Bank AG
Honorary Chairman
HlLMAR KOPPER
Frankfurt am Main
Member of the Board of Management,
Deutsche Bank AG
Chairman
(from March 7, 1990)
KARL FEUERSTEIN*)
Mannheim
Chairman of the Corporate Labor
Council,
Daimler-Benz AG
Chairman of the Joint Labor Council,
Mercedes-Benz AG
Deputy Chairman
(from April 25, 1990)
PROF. DR. RER. NAT. GERD BINNIG
Munich
Head of IBM Physics Group
(from July 4, 1990)
DIPL.-ING. RICHARD BOLLMANN*)
Mannheim
Senior Departmental Manager
(from September 2, 1990)
PROF. DR.-ING. E.h. WERNER BREITSCHWERDT
Stuttgart
DR. RER. POL. HORST I, BURGARD
Frankfurt am Main
Member of the Board of Management,
Deutsche Bank AG
HELMUT FUNK*)
Stuttgart
Chairman of the Labor Council,
Unterturkheim Plant and Main Office,
Mercedes-Benz AG
ERICH KLEMM*)
Calw
Chairman of the Labor Council,
Sindelfingen Plant,
Mercedes-Benz AG
RUDOLF KUDA*)
Frankfurt am Main
Departmental Manager within
the Board of Management,
Metal-Workers' Union
HUGO LOTZE*)
Reinhardshagen
Chairman of the Labor Council,
Kassel Plant,
Mercedes-Benz AG
FRANZ STEINÜUHLER*)
Frankfurt am Main
First Chairman, Metal-Workers' Union
HERMANN-JOSEF STRENGER
Leverkusen
Chairman of the Board of Management,
Bayer AG
BERNHARD WURL*)
Mainz
Departmental Manager within
the Board of Management,
Metal-Workers' Union
Retired from the Supervisory Board:
DlPL-ING. HANS-GEORG POHL
Hamburg
Chairman of the Board of Management,
Deutsche Shell AG
HERBERT LUCY*)
Mannheim
Chairman of the loint Labor Council,
Daimler-Benz AG
DR. RER. POL. WOLFGANG ROLLER
Frankfurt am Main
Speaker for the Board of Management,
Dresdner Bank AG
SIEGFRIED SAUTER*)
Frankfurt am Main
Deputy Chairman of the
Corporate Labor Council,
Daimler-Benz AG
Chairman of the Joint Labor Council,
AEG Aktiengesellschaft
(from October 11, 1990)
Deputy Chairman
(on March 7, 1990)
WILLI BOHM*)
Kandel
Member of the Labor Council,
Worth Plant, Mercedes-Benz AG
(on October 1, 1990)
RICHARD HELKEN*)
Bremen
Chairman of the Labor Council,
Bremen Plant, Mercedes-Benz AG
(on October 1, 1990)
PROF. DR. JUR. GERHARD TREMER
Grafelfing near Munich
Member of the Board of Management,
Bayerische Landesbank Girozentrale
(on July 4, 1990)
DIPL.-ING.
MARIA-CHRISTINE FURSTIN VON URACH*)
Stuttgart
Director
(died September 2., 1990)
DR. JUR. ROLAND SCHELLING
Stuttgart
Attorney at Law
PETER SCHONFELDER*)
Augsburg
Member of the Labor Council,
Messerschmitt-Bölkow-Blohm GmbH
(from October 11, 1990)
DR. JUR. WALTER SEIPP
Frankfurt am Main
Chairman of the Board of Management,
Commerzbank AG
PROF. DR. JUR. IOHANNES SEMLER
Kronberg/Taunus
Member of the Board of Management,
Mercedes Aktiengesellschaft Holding
Retired from the Board of Management:
HEINZ DÜRR
Frankfurt am Main
AEG
(on December 31, 1990)
DR.-ING. RUDOLF HÖRNIG
Stuttgart
Research and Technology
(on April 30, 1990)
EDZARD REUTER
Stuttgart
Chairman
DR. JUR. MANFRED GENTZ
Stuttgart
Daimler-Benz InterServices (debis)
PROF. DR.-ING. E.h. DR. h.c. WERNER NIEFER
Stuttgart
Mercedes-Benz
DR. RER. POL. GERHARD LIENER
Stuttgart
Finance and Materials
Deputy Chairman
JURGEN E. SCHREMPP
Munich
Deutsche Aerospace
HELMUT WERNER
Stuttgart
Mercedes-Benz
DR. JUR. HANS-WOLFGANG HIRSCHBRUNN
(Deputy Member)
Stuttgart
Personnel
(from July 1, 1990)
ERNST GEORG STÖCKL
(Deputy Member)
Frankfurt am Main
AEG
(from January 1, 1991)
PROF. DR.-ING. HARTMUT WEULE
(Deputy Member)
Stuttgart
Research and Technology
(from September 1, 1990)
Directors
DR. JUR. BOY-JüRGEN ANDRESEN
Personnel and Social Policy
MATTHIAS KLEINERT*)
Public Relations and Economic Policy
KONRAD STRAUB
Group Accounting Control
HANSJÖRG BAUMGART
Daimler-Benz Art Possessions
DR. MICHAEL KRÄMER (provisionally)
Vehicle and Traffic Systems Research
DR. OEC. PUBL. PAUL WICK*
Finances and Taxes
MARTIN BERGER
Annual Accounts and Disclosure
DR. RER. NAT. VOLKER LEHMANN
Research Institutes AEG/Aerospace
DR. JUR. SOLMS WITTIG*)
Staff Lawyer
DR. RER. POL. ROLF A. HANSSEN
Consolidated Planning and Controlling
WERNER POLLMANN (provisionally)
Technology
JÖRG SEIZER
Subsidiaries and Affiliated Companies
GERD WORIESCHECK
Personnel Development
for Senior Executives
i With general power of procurement.
Daimler-Benz Group Representatives
BERLIN
BRUSSELS
TOKYO
PETER-HANS KEILBACH
Hohenzollerndamm 150
D-1000 Berlin 33
DR. JUR. HANNS R. GLATZ
133, Rue Froissart - Bte 29
B-1040 Brussels
MICHAEL N. BASSERMANN
P.O. Box 510, Ark Mori Bldg.
Minato-Ku, Tokyo 107, Japan
BONN
DR. RER. POL. JURGEN MORLOK
Friedrich-Ebert-Allee 26
D-5300 Bonn 1
HONG KONG
KLAUS BEHRENDT
6th Floor, Ruttonjee House
11 Duddell Street, Central
Hong Kong
WASHINGTON D. C.
RICHARD H. IMUS
Suite 800, 1350 I Street, N.W.
Washington D. C 2005, U.S.A.
1990 was a year with which we can
well be pleased. There were indeed
specific problems not anticipated in
the form in which they emerged, and
not least of all in parts of AEG. Nev
ertheless, we made commendable pro
gress. After overcoming the quality
problems which appeared at times, our
cars gained considerable ground again
facing tough competition, and consoli
dated their continued leading position.
Our commercial vehicles were able to
further improve their international
leading position. Deutsche Aerospace
is following the optimum course to
wards uniformly organizing its fields
of activity, and is thus becoming a
sought-after partner for international
cooperation ventures. Daimler-Benz
InterServices can look proudly at the
first steps it made on the services
market. Most importantly, we can be
confident that in the financial year
under review we passed the point of
maximum costs and investment which
we consciously took on with the goal
of restructuring our company to be
come an integrated technology group.
We must not, however, overlook the
fact that from a general economic
point of view many things have hap
pened since last fall on a wide front
and with considerable momentum,
which we too were not able to avoid.
Since we wish to remain true to our
strategy of being traditionally oriented
toward circumspection and adequate
provisions, we are therefore proposing
that the dividend should remain the
same as in 1989, at DM 12.00 per DM
50 share.
How have we reached this decision?
First and foremost exchange rates
have been considered. If the exchange
rates of the D-mark to the US dollar
and yen had remained unchanged with
respect to 1989, we would have been
able to achieve DM 2 billion more in
sales revenue. Although measures to
secure exchange rates may cause a
certain cushioning effect over time, a
shift of this nature must, of course, be
reflected in our net result at the end
of the day.
For important export areas in Ger
man industry, this means that an on
going currency parity which is below
actual purchasing power demands con
siderable structural efforts in order to
be able to balance out disadvantages
on such a scale. In the long run they
inevitably lead to the shifting abroad
of parts of net product added which
are of fundamental importance to the
productive power of the whole of Ger
man industry. It would be irrespons
ible not to take this very seriously,
particularly as there are enough sec
tors of industry and products which
will not be able to convert simply to
the "Made in Europe" of the single
European market.
It is therefore difficult to compre
hend which circumstances or interests
could force German exchange rate pol
icy to adopt a position which neces
sarily leads in the long term to the in
dustrial foundations of Germany being
eroded. In other words, the people
bearing political responsibility must
take note that the currency pain
threshold in the case of exchange
rates has been considerably exceeded
in terms of how the latter have devel
oped into 1991.
The only option open as a short-term
counter measure to the export-oriented
sectors is to take drastic action to
reduce costs within their own com
panies. Daimler-Benz is thus also
applying measures to reduce costs,
which have now been in force over a
longer period of time, with added vigor
and more ambitious aims. We have
promised ourselves a sustained re
duction in the volume of costs over the
next four to five years on a scale of
DM 4 billion throughout the group.
Moreover, an important factor is that
in Germany there is much public de
bate about exports of defense technol
ogy, which is energetically assisted by
politicians, yet for the most part with
out a clear direction; a debate which
extensively confuses an honorable
strength of conviction with the mis
guided view that a world without secu
rity through defense and without secu
rity based on balance would be self-
regulating and that this should be at
the top of the agenda.
However, as with the shifting of
sourcing or of the company's own
manufacturing facilities to other coun
tries, measures taken by German
industry on a comparable scale would
have not only structural effects but
also macro-economic consequences in
the Federal Republic of Germany.
Against such a background, it is not
surprising that we at Daimler-Benz
now look to the future with somewhat
reserved expectations and are critically
examining the availability of our re
sources. In addition, even with a con
tinued favorable situation in Germany,
there will be sufficient difficulty in ad
vancing the rebuilding of industry in
the new Federal German states with
out initial exertion.
There are, however, other diffi
culties. Developments in the Soviet
Union and its former European satel
lite countries conceal risks which have
now emerged as being more than just
purely economic factors. The additional
effects of the Gulf Crisis are difficult to
fathom in their entirety, and its spe
cific effects for Germany in terms of
important trade partners give rise to
feelings of apprehension.
This subject also includes the funda
mentally justified and welcome in
crease in export regulations for de
fense technology, including threats of
greater punishment. The force behind
that is partly what we had already
established as a guideline within our
group for our own export practise.
Counter to many claims which were
publicly made, in some cases, against
better knowledge, the companies
within the Daimler-Benz group have in
no instance contravened the spirit or
letter of existing laws.
Nevertheless, that does not mean
that the new conditions would be un-
problematic without exception. Under
the extended laws, export goods which
include almost all products in the
electro-technology and electronic sector
and which are required for the most
varied purposes are subject to controls.
If the definition of civilian goods which
can be used to military ends ranges
though from light bulbs to trucks, then
it must be obvious that the instru
ments available for monitoring export
goods not only become a frustrating
bureaucratic tool, but one which must
also fail due to being overstrained.
All in all, the international economic
scene has therefore altered drastically
over a short period of time. In Ger
many, 1991 should on the one hand
still see positive growth rates, but on
the other hand also considerable addi
tional pressure on profits, which will
not least of all be due to the new tax
resolutions of the Federal government,
however inevitable they may be.
In order not to fall into a possibly
sustained exchange rate trap in the
face of such conditions, we will closely
examine the nature of our cost struc
ture beyond the saving measures intro
duced. I cannot predict today the re
sults which will emerge, but the stra
tegic issues on the agenda are clear.
Dogma regarding production locations
or supplier preferences, taboos con
cerning voluntary social payments, fi
nancing means or company profiles in
our group will not be permissible. We
shall adhere to the fundamental expe
rience that anyone will only have
success with their strategy if they do
their homework both resolutely and in
good time, paying the necessary atten
tion to proven traditions.
Since we feel that we have the
capacity required, we also remain able
to make the necessary outlay towards
becoming an integrated technology
group. Obviously, in the long term this
can only be on the basis of corporate
units which are autonomously profita
ble and capable of growth. We are
working in that direction at full steam
- which will become more apparent
this year, after we were able to make
such an impressive start in 1990 with
the creation of debis.
Daimler-Benz is only acting consis
tently in also using this instrument
within the framework of our business
policy. We now have a series of alli
ance partners in various fields, and
with others, for example Mitsubishi,
we are continuing promising discus
sions. We attribute a particular signifi
cance to the collaboration which has
now been bindingly agreed between
Deutsche Aerospace/MTU and United
Technolgies/Pratt & Whitney in the
domain of aircraft engines, which could
open up interesting further possibilities
with this important US technology
partner.
Moreover, and I feel this point is not
one of inconsiderable importance, a
partnership network of this nature can
contribute within the framework of
business alliances to solving problems
not just in the economic and technical
spheres of our lives. Relationships
arise which promote, beyond the com
panies concerned, growth towards one
another for a community of interests
with the spirit of good neighborliness.
All of our efforts would of course
founder without the employees who
work for the future of Daimler-Benz
with their ability, commitment and
enthusiasm. You, as our shareholders,
can place your trust in them in the
same way as we are proud of this vital
prerequisite for the success of the
course we have chosen.
However, a technology group always
remains a mixture of deliberately toler
ated losses, i.e. investment in new
fields of activity, income sources used
for innovations, i.e. "cash cows" and
proceeds from planned disinvestment,
i.e. from business coming to a close.
The latter feature presupposes that
analyses are constantly carried out in
a company as to where things can be
wound down before it becomes bla-
tently obvious to all. Conversely that
means from the purchaser's point of
view that he can make more of the
business concerned than the seller is
able to. Only then can a reasonable,
good sales price be achieved, and jobs
in the new corporate network are more
secure than before.
We can also continue this work with
improved accuracy because our inter
nal planning system allows us to oper
ate effectively calculated resource
management. Following the imminent
conclusion of what has in part been
extremely elaborate, methodical pre
liminary work, we will soon be in
a position to control management
resources, the promotion of up-and-
coming employees, capital and liq
uidity, research, and project-related
investment in accordance with criteria
of corporate strategy.
We have proceeded with strategy
projects of this kind in many fields of
the group's activities, without making
external announcements. It is indeed
enough for the competitors to become
acquainted with the resulting products.
At any rate, this work confirms to us
with each day that passes that the eco
nomic world is very much in motion.
Anyone wishing to be successful to
morrow using today's product concept,
with the exception of certain niches,
will be bitterly disappointed.
A study for an overall transport
system which we have presented to
united Berlin shows what it is all
about. We have demonstrated through
it our capacity to develop complex sys
tems in context and to deduce the cor
rect specifications for individual prod
ucts from an understanding of the
whole. Conditions are required for this
purpose which only Daimler-Benz can
provide in such a combination: mas
tery of all vehicle techologies on road,
rail and in the air, together with infor
mation technology and systems knowl
edge.
The companies still of course rely on
politically favorable conditions for their
conduct. We need open borders, since
several projects such as the next gen
eration of aircraft engines, space sys
tems and traffic guidance technology,
together with products such as road
vehicles or helicopters, can only be
mastered in an economically competi
tive manner if there is an international
division of work.
This can also be seen from the ex
ample of a more recent form of inter
national cooperation between com
panies, when they merge to become
business alliances. Contrary to several
misunderstandings which still exist in
the public eye, it is not a matter of a
new title for efforts which are ques
tionable from the point of view of com
petition, nor of indissoluble alliances.
The common interest is actually based
on the fact that neither of the partners
is able to implement the economic or
technical aim of the collaboration en
tirely through their own efforts. The
idea is therefore not to establish un
restrained market power but rather to
secure, through collaboration, advan
tages comparable to those likewise
secured by competitors through
similar cooperation.
units, slightly below the previous
year's volume; this drop was mainly
due to the taxation on discounts for
company employees, which came into
effect in 1990, and to the continuing
fiscal discrimination against diesel
cars. The compact-series models fa
vored by our employees were partic
ularly affected by this. By contrast, de
mand from our customers for the mid-
series cars grew. In the S-class new
car registrations again reached last
year's volume.
Sales abroad went up by 3.0 % to
309,800 cars. Exports to the neighbor
ing countries of the European Commu
nity rose by 5.3 % to 131,800 units,
which was again above average. We
achieved high growth rates particularly
in Italy and Spain, while we were not
able to escape the weak state of the
markets in the United Kingdom and
Sweden. Outside the EC, our passenger
cars benefited from the opening up of
the East European markets.
Worldwide Decline in Economic
Growth
Daimler-Benz: Worldwide Sales
Over DM 85 billion
The economic growth stimuli in the
industrialized countries of the west
slackened off perceptibly during the
course of 1990. This development,
which had already become noticeable
before the Gulf crisis, was accelerated
by the temporary rise in oil prices.
North America, the United Kingdom
and the Scandinavian countries are in
recession, with demand declining, the
utilization of production capacity fal
ling, and inflation rising. At the same
time, the competitiveness of European
products in price terms was considera
bly reduced by the weakness of the US
dollar and the Yen. This resulted in a
larger balance of trade deficit between
the EC and the USA and Japan.
The economy of the Federal Repub
lic of Germany remained largely un
affected by general trends in the world
economy, experiencing an economic
climate all of its own. As a result, par
ticularly, of the enormous need to
catch up in the new Federal German
states, industry in the old Federal Ger
man states was operating virtually at
full capacity. Gross National Product
increased by 4.6 %, a figure not
achieved for over ten years. At the
same time, however, exports were con
siderably affected by falling demand in
some important foreign markets and
the rise in the value of the D-mark.
The balance of trade surplus declined
sharply for the first time since 1983,
from DM 135 billion to DM 92 billion.
The generally healthy condition of
the old Federal German states, how
ever, must not be allowed to conceal
the fact that no reversal of the difficult
economic trend in the new Federal
states is discernible.
In the 1990 financial year, Daimler-
Benz continued its upward trend. Con
solidated sales rose above the compa
rable previous year's (i.e. including
MBB) by 5.2 % to DM 85.5 billion. The
increase in the domestic market, by
11 % to DM 36.7 billion, was well
above average; in the other countries
of the European Community our sales
totaled DM 18.9 billion (+ 5.1 %). For
the EC market as a whole, there was
thus an 8.8 % rise, to DM 55.6 billion.
Outside the EC the volume of business
remained at the same level as in 1989,
at DM 30.0 billion. This can be attrib
uted above all to the rise in the value
of the D-mark and the downturn in a
number of major markets outside
Europe.
More than two thirds of consolidated
sales were accounted for by the corpo
rate unit Mercedes-Benz. AEG and
Deutsche Aerospace each contributed
about 15%; the newly founded
Daimler-Benz InterServices accounted
for 3.2 % of consolidated sales.
Mercedes-Benz Cars: Considerable
Increase in Production Output
Despite a tendency to slacken on
the part of some important automotive
markets, the international passenger
car industry in 1990 matched the high
level of unit sales of the preceding
years. One decidedly negative factor
was the car market in the USA, which
shrank by a further 4.8 %. In Japan,
the already exceptionally high level of
new-car registrations rose yet further;
unit sales in Western Europe approx
imately matched the previous year's.
In the year under review, Mercedes-
Benz sold 561,900 vehicles worldwide,
2.0 % more than in 1989. In Germany,
new-car registrations totaled 245,600
Note:
The Business Review is combined for Daimler-
Benz AG and the group as a whole.
In the largest foreign market, the
USA, we once more succeeded in sell
ing more Mercedes-Benz cars, despite
keener competition in the upper mar
ket segment. In Japan we continued
the expansive trends of the last few
years with a 23 % increase; this made
us the highest-selling import make. In
Indonesia, Malaysia and Singapore we
sold over 70 % more cars than the year
before and thus could reach a volume
of 6,500 units.
With all available facilities working
to full capacity, we raised production
output in 1990 by 5.9 % to 574,200
cars. Growth was achieved above all
by the mid-series - including the
T-models - and by the coupes and the
roadsters. The proportion of diesels to
total cars produced fell yet again,
to 23.6% (24.5% in 1989).
Our subsidiary in Mexico nearly
doubled its sales and considerably
improved its market share. Despite
generally weaker demand in the USA,
Freightliner also increased its market
share in the class 8, from 16 to 19 %.
Mercedes-Benz of South Africa and
Mercedes-Benz Espana suffered a drop
in sales; Mercedes-Benz Turk, by con
trast, achieved significant growth in
the case of both trucks and buses.
Altogether, our foreign commercial
vehicle companies cut back their out
put in 1990 by 10 % to 90,100 vehi
cles. For that reason, production output
for the group as a whole was slightly
below the previous year's high level,
at 258,900 worldwide.
In the fall of 1990, Mercedes-Benz
entered into a joint venture with Auto-
mobilwerk Ludwigsfelde GmbH (IFA)
and the Treuhandanstalt (Federal Ger
man agency in charge of privatizing
industry in the former East Germany),
based in Berlin. For a transitional
period, the agreement provides for the
assembly of vans and trucks on a com
mission basis. For the medium term,
we plan to build a new assembly plant
in the Ludwigsfelde area, south of
Berlin, which is to reach an annual
capacity of 40,000 commercial
vehicles by the mid-90's.
Mercedes-Benz:
Leading Position with Commercial
Vehicles Improved
In 1990 most of the commercial ve
hicles markets abroad were affected by
a general weakening of the economic
situation. Demand-related cuts in out
put were necessary particularly in
lapan, the USA and South America,
while commercial vehicle production in
Germany and Mexico experienced
strong growth.
Mercedes-Benz consolidated its posi
tion of world leadership as a manufac
turer of trucks of over 6 tonnes GVW.
In Germany our new-vehicle registra
tions went up by a total of 20 %; of
these, registrations of trucks over
6 tonnes rose by 24 %, and those of
heavy-duty trucks of 16 tonnes and
above by 26 %. Due to a decline in
some European markets our exports
out of our German plants decreased by
14 %, as compared with the previous
year, to 87,100 units; among heavy-
duty trucks over 16 tonnes, the de
cline amounted to 22 %. Nonetheless,
we succeeded in improving our posi
tion in important countries like France
and Italy. For trucks over 6 tonnes,
Mercedes-Benz increased its market
share by 3.0 percentage points to 26 %
and thereby considerably expanded its
leading market position.
Domestic manufacturing plants were
operating at full capacity and produced
168,800 units, again 5.0 % more than
in 1989. Output of kits for production
abroad went up by 66 % to 21,200
units.
The fall in demand for commercial
vehicles in South America made it
necessary to cut the output of our sub
sidiaries in Brazil and Argentina by
18 % and 11 %, respectively. While this
also resulted in a loss of market share
in Brazil, the market share of
Mercedes-Benz vehicles in Argentina
increased.
AEG: Further Increase in Sales
and Incoming Orders
In the German electrical industry
the pleasing development of former
years continued on a high level. The
AEG group fully participated in this
growth and in some areas performed
better than the sector as a whole. The
increase in sales is principally attribu
table to domestic business. The fields
of activity Rail Systems, Electrotechni
cal Systems and Components, Office
and Communication Systems, and Do
mestic Appliances contributed two-
figure growth rates to this increase.
New acquisitions also added to total
sales volume. Our microelectronics
subsidiary TELEFUNKEN electronic
and the divisions AEG Electrocom and
Components boosted their volume of
foreign business. In both the domestic
and foreign markets, sales of Industrial
Systems, in the Automation field of
activity, were clearly above average.
Incoming orders for the AEG group
exceeded the previous year's high
level in 1990, at DM 14.2 billion. The
1.9 % rise came entirely from the
domestic market. Here, AEG achieved
growth of 11 %, to DM 7.9 billion,
while orders from abroad were 7.2 %
down on those for 1989.
The increase in orders for Germany
is due mainly to the fields of activity
Rail Systems, Electrotechnical Systems
and Components, as well as Office and
Communication Systems. In Rail Sys
tems, this is partly the result of ac
quiring the track-bound vehicle sector
of MAN GHH. In the field of activity
Electrotechnical Systems and Compo
nents, increases were achieved espe
cially by the divisions Components,
and Power Transmission and Distribu
tion; a gratifyingly high number of im
portant orders were also received in
the Industrial Systems sector of Auto
mation.
The drop in export sales was due
primarily to the fact that we had re
ceived a number of major orders in
the field of activity Rail Systems in the
previous year; moreover, the cyclical
downturn in some important foreign
markets, together with unfavorable
trends in the dollar exchange rate,
had an adverse effect on business.
DASA: Progress Despite increased
Competition
Under the umbrella organization of
Deutsche Aerospace (DASA), the com
panies Dornier, Messerschmitt-Bölkow-
Blohm (MBB), MTU Motoren- und
Turbinen-Union and Telefunken Sys-
temtechnik (TST) have been integrated
to form an efficient network. In bring
ing this about, we are catering for the
growing globalization of markets, in
which the only companies to survive
are those with comprehensive know-
how, coupled with the capability of as
suming a leading role in international
programs. Both as a competent partner
and as a main contractor, the DASA
group is participating in a number of
international joint ventures, partic
ularly in the fields of aviation and
space technology, defense systems and
propulsion units.
377,000 Employees in the
Daimler-Benz Group
At the end of 1990, the Daimler-
Benz group employed 376,785 people
worldwide (1989: 368,226); of these,
303,404 were in Germany and 73,381
abroad. Of the total workforce, 17,565
young people were trainees or appren
tices (1989: 17,032). Daimler-Benz AG
and holding companies alone had
2,707 employees.
The increase in the workforce in
Germany of 5,205 was due primarily
to the taking on of new personnel
which became necessary in the Pas
senger Car and Commercial Vehicle di
visions of Mercedes-Benz AG. Abroad,
employment levels of the production
and assembly companies in some
countries were affected by a more dif
ficult economic and political environ
ment. The increase by 3,354 em
ployees is primarily attributable to the
first-time inclusion of employees from
Mercedes-Benz Turk.
At corporate unit level, Mercedes-
Benz had 230,974 employees at year-
end (1989: 223,219), AEG had 76,949
(1989: 77,722) and Deutsche Aero
space 61,276 (1989: 62,959). Follow
ing its foundation as a new company,
debis took over staff from Daimler-
Benz AG as well as from Mercedes-
Benz, AEG and DASA; at the end of
the year 4,879 people were working
for the new corporate unit.
At Dornier, the Space Systems
sector showed strong growth in sales
turnover due to the settlement of in
voices within the programs for the Eu
ropean Earth Reconnaissance Satellite
ERS-1 and the X-ray satellite Rosat.
Other contributors were the Dornier
228 regional aircraft, assemblies for
the Airbus program, as well as further
development work on the JF90/EFA
fighter aircraft. In Defense Systems,
major deliveries of the CL 289 recon
naissance drone were invoiced. In the
Medical Systems division, the rise in
sales did not meet expectations.
MBB achieved almost half of its
sales in the Aviation sector, mainly
due to the Tornado, the Airbus pro
gram and the helicopter types BO 105,
BK 117 and Tiger (PAH-2). The Space
Systems division invoiced products
and services in the programs Ariane,
Columbus, DFS Kopernikus and
Hermes. In defense technology, the
main sources of revenue were the Ro
land air defense weapons system and
the Pars 3 and Milan anti-tank sys
tems.
At MTU, the proportion of foreign
business to the slightly lower total
sales stabilized at the previous year's
high level, although sales of diesel en
gines and of aero-engines for civil avi
ation suffered considerably due to a
weak dollar. Activities centered around
aero-engines for the Tornado and the
IF90/EFA fighter aircraft, as well as on
various civilian aircraft programs. In
the Diesel Engines division, the main
volume of business was accounted for
by marine engines.
TST hived off the Marine Systems
division at the beginning of 1990; at
the same time, the company took over
Telefunken Sendertechnik GmbH from
AEG. When adjustment is made for
these structural changes, TST achieved
an increase in sales. The chief focus of
business was in radar systems for the
army and air force, increased scopes of
delivery for remote reconnaissance
systems, and large transmitting sta
tions.
Altogether, at the end of 1990 Deut
sche Aerospace had an extensive order
backlog of DM 25 billion, which also
reflects incoming orders for major pro
jects from 1989.
Good Start for debis
The new Daimler-Benz InterServices
(debis) AG started actual trading at the
beginning of 1990, as the fourth corpo
rate unit in the Daimler-Benz group;
legally, it has been operating as a joint
stock company since July 1, 1990. The
company initially consists of five divi
sions, incorporating the services
already existing in the Daimler-Benz
group: Software House, Financial Ser
vices, Insurance, Trading and Market
ing Services.
Despite considerable initial diffi
culties and keener international com
petition in 1990 the first year of trad
ing, was generally encouraging. Total
output was higher than originally ex
pected. The reasons for this were the
generally positive trend in business
and a number of acquisitions made in
1990.
The latter include the purchasing of
majority interests in Systemhaus Cur-
adata GmbH, Hamburg, and in Metall-
gesellschaft Informationsverarbeitung
GmbH, Frankfurt am Main, as well as
the foundation of the new companies
Mercedes-Benz Finance Ltd in the
United Kingdom and sfi Systemhaus
fur Informationsverarbeitung GmbH,
Berlin. Also, debis took over the sys
temhaus GEI - Gesellschaft fur Elek-
tronische Informationsverarbeitung
mbH, Aachen, from AEG.
Further Rise in Group Purchasing
Volume
In 1990, the Daimler-Benz group
worldwide purchased goods and ser
vices to a value of over DM 50 billion
(1989: DM 45 billion). More than two
thirds of the total volume was ac
counted for by Mercedes-Benz, 14 % by
AEG and 13 % by Deutsche Aerospace.
The price situation in the procure
ment markets was marked by higher
personnel costs on the part of sup
pliers, and by falling raw materials
prices. As a result of the Gulf crisis,
oil-dependent products became signifi
cantly more expensive in the latter
half of the year.
Our efforts to internationalize pur
chasing ("global sourcing") reduced
costs. In future we will make greater
use of foreign manufacturing bases
belonging to domestic suppliers and
thereby create new purchasing poten
tial. We have incorporated the new
Federal German states to a greater
extent into our procurement policy; in
the medium term, we expect important
stimuli from this region in particular.
We aim to further intensify business
relations with our suppliers by acquir
ing complex systems and components,
extending quality assurance measures
and increasing the scope of parts re
quired from them. We are already in
cluding a growing number of them in
product development at an early stage.
In our decision-making on procure
ment, we are according more and
more importance to the environmental
compatibility of products and manufac
turing processes, as well as to the re-
cyclability of externally sourced parts.
In the year under review we further
improved communication concerning
goods and services to be purchased,
by applying an integrated material re
quirements planning system and by
making greater use of remote data
transmission. The logistics from the
supplier through to the final destina
tion of the procured material in our
factories have been optimized so as to
ensure that production facilities are
supplied smoothly.
At this point, we would like to ex
press our thanks to all supply, trans
port and service-rendering companies
for their good cooperation. Our sup
pliers, above all the medium-sized
firms, showed a high degree of flex
ibility and innovative capability in
1990.
Substantial Investment to Secure
the Future
In the year under review, substantial
funds were again invested to secure
the future existence of the companies
in the Daimler-Benz group. Despite
good capacity utilization, we were able
to implement our investment program
smoothly and according to schedule.
Additions to fixed assets amounted
to DM 5.7 billion in 1990; the previous
year's figure of DM 5.9 billion in
cluded the fixed assets taken over
from MBB (DM 1.2 billion). Daimler-
Benz invested DM 0.3 billion both in
intangible and in financial assets.
Following the restructuring of the
Daimler-Benz group, a goodwill
amount of DM 124 million has been
shown; this is being written down as
planned. Additions to intangible, fixed
and financial assets were again fully
financed from the cash flow of DM 6.7
billion.
The goodwill of DM 591 million aris
ing particularly from the acquisition of
a further interest in MBB raised the
total volume of investments to DM 6.9
billion. This was directly offset against
the stockholders' equity of the group,
since it arises from the group's
restructuring. In future, acquired
goodwill amounts will be depreciated
in instalments.
Of the investments made by the
Daimler-Benz group in fixed assets,
DM 3.5 billion (1989: DM 3.0 billion)
was accounted for by Mercedes-Benz.
The main focus was again on the pas
senger car division and pertained ad
vance outlay for the production start
up of the new S-class in particular. On
the commercial vehicle side, nearly
DM 1 billion was invested. Additions
In the two divisions of Passenger
Cars and Commercial Vehicles,
Mercedes-Benz spent a total of DM 3.1
billion on research and development.
On the passenger car side, the
190 E 1.8, a model for first-time Mer
cedes buyers, received a positive re
sponse both in Germany and abroad.
At the beginning of 1991 we further
improved standard equipment and en
gine capacities in our compact class.
In the mid-series, the Mercedes-Benz
500 E was launched as a new top
model in October 1990; with its 5-liter,
V8, 4-valve engine it is the most pow
erful car in this series.
In the spring of 1990 we introduced
a new emission control system for our
diesel cars consisting of exhaust gas
recirculation and an oxidation catalytic
converter; this is being offered as an
optional extra. The system makes it
possible to further reduce the already
low emissions of hydrocarbons, carbon
monoxide and particulates.
At the Geneva Motor Show in March
1991, two years after the premiere of
our roadster, we presented the new
S-class. It met with an exceptionally
positive response internationally. This
standard-setting automobile will fur
ther consolidate our leadership in the
to fixed assets totaled DM 774 million
for AEG, DM 938 million for DASA
and DM 333 million for debis. Efforts
by all the corporate units concentrated
on new products and features, intro
ducing new technology and raising
productivity.
Investment in the vehicle leasing ac
tivities of Daimler-Benz InterServices
amounted to DM 3.6 billion (1989: DM
3.1 billion), financed by depreciation
and disposals of fixed assets, and by
sequential additions to liabilities. For
the refinancing of our entire leasing
and sales financing business, we bor
rowed DM 6.2 billion.
DM 8.2 Billion for Research
and Development
Expenditure on research and devel
opment in the Daimler-Benz group -
including MBB for the first time - rose
to DM 8.2 billion (DM 7.5 billion in
1989). Worldwide, more than 36,000
people are employed in research, de
velopment and testing, to consolidate
and further improve our position as an
integrated technology enterprise.
"Research" at Daimler-Benz comes
under the auspices of the executive
holding company as a task which goes
beyond corporate unit areas of compe
tence. Accordingly, we devised re
search institutes which belong to the
central "Research and Technology" di
vision, but which are geared to the re
quirements of the individual corporate
units and their fields of activity. In
"Technology" we have concentrated all
the instruments of knowledge and
technology transfer, to ensure rapid
and efficient exchange within Research
and between the corporate units.
automotive upper class. With an abun
dance of innovations in vehicle and en
vironmental engineering, it sets new
standards in comfort, motoring enjoy
ment and handling, without neglecting
our basic values of solidity, security
and high quality. In order to reconcile
the desire for top-quality individual
mobility with the demands of society
and the environment, we have devoted
particular attention to achieving the
maximum ecological compatibility of
all features and design criteria.
On the commercial vehicle side, we
launched the models 1324 and 1524
from the "LK" or light Worth series,
fitted with the 177 kW/240 horse
power OM 366 LA engine. In the
equally new models of the Worth
"MK", or medium-heavy series, with
gross vehicle weights of 12, 14 and 17
tonnes, major technical elements from
the heavy-duty series have been incor
porated. The Diisseldorf-made T2 van
range was extended by the addition of
vehicles with permanent all-wheel
drive, and by the introduction of the
anti-lock braking system, ABS, as an
optional extra.
With a view especially to safety and
ecology, Mercedes-Benz has developed
an engine brake of considerably im
proved efficiency; this not only raises
active safety, it also reduces both wear
and noise, and relieves stress on the
wheel brake. For Mercedes-Benz com
mercial vehicles already in operation,
our retail branches and agencies are
offering an "eco-check", with low-cost
repairs and environment-friendly retro
fit packages. More noise-damping
equipment is also being developed for
all Mercedes-Benz commercial vehi
cles, and in some cases this can also
be retrofitted.
At AEG, expenditure on research
and development, at DM 782 million,
nearly equaled the previous year's
level and represented 5.9 % of the AEG
group's total sales. A sum of DM 112
million was spent on research and de
velopment work related to specific or
ders. A total of 4,750 employees were
working on the development of new
products and processes. In 1990, AEG
participated in 35 national and interna
tional research projects; these mainly
involved the fields of activity Micro
electronics, Automation, Rail Systems
and Communication Systems.
The companies of the DASA group
altogether spent DM 4.2 billion on re
search and development, representing
34 % of sales. Of this sum, DM 0.8 bil
lion was accounted for by free re
search and development projects not
related to specific orders. In the avia
tion sector, development effort was
concentrated on the 30-seater Dornier
328 turboprop aircraft, the A321 and
A330/A340 Airbus programs, and on
the IF90/EFA European fighter aircraft.
Work on the BO 108 light helicopter
made good progress. In the space tech
nology sector, the Rosat X-ray satellite
was put into orbit, and the Ulysses
space probe launched. In the Defense
Systems division, we continued to de
velop the second and third-generation
anti-tank systems as commissioned.
Work on the engines for commercial
and executive aircraft, and on military
fixed-wing aircraft and helicopters was
continued. In September 1990 we in
troduced the completely new 595-
series diesel engines.
Consolidated Net Income
DM 1.8 Billion
The 1990 consolidated statement of
income shows the generally satisfac
tory amount of DM 1.8 billion. The
slight increase over the calculated, no
tional net income of the previous year
(DM 1.7 billion) can be attributed to
the lower taxes on income in the year
under review. Operating income, at
DM 4.2 billion, was 10 % below the
comparable figure for the previous
year.
The mainstay of income in the
Daimler-Benz group continues to be
automotive business. However, the
strength of the D-mark, which ham
pered exports, together with uncer
tainty regarding the international
political situation, had a perceptible
damping effect. This contrasted with
positive stimuli resulting from the
unique upturn in the German market,
from increased sales in a number of
major volume markets abroad, from a
more favorable model mix, and from
cost-reduction programs.
At AEG, losses incurred in current
business, coupled with investments
which had to be made in the interest
of the group as a whole, depressed re
sults considerably. Deutsche Aerospace
shows a negative result in its state
ment of income, although this is
entirely due to the year's net loss
incurred by Deutsche Airbus GmbH.
Because of provisions made the year
before, this loss does not affect the
consolidated statement of Daimler-
Benz, so that DASA made a positive
contribution to consolidated net in
come in 1990. This also applies to
debis, whose result was distinguished
by gratifying trends on the part of the
leasing and finance companies.
In the non-operating area, average
liquidity for the year was low, and in
come from interest declined by 12 % to
DM 989 million. As in previous years,
a monetary adjustment was made on
the financial statements for subsid
iaries in high-inflation countries, which
to some extent eliminates apparent
profits.
Balance Sheet Structures
Remain Favorable
The expansion in the volume of
business to DM 85.5 billion led to a
DM 4.6 billion rise in the balance
sheet total to DM 67.3 billion. Due to
higher investments and another con
siderable increase in the inventory of
leased vehicles, the assets side of the
balance sheet has become more
heavily weighted towards long-term in
vestments. Currents assets, which rose
in value by DM 0.8 billion, make up
63 % (1989: 66 %) of total assets. Since
the ratios of items on the liabilities
side, especially the equity ratio at
26 %, remain virtually unchanged, the
rise in non-current assets has caused
coverage of fixed assets by stock
holders' equity to decline from 109 %
to 102 %; this does not include leased
items, which are mainly financed by
borrowing. After inclusion of long and
medium-term provisions, especially
pension provisions, and liabilities due
after more than one year, the share of
medium and long-term capital in the
consolidated balance sheet total
amounts to 64 % (1989: 65 %). This
means that non-current assets, inven
tories and parts of the remaining
assets are covered.
Allocation of Earnings
Outlook
The net income of Daimler-Benz AG
amounts to DM 1,120 million, roughly
equaling the previous year's level. As
the executive holding company,
Daimler-Benz again applied §58 Ak-
tiengesetz (German Stock Corporations
Law) and transferred half of this sum
to retained earnings. By far the great
est part of the net income was contrib
uted by Mercedes-Benz AG, which
once again transferred its entire earn
ings for the year, DM 980 million. As
laid down in the existing control con
tract, we assumed responsibility for
the loss made by AEG Aktiengesell-
schaft of DM 214 million.
To the Annual General Meeting of
Stockholders on June 26, 1991, we
propose the paying out of a dividend
of DM 12 per DM 50 share. The total
dividend paid thus amounts to DM 557
million. The remaining DM 3 million is
to be carried forward, together with
the sum carried forward the previous
year (DM 5 million).
The share capital increase autho
rized by the Annual General Meeting
of July 2, 1986 is valid until June 30,
1991. To provide advance security for
the complex tasks facing us in the
future, and to ensure entrepreneurial
flexibility, we propose that a new capi
tal increase in the amount of DM 600
million be authorized.
In a number of important Western
industrialized countries, economic
growth slackened off still further in
the first few months of the year. How
ever, following the swift conclusion of
the Gulf war, the prospects that the
world economy will pick up in the sec
ond half of 1991 have improved. The
German economy will be able to con
tinue the upturn stimulated by internal
demand, although the situation in the
new Federal German states gives rise
to considerable concern.
The car industry is optimistic that
the catching up still necessary in the
new Federal German states will greatly
benefit both domestic manufacturers
and import makes in 1991. The num
ber of cars sold in important export
markets, on the other hand, is ex
pected to fall further. Mercedes-Benz
expects sales opportunities for its cars
to be generally good, with the market
launch of the new S-class having a
positive rub-off effect on the whole
model range.
Fiercer competition in a number of
major international markets, and the
pressure this causes on profit margins,
is having an increasing effect on the
performance of the European commer
cial vehicle industry. At the same
time, the creation of the single Euro
pean market and the opening up of
Eastern Europe are creating attractive
opportunities to adapt the quality of
the product range to the growing de
mands of the movement of freight.
Mercedes-Benz is prepared for such a
development. We have a broad-based,
technically mature vehicle range.
Moreover we can offer services which
optimize vehicle operation as well as
environmental acceptability. For 1991
we expect the sales volume of
Mercedes-Benz commercial vehicles to
be high once again, with a special set
of economic circumstances continuing
in Germany and with generally im
proved market opportunities outside
Europe.
AEG expects its volume of business
to grow again in the current year. The
main contributors to this will be its
Automation and Rail Systems fields of
activity. After the modest rise in ex
port sales in the year under review we
expect a significant improvement in
1991. In Germany we expect growth to
be boosted by our activities in the five
new Federal German states; it is espe
cially in this region of Germany that
we wish to build on our old traditions.
The historically close contact between
AEG and the countries of Eastern Eu
rope is to be further developed as the
political and economic situation allows.
The basis for this is provided by the
branches we have already opened in
Poland, Hungary and Czechoslovakia,
together with the agency agreement
concluded with a Bulgarian partner,
which involves the entire AEG product
range. Despite the great significance
which the new Federal German states
and Eastern Europe have for us, how
ever, we will not be neglecting to im
prove our position in the economic
areas of the European Community, the
USA and the Far East.
Deutsche Aerospace also expects
sales to increase further in the current
year. In the aviation sector, settle
ments of invoices in the aircraft and
helicopter programs should be higher
overall; for the Tornado, by contrast,
sales will decline. In the space sector,
we expect major payments to be made
for the development projects Hermes
and Ariane 5, for the launching of the
ERS-1 and for the Eureca platform; in
the longer term, this sector is subject
to a degree of uncertainty because the
space flight programs of ESA are being
totally revised. In the defense sector,
the first payments for work on the pro
gram for the European version of
Stinger will be made. Deliveries of the
CL 289 drone are also expected to be
stepped up. We will have to wait and
see what effects the political decisions
still to be made will have on defense
spending. In the propulsion systems
sector, business will greatly depend on
exchange rate parities and on military
procurement programs; cooperation
with international partners will provide
us with important additional market
opportunities.
Daimler-Benz InterServices has set
itself some ambitious objectives for its
future business. By extending the exis
ting fields of activity, by consistently
tailoring the range of services to the
specific requirements of customers and
by greatly expanding the volume of
business with customers inside and
outside the Daimler-Benz group, debis
aims to double the total revenue of the
year under review in the medium
term. The expansion of the corporate
unit is taking place against the back
drop of a fundamental change in Eu
rope's economic environment, because
services are increasingly being offered
across international borders, and there
fore have to take account of European
- and indeed global - competition in
terms of both structure and approach.
The processes of concentration in the
field of information technology and
among companies offering marketing
services is accelerating. The opening
up of the Eastern European markets is
making increasing demands of barter
trading. In the classic fields of finance
services and insurance, additional and
more varied services are being offered.
Altogether, Daimler-Benz as an in
ternationally oriented technology group
views these developments as tanta
mount to a major challenge. In order
to remain successful in the face of
worldwide competition, we will there
fore systematically continue our cost-
reducing programs, which have
already proved effective. At the same
time, we aim to offer our customers
innovative services and systems in
accordance with market requirements
and to an even greater extent than
before. This includes the development
of new concepts in transport, on which
we are working intensively. In view of
the ever-increasing volume of goods
traffic, for instance, the truck must be
better integrated into transport chains
which employ different types of
carrier. The linking together of various
means of transport - and this applies
right across international frontiers -
will therefore become more and more
important.
We expect the creation of the single
European market and the fundamental
political and economic changes in
Eastern Europe to provide more poten
tial for increases across our business
spectrum. Our confidence in the devel
opment of the Daimler-Benz group is
emphasized by the fact that we plan to
invest about DM 30 billion in the next
five years. Added to this are expendi
tures on research and development to
taling over DM 43 billion.
In the year under review, Mercedes-
Benz increased employment and pro
duction and again achieved gratifying
results, amounting to DM 1.5 billion.
At DM 59.8 billion, the sales of the
group exceeded those of the previous
year by 6.1 %. Sales of the Passenger
Car division increased sharply by 8.0 %
to DM 35.5 billion, while commercial
vehicles contributed DM 24.3 billion
(+ 3.4 %). Cars thus accounted for 59 %
of consolidated sales and commercial
vehicles for 41 %.
The importance of the EC markets
for Mercedes-Benz continued to in
crease; DM 37.0 billion, or 62 % (1989:
58 %) of total business, was generated
in this important economic zone. In
Germany alone, we increased our sales
by 19 % to DM 24.3 billion. In the
markets outside the EC, the strong
Deutschmark and declining commer
cial vehicles business in South and
North America meant that sales were
slightly short of the previous year's
high level at DM 22.8 billion (1989:
DM 23.4 billion). Mercedes-Benz AG
on its own increased its sales by 12 %
to DM 48.6 billion (1989: DM 43.6
billion).
At the end of 1990, the Mercedes-
Benz group employed 230,974 (1989:
223,219) people around the world,
179,120 (1989: 173,510) of these in
Germany and 51,854 (1989: 49,709)
abroad. Of this total, 11,288 were
trainees and apprentices.
In 1990 we again undertook sub
stantial investment to secure the fu
ture of our vehicles business and our
comprehensive investment program
proceeded according to schedule. DM
3.5 billion (1989: DM 3.0 billion) was
invested in fixed assets worldwide, DM
2.7 (1989: DM 2.0 billion) of this in
Germany. The main focus was again
the Passenger Car division, with an ex
penditure of DM 2 billion, chiefly com
prising preparations for production of
the new S-class and the setting up of
the Rastatt car assembly plant. Of the
investments in the Commercial Vehicles
division, DM 500 million was ac
counted for both by the German facto
ries and by the foreign production
companies. Mercedes-Benz spent a to
tal of DM 3.1 billion on research and
development.
About DM 300 million was invested
in further extending the performance
of our worldwide sales and service or
ganization. The main emphasis was on
branches and supply depots in the ter
ritory covered by Mercedes-Benz Ver-
triebsorganisation Deutschland (MBVD)
and Mercedes-Benz Japan.
In the coming years, Mercedes-Benz
expects sales to increase substantially.
The exploitation of inherent technologi
cal potential within the Daimler-Benz
group will open up promising pros
pects for the future of the motor vehi
cle. We shall seize this opportunity by
investing DM 21 billion in fixed assets
over the next five years, and spending
a further DM 16 billion on extensive
research and development activities.
Downturn in International Vehicle
Markets
After seven years of continuous
boom in international car business,
1990 saw a downturn in the vehicle
markets. Despite this however, the
high sales volume of the previous
years was repeated. World production
again exceeded 36 million cars. In the
USA, sales fell by a further 4.8 % in
1990 to 9.3 million cars. The US man
ufacturers were particularly affected.
They had to reduce their production by
16 % to 4.9 million cars. By contrast,
the Japanese manufacturers increased
their production in the USA by 17 % to
1.1 million cars; in conjunction with
the 1.5 million cars imported from la-
pan, they increased their market share
from 25 % to 28 %. 85,000 of the new
lapanese luxury cars were sold in
their very first year. The German car
manufacturers represented in the high-
quality market segment sold 168,000
cars, 1.4 % more than in the previous
year.
In Japan, with an increase of 16 % to
5.1 million new car registrations, the
previous year's results were substan
tially exceeded. Imported makes in
creased their sales by 19 % in 1990, to
209,000 cars.
German importers, who account for
around two thirds of car imports, made
large gains particularly in the category
over 2 liters engine displacement. Ex
ports of cars by Japan increased only
slightly, by 1.8 %, to 4.5 million vehicles.
In the year under review, some 2 mil
lion cars carrying Japanese makers'
names were produced outside the
country; in total, Japanese vehicle
companies built some 12 million cars.
In Western Europe, including the
new Federal German states, car sales
attained a similar magnitude to those
of the previous year at 13.2 million
units. While there were substantial
falls in sales in the United Kingdom,
Spain and Sweden, the large French
and Italian markets maintained the
high levels of the previous year. At
13.6 million cars, production in West
ern Europe was slightly below the
previous year's level (13.7 million).
Federal Republic of Germany:
Record Number of Registrations in
the West German States
In the states of former West Ger
many, new car registrations for the
first time exceeded the 3 million mark.
This gratifying trend was due to the
increase in real income in the old
West German states and buoyant used
vehicle business in the new Federal
German states, which had a positive
effect on substitution demand for new
vehicles. In the new Federal German
states, approximately 1 million cars
were registered, including 280,000
new vehicles. The unexpected increase
in demand in Germany led to substan
tial delivery problems for West Ger
man manufacturers. European and Ja
panese competitors profited from this
and sharply increased their market
share in the former West German
states. The share of foreign makes sup
plying the German market increased to
32.3 % (1989: 30.2 %); in the new Fed
eral German states, their share of new
registrations was considerably higher
still, at almost 40 %.
In former West Germany, 96 % of
vehicles newly registered in 1990
were in the pollutant-reduced category;
90 % of all gasoline-engined cars were
equipped with a closed-loop catalytic
converter. There was an increase in
sales of diesel cars for the first time
since 1986 (+ 15 %); their share of the
total market increased to 11%. Clearly,
the objective arguments for buying a
diesel, such as high economy and long
life, seem to be gaining recognition
once again.
As far as exports are concerned, the
German vehicle industry achieved its
second best ever result (2.6 million
cars (-4.6 %). Higher exports to Japan
and the USA contrasted with a decline
in deliveries to Western Europe. West
German car production climbed during
1990 to a new record level of 4.7 mil
lion cars (+2.1 %). Foreign production
by German manufacturers increased
further to 1.6 million (1989: 1.5 mil
lion) vehicles.
Mercedes-Benz:
Domestic Registrations at
Last Year's Level
There were 245,600 new registra
tions of Mercedes-Benz cars in the
Federal Republic of Germany in the
year under review (1989: 247,100).
Sales to company employees suffered
noticeably - though less than expected
- from the new taxation of employee
car sale discounts. The resulting drop
in sales to employee customers af
fected particularly diesels. 86,000 com
pact class cars were registered in the
year under review, 7 % less than in the
previous year. The gratifying demand
for our mid-series, continued unabated
view, 38,700 Mercedes-Benz cars were
registered there (+23 %). Our mid-
series models were again particularly
successful as were the S-class models
and the coupes and sports cars. Out
standing sales successes were
achieved also in Indonesia, Malaysia
and Singapore, where we increased
our sales by 74 % to 6,500 Mercedes-
Benz cars.
In the year under review, Mercedes-
Benz built 574,200 cars (+5.9 %). The
diesel share of this fell further for de
mand reasons from 24.5 % to 23.6 %.
Licensed production of cross-country
vehicles at Steyr-Daimler-Puch AG in
Graz, Austria, was stepped up consid
erably during 1990 due to the new
model generation.
in the year under review, with
139,000 new registrations (+3.5 %).
14,100 (1989: 14,600) S-class vehicles
were newly registered in 1990; given
the advent of the new generation an
nounced for spring 1991, this was a
remarkable success.
Foreign Sales Record
In 1990 we increased our sales
abroad by 3.0 % to 309,800 cars,
which represented our best sales
result to date. In the markets of the
European Community excluding Ger
many, we sold 131,800 cars (+5.3 %),
the largest volume ever. Italy, with a
13 % rise in Mercedes-Benz sales to
39,200 cars, was again our largest
market. In France, we gained ground
with an increase of 4.0 % to 28,700
vehicles, while the economic situation
in the United Kingdom resulted in a
5.2 % fall from the record year of 1989
to 27,300 cars sold.
Sales in the USA were 3.5 % up on
those of 1989 at just under 78,400
Mercedes-Benz cars, despite the gen
eral worsening in market conditions.
There was a high demand particularly
for our roadster and also for our mid-
series coupes and the S-class.
The East Asian markets are becom
ing more and more important for
Mercedes-Benz. This applies partic
ularly to Japan. In the year under re
Further Attractive Models
and Environment-Friendly
Diesel Engines
A variety of technical improvements
and new model versions have now
made our car range even more attrac
tive. The four model series offer our
customers 56 different models to
choose from.
Further upgrading of our compact
series took place at the beginning of
1991 when the range of standard
equipment was extended.
At the Paris Motor Show in October
1990, we presented our new top model
in the mid-series, the 500 E. Wider
wheel arches, 225/55 ZR16 tyres and
greater track width are among the
more striking outward features; the
four-valve 5-liter V8 engine already
proven in the SL series provides per
formance to match the calibre of the
vehicle. A breath-taking stride has
been taken in engine and drive man
agement with sequential fuel injection,
which supplies the correct quantity of
fuel to each cylinder at exactly the
right moment.
Since December 1990, the 500 SL
has been offered with acceleration skid
control (ASR) as standard.
In September 1990, we brought out
a completely new generation of stereo
equipment which combines the latest
technology with a perfect matching of
all systems to the interior design of
the vehicle.
In spring 1990, we introduced as an
option for diesel cars a new emission
control concept consisting of exhaust
gas recirculation and oxidization cata
lyst. The already very low hydrocar
bon, carbon monoxide and particulate
emissions are thereby reduced still fur
ther.
The Geneva Motor Show in March
1991 - two years after our sports car
made its premiere at the same event -
saw the presentation of the new
S-class. It met with an exceptionally
positive response from the interna
tional public. We are convinced that
this vehicle series will consolidate our
leading position in the luxury market
segment, particularly since its many
innovations in vehicle and environ
ment technology entail no sacrifices in
our basic values of sound workman
ship, security and high quality.
Innovations in Vehicle Safety
Mercedes-Benz has more than 50
years of experience in the field of ve
hicle safety. Innovation followed inno
vation, pointing the way for others to
follow. Mercedes-Benz has fitted more
than 2.5 million ABS systems, more
than 7.2 million belt-tensioners and
more than 750,000 airbags into its
cars, thereby making a major contribu
tion to greater active and passive road
safety. In the event of an accident, the
new S-class offers occupants and other
road users even greater protection
than its predecessor thanks to a more
rigid passenger cell and longer defor
mation zones front and rear.
Greater Investment in the Passenger
Car Division
During the year under review, DM
2 billion was invested in the Passenger
Car Division, some 10 % more than in
the previous year. The main activities
were again directed at the introduction
of new products built on efficient, in
novative and economical production fa
cilities. The use of the latest technolo
gies guarantees product quality, re
duces the strain on employees at the
workplace and at the same times pro
motes effective environmental protec
tion.
A case in point is the production of
Good Collaboration With Suppliers
our new S-class. A highly flexible
bodyshell production set-up was in
stalled at the Sindelfingen plant, capa
ble of reacting at short notice to mar
ket requirements by reallocating pro
duction between different model series.
We have broken new ground with
modular assembly technology which
allows separate pre-assembly of the
doors, the cockpit and major assem
blies. A progressive elimination of
overhead work - the bodies are tilted
to a convenient working position - and
further automation measures for
example in window installation have
brought major benefits in workplace
design. To accommodate the many
technological and logistic restructuring
measures, an increase in the factory
area was necessary.
Modern Development Methods
New methods of vehicle develop
ment are required to keep pace with
the ever greater complexity of vehicle
technology and ensure development
progress in the space of shorter model
cycles. Computer Aided Design (CAD)
and Simultaneous Engineering are par
ticularly useful instruments here.
It is increasingly important when
testing the vehicle as an overall sys
tem to check all electric and electronic
components in the vehicle for their
electro-magnetic compatibility (EMC).
A large EMC test shop went into ser
vice this year, where highly informa
tive tests, which can be reproduced in
finitely, can be carried out quickly on
vehicles and their components. Our
aim is to ensure even more reliable
functioning of the electronic systems
in our vehicles.
In order to maintain at all times the
supply of bought-in parts to our pro
duction lines and to minimize the
strains imposed by the more difficult
situation as far as environmental mat
ters are concerned, we have taken the
step of overhauling our information
and communication systems. At the
same time, collaboration with the sup
ply industry is geared to keeping costs
under control. Amongst other things,
this entails making greater use of the
international procurement markets. We
always consider foreign materials
sourcing as an alternative when the
parts can be supplied with precisely
the same high quality standards, with
out major risk of interruptions in sup
ply and at competitive prices.
We further stepped up our collabora
tion with suppliers in the fields of re
search into, development of and imple
mentation of new technologies. The
high flexibility and commitment of our
suppliers were in particular evidence
among those firms who helped us pre
pare for production of the new S-class.
Continuing Success in Motor Sport
In 1990, we again had a very suc
cessful motor sport year. For the sec
ond time in succession, Mercedes-Benz
won the teams' and drivers' title in the
World Sports Prototype Championships
(Group C), thus consolidating its posi
tion at the head of the field.
With eight wins - including five
double wins - in nine races, the Silver
Arrows and the Sauber Mercedes team
took first place among the teams. The
drivers' title was fought out among the
Mercedes works drivers: Frenchman
Jean-Louis Schlesser and Italian Mauro
Baldi won six races and became joint
World Champions, just in front of
Jochen Mass.
Although not winning a title,
Mercedes-Benz had a good season
overall in the German Touring Car
Championships (Group A), whose rules
were the subject of some debate. The
AMG team took third and fifth places
among the drivers with the Dane Kurt
Thiim and the German driver Klaus
Ludwig respectively; this is an
extremely satisfactory result for
the Mercedes-Benz 190 E 2.5-16
Evolution II.
Outlook
The outlook for the German car mar
ket remains favorable. The demand for
used vehicles in the new Federal Ger
man states will again be the major fac
tor. There are many indications that
the German car industry may be able
to repeat the high sales volume of
1990, although the continuing high
interest rates and tax increases
approved by the German government
in early 1991 pose a threat to the
German vehicle market.
The Gulf War has had a depressing
effect on already slackening car de
mand in important markets in Europe
and in Japan. In the USA, sales are
further handicapped by the decision to
impose a luxury tax on cars designed
to hit hardest the German manufac
turers represented in this market
segment.
Despite the prevailing risks,
Mercedes-Benz believes there is a
good chance of maintaining the high
level of production and sales estab
lished in recent years. In the German
market particularly, we expect contin
ued growth in sales, influenced to an
increasing extent by rising demand in
the five new Federal German states,
where we are steadily expanding our
sales network. We have high hopes
that the new S-class will act as a stim
ulus to a growth in sales of all models
in our car range. We are therefore also
confident that it will be possible to
partially offset the substantial fall in
sales in the USA by increases in other
markets.
Successful Performance of
Mercedes-Benz Commercial Vehicles
in European Market
With worldwide sales of 261,800
commercial vehicles (+ 2.5 %), we
maintained our position as the world's
largest truck manufacturer and in im
portant markets improved our standing
further. In the Federal Republic of Ger
many, new Mercedes-Benz registra
tions climbed 20 % to 84,700 units.
The increase for trucks over 6 t was
above the average, with a rise of 24 %
to 39,500 vehicles. Heavy-duty trucks
upwards of 16 t registered an increase
of 26 % to 19,300 units. Mercedes-Benz
was not able to escape the downturn
In Western Europe, demand for com
mercial vehicles fell appreciably fol
lowing five years of expansion. A
depressing effect was exercised partic
ularly by an economic downturn and
the increased interest rates; the head
long modernization of vehicle fleets in
recent years was another factor. New
registrations of commercial vehicles in
the countries of the European Commu
nity fell by a total of 3.0 % to 1.7 mil
lion units; production fell by 6.1 % to
1.8 million units.
German Commercial Vehicle Industry:
Domestic Market Continues Strong
Demand for commercial vehicles ex
panded sharply in the Federal Repub
lic of Germany in 1990. Crucial factors
in this were the favorable macro-
economic conditions, the lively state of
the capital goods and construction in
dustries and additional market capac
ity in the new Federal German states
for new and used vehicles. Total new
registrations of commercial vehicles in
Germany increased by 18 % to
203,400. Exports at 167,900 units
were in the order of last year's high
level. Domestic production by all man
ufacturers increased by 10 % to
315,900 vehicles.
Decline in World Demand for
Commercial Vehicles
The international commercial vehicle
market declined further in the course
of 1990. The fall in demand on the
American continent and in Japan in
particular led to a reduction in world
wide production to 12.5 (1989: 13.7)
million commercial vehicles.
In the USA, sales fell by 4.5 % to 4.8
million vehicles. The American vehicle
industry cut back its production by
8.9 % to 3.7 million commercial vehi
cles. In Argentina and Brazil, restric
tive anti-inflation measures depressed
demand for commercial vehicles. The
stabilization and liberalization in Mex
ico on the other hand led to a further
substantial improvement in truck and
bus business. In Japan, new registra
tions of commercial vehicles fell by
6.2 % in the year under review to 2.7
million units. Japan remained by far
the world's largest exporter of com
mercial vehicles with exports of some
1.4 million vehicles. Its production fell
by 11 % to 3.5 million units.
in important commercial vehicle mar
kets around the world. Exports from
the German plants therefore fell by
14 % to 87,100 units. In the truck cate
gory over 6 t, Mercedes-Benz remained
the largest supplier in Western Europe
with a growth in market share of 3
percentage points to 26%. The coun
tries of the European Community ab
sorbed 73,300 commercial vehicles in
1990, 7.8 % fewer than in the previous
year.
Substantial Recovery in Bus Demand
In the former Western German states,
new registrations of Mercedes-Benz
buses increased by 1.4 % to just short
of 1,500, raising our market share
there to 37.1 %. Exports of buses over
8 t were 22 % higher than in the pre
vious year at 3,600 units. At the Ger
man plants of Mercedes-Benz AG, total
production in all weight categories
amounted to some 5,500 buses and
bus chassis (+ 11 %). Worldwide pro
duction of Mercedes-Benz buses and
bus chassis increased by 15 % to
22,000 units.
High Sales of Unimogs
and MB-tracs
Sales of Unimogs increased in the
year under review by 14 % to 4,200,
with an increase of 26 % in Germany
alone to more than 2,000 units. The
new, most powerful, Unimog with 214
hp output as well as the Unimog with
240 hp output for fire-fighting, airfield
and disaster-aid application have
proven very popular on the market.
Sales of the MB-trac increased world
wide. As planned, production of the
MB-trac will be discontinued at the
end of 1991.
Industrial Engines: Stabilization
at a High Level
Sales of industrial engines and in
stallation engines from the German
plants to manufacturers of agriculture
and construction machinery, fork-lift
trucks, buses and special-purpose vehi
cles were in the same order as those
for 1989 at 15,900 units. As a result
of continued growth in demand in the
crane and bus segments, we were able
to supply more powerful engines with
a higher invoice value. Sales of axles
and transmissions totalled 4,700
(1989: 4,900).
Commercial Vehicle
Capacity Fully Stretched
in the Federal Republic of Germany
Output at our plants in the Federal
Republic of Germany increased further
in 1990 by 5.0 % to 168,800 commer
cial vehicles. Manufacture of parts kits
for production at our plants abroad
climbed by two thirds to 21,200 units.
Capacity at our German commercial
vehicle plants was fully utilized
throughout the entire year.
Mercedes-Benz do Brasil sold only
21,300 commercial vehicles (1989:
27,600) in 1990. Production was ham
pered by strikes and a five-week close
down, causing the market share for
trucks over 6 t to fall from 43 % to
34 % and that for buses from 76 % to
75 %. Production fell by 18 % to 31,200
trucks and buses. At Mercedes-Benz
Argentina, sales fell by a further 12 %
to 2,700 vehicles. Nonetheless, the
market share for trucks increased to
46 % (1989: 39 %) and that for buses
climbed slightly to 69 % (1989: 67 %).
Production was cut back to 2,700
vehicles (1989: 3,100).
Our Mexican subsidiary, which
changed its name at the beginning of
1991 to Mercedes-Benz Mexico, in-
creased its sales by 73 % to almost
6,000 vehicles. Its share of the truck
market remained roughly constant at
36.4 %; in the bus market, its share
surged from 11.1 % to 31.2 %.
Due to the continuing slow-down of
the commercial vehicle market in the
USA, particularly in Class 8 (upwards
of 15 t GVW), our subsidiary Freight-
liner recorded a fall in sales to 23,000
vehicles (-1.5 %), although its market
share increased from 16.1 % to 19.0 %.
In the USA and Canada, the company
produced a total of 24,800 vehicles
(1989: 26,500).
Sales at Mercedes-Benz of South
Africa were hit during the year under
review by a strike lasting eight weeks
and a recession in the market. Sales
fell 29 % to 2,700 commercial vehicles;
production was cut back to 2,245 units
(1989: 3,764).
Mercedes-Benz Espana sold 23,100
vans from its own production (-6.1 %).
New registrations of commercial vehi
cles imported from Mercedes-Benz AG
declined due to the fall in the market
by 3.1% to 5,100.
Following an increase in the
Daimler-Benz holding to 50.3 %, our
Turkish subsidiary was renamed
Mercedes-Benz Turk A.S. (MBT). It
sharply increased its sales of commer
cial vehicles in 1990 to 2,800 (1989:
1,700) units of which 1,160 were
buses (1989: 840).
Production in the New Federal
German States Planned
In the fall of 1990, a co-operation
agreement was drawn up between
Mercedes-Benz AG, Automobilwerk
Ludwigsfelde GmbH (IFA) and the
Berlin-based Treuhandanstalt, the state
agency in charge of privatization in
the former East Germany, providing
for assembly of Mercedes-Benz com
mercial vehicles for a limited period at
the present plant to the south of Berlin
in liaison with the Worth and Düss-
eldorf truck plants.
By 1993/94, it is planned to step up
truck production in stages to more
than 20,000 trucks. In the medium
term, we are planning to set up a new
commercial vehicle assembly plant in
the Ludwigsfelde region. When this is
fully operational, it will be capable of
manufacturing up to 40,000 vehicles
annually.
More Difficult Market Conditions for
Foreign Production Companies
Production at our foreign commer
cial vehicle companies had to be cut
back during the year under review by
10 % to a total of 90,100 vehicles, due
particularly to the generally difficult
economic situation in South and North
America and also in South Africa. By
contrast, the trend in Mexico and Tur
key was positive. Total commercial ve
hicle production by the Mercedes-Benz
group fell slightly short of the previous
year's high production volume, at
258,900 vehicles.
Trend at the
Associated Companies
New Products and Product
Improvements
Developments in the Interests of Road
Safety and Environmental Protection
The Indonesian affiliates P.T. Ger
man Motor Manufacturing, P.T. Star
Engines Indonesia, Wanaherang, and
P.T. Star Motors Indonesia, Jakarta,
were able to profit from the favorable
economic trend in the country and to
increase their sales to 2,300 commer
cial vehicles (1989: 2,000).
NAW Nutzfahrzeuggesellschaft Ar-
bon & Wetzikon AG, Switzerland,
which converts and assembles
Mercedes-Benz commercial vehicles
built 1,700 units during the year un
der review (1989: 1,900).
In the Commercial Vehicle Division,
we devote around a third of our annual
research and development expenditure
to improving the environmental com
patibility and safety of our vehicles.
One valuable result of this work can
be seen in the new engine brake with
enhanced performance, which offers
greater safety on downhill gradients
and which in the meantime is avail
able for all V8 engines. This engine
brake with a constantly open throttle
valve - incorporated as an additional
valve in the cylinder head - increases
engine brake performance by about
60 % in the top engine speed range
and up to 100 % at the lower end of
the range. There are further advan
tages in terms of brake lining wear
and quieter operation.
The Mercedes-Benz branches and
agents offer an "environmental check
up" for the Mercedes-Benz vans,
trucks, buses and Unimogs on the
roads today. This consists of attrac
tively priced repair packages for the
injection system and a retrofit package
for the flame-starting system, which
prevents white smoke emission when
starting the engine. The "environment
check 90" also includes a whole series
of checks covering amongst other
1990 saw further additions and
product improvements in the broad
range of individually-tailored, environ
mentally advanced Mercedes-Benz
commercial vehicles designed for eco
nomical transport work.
The new light Worth "LK" models
1324 and 1524 and the vehicles in the
new heavy-duty Unimog series are fit
ted with an upgraded 177 kW/240 hp
OM 366 LA engine. While the light-
series trucks are designed for partic
ularly economical long-distance opera
tion, the heavy-duty Unimogs are used
particularly in fire-fighting, airfield and
disaster-aid application. The new
medium-heavy "MK" models with
gross weights of 12, 14 and 17 t fea
ture many of the technical specifica
tions of the heavy-duty series. This ap
plies particularly to the cabs and the
central lubrication system, so that in
this category too, maintenance inter
vals are increased to as much as
45,000 km in long-distance operation.
In the bus sector, we presented the
new O 600 bus series based on the T
2 vans (O 609 D, O 611 D and
O 614 D).
The 814 DA models in the T 2 van
series from Düsseldorf offer permanent
all-wheel drive and the anti-lock brak
ing system is optionally available. The
Tl and T2 series vans with M 102
gasoline engines can optionally be sup
plied with closed-loop three-way cataly
tic converter, exhaust gas recirculation
systems.
things the intake, fuel and exhaust
systems and the engine brake. A noise
package developed for all Mercedes-
Benz commercial vehicles reduces
emission of noise by vehicles with en
gines above 150 kW/204 hp rating to
a maximum of 84 dB (A), correspond
ing to a reduction in noise intensity of
60 %. The noise package is also avail
able for retrofitting.
Substantial Investment
in New Products and
Production Technologies
With the goal of ensuring pro
gressively designed products and effi
cient production technologies, we in
vested almost DM 1 billion worldwide
in the Commercial Vehicle division.
The "Truck of the Year 1990" award
for the SK series is an incentive for us
to continue to produce tailor-made ve
hicles with the customary high utility
value on economical and ergonomically
and environmentally advanced produc
tion facilities at our plants.
Integration of Purchasing Function
into the Commercial Vehicles Division
Preparation for the
Single European Market
The creation of the single European
Market including a united Germany
and the opening up of Eastern Europe
give European industry the chance of
acquiring a new dimension. This ap
plies particularly as far as the haulage
market is concerned. At the same time
as the quantitative increase in trans
port demand, the demand for greater
quality and efficiency in haulage oper
ations has also grown. As market
leader in the truck category over 6 t,
with a full and diversified product
range, we are able to offer high-calibre
vehicles and services for all transport
tasks. In the interests of swiftly imple
menting environmental solutions to
goods haulage, we are keen to opti
mize vehicle operation by means of
new technologies and innovative ser
vices. Our formula for the 1990's is:
"Vehicle plus intelligent service". As
well as flexible maintenance and diag
nosis systems, an extensive service
network and 24 Hour Service, this also
embraces our Fleet Information Sys
tems.
Within the framework of a European
environmental strategy it is important
to further reduce exhaust and particu
late emission. Against this background,
Mercedes-Benz will be moving in two
stages to cut the pollutant emission of
trucks by up to 60 % by the mid
1990's and thus to offer our customers
environmentally advanced vehicles
across the entire product spectrum.
With the aim of co-ordinating our
materials procurement even more ef
fectively with our diversified commer
cial vehicle product range, we took the
step in 1990 of integrating purchasing
activities in the Commercial Vehicles
division. In this way we will be better
able to co-ordinate our global procure
ment activities with our international
production locations.
We continued to implement our
long-term purchasing strategy. In par
ticular, in the year under review, we
optimized the numbers of our sup
pliers and the allocation of components
between them. We also concluded a
greater number of long-term supply
contracts. At the same time, we main
tained our traditional commitment to
wards medium-sized and smaller com
panies and in the social sphere, for ex
ample to workshops for the
handicapped.
Our procurement logistics in 1990
again reflected the high standards of
our product range and our increasingly
international production structure. Our
efforts to reduce transport and storage
costs and improve in the area of just-
in-time materials requisitioning sys
tems, were successfully continued.
The close collaboration with our sup
pliers not only made it easier for us to
reorganize purchasing but also helped
in markets with capacity problems to
ensure a trouble-free supply of mate
rials at all times. Our requirements in
terms of quality, reliability and innova
tion were fulfilled most satisfactorily.
We should like to take this opportunity
to express our thanks to all our sup
pliers and transport and service com
panies for their support.
A further element in our environ
ment strategy is the development of
new transport concepts. As goods
transport continues to grow, better in
tegration of the truck in transport
chains which embrace a range of dif
ferent types of transport is required.
Thus in the future the importance of
combining different types of transport
will grow considerably.
Outlook
The European commercial vehicles
market, which declined considerably
over the last year following five years
of uninterrupted growth, will probably
diminish only slightly this year. While
diverging sales trends can be expected
in the West European markets, the
markets now opening up in Eastern
Europe so far lack adequate purchas
ing power. The increasing intensity of
competition will accelerate the process
of co-operation and concentration in
the European commercial vehicles in
dustry.
Mercedes-Benz is confident that it
will be able to repeat in 1991 the sat
isfactory overall trend of the previous
years, in contrast to the general mar
ket trend in Europe. With its competi
tive product range, broad European
presence and the relatively favorable
state of the German commercial vehi
cles market, we again expect
Mercedes-Benz to generate a high vol
ume of sales. In the Commercial Vehi
cles division, the immediate future will
see wide-ranging and ambitious cost-
cutting programs. New products and
production facilities require a large
amount of investment; with an invest
ment budget of some DM 6 billion
over the next five years, we shall be
doing everything in our power to
maintain our technical and qualitative
lead on the European commercial vehi
cle front.
We are convinced that the truck will
retain its leading position in European
goods transport. Without it, swift inte
gration of the outlying parts of Europe
and Eastern Europe into the interna
tional division of labor will not be pos
sible. As market leader, Mercedes-Benz
has the capability to make a major
contribution to efficient and
environment-friendly goods transport
in Europe.
over, the cyclical downturn in a num
ber of important foreign markets, and
the unfavorable trend in the dollar ex
change rate, tended to dampen overall
performance.
At the end of 1990 AEG had 76,949
employees worldwide; 57,173 in Ger
many and 19,776 abroad. Of the total
number of employees, 3,030 were
trainees and apprentices; about 80 % of
the employees work in technical pro
fessions.
Investment by AEG, including non-
current assets taken over from newly
acquired companies, amounted to over
DM 1 billion in 1990. Additions to
fixed assets worldwide amounted to
DM 774 million; DM 128 million was
invested in the equity of affiliates. Im
portant projects include the integrated
technology center for medium-voltage
switchgear and circuit breakers in Re-
gensburg (construction of which began
in 1990), the extension of the factory
in Rothenburg ob der Tauber for cook
ing and floor-care appliances as well
as small household devices, and the
modernization and extension of the IC
manufacturing facilities in Heilbronn.
Abroad, investment in fixed assets
mainly concerned MODICON in the
USA, AEG Austria and TELEFUNKEN
electronic in Austria, and TELE
FUNKEN Semiconductors in the
Philippines.
Investment in subsidiaries and affili
ates mainly went into the acquisition
of MAN GHH Schienenverkehrstechnik
GmbH in Niirnberg and Schorch GmbH
in Monchengladbach, and the raising
of our capital stake in Siliconix, Santa
Clara/California.
Expenditure on research and devel
opment in the year under review
amounted to DM 782 million (5.9 % of
consolidated sales of AEG), nearly
matching the previous year's level. We
spent DM 112 million on research and
development projects related to spe
cific orders.
In the field of propulsion technology,
new designs for drives with speed and
position control were investigated. In
microelectronics we are pursuing the
objective of developing new transistors
and monolithically integrated micro
wave circuitry with very high cutoff
limits. In the field of digital data trans
fer we are concentrating primarily on
developing the scientific foundations
for video telephones. In pattern recog
nition, research is focusing on hand
writing recognition and document
analysis. In the field of large-area elec
tronics, electronic circuitry is being
based on glass and other electrically
inactive substrates. In systems engi
neering and software technology a pro
totype "switchgear expert" was devel
oped. As part of a joint venture, AEG
heads a project to develop the high-
energy sodium/nickel-chloride battery
for industrial use. Research work in
the field of environmental technology
has led to the development of new
equipment for measuring the sulphur
and nitrogen oxide emissions of large
and small furnaces.
AEG will continue its expansion in
the former GDR begun at the end of
1989. At an early stage, we achieved
comprehensive coverage of the new
Federal German states by setting up
technical sales offices in Magdeburg,
Erfurt, Rostock and Dresden, as well
as sales support offices in Halle,
Schwerin, Leipzig and Chemnitz, and
by extending the activities of our tech
nical sales office in Berlin; in 1991,
we intend to reinforce that coverage.
At the same time, the historically close
contact between AEG and the coun
tries of Eastern Europe is to be further
developed as the political and eco
nomic situation allows. The basis for
this is provided by the branches we
have already opened in Poland, Hung
ary and Czechoslovakia, together with
the agency agreement concluded with
a Bulgarian partner, which involves
the entire AEG product range. In
Yugoslavia we are still working to
gether with a number of foreign repre
sentatives. Despite the great signifi
cance of the new Federal German
states and Eastern Europe, have
for us, we will in no way neglect ex
panding our position in the economic
areas of the European Community, the
USA and the Far East.
DM figures in millions 1990
1989
Sales
13,149
12,244
Year-end result
(205)
275
Incoming orders
14,156
13,893
Investment in
fixed assets
R + D expenditure
774
782
7 39
787
Employees (12/31)
77,722
The West German electrical industry
76,949
was able to profit from a generally fa
vorable economic climate and continue
the upward trend of the last few years
on a high level The focus of growth,
however, shifted from capital goods to
consumer goods, and especially to do
mestic appliances. Business in systems
and equipment for power generation
and distribution was also encouraging.
The demand for electronic components
did not match the positive develop
ment in the electrical sector until the
second half of the year.
Consolidated sales of AEG amounted
to DM 13.1 billion (+ 7.4%) in the
year under review. The increase was
due mainly to the 12 % rise in domes
tic sales to DM 7.4 billion, although
new acquisitions in the fields of activ
ity Rail Systems and Electrotechnical
Systems and Components also contrib
uted. The volume of business abroad
rose by 2.4 %. Losses from current
business and investments which had
to be made in the interest of the group
as a whole caused a negative result for
the year of DM 205 million.
Incoming orders for the AEG group
totaled DM 14.2 billion (+ 1.9 %) in
1990, once again topping the previous
year's high level. This growth came
entirely from the domestic market,
where orders went up by 11 % to DM
7.9 billion, while they declined in the
export market by 7.2 %. The encourag
ing growth in Germany was experi
year in the Rail systems area. More
large projects booked in the previous
in foreign business was above all the
cation Systems. Decisive in the decline
Components, and Office and Communi
Systems, Electrotechnical Systems and
enced in the fields of activity Rail
Automation
1990
1989
Sales (millions of DM) 2,712 2,529
Foreign share in %
44
42
Employees (12/31)
16,953 17,577
This field of activity comprises In
dustrial Automation, with the divisions
Automation Systems and Products and
Industrial Systems, as well as Postal
Automation, with the division AEG
Electrocom GmbH (AEC). The activities
of the systems and software house
GEI-Gesellschaft fur Elektronische In-
formationsverarbeitung mbH, regis
tered in Aachen, were transferred to
debis Systemhaus GmbH in 1990.
Sales of this field of activity in the
year under review rose further to DM
2.7 billion. The range of products and
services available with the Geamatics
automation system was enlarged, and
the activities of MODICON Steuerungs-
und Regelungstechnik (Control and
Regulation Systems) - the core of Gea
matics - further expanded. The world
wide market launch of a stored-
program small control unit which can
be integrated into various different
systems is especially noteworthy.
Delivery of the new MODCOMP MC 97
real-time computer also started in
1990; more than 100 new systems
are for NASA alone. Both in high-
performance drives and servo systems,
AEG achieved an overproportionate
share of the market's growth.
In Industrial Systems, too, the rise
in sales was above average. One major
project involved the equipping of a
test rig for 12-cylinder engines at the
Stuttgart-Untertiirkheim plant of
Mercedes-Benz AG. In the field of pro
cess and environmental technology,
some encouraging orders were re
ceived, including major projects such
as process control systems for large
sewage treatment plants in Frankfurt
am Main, the control system for regu
lating and monitoring a drinking water
pipeline carrying treated Lake Cons
tance water to the Stuttgart area, as
well as the automation and monitoring
equipment for the runway and taxiway
lighting, including the power supply
equipment, for the Frankfurt am Main
Airport. In the raw materials and pro
cessing industries, modernization pro
jects predominated.
For the Eurotunnel between Great
Britain and France, AEG was made
main contractor, in cooperation with
Daimler-Benz Research, to equip the
50 km service tunnel with a transport
system, including the auxiliary sys
tems.
AEG Electrocom (AEC) further glob
alized its core area of activity, postal
automation, and penetrated new mar
kets in 1990. The first orders were re
ceived from the new Federal German
states and from Eastern Europe. AEC
has added logistics consultancy for ef
ficient, competitive goods distribution
to its range of services. In order to
strengthen our involvement with li
cencees in the USA, we have acquired
a stake in ElectroCom Automation,
Arlington/Texas.
We are expecting further growth for
the Automation field of activity in
1991.
This field of activity comprises the
companies AEG Westinghouse
Transport-Systeme GmbH, Berlin, AEG
Westinghouse Transportation Systems,
Inc., Pittsburgh/Pennsylvania, Magnet-
bahn GmbH, Starnberg, and MAN GHH
Schienenverkehrstechnik GmbH,
Niirnberg.
Through the takeover of a part of
MAN GHH, with its track-bound vehi
cle activities, on June 30, 1991 AEG,
as a supplier of local and long-distance
transport systems, will in future be
able to manufacture not only electrical
equipment, but also complete traction
vehicles and rail cars. In addition, the
track-bound vehicle activities of MBB
were transferred to the Rail Systems
field of activity at the end of 1990. We
have thereby taken an important step
towards our objective of supplying
comprehensive rail systems.
Compared with the previous year we
raised this field of activity's sales con
siderably, from DM 587 to DM 722
million.
The first ICE high-speed trains, for
which AEG is supplying the electrical
equipment in the power driving units
and intermediate trailer cars, were
handed over to the German state rail
road company (Bundesbahn) in the
year under review. MAN GHH Schie-
nenverkehrstechnik and the track-
bound vehicle sector of MBB are play
ing a major part in supplying the in
termediate trailer cars of the ICE
trains. Further orders have already
been received. We delivered the first
new standard trains for Berlin's rapid
transit system. We also received a
follow-up order for 55 suburban multi
ple train sets.
A water cooling unit was developed
for compact and environment-friendly,
modular high-performance rectifiers in
electric traction vehicles. The first of a
new generation of low-floor streetcars
developed by MAN GHH Schienen-
verkehrstecknik were successfully pre
sented in Bremen and Munich.
AEG Westinghouse received an or
der from the New York subway com
pany for three-phase current equip
ment, to be fitted in a prototype series
of 10 vehicles. With the delivery of a
series of DUO buses for Seattle, vehi
cles fitted as standard with three-
phase drive technology entered service
for the first time in the USA. We also
received an order for the electrical
equipment of 88 vehicles for the new
Taipei Metro.
AEG Westinghouse has been com
missioned to plan and build a com
plete People Mover system for trans
ferring passengers to and from Denver
Airport; the system is to go into ser
vice in 1993. The People Mover sys
tems at the international airports of
Las Vegas and Orlando are being ex
tended by the supply of further vehi
cles and more track sections. After
one-and-a-half years of trials in Berlin,
the main conditions for approving the
M-Bahn as a public transport system
in accordance with the legislation on
passenger transport have been ful
filled.
We expect a further increase in
sales during the current financial year.
Our intended acquisition of the track-
bound vehicle sector of Lokomotivbau -
Elektrotechnische Werke Hennigsdorf
GmbH should strengthen our position
as a supplier of comprehensive sys
tems; at the same time we expect this
involvement to give us access to the
markets of Eastern Europe.
This field of activity comprises AEG
Olympia Office GmbH and AEG Mobile
Communication GmbH. Effective Octo
ber 1, 1990, we brought all our mobile
radio activities into the newly founded
AEG Mobile Communication GmbH.
Since then, the area of business of
AEG Olympia Office has been made up
of the product divisions Office Systems
and Office Equipment. TELEFUNKEN
Sendertechnik GmbH, Berlin, was
transferred to Deutsche Aerospace AG
effective April 1, 1990. AEG Electro-
corn GmbH, Konstanz, was put under
the control of the Automation field of
activity in 1990.
Calculated on a comparable basis,
sales by the field of activity in the
year under review were of the same
order of magnitude as the previous
year's, at DM 1.1 billion. This also ap
plies to AEG Olympia Office, in which
a decline in sales in some important
export markets was balanced out by
higher domestic income. The improve
ment in domestic business was partly
the result of successful marketing of
the personal computer range, the turn
over in the five new Federal German
states, and the commissioned manufac
turing carried out at the factory in
Wilhelmshaven.
Due to the extension of the personal
computer range, and the winning over
of new software houses and systems
centers as business partners, the
Office Systems product division suc
ceeded in greatly increasing PC sales.
Augmenting the range with compre
hensive packages has made it possible
to gain access to the market for larger
PC projects. In the typewriter segment,
the Office Equipment product division
succeeded in improving its domestic
market position and increasing turn
over. Sales of copying machines, for
which we adopted a standardized
model range for the whole of Europe,
also exhibited a positive trend. Sales
revenue from telephone answering
devices and cordless telephones was
slightly higher than in the previous
year.
AEG Mobile Communication re
turned a highly gratifying performance
particularly in the sales of terminals;
in car telephones, growth amounted to
over 50 %. In the Radio Systems divi
sion, sales were slightly below the
comparable figure for the previous
year; by contrast, incoming orders in
1990 enjoyed an exceptional increase.
In view of growing competition and
due to prices falling at an increasing
rate, AEG Olympia Office is endeavor
ing to enter into joint ventures in the
office technology sector.
Through the acquisition of Schorch
GmbH in Monchengladbach, including
the motor program of Garbe, Lahmeyer
& Co. AG, we rounded off our range of
products in the Electrical Machines
segment. In the field of special meters
we further consolidated our market
position. Together with EAW-Automati-
sierungstechnik AG, we founded AEG
EAW Zahler GmbH in Berlin-Treptow,
in which AEG has a majority interest.
We achieved high growth rates in Ger
many and the rest of Europe with the
Elfa line of miniature circuit breakers.
Demand for the new, energy-saving
devices was especially high. At the
Hanover Industrial Trade Fair 1990 we
presented for the first time the Ron-
dolux exterior lighting system, which
offers variety and a high degree of
flexibility due to various structural
elements.
AEG KABEL continued the positive
business trends of the previous years.
After adjustment for copper prices,
which were lower than in 1989, sales
rose again, particularly in the domestic
market. The concentration of our
enamelled wire production at Lack-
draht Union GmbH, which we acquired
in 1989, went according to schedule.
This made it easier to reorganize the
production routines of AEG KABEL in
the Monchengladbach plant to meet
the demand of the markets in East and
West as they grow together.
With our involvement in the new
Federal German states and the coun
tries of Eastern Europe we are in a
good position to expand our business
in this region.
Domestic Appliances
1990
1989
Sales (millions of DM) 2,817 2,599
Foreign share in %
48
50
Employees (12/31)
12,516 11,945
Effective June 1, 1990, we trans
formed the Domestic Appliances divi
sion into a legally independent com
pany, AEG Hausgerate AG. This now
consists of the divisions Domestic
Appliances and Power Tools.
Due to the lively economic climate
in the domestic market, we increased
sales in this field of activity by 8.4 %
to DM 2.8 billion. Our plants were
working to full capacity during the
financial year under review. In many
areas, it was not possible to satisfy
demand. Even so, AEG's domestic
appliances achieved a 12 % growth in
sales in the domestic market. Exports
rose by 13%, considerably more than
the average for the industrial sector.
We achieved gratifyingly high sales,
exceeding our expectations, in the
former GDR. On the export side, high
increases were again noted in Spain
and the Netherlands. AEG Hausgerate
AG was awarded the German Market
ing Prize in 1990 for exceptional mar
keting achievements.
The Power Tools Division succeeded
in considerably raising the volume of
domestic business, achieving powerful
growth. Demand for high-quality power
tools for professional use was above
average. We improved our market po
sition in Germany and abroad partic
ularly in the segment for rechargeable
battery-driven tools. Despite this, for
eign sales revenue declined, since a
large proportion of the power tools
business is carried out in countries
belonging to the dollar zone.
Electrotechnical Systems and
Components
1990
1989
Sales (millions of DM) 4,546 4/112
Foreign share in %
38
42
Employees (12/31)
23,705 22,133
This field of activity consists of the
divisions Power Transmission and Dis
tribution, Components and AEG KABEL
Aktiengesellschaft.
Sales of the field of activity rose in
the year under review by 11 % to DM
4.5 billion. In the Power Transmission
and Distribution Division, we benefited
from the general growth in the market
and again increased both sales and in
coming orders. In the high-voltage
switchgear sector we received some
impressive major orders from within
Germany and from abroad. We started
producing our new series of third-
generation, high-voltage circuit-
breakers on schedule. The market situ
ation with regard to medium-voltage
switchgear and circuit breakers re
mains favorable. The new building for
the integrated Technology Center for
Medium-Voltage Systems in Regens-
burg will come into service in 1991.
In order to build up business in the
new Federal German states and the
cities of Eastern Europe, AEG has
acquired Starkstromanlagen Dresden
GmbH. In Hungary, a joint venture
called AEG Union has been founded,
with AEG as senior partner, in collab
oration with VAV Schaltanlagenbau
and Transelektro AG in Budapest. Our
transformer business has been given a
broader base with the addition of the
transformer division of Schorch GmbH,
Monchengladbach.
The continued favorable economic
climate and a large number of product
innovations resulted in a further con
siderable rise in sales and incoming
orders for the Components division in
1990. There was encouraging growth
in the volume of business for low-
voltage switchgear and switchboards.
For the current financial year, we
expect sales revenue to increase fur
ther. The main growth stimulus will
once again come from the domestic
market, because there is a large re
quirement for products which form the
basic equipment of a modern house
hold in the new Federal German
states. For our business abroad, we
expect the depressed export climate
which is now becoming apparent to
continue. Despite this, AEG's domestic
appliances will maintain their position
due to their good quality image.
This field of activity comprises
TELEFUNKEN electronic GmbH and
the Opto- and Vacuum Electronics
Division. Effective April 1, 1990, AEG
brought its fractional horsepower mo
tors business into a joint venture with
Electrolux.
In the year under review, the Micro
electronics field of activity recorded
sales totaling DM 1.1 billion. The
slight decline compared with the pre
vious year can be attributed to the hiv
ing off of the Fractional Horsepower
Motors division; calculated on a com
parable basis, the volume of business
increased significantly. The growth in
sales was due in approximately equal
measure to TELEFUNKEN electronic
and the Opto- and Vacuum Electronics
Division.
For TELEFUNKEN electronic the
sales of electronic components, partic
ularly for the automotive industry, and
of individual semiconductors, were
responsible for the increase in the
volume of business to an above-
average extent.
In Nurnberg, we inaugurated a new
development center for future systems
in automotive electronics. At the
Heilbronn plant, modernization of the
wafer production facilities for inte
grated circuits continued. In future,
application-oriented integrated circuits
(ASIC's), based on 6-inch silicon slices,
are to be manufactured here.
We raised our holding in Siliconix,
Santa Clara/California, from 39 to
80 %. AEG has acquired 50 % of the
shares in Matra-MHS in Nantes. The
company is active in the field of CMOS
semiconductors, specializing in ASIC's
and in the production of micro
controllers under licence from Intel.
In the Opto- and Vacuum Electronics
Division, displays are gaining in impor
tance, e.g. large liquid-crystal display
boards. These are destined, for in
stance, for the airports of Orlando,
Toronto, Basel-Mulhouse and Munich II;
some deliveries of these have been
effected. In the Condensers sector, into
which the Transducer section was re
cently incorporated, AEG consolidated
its market position and performed well
in the fiercely competitive components
market.
With the increase of our stake in
Siliconix and the joint ventures
together with Matra-MHS and Remitel
electronic (Hungary), we have opened
up additional potential for growth.
High incoming orders lead us to
expect another increase in sales for
1991.
The future course of business activ
ities at DASA will depend on how the
procurement programs of public au
thorities at home and abroad develop.
They include the space programs of
the European Space Agency (ESA). Ex
change rates will also have a consider
able influence on future developments.
DASA has introduced comprehensive
new projects to consolidate its market
position. Agreements were made with
our partners Aerospatiale and Alenia
to further pursue the project for a re
gional aircraft with 80 to 130 seats,
with substantial participation by Deu
tsche Aerospace. Our subsidiary MBB
signed a Memorandum of Understand
ing with Aerospatiale regarding close
cooperation in the helicopter sector.
This represents the first step towards
uniting the activities of the two com
panies in a joint entity.
In the field of space flight, the sig
nature of a Memorandum of Under
standing prepared the foundation of
the industrial consortium EuroHer-
mespace, in which Aerospatiale,
Dassault Aviation and Aeritalia will
participate alongside DASA. The re
sponsibility of this company, residing
in Toulouse, will be to advance devel
opment of the Hermes orbital glider.
Deutsche Aerospace intends to take
over Luftfahrttechnik Ludwigsfelde in
the new Federal German states.
corporate division. The internal reorga
nization of key aspects of work was
commenced with the structural con
cept for aviation, which is now being
implemented. In accordance with the
condition stipulated by the Federal
Minister for Economic Affairs, imposed
with the approval for acquisition of a
majority share in MBB, the specified
areas of Marine and Special Systems
of MBB and TST were hived off at the
beginning of 1990, and 51 % of them
were sold. In accordance with the con
dition stipulated, in 1991 we shall
relinquish the remaining shares in
marine technology activities.
The group sales of Deutsche Aero
space reached DM 12.5 billion in
1990, corresponding to the volume of
the previous year. Since Marine and
Special Systems are no longer in
cluded, this equates to a rise of 5.0 %
on a comparable basis. Due to the an
nual deficit of Deutsche Airbus GmbH
to be assumed pro rata, DASA shows a
negative year end result of DM 135
million. Incoming orders remained, at
DM 11 billion, below the value of
1989, which was influenced by several
large orders occurring over a longer
period.
Investments in fixed assets
amounted to DM 938 million (1989:
DM 1,068 million). Expenditure on re
search and development was further
increased and reached 34 % of turn
over, at DM 4.2 billion (1989: DM 3.8
billion). At year-end 1990, the com
panies within the DASA group em
ployed 61,276 people (1989: 62,959).
The drop is mainly due to the fact that
the Marine and Special Systems divi
sions have been hived off.
Within the Deutsche Aerospace AG
group; Dornier, Messerschmitt-Bolkow-
Blöhm, MTU Motoren- und Turbinen-
Union and Telefunken Systemtechnik
have grown together to form an effec
tive union of companies. The group
has become a viable cooperation part
ner on an international level, above all
in its key fields of activity - aerospace,
defence technology and propulsion sys
tems. Through our systematic policy of
collaboration we are taking into ac
count the increasingly global trend in
these markets. We have made agree
ments to extend our policy on collab
oration, with European and both Amer
ican and Japanese partners, and these
are currently being applied within the
individual business alliances.
The continued development of the
corporate structure of DASA should be
seen against this background. In all
the companies business activities were
allocated to product divisions which
operate independently and with a high
degree of market proximity. The prod
uct divisions each collaborate within a
*) 1989 including MBB. Figures for Marine
and Special Systems at MBB and TST, which
were hived off on January 1, 1990, are still in
cluded in 1989.
Exceptional Growth of Sales Volume
In the reporting year, the Dornier
Group increased its sales by 28 % to
DM 2.8 billion. With settlements over
DM 900 million for the European re
mote sensing satellite ERS-1 and the
X-ray satellite Rosat, the Space Sys
tems division made the largest contri
bution to this growth rate. As ex
pected, the volume of incoming orders
to the amount of DM 3.1 billion did
not reach the level of the previous
year which had been marked by the
contract for the Stinger license produc
tion program and a surge in orders for
the Dornier 328 regional airliner
which is under development. Major or
ders in the reporting year include the
development of the JF90/EFA fighter
aircraft and the service life extension
program for the transport helicopter
Bell UH-1D of the German Armed
Forces, which extends over a period of
four years.
In 1990, expenditure for research
and development rose from DM 925
million to DM 1,287 million. The
spending on projects performed for
third parties rose to DM 1,022 million
(1989: DM 715 million). Efforts were
concentrated on the Space System divi
sion. Spending on in-house projects
amounted to DM 265 million (1989:
DM 210 million). Investments in fixed
assets totaled DM 157 million (1989:
DM 201 million) with the emphasis on
the expansion of plant facilities and
the improvement of plant infrastruc
ture. At the end of 1990, the Dornier
Group numbered 10,931 employees
(1989: 10,247).
Aviation
During the year, 15 (1989: 17)
Dornier 228 aircraft were delivered.
More than 70 customers throughout the
world operate 179 Dornier 228's in re
gional air traffic or as special versions
for maritime, coastal and border patrol
as well as for environmental protec
tion. Up until the end of 1990 our In
dian licensee Hindustan Aeronautics
Ltd., Bangalore, had delivered a total of
22 airplanes of this typ, 9 thereof in
the reporting year.
Development efforts on the 30-seat
Dornier 328 turboprop airplane, for
which 39 firm orders and 48 options
had been placed by the end of 1990,
continued as planned. The maiden
flight is targeted for 1991; our cus
tomers can expect delivery from 1993
on. Under contract to Deutsche Airbus
GmbH, Dornier participates in the de
velopment and assembly of various
components. In addition major develop
ment steps for the technologically so
phisticated European Fighter Aircraft
JF90/EFA were taken.
In the aircraft support sector we
were awarded the important contract
for the service life extension program
for the Bell UH-1D transport helicop
ter. As the prime contractor Dornier
services Nato's E-3A early warning
fleet (Awacs).
Space Systems
At the end of May, the X-ray satel
lite Rosat was deployed into orbit; in
October the Ulysses space probe set
off on a trajectory which will take it
into orbit around the sun. The launch
of the European remote sensing satel
lite ERS-1 which was scheduled for
1990 is now planned for May 1991.
For all three programs Dornier was the
prime contractor. For the Hubble Space
Telescope, deployed into orbit in April,
we developed the Faint Object Camera
designed to detect extremely faint ob
jects in space.
Further notable accounts were set
tled for the Columbus, Cluster and Ar-
iane 5 projects. Within the Columbus
project Dornier is developing the envi
ronmental monitoring and life support
systems; under the Cluster project we
are responsible for the development of
four satellites which will investigate
solar winds. The first central-stage
bulkheads were furnished for the
launcher Ariane 5.
Defense Systems
In the Defense Systems division Dor
mer's major activities lay with mobile
ground systems and the CL 289 recon
naissance system which we are deve
loping together with Canadian and
French partners. In the year under re
view the deliveries of workshop equip
ment for the Roland air defense sys
tem again reached a substantial vol
ume. For the Patriot system antenna
mast systems were supplied.
The setting up of the production fa
cilities for the license production of
Stinger in Europe proceeded according
to plan. In addition to the Federal Re
public of Germany Turkey, Greece and
the Netherlands are participating in
this project under the leadership of
Dornier. The first units of this short-
range air defense missile are sched
uled for delivery in 1992. Dornier is
also the prime contractor for the anti-
radar drone project, for which the defi
nition and development work were car
ried out in the year under review.
Medical Sytems
Once Dornier Medizintechnik GmbH
had been granted approval for the MPL
9000 and the MFL 5000 lithotripters
in lapan towards the end of 1989, it
was able to conclude long-term skele
ton agreements with lapanese dealers.
At home and abroad a total of 83
lithotripters (1989: 66) were delivered,
nearly half of these being MPL 9000
units.
To expand its product line, Dornier
Medizintechnik GmbH increased the
stake it had origionally acquired in
1989 in Acoustic Imaging Technologies
Corp., Tempe/Arizona to 82 %. The
high-quality ultrasonic diagnostic de
vices of this company are marketed as
separate units, but they are also built
into Dornier's lithotripers as imaging
units.
Special Markets
The main focus of effort in the Spe
cial Markets division during the year
under review was on motor vehicle
electronics, with special attention to
environmental conservation and traffic
safety. Development projects are con
cerned with tyre pressure control, en
gine management, radar systems for
monitoring traffic to the rear, flat-
surface test rigs and driving pilots.
Further fields include energy systems,
information systems, planning consul
tancy and materials technology.
Outlook
In the current business year, the
sales of the Dornier Group will not
achieve the high level of 1990, which
was attributable to the settlement of
large-scale accounts, even though the
major settlement of accounts is ex
pected in the aircraft division for the
programs Dornier 228 and Bell UH-1D.
In the Space Systems division, the set
tlement of large-scale accounts is ex
pected for the Hermes and Ariane 5
development projects and for ERS-1
launch support. Sales in the Defense
Systems division will rise as a result
of a higher delivery volume for the CL
289 program. The Medical Systems di
vision, as well, anticipates growing
sales revenues.
To complement activities in the com
munications sector, the takeover of the
Data Networks division of AEG Electro-
corn GmbH, Konstanz, is envisaged.
1990 1989*)
Sales (millions of DM) 4,610 5,112
Foreign share in %
41
32
Employees (12/31)
Positive trend in the Aircraft Sector
Due to the transfer of the Marine
23,229 24,194
and Special Systems division, busi
ness during the financial year de
clined by 10 % to DM 4.6 billion.
Comparable sales remained at the
previous year's level. The Aircraft di
vision accounted for approximately
one half of total sales. Increases were
mainly due to the invoicing of larger
amounts in the Airbus program and
the BO 105, BK 117 and Tiger
(PAH-2) helicopter programs. Defense
Systems sales were largely accounted
for by the Roland weapon system, as
well as the Pars 3 and Milan anti
tank weapons. At DM 3.7 billion or
ders received remained below the
high levels recorded in the previous
year.
Expenditure on research and devel
opment totaled DM 2.0 billion,
amounting to 43 % of sales. Research
and development projects charged to
external customers amounted to DM
1.8 billion (1989: DM 1.9 billion);
company projects totaled DM 213
million (1989: DM 191 million). In
vestments on fixed assets rose to DM
315 million (1989 : DM 264 million).
Due to the transfer of the Marine and
Special Systems division, the number
of employees decreased to 23,229
(1989: 24,194).
completed. Systems development for
the ISO European infrared observatory
and the Astro-Spas scientific satellite
proceeded according to plan.
Production of the second stage and
the liquid-fuel booster rockets for the
European launcher Ariane 4 was at the
forefront of work in the Orbital Infra
structure Strategic Business Unit. This
Unit is involved in developing the up
per stage of the new European
launcher Ariane 5. Integration of Eu
rope's first free-flying retrievable car
rier Eureca (European Retrievable Car
rier) proceeded on target. Within the
framework of ESA's Columbus program
MBB prepared a proposal which in the
meantime has been submitted to ESA.
Defense Systems
The Roland program continued to be
the main earner in the Defense Systems
division. Since the Roland weapon sys
tems program, which was handled by
the Franco-German marketing com
pany Euromissile, was completed in
the year under review, sales attributa
ble to this program fell short of the
previous year's levels.
We continued the development of
the Hot and Milan second-generation
antitank systems and of the Pars 3
MR/LR third-generation anti-tank sys
tems for medium and long-range oper
ation. In December 1990, the Ameri
can company Raytheon and DASA
signed a Joint Venture Agreement for
future development, production and lo
gistical support in the operational field
of medium and long-range air defense
systems.
Industrialization of the DWS 39 dis
penser system for the Swedish Air
Force was contractually completed in
1990.
Aviation
In the Aircraft division, the largest
earner was again the Tornado pro
gram. The consortium under the man
agement of the Panavia Aircraft GmbH
had delivered a total of 846 aircraft by
the end of 1990, 44 thereof in the
year under review. The development
work for the JF90/EFA fighter aircraft
continued. An important landmark in
the Aircraft Division was the success
ful maiden flight of the German-
American experimental aircraft X-31A
in October 1990. As the prime contrac
tor MBB has been commissioned to
modernize of the Phantom II F-4F used
by the German Airforce. Under our co
operation agreement with Deutsche
Airbus GmbH to develop and manufac
ture major assemblies and components
for the Airbus family, production of the
A330 and A340 began in 1990.
The main customers for our BO 105
multipurpose helicopter were again the
police and air rescue services. It is es
pecially pleasing that the BK 117, de
veloped jointly with Kawasaki Heavy
Industries, turned out to be the best
selling twin engine rescue helicopter
on the hotly contested US market. The
market share amounted to 37.0 %, to
gether with the BO 105 it came to as
much as 59 %. The development work
on the BO 108, which is to succeed
the BO 105, as well as on the Tiger
antitank helicopter (PAH-2/HAC/HAP),
a German and French bilateral pro
gram, continued successfully.
Space Systems
MBB had a major role in the devel
opment of five communication satel
lites and one research satellite which
were deployed in 1990. The third Ger
man telecommunications satellite DFS
Kopernikus 3 was completed in the
year under review. Subsystems work
on further flight equipment for the Eu
ropean Eutelsat II communication sat
ellite system, the Japanese Superbird
and the Chinese DFH-3 are almost
Other Activities
Finding new applications for know-
how gained in the aerospace and de
fense sectors has led us to a number
of new activities. In the field of energy
technology MBB is building large wind
farms and developing photovoltaic sys
tems. The erection of a pilot plant for
manufacturing large solar modules is
particularly noteworthy here. Among
our diversification products, one of the
most important is the airbag, for which
demand on the part of the automotive
industry has increased considerably.
There was a further expansion of activ
ities in the fields of data and control
technology, plastics and medical laser
systems.
Outlook
An increase in sales is expected for
1991. MBB anticipates a significant in
crease in the Aircraft Division, in par
ticular in the Airbus program and the
BO 105 helicopter line, even if the Tor
nado remains our main earner; major
parts of the JF90/EFA European
Fighter Aircraft program will again be
invoiced. We also expect a vigorous
rise in sales in the Space Systems di
vision. In contrast, we expect declining
turnover in the Defense Systems divi
sion.
A decisive prerequisite for the
scheduled amalgamation under the
umbrella of a joint holding company,
Paris-based Eurocopter S.A., of the
activities conducted by the Helicopter
Unit with those of Aerospatiale's Divi
sion Helicopteres was created by con
centrating helicopter activities at the
Donauworth plant. A Memorandum of
Understanding concerning this cooper
ation was signed by MBB and Aero
spatiale on December 21, 1990.
a division of United Technologies Corp.
(UTC), Hartford/Connecticut; the agree
ment is to be further underpinned by
each of the companies acquiring
shares in the other. We entered into
this business alliance without jeopar
dizing our traditionally good relations
with General Electric (GE); after man
aging amicably to resolve a temporary
misunderstanding, MTU will continue
in future to engage in its long-standing
and successful cooperation with GE.
Aero-Engines
In the Aero-Engine unit the pro
grams RB 199 and El 200 for the Tor
nado and the fighter aircraft IF90/EFA,
respectively, made a substantial contri
bution to sales in the year under re
view. The EJ 200 engine is also by far
the largest research and development
project; toward the end of the year, the
prototype successfully completed its
first trial. Major earners were the CF 6
and JT 8D aero-engines; these are used
by the aircraft manufacturers Airbus
Industrie, Boeing and McDonnell
Douglas.
In August 1990, the PW 300 aero
engine, which has been developed for
executive aircraft, received its ap
proval. Within the V 2500 program we
dismantled the engine with the hith
erto highest number of hours in opera
tion for inspection purposes; the result
revealed that the engine was in very
good condition. Among other aircraft,
the Airbus A3 20 is fitted with this en
gine. The helicopter engine MTR 390
for the German-French anti-tank heli
copter Tiger (PAH-2) was given ap
proval for flight-testing at the begin
ning of November 1990. The first two
prototypes have now been delivered to
Eurocopter. Concept and technology
development laid the groundwork for,
inter alia, a propfan engine, hypersonic
propulsion systems and gas turbines.
Diesel Engines
With diesel engines, which are pro
duced by MTU Friedrichshafen, busi
ness once again focused on engines
from the 396 series, mainly for marine
application. There was an increased
demand in engines for high-speed
yachts and high-speed ferries. Partic
ularly encouraging was the order to
supply marine engines and engines for
the operation of on-board equipment
for 10 frigates of the Australian and
New Zealand navies. Steady progress
is being made with the completion of
the large-scale order concluded with
the USSR in 1986 for the supply of en
gines for tractors and earthmoving ma
chinery. A large number of locomotive
engines were delivered to the Dutch
state-owned railways.
In September 1990, we presented
the 595 engine series. These com
pletely new engines in the power
range between 2,000 and 4,400 kW
feature a successful combination of
benefits for the user with regard to
power concentration, service life, eco
nomic efficiency and environmental
compatibility. The first engine of this
new series was installed in the ocean
going ferry Deutschland. In the follow
ing years, this engine will be used for
field-testing, providing data to supple
ment the previous tests conducted on
the test stand.
Other Activities
In the year under review, MTU
Maintenance GmbH maintained and re
paired aero-engines from our coopera
tion partners General Electric and
Pratt & Whitney. The company ex
tended its production area and was
able fully to utilize its capacity with a
further-augmented workforce.
1990
1989
Sales (millions of DM) 3,602 3,659
Foreign share in %
65
66
Employees (12/31)
Successful Commencement of
Strategic Realignment
17,524 17,654
In view of the fact that the MTU
group is predominantly export-
oriented, the trend in the exchange
rate of the dollar has detracted from
the otherwise positive situation with
regard to sales and profits, particularly
as far as engines for commercial air
craft and diesel engines are concerned.
Furthermore, the continuing low levels
of government spending in important
export countries had a curbing effect
on demand. Sales fell slightly to DM
3.6 billion. At 65 %, the share ac
counted for by exports stabilized at the
high level of the previous year. Incom
ing orders of DM 3.0 billion were be
low the level of the previous year.
DM 509 million (1989: DM 469 mil
lion) was spent on research and devel
opment with DM 282 million (1989:
DM 232 million) relating to projects
conducted on behalf of third parties.
The MTU group invested DM 239 mil
lion (1989: DM 264 million) in fixed
assets, principally buildings and manu
facturing facilities. At the end of 1990,
at 17,524, the number of employees
was slightly below the level of the pre
vious year (17,654).
An important step toward ensuring
further success in the field of aero
engines for commercial and executive
aircraft was the agreement entered
into by MTU on extensive future coop
eration with its long-standing Ameri
can partner Pratt & Whitney (P & W),
The sales of fans, compressors and
steam turbines developed and pro
duced by Aktiengesellschaft Kühnle,
Kopp und Kausch in Frankenthal al
most equaled those of the previous
year. As a result of the general down
turn in this European automobile in
dustry, the number of exhaust-gas tur-
bochargers produced for vehicle and
industrial engines was below the high
figure of the previous year.
L'Orange GmbH, Stuttgart, which
manufactures high-grade fuel-injection
systems for large diesel engines was
able further to expand its business.
Outlook
In order to safeguard its competitive
position in the market place, MTU will
increase its efforts to promote the de
velopment of new products and to im
prove existing successful products. By
means of even more intensive collab
oration with international partners and
new cooperation projects, MTU will se
ize the opportunities available on the
world market and will further consoli
date its market position. The large
number of aero-engines on order and
the introduction of new diesel engines
suggest that, overall, 1991 will see a
slight rise in sales together with a sat
isfactory level of utilization of existing
capacity. However, it is not possible at
present to estimate the impact that the
tightening of export regulations for all
dual-use exports will have.
As far as aero-engines are con
cerned, it can be expected that the
principal area of activity will be en
gines for civilian aircraft, the Tornado
and the JF90/EFA fighter aircraft. As
regards diesel engines, attention will
be focused on the 396 series.
1990
1989
Sales (millions of DM) 1,688
1,961
Foreign share in %
22
19
Employees (12/31)
Comparable Sales Increased
9,372 10,779
At the beginning of the year under
review, the Marine and Special Sys
tems division was separated from Tele
funken Systemtechnik GmbH; at the
same time the company took over
Telefunken Sendertechnik GmbH from
AEG. In consequence, sales at DM 1.7
billion remained slightly below the
previous year's level; if adjustment is
made for these structural changes
sales increased by 3.0 % results. At
DM 1.7 billion, orders received were
below last year's figure, which was
substantially influenced by a large or
der for the modernization of the Phan
tom aircraft.
Research and development work for
the civilian sector increased again; ac
cordingly comparable expenditure in
creased by 13 % to DM 373 million. In
vestment in fixed assets amounting to
DM 126 million (1989: DM 147 mil
lion) were related mainly to construc
tion, modernization and rationalization
measures initiated in 1987 which will
be completed in 1991. At year end,
Telefunken Systemtechnik employed a
staff of 9,372.
Radar, Radio and Sensor Systems
In the year under review, further
TRM-S 3D air space surveillance radar
systems were delivered to the German
Armed Forces for deployment in the
Army anti aircraft system. Further Ro
land air defense command stations of
the German Air Force were equipped
with TRM-L 2D radar systems.
Deliveries were continued to sched
ule of forward-looking nose radars for
the Tornado. Production has started as
planned of the airborne radar APG-65
for Phantom aircraft so that deliveries
can commence during 1991. Tele
funken Systemtechnik is contributing
substantially to the development of the
airborne radar for the fighter aircraft
JF90/EFA.
In the field of electronic warfare
(EW), development of self-protection
systems for the Tornado was contin
ued. Orders for shipborne EW systems
as well as for computer-controlled
communication systems were received
from the German Navy. From the Ger
man Army we received an extensive
order for HF/DF equipment sets for
data transmission in the Army EW
system. Under contract to the Ameri
can company Raytheon, Telefunken
Systemtechnik is participating in the
further development of the seeker
head of the Patriot system; the pro
gram will decisively improve defensive
capability against ballistic missiles.
In view of declining defense bud
gets, our civilian activities are being
steadily expanded. In radar systems
the emphasis was on control and sur
veillance of vessel traffic. During the
year under review, orders were exe
cuted inter alia for the replacement of
the radar systems along the river Elbe
and in Hamburg.
From the Federal German Railways
we received a consultancy contract for
the transport system TS 90. TST
opened up a new field of activity in
the area of short-wave communication
with the successful completion of an
HF communication system, for which a
total of 850 field sets were delivered.
In export business, TST secured a
large order for spares for the mobile
radio reconnaissance system supplied
to the Spanish Army in the preceeding
year. In addition the Spanish broad
casting company ordered a large-scale
transmitter system. We also received
an order for the installation of TV
transmitters in the new Federal Ger
man states; the first transmitters went
into service during the year under re
view. In response to an order from the
Central Telecommunications Bureau
(FTZ) in Darmstadt, TST supplied a
large number of recently developed
digital analysis receivers, which are
used for high-quality receiving and
measurement purposes.
Electrical Energy Systems
In the field of power supply, electri
cal engineering and electronics, the
percentage of civilian orders was fur
ther increased in the year under re
view. The most important current pro
ject is the large contract for the new
airport Munich 2, for runway lighting,
for which we are project leader. In ad
dition, orders were executed for var
ious civilian and military airports. The
mature technology of TST in traffic
control systems contributed decisively
towards the Northern Bavaria motor
ways authority placing an order with
us for the expansion of its traffic data
acquisition and traffic control systems.
Among future civilian applications, we
view the development of the VSCF
power generation system for the JF90/
EFA fighter plane as particulary impor
tant.
For the Hubble space telescope TST
developed the flexible, reeled high-
power solar generator and for the
X-ray satellite Rosat a rigid solar gen
erator. TST has sofar equipped more
than 120 spacecraft and satellites with
power supply systems. For the solar-
driven automobile Spirit of Biel II,
which won a competition in Australia,
TST supplied the most powerful terres
trial solar generator ever manufac
tured. The Federal German Ministry of
Research and Technology is sponsoring
this new development.
In the field of regenerative power,
we received an order for the hybrid in
stallation to exploit both solar and
wind energy on the North Sea island
of Pellworm. For this installation, the
largest of its type so far, the company
undertook system responsibility in co
operation with Schleswag AG.
Logistics and Training
In the field of system support TST
expanded its range of services by se
curing the maintenance contract for
the training simulator Asim of the Fed
eral German Airtraffic Control Author
ity. In the new Federal German states
we have become main contractor for
the vocational advancement service.
Particularly noteworhty in the field of
systems technology were orders to
supply analysis stations for a radio re
connaissance system and also logistics
services for German coastal radar op
erations in the Baltic.
Outlook
The company's wide-ranging exper
tise in diverse fields of high-
technology areas constitute a good
premise for growing engagement in ci
vilian projects. With targeted research
and development, TST will exploit its
chances in the civilian sector and con
tinue to expand its market presence in
the fields of orbital and terrestrial so
lar technology, traffic control technol
ogy, electronics and electronic testing
technologies. Supported by a high vol
ume of orders on hand, which will en
sure capacity working for about eighteen
months, TST will continue to increase
sales in the current financial year.
At year-end 1990, debis had 4,879
employees worldwide, 4,148 located in
Germany, and 731 abroad. The number
of trainees and apprentices in the total
was 82.
Investment in fixed assets (mainly
data processing equipment) amounted
to DM 333 million, and in rented as
sets DM 4,174 million. Vehicle leasing
represents approximately 94 % of total
assets. Additions to financial assets
were DM 13 million. In the year under
review, majority holdings in System
haus Curadata GmbH, Hamburg, and
Metallgesellschaft Informationsverar-
beitung GmbH, Frankfurt am Main
were acquired. Like the newly founded
Mercedes-Benz Finance Ltd. in the
United Kingdom and the sfi System
haus fur Informationsverarbeitung
GmbH, Berlin, these have also been in
corporated into the group. In addition,
there was the takeover from AEG of
the Systemhaus GEI - Gesellschaft fur
Elektronische Informationsverarbeitung
mbH, Aachen.
Software House
Major parts of the information pro
cessing activities of the German com
panies in the Daimler-Benz group have
been joined together in debis System
haus GmbH, which was founded on
January 1, 1990, as an independent
division.
The debis software house, which
produced a total revenue of DM 657
million in the reporting year, com
prises five subdivisions.
The Computer and Communication
Services area took over the majority of
the computer centers in the Daimler-
Benz group in 1990. This process will
be completed in 1991. At the same
time, the existing computer centers
will be concentrated into a few large
computer centers within the frame
work of a regionalization concept. The
planned formation and expansion of a
functional group-wide network has
begun and shall be completed in 1991.
The network will also be offered to
external customers. With the majority
takeover of Metallgesellschaft Informa
tionsverarbeitung GmbH, together
with the computer center of Indu-
strieanlagen Betriebsgesellschaft mbH
(IABG), we are taking into account the
growing trend among major users of
increasingly transferring data process
ing tasks to external specialists.
The combination of various hard
ware with effective local networks is
becoming increasingly important in
data processing. With this in mind, we
have founded the software company
DisCom - Distributed Computing
GmbH.
In June 1990 the first important
step was made for entering the mar
kets of the new Federal German states
and Eastern Europe with the founda
tion of the software company sfi Sys
temhaus fur Informationsverarbeitung
GmbH, in Berlin, in which Hewlett-
Packard has a minority holding of
25.1 %.
In the Commercial Systems and Pro
jects subdivision, activities are concen
trated on developing software for the
group. In order to extend our business
with customers outside the Daimler-
Benz group, we acquired the software
companies Systemhaus Curadata
GmbH and ORGA-SOFT Organisation
und Software GmbH in 1990. Curadata
provides products for tax advisors,
accountants and tax departments in
large companies. ORGA-SOFT markets
services for logistics and trade. Both
companies were successful in 1990
in the new Federal German states.
The Industrial Systems and Projects
subdivision develops comprehensive
systems for individual customers, mar
kets standard products and services
and advises design and manufacture
divisions of industrial users. System
haus Industrie GmbH develops and
sells user software systems for produc
tion planning and control, quality as
surance and servicing.
Systemhaus GEI-Gesellschaft fur
Elektronische Informationsverarbeitung
mbH, was transferred during 1990
from AEG to the debis software house.
After extensive examinations, it was
decided at the end of 1989 to concen
trate the service activities of the
Daimler-Benz group in a fourth corpo
rate unit. Daimler-Benz InterServices
(debis) AG, which is structured into
the five divisions Software House,
Financial Services, Insurance, Trading
and Marketing Services, commenced
its activities at the beginning of 1990.
The company was legally founded on
July 1, 1990.
The aim of Daimler-Benz InterSer
vices is to offer sophisticated services
and to meet the customer's require
ments quickly, at a competitive price
and with a high level of quality. It pro
vides its services to the companies of
the Daimler-Benz group and to exter
nal customers. After a short transition
period, all group companies can decide
whether they wish to use the services
of debis or of other companies. This
means that debis is exposed to inter
national competition from the outset.
The first financial year for Daimler-
Benz InterServices, 1990, was alto
gether favorable, despite considerable
initial outlay and more intense inter
national competition. Debis achieved a
total revenue of DM 4.0 billion world
wide. This includes sales revenue of
DM 3.7 billion and interest received
from sales financing. The year-end
result reached DM 50 million.
Of the total ouput, 48 % is accounted
for by the domestic market, 11 % by
other EC countries and 37 % by the US
market. A volume of DM 974 million
resulted from companies in the
Daimler-Benz group.
The company has over 20 years' expe
rience in production automation, infor
mation and communication systems,
information technology security and in
the field of CASE (Computer Aided
Software Engineering).
The Training subdivision, which is
being established, provides training for
the software house's own products,
current subjects of information tech
nology such as project management,
software engineering and programming
languages, as well as operating sys
tems.
The market for computer center and
network services as well as complex
software developments is subject to
strong growth stimuli due to the
changing framework conditions in the
single European market and the in
creasing liberalization of the telecom
munication sector. This will result in a
considerable expansion of business
volume at the software house in the
next few years.
Financial Services
The debis Financial Services division
offers complex leasing and finance
programs tailored to customers' re
quirements. In addition to pure financ
ing, service components desired by the
customer are also included, which are
offered within the framework of full
service leasing contracts. They encom
pass, for example, the handling of re
pair and maintenance work, tyre re
placement, vehicle tax, replacement
vehicles, insurance and service cards.
The group's own leasing and financ
ing companies now operate in all the
important sales markets of Mercedes-
Benz AG, and thus Germany, the USA,
France, Italy, the United Kingdom,
Switzerland, the Netherlands, Belgium,
Spain and Canada. With the foundation
of Daimler-Benz InterServices (debis)
AG, and the transfer of these com
panies to debis, financial services are
available both for Mercedes-Benz vehi
cles and the products of the corporate
units AEG and DASA.
Through combined efforts and close
collaboration between leasing and fi
nance companies and the sales organi
zation of Mercedes-Benz AG, success
was achieved in 1990 too in gaining
many new customers despite difficult
market conditions, and in continuing
the growth of the last few years. Newly
acquired business rose by 23 % to
122,000 vehicles. Around 70 % of new
contracts applied to passenger cars.
The proportion of new vehicles
financed and leased via the debis
leasing and finance companies was
on average 17 % in the markets in
which this type of company is estab
lished. The number of contracts in
creased by 26 % to 282,000. This cor
responds to a value of DM 12.2 billion.
In the USA the Mercedes-Benz Credit
Corporation, the largest leasing and
finance company of debis, increased
the number of contracts by 32 % to
112,000. In Canada, Mercedes-Benz
Credit of Canada concluded 47 % more
new contracts than in the previous
year.
The European leasing and finance
companies also continue to enjoy
steady growth. Mercedes-Benz Finanz
GmbH and Mercedes-Benz Leasing
GmbH, which operate in Germany as
Mercedes-Benz Lease Finanz, extended
their business volume by 37 % to DM
2.9 billion. An important aspect was
the strong demand from the new
Federal German states.
In Spain we acquired a capital share
of 40 % from our partner the Banco
Hispano Americano, so that our hold
ing now totals 90 %. The most recently
created company, Mercedes-Benz Fi
nance Ltd, founded in February 1990 in
the United Kingdom, has so far been
extremely successful in the highly
competitive British market, achieving a
business volume of approximately
DM 420 million.
The leasing and finance companies
will meet the challenges arising from
changing requirements with new ser
vices that go beyond what is currently
available.
The field of Marketing Consulting
comprises customer-specific market
research and conventional marketing
advice. The points of emphasis are
capital goods and service marketing.
In the year under review, orders
were carried out in the market seg
ments of passenger car fleet business,
traffic guidance technology, photo-
voltaics, added value services, elec
tronic displays and various other capi
tal goods.
In 1990, the media budgets of the
Passenger Car Division of Mercedes-
Benz AG, of AEG and Deutsche Aero
space were transferred to the largest
marketing division, Communication &
Media. Due to existing contractual
links, the other budgets in the group
will be transferred to debis Marketing
Services in the course of 1991. The
Sales Promotion Services subdivision
comprises trade marketing, sponsoring
advice, event marketing (marketing
and setting up of events) together with
services in the sphere of advertising
media (advice, selection, purchase and
dispatch).
The Fairs & Exhibitions subdivision
handled over 200 trade fairs and exhi
bitions, worldwide, in 1990. The larg
est customers were AEG, Daimler-Benz
and Deutsche Aerospace. Due to the
high growth potential and varied inter
ests of customers from Asia, debis
Marketing Services Asia and Pacific
Pty. Ltd. was founded in July 1990 in
Singapore.
Marketing Services anticipates a
considerable increase in the volume of
business in all fields of activity.
Insurance
Trading
The lack of restrictions on services
within the EC will accelerate the coop
eration and concentration processes
among insurance companies and bro
kers. This was the reason why we
joined together all of the insurance
activities of the Daimler-Benz group
within Daimler-Benz InterServices. The
newly founded Insurance division of
debis (debis Assekuranz) is to handle
the insurance requirements of the
Daimler-Benz group, including its sub
sidiaries, with comprehensive, favora
bly priced risk management. The
grouping of insurance activities was
implemented in part in 1990. Daimler-
Benz Versicherungsdienst GmbH was
taken over from the point at which
Daimler-Benz InterServices was foun
ded, and was renamed debis As
sekuranz Vermittlungs GmbH. To date
the debis Insurance division has cov
ered the insurance requirements of
Daimler-Benz AG and Mercedes-Benz
AG, and carried out risk management
for these companies.
Since the beginning of 1991, the di
vision has also taken over the shares
of EAS Assekuranz Vermittlungs-
GmbH previously held by AEG. Prepa
rations are being made to incorporate
the other insurance services of the
group.
The brokerage services of debis As
sekuranz will increasingly be offered
to third party industrial clients, and
the availability to employees of the
Daimler-Benz group will be expanded.
All in all, we expect debis Insurance
to increase its total premium income
in 1991.
Existing know-how in the field of
barter is concentrated in the debis
Trading division in order to open up
the markets in countries short of for
eign currency to exports from the
Daimler-Benz group and external cus
tomers. The amount made available for
barter purposes was approximately DM
110 million.
Daimler-Benz InterServices has 50 %
of shares in Industriehandel Handels-
und Industrieausrustungsgesellschaft
mbH, Stuttgart, a joint enterprise with
Metallgesellschaft AG, Frankfurt am
Main. In November 1990 debis, to
gether with Intrac Handelsgesellschaft
mbH, Berlin, founded debis Interna
tional Trading GmbH with its regis
tered office in Berlin; debis holds 75 %
of the stock. This company debis Inter
national Trading is to operate in the
countries of Asia, Latin America, East
ern Europe and in the Soviet Union.
The Trading division provides solutions
to complex problems regarding barter,
by identifying exportable goods in the
relevant targetted markets, finding
marketing routes and partners.
In the face of the debt crisis of the
countries of the Third World and the
economic changes in Eastern Europe,
the Trading division anticipates a con
siderable rise in sales volume.
Marketing Services
debis Marketing Services GmbH was
founded through renaming the former
AEG subsidiary, Werbeagentur Dr.
Kuhl GmbH (WAK) on June 13, 1990.
Furthermore, important parts of AEG's
central marketing (marketing consul
tancy, trade fairs and exhibitions, parts
of central advertising) have been incor
porated in the Marketing Services divi
sion. In the abbreviated financial year
of 1990, debis Marketing Services
GmbH which is divided into four sub
divisions, achieved a total output of
DM 109 million.
Research Geared
to Corporate Units
Mercedes-Benz Research
Institute Organized
In the integrated technology group
The "Mercedes-Benz Research Insti
of Daimler-Benz, research is a task
which goes beyond the confines of in
dividual companies, so it is carried out
under the auspices of the executive
holding company. The activities are
geared to the requirements of the cor
porate units and their fields of busi
ness. In order for the different devel
opment departments to utilize the
results of that research quickly and
efficiently, we further modified the
structure of the research sector in 1990.
In doing so, our objective was to com
bine the advantages of centrally orga
nized research with those of decentral
ized research, in accordance with the
principle "as centralized as necessary,
as decentralized as possible."
We therefore devised research
institutes which belong to the central
"Research and Technology" division but
which are directly tailored to the needs
of the individual corporate units and
their fields of business. Basic topics
affecting several corporate units simul
taneously, on the other hand, are dealt
with as central "Joint Research Fields."
In this way, we can achieve the essen
tial integration of the individual re
search institutes.
Under the designation "Technology",
we have concentrated all the instru
ments of knowledge and technology
transfer to ensure the rapid and effec
tive exchange of information within
Research and with the development
sectors.
tute," which belongs to the Daimler-
Benz holding company in terms of cor
porate structure, took clear shape in
1990. Its brief is two-pronged: firstly,
the acquisition of basic knowledge in
fields such as alternative propulsion
systems which are of particular strate
gic importance to Mercedes-Benz AG.
Secondly, its task is to work closely
with the development departments of
Mercedes-Benz itself and to conduct
research geared to the medium and
long-term aims of those departments.
The Mercedes-Benz Research Insti
tute is divided into three Centers of
Competence. These deal with: basic
questions of physics and chemistry;
thermo- and aerodynamics; as well as
cybernetics and simulation. Then there
are four Product-Oriented Centers:
electronics, vehicles, vehicle compo
nents and vehicle information technol
ogy. Further improvements to quality
and efficiency are to be achieved by
combining various fields of scientific
work, reducing the number of hier
archical levels and streamlining pro
ject structures. The directorate respon
sible for the Mercedes-Benz Institute is
also in charge of the Joint Research
Fields of materials and transport tech
nology. This new concept is intended
to serve as an example for the other
research institutes.
Joint Research Fields
at the Ulm Research Center
For the Joint Research Fields within
the Research and Technology division,
the Ulm Research Center will play a
major role. The buildings erected in
the first phase of construction, at Ob-
erer Eselsberg, were inaugurated on
June 1, 1990, also the foundations for
the second phase were laid. By the
end of 1992, two more laboratory
buildings and a "cafeteria" should be
completed; the cafeteria building will
also contain seminar and lecture facili
ties, and will serve as a communica
tion center.
The Research Center will function as
a knowledge center not just for the
Daimler-Benz group. It will also be
come an integral part of Ulm as a city
of science, which already includes the
Ulm universities, related institutes and
a science park. Close contact is planned
between these bodies to promote the
extensive exchange of findings by uni
versity and industrial research. Work
has already begun with the formation
of working teams to deal with mate
rials and production research, informa
tion technology and energy research;
these teams are initially based in the
first-phase buildings, in Ulm-B6fingen
and in Esslingen. Before they can be
expanded, however, priority is being
given to precise definition of the main
work focus and to qualifying the new
employees.
Environmentally Compatible
Production Research
The move to Ulm by the production
research team has paved the way for
the smooth expansion of this sector. In
1990 the main task here was to define
what had to be researched and detail
the approaches to be adopted.
Environmental compatibility is a
central theme of industrial production,
and will become more and more im
portant in the future. For this reason,
the focal points of production research
are, on the one hand, those aspects of
manufacturing processes which affect
the environment and, on the other,
those areas of technology concerned
with reprocessing and recycling. With
regard to this, the factory must not be
viewed in isolation, but must be inves
tigated in all the ways it relates to the
environment.
Lower Pollutant Levels due to
Improved Propulsion Technology
Conserving the environment is also
a central issue when it comes to im
proving propulsion technology. With
new concepts, we are trying to further
reduce the levels of pollutants gener
ated by the combustion of gasoline or
diesel fuel in the engine. This primar
ily means nitrogen oxides, unburnt hy
drocarbons and particulates. Our basic
research is aimed at finding out how
these substances form and how they
can be avoided. Special experimental
engines with optical windows make it
possible to see inside the combustion
chamber. The individual combustion
cycles are analysed with the aid of
multi-dimensional lasers. In parallel to
this, we conduct computer simulations
of the physical and chemical processes
involved, so as to back up practical ob
servation with theoretical understand
ing. Only in this way is it possible to
improve combustion chamber design
and to optimize fuel injection even fur
ther.
With the "thermal induction control"
for the four-stroke engine, there is no
throttle valve for regulating the load.
This means the engine consumes less
fuel in the part-load range, thereby
producing lower quantities of pollutant
and less carbon dioxide. More fuel is
also saved by having pistons with vari
able compression; these are already
being tested in eight-cylinder engines.
What is known as ARD technology (ad
sorption, reduction, desorption) has
proved in principle suitable for the
post-combustion treatment of nitrogen
oxides in an oxidizing environment. In
a first step, the nitrogen oxides stick
(adsorb) to the surface of catalysts.
Through the addition of special reduc
ing agents in a second step, they sepa
rate into nitrogen and oxygen, after
which they are released (or desorb)
from the catalyst's surface. These pro
cesses alternate during driving. The
catalysts are arranged on a disk which
turns slowly in the exhaust gas stream.
Alternatives to Gasoline
and Diesel Fuels
For over 20 years now, research has
been investigating possible alternatives
to gasoline and diesel engines, and try
ing to find viable propulsion systems
which do not require fossil fuels. The
first electro-hybrid bus from Mercedes-
Benz, using combined diesel and elec
tric drive, took to the road as early as
1970. In 1975 a Mercedes-Benz van
became the first vehicle in the world
to derive its energy from a hydrogen
hydride storage medium. The latest
legislation in California has made
research in these areas more topical
than ever. The law stipulates that,
from the year 2003, a manufacturer
like Mercedes-Benz has to equip 10%
of the vehicles it sells there as "zero-
emission vehicles." At present, the
only vehicles to meet this demand are
electrically powered ones - provided
their electricity comes from non-fossil
energy sources.
The main problem with both electric
and hydrogen drive is how to store the
"fuel." Even the most efficient high-
temperature batteries are many times
heavier and bulkier than a gasoline or
diesel tank. It is a similar story with
the storage of hydrogen. Neither pres
surized gas nor liquid hydrogen nor
hydride storage gives vehicles the per
formance or transport efficiency to
match modern vehicles with gasoline
or diesel engines. For this reason, al
ternative propulsion systems are ini
tially limited to applications in which
shorter range and lower performance
do not matter.
Daimler-Benz as a technology group
has the opportunity to go beyond the
motor vehicle and work on basic solu
tions to energy and environmental
problems. For instance, within the
framework of project "HYPASSE"
(Hydrogen lowered Automobiles using
Seasonal and Weekly Surplus of
Electricity), sponsored by the Federal
German Ministry for Research and
Technology, we are developing a proto-
type city bus. This is to be fueled by
hydrogen which is produced using the
excess energy generated at certain
times of the week and during certain
seasons of the year by Swiss hydro
electric power stations.
High-Capacity Battery
One of the key elements in the utili
zation of environment-friendly energy
technology is the battery, as the stor
age unit for electricity. Batteries avail
able today are far too heavy; moreover,
they do not have have the necessary
durability and are also too expensive.
As part of a joint venture, AEG is
helping to develop the sodium/nickel-
chloride battery for industrial use; its
storage capacity, at equal weight, is
three to four times as high as that of a
conventional lead/acid battery. The re
search team is concerned with the ma
terial, the cell configuration and the
production process, with a view to im
proving the efficiency and durability of
this type of battery even further.
Comprehensive Solutions
to Traffic Problems
One of the ways our research sector
is dealing with energy and environ
mental problems is through new ap
proaches to traffic technology. Within
the European traffic projects PROM
ETHEUS and DRIVE we are working,
together with partners in the automo
tive and electronics industries, on traf
fic guidance systems and information
technology. The objective is to devise
and build up a system which uses au
tonomous vehicle-borne elements on
the open road, and in urban areas re
ceives information via traffic lights or
other sources from a central control
station. Examples of this include rec
ommended detours or up-to-the-minute
information on traffic routes,
In the goods transportation sector
we are developing fleet management
systems which cover the entire infor
mation chain from logistics and fleet
scheduling up to actual vehicle sys
tems. An essential prerequisite for use
throughout Europe is the laying down
of standards for communication sys
tems between individual vehicles and
the fleet headquarters.
A digital road map of Europe is de
signed as the basis for fleet manage
ment and traffic guidance systems.
Here, too, there is a need for stand
ardizing processes and formats in or
der to record the enormous quantity of
data involved, keep it up to date and
make it accessible to users. In the
Greater Stuttgart area, a traffic project
called "STORM" (Stuttgart Transport
Operation by Regional Management)
has been started up in collaboration
with the city authorities and the gov
ernment of Baden-Wuerttemberg. This
forms the basis of a long-term, com
prehensive research project. The idea
is to extend the regions' transport in
frastructure, integrating it in an overall
system to provide an optimum network
which makes use of road, rail and air
transport. The first step is a feasibility
study as part of the European cities
initiative POLIS.
Studies on the Transport of the Future
Investigations into the economic and
social context of transport and technol
ogy have acquired new emphasis with
the reunification of Germany. Our
study on "The Transport Environment
and Transport Structures of the GDR"
has therefore met with great interest.
In cooperation with a large number of
external partners from various Berlin
research facilities, conceptual plans for
an inter-disciplinary research project
"The City as a Living Environment"
were detailed and submitted for deci
sion. A further focus of effort was our
participation in the study "Berlin -
City in a State of Change." This pre
sented the ideas of the Daimler-Benz
group with regard to traffic and trans
port systems in a unified Berlin, and
was handed over to the authorities in
the eastern and western parts of the
city in October of 1990.
We concluded a further strategic
study, the "Development of Road Trans
port in the People's Republic of China,"
at the end of 1990. The results of this
joint project between Daimler-Benz AG
and the Chinese government are being
phased into China's next Five-Year
Plan and are to form the basis for fur
ther cooperative ventures with the
People's Republic.
New Research Results for
More Active Safety
Active safety systems help the
driver to retain control of the vehicle
even in potentially critical situations.
Rear axle steering, for instance, can
compensate for negative influences
from road surfaces, wind or from
trailers.
In this context, our road testing is
augmented by our driving simulator in
Berlin. This makes it possible to inves
tigate critical situations - such as the
failure of a major component - without
any danger. It is thus also possible to
systematically study the behavior of
less experienced drivers. It is espe
cially these drivers who could be parti
cularly at risk in a car which remained
stable right up to the physical limits, if
they were not warned in time that
those limits were about to be reached.
We are therefore concerning ourselves
with appropriate alarm systems, as
well as with systems which intervene
actively in the accelerator, brake and
steering mechanisms in such cases.
These systems are capable not only of
improving safety, but also of relieving
the driver of routine functions. The
automatic distance retaining system is
one example, which we have already
tested in experimental vehicles, with
the help of radar and infrared monitor
ing equipment.
In this context we are also working
on "computer vision," by which pic
tures from a camera directed at the
road are interpreted automatically. On
empty sections of motorway, an exper
imental vehicle equipped with such a
system has already proved it can work
at speeds of up to 100 km/h. This
helps to provide the conditions under
which vehicles can - in extreme cases
- be driven automatically, and at least
stay in the correct lane or for instance
move along safely in a traffic jam.
Technology in the Service of Man
The interaction between the driver
and the vehicle is to a large extent de
termined by the instruments and con
trols. As part of the the "F 100" exper
imental vehicle, we developed some
completely new concepts. Since the
driver needs to be informed as com
prehensively as possible, while at the
same time concentrating on essentials,
important information is presented
centrally and in a large display in this
vehicle. Only faults etc. which require
immediate action are indicated while
the vehicle is being driven.
The outer edges of the instrument
panel relate the vehicle to its environ
ment. If an object approaches in a
threatening manner, the display
alarms the driver by means of colored
markings in the sector concerned; at
the same time, a warning signal
sounds. The controls of the F 100 are
grouped together according to their
functions and arranged around the
steering wheel in such a way that the
driver intuitively uses the right one.
Functions which are not important
with regard to safety could be con
trolled by voice; to this end, we have
initiated the project "VESPRA." The
cassette/radio, climate control, window
mechanisms, seat adjustment and tele
phone can be activated by vocal com
mands. The system is designed to
adapt to the user's familiarity with it,
and not to require the studying of a
long operator's manual.
Adapting technology to human be
ings is also an important field for our
Berlin research group dealing with
"The Environment of Technology."
Work here concentrates on optimizing
vehicles and domestic appliances. In
the year under review, this mainly
consisted of dealing with details relat
ing to the new S-class, and a control
simulator for AEG domestic appliances
Extra-High-Frequency Chips
Extra-high frequencies, e.g. for satel
lite communications or distance warn
ing radar for vehicles, require excep
tionally high processing speeds on the
part of the electronic components in
volved. Since such frequencies cannot
be achieved using conventional silicon
chips, new solutions are necessary.
With what is called hetero technology,
extremely thin layers of varying com
position but a uniform crystalline
structure are built up. Using this tech
nique, we have already attained ex
tremely high cutoff frequencies of
about 100 Megahertz.
The basic technology for manufactur
ing discrete hetero-transistors has
been transferred to TELEFUNKEN Elec
tronic. The first microwave circuits for
low-noise, broad-band amplifier sys
tems have been developed.
Pattern Recognition -
Reading Handwritten Texts
The aims of pattern recognition are
to read writing and analyze docu
ments. For AEG Electrocom, which is
one of the leaders in the market for
letter distribution and mail system au
tomation, we are working on methods
of automatically interpreting handwrit
ten and incomplete letter addresses.
This is an important prerequisite for
future success in the international
market.
The automatic reading of addresses
and entire documents requires very
many analytical steps. To keep pro
cessing times low despite this, several
characters have to be analyzed in par
allel by different processors. We have
already developed the foundations for
such a parallel text recognition sys
tem.
In the field of multiple parallel sys
tems, we are investigating the suit
ability of neuronal networks for special
tasks in signal processing. This tech
nology uses a very large number of
simple processing units which are
linked together in a tight network and
all operate in parallel. They are not
programmed but "learn" independently
to perform their respective jobs by
adapting the links between the units
to prescribed solutions.
High-Grade Flat Monitor Screens
for Information Systems
While conventional microelectronics
uses single-crystal silicon slices as a
base for integrated circuits a few
square centimeters in size, large-area
electronics employs glass and other
substrate materials. The semiconduct
ing poly-crystalline silicon structures
are applied by means of large-area
thin-film deposition processes. NMOS
and CMOS thin-film circuitry for clock
pulse rates of up to 10 MHz are under
development.
One example of a highly promising
application is in high-definition, color-
capable flat screens, known as active-
matrix liquid crystal displays. The acti
vating elements for the individual ma
trix dots can be integrated with the
drive electronics on one and the same
glass substrate, which cuts costs.
Using this technology, a compact flat
screen which would be suitable for
vehicle-borne driver information sys
tems is being developed.
Synergy Project "Energy Systems"
The rapid translation of research
findings into development and into
plans for new products and areas of
business is just as important as ac
quiring the research findings in the
first place. The aim of the synergy pro
jects undertaken by the Central Re
search and Technology division is to
act as a catalyst to that effect. One
such synergy project concerns itself
with energy technology.
Problems relating to the environ
ment and to natural resources necessi
tate new answers. Our entire group,
with all its activities, itself depends on
the commercial availability and degree
of acceptance of energy media. It is
therefore advantageous for Daimler-
Benz, as an integrated technology
group, to have a broad technological
base and the necessary comprehensive
capacity within the group.
As part of a DASA diversification
project, for example, a study was made
as to whether the technical and eco
nomic resources sufficed to set up a
group-wide "Energy Systems" sector.
The main areas of emphasis were:
• utilization of regenerative energy
sources such as solar cells and
wind-generated power
• efficient utilization of energy by
means of combined power and heat
generation, using gas engines and
gas turbines, and later "fuel cells"
• electro-chemical energy storage
using high-temperature batteries and
hydrogen generated from water by
means of electrolysis.
As they near completion, the investi
gations are revealing some interesting
possibilities and commercial potential
for a sector which could be designated
"Decentralized Energy Supply Sys
tems." At the same time, the investiga
tions show that putting such projects
into practice will require considerable
investment.
New Responsibilities for the
Personnel Department
The increasing pressure of competi
tion and costs, the dynamic develop
ment of the markets and the objective
of securing the future success of the
group place high demands on our
managerial staff and employees.
It is the responsibility of the person
nel department to provide the neces
sary personnel policy framework for
this environment, which is undergoing
a process of transition. Moreover, the
personnel sector is searching for new
ways of matching the group's require
ments and those of its employees.
Efforts concentrated especially on the
continuing development of personnel
exchange, a group-wide managerial
staff development and planning pro
gram, and intensified basic and ad
vanced training programs.
Employment Developments
and Structure
At the end of 1990, the Daimler-
Benz group employed a staff of
376,785 (1989: 368,226) in all, includ
ing 303,404 (1989: 298,199) at the do
mestic plants alone. The employment
situation in Germany was encouraging
overall. On the other hand, some of
our foreign production and assembly
subsidiaries had to contend with diffi
cult political and economic conditions,
which in some cases had considerable
effects on employment figures.
Daimler-Benz
Mercedes-Benz
AEG
DASA
debis
Daimler-Benz
group
2,689
179,120
57,173
60,274
4,148
18
2,707
51,854 230,974
76,949
19,776
61,276
1,002
4,879
731
73,381 376,785
At Mercedes-Benz, full capacity utili
303,404
zation was achieved at all domestic
plants throughout the year under re
view; the number of employees in
creased by more than 5,300. The in
creased personnel requirements due to
higher production volumes at the pas
senger car plants were met largely by
means of indefinite contracts.
The employment situation for 1990
at AEG was well-balanced overall; the
domestic production plants were well
utilized for the most part. The fact that
the number of employees within Ger
many fell by 2.3 % (1,300 employees)
was above all due to the transfer of ac
tivities to other corporate units of the
Daimler-Benz group and the hiving off
of individual sectors.
The reduction in DASA's workforce
by 1,700 as against 1989 was largely
accounted for by the hiving off of the
marine technology activities.
The employees of the newly estab
lished Daimler-Benz InterServices orig
inate largely from the group's subsid
iaries which were transferred to debis,
but also from companies newly ac
quired during the year under review.
At the end of 1990, the group em
ployed 13,257 severely handicapped
people domestically. The legally pre
scribed employment quota of 6 % was
not reached; as in previous years, how
ever, a considerable number of orders
were awarded to outside workshops for
the handicapped.
Collective Agreements for 1990
The collective bargaining round in
1990 brought about a 6 % increase in
standard wages and salaries for the
employees of the metal-working indus
try effective on April 1, 1990 and new
collective agreements relating to a re
duction in working hours.
Negotiations resulted in a standard
working week of 36 hours from 1993
and 35 hours from 1995. As a depar
ture from the 37-hour week which
came into effect April 1, 1989, individ
ual working hours of up to 40 hours
per week were negotiated for 18 % of a
company's employees in North Wiirt-
temberg/North Baden, Lower Saxony
and North-Rhine Westphalia. In other
regions, the quota was 13 %. The do
mestic group companies are making
use of this opportunity.
Personnel Expenditure
The group's personnel expenditure
rose by 16 % to DM 26.9 billion. In the
domestic works of our Corporate divi
sions, rises in standard wages, salaries
and social welfare contributions were
due to an increase in the number of
employees, particularly through the in
clusion of MBB.
Company Pensions
As before, company pensions consti
tute the nucleus of social benefits in
all corporate units of the Daimler-Benz
group. Together with state pensions
and individual personal savings, they
help assure financial security for our
retired employees. Within the Daimler-
Benz group in Germany, a total of DM
1.3 billion in company pensions was
paid. The same pension benefit rules,
as established in 1987, continued to
be in effect for both Daimler-Benz AG
and Mercedes-Benz AG even after the
regrouping of the vehicle business.
The Daimler-Benz AG and Mercedes-
Benz AG paid a total of DM 274 mil
lion to 45,600 pensioners, widows and
children in the year under review. As
per the Company Pension Law, pay
ments of DM 6.6 million were made to
approximately 21,500 pensioners and
widows, that received assistance till
1974 as well as for the first time in
the years 1975, 1978, 1981, 1984 and
1987.
One off assistance payments were
made to approximately 6,500 em
ployees. Three years after the introduc
tion of the Pension regulations, with
effect from the 1st of January 1990,
the Pension tables were increased by
5.6 %.
In order to cover future payments,
an amount totaling DM 1.0 billion was
allocated to pension provisions at
Daimler-Benz AG and Mercedes-Benz
AG. Of this amount DM 28 million per
tained to Daimler-Benz AG and
DM 986 million to Mercedes-Benz AG.
Of the latter figure, Daimler-Benz AG,
in accordance with the contractual
agreement at the time of the reassign
ment of the vehicles business, bore
DM 184 million.
AEG disbursed DM 133 million to
42,000 pensioners, widows and or
phans during the year under review.
Corresponding payments made by the
companies of Deutsche Aerospace
amounted to DM 72 million.
Special Remuneration
The special remuneration awarded
domestically amounted to more than
DM 1 billion in all. These payments
are broken down between the individ
ual corporate units as follows:
At Daimler-Benz AG and Mercedes-
Benz AG, the basic Christmas bonus
was increased by DM 100, with an ad
ditional DM 10 increase for every
three years spent at the company.
Assistance in the Formation
of Private Capital
In accordance with the 5th Capital
Formation Law, all the employees in
Germany were given the opportunity,
for the first time, of purchasing shares
in Daimler-Benz AG for a preferential
price and at a reduced tax rate. Em
ployees of Daimler-Benz AG, Mercedes-
Benz AG and Daimler-Benz InterSer-
vices AG were alternatively offered
Mercedes Aktiengesellschaft Holding
shares. Such an offer was introduced
as a regular feature of Daimler-Benz
AG's capital formation policy in 1973,
and this social institution has now also
proved very popular with employees of
the other corporate units. This offer
has been taken up by 154,877 em
ployees in all. Each employee of
Daimler-Benz AG and Mercedes-Benz
AG was also given the opportunity of
putting DM 312 in company debt cer
tificates with an interest rate of 10 %.
This option was made use of by
30,835 employees.
Residential Property
Subsidies
Many of the group's member com
panies supported their employees once
more in the building and acquisition of
apartments and houses. Interest-free
and reduced-interest loans totaling
more than DM 78 million were granted
for 3,315 houses and apartments.
Family and Career
Vocational Training
An important responsibility in the
personnel policy of all corporate units
of Daimler-Benz is enabling our em
ployees to plan a working career com
patible with family life. At Daimler-
Benz AG, Mercedes-Benz AG, AEG Ak
tiengesellschaft and Messerschmitt-
Bölkow-Blohm GmbH, labor agree
ments were reached which for example
provide a "family break" for a maxi
mum of ten years as a continuation of
the legally prescribed maternity/
paternity leave, after which employees
are entitled to resume working in a
comparable job. At the end of 1990,
this provision had been made use of
by a total of 600 female and some
male employees.
Managerial Planning
and Development
In the implementation of our corpo
rate strategies, the recognition, quali
fication and specific use of the man
agement potential already at our dis
posal is of decisive importance. Now
that the development and disposition
of managerial staff has been imple
mented in a comparable manner
throughout all corporate units, we have
started to extend promotion programs
for up-and-coming managerial staff to
the entire group and have established
a broadly based group-wide scheme for
the placement of top managerial staff.
We have thus further improved the
systematic development and the spe
cific utilization of managerial potential.
At the end of 1990, 14,630 young
people were undergoing vocational
training within the Daimler-Benz
group. In the year under review, 4,440
young men and women began their
training courses, including 3,550 in
the technical trades and 890 in busi
ness professions. Of those who com
pleted their courses, 85 % commenced
work for the various corporate units.
As a result of general trends in popu
lation growth, the number of appli
cants for vocational training courses
continued to decline. Within the frame
work of intensified information and ad
vertising programs, young women in
particular were informed of the oppor
tunities available to them in technical
training courses.
In 1990, too, there was great de
mand for special programs for school
leavers and for courses of study at col
leges of advanced vocational studies.
Within our qualification scheme for
young specialist personnel, we have
assisted a large number of students
and intensified our program for their
care and counseling by means of
training placements, opportunities for
writing theses and seminars to supple
ment their courses of study.
Considerable investments in modern
equipment have been made in order to
meet the increasing demands in tech
nology training. The training staff have
received appropriate further qualifica
tion with regard to both teaching meth
ods and content, in order to deal with
the introduction of new technologies.
The Incorporation of Employees
in Problem-Solving
In 1990, the workshop and produc
tion quality circles continued to prove
their worth as the expression of the
reinforced identification of our em
ployees with the respective depart
ments' objectives and their more effi
cient fulfillment.
With more than 34,000 suggestions
for improvement submitted, the em
ployees of all corporate units contin
ued to show great interest in their
work. The employees' suggestions
were rewarded with premiums
amounting to about DM 11 million.
Activities in the
New Federal German States
By offering basic and advanced
training programs and trainee posts to
employees of former GDR concerns for
qualification in west German concerns
and by providing experienced staff, the
personnel and training departments of
all corporate units contributed to the
economic growth of the new Federal
German states in 1990.
Advanced Training
The group's training scheme for se
nior managerial staff from all corporate
units has now become a firm constitu
ent of our training program. This pro
vides an effective contribution towards
a common understanding for the devel
opment of the group and towards per
sonal dialog amongst the responsible
managerial staff.
Our in-company and external ad
vanced training programs are continu
ing to prove very popular. A total of
171,000 employees participated in
these courses during working hours.
The education program for our staff
in the area of new technologies and in
formation processing, in particular,
was extended. We have also further in
tensified advanced training measures
for our workers. The costs due to ad
vanced training rose during the year
under review to DM 750 million.
New Forms of
Work Organization
In view of the increasing proportion
of work procedures which are auto
mated and incorporated into informa
tion processing networks, along with
the higher qualifications of our em
ployees and their changing attitudes to
work, the distribution of labor is grad
ually having to make way for new
forms of work organization to be im
plemented in production. Group-based
work unites corporate and employee
aims in an exemplary manner. This in
creases work satisfaction and uncovers
previously unrealised potential. Espe
cially Mercedes-Benz AG is putting
comprehensive pilot projects on group-
based work to the test. This future-
oriented form of work organization
places modified requirements on em
ployees and managerial staff; the per
sonnel and training departments have
prepared themselves for this with in
tensified activities for development in
all areas of the company.
Preventive Health Care
and Safety at Work
The medical services of the various
corporate units employed a staff of
276 in all, including 57 company doc
tors. Particularly at small locations,
this staff was supported by a large
number of part-time company doctors
and contracted doctors. Their work
was mainly concerned with rendering
first aid, carrying out preventive check
ups, offering advice and giving courses
on topics such as nutrition and addic
tive and dangerous substances; a fur
ther significant activity was collabora
tion in workplace design.
The number of industrial accidents
occurring in the various corporate
units was either reduced or main
tained at an already low level. This
pleasing result was particularly due to
the commitment of managerial staff
and their employees, the advanced
training of safety experts and the care
ful planning of hazard analysis pro
grams. The increased attention given
to safety at work and ergonomics right
at the planning stage of work systems
has also helped reduce hazards.
In-company social consultancy, prac
tised above all by Mercedes-Benz AG,
has been very successful. This service
offers counseling for employees in dan
ger of addiction and for those with
psychological problems or in personal
crisis situations. In cooperation with
doctors and other advisory services,
it also refers employees to sources of
assistance within and outside the com
pany.
Thanks to Our Workforce
We would like to express our grati
tude to all our employees for their
commitment and hard work throughout
a difficult year, which was marked by
far-reaching transformations in the po
litical and economic spheres and by
the continuation of the restructuring
of our group. Our thanks are also due
to the representatives on the various
labor councils and committees at all
levels of our group for their confident
cooperation.
showed an above-average rise of 12 %;
its share of total output now amounts
to 50.4 % (49.1 % last year). Consider
ing the fact that general price levels
rose only moderately, our purchases of
goods and services increased, in spite
of sales losses due to low exchange
rates for the U.S. dollar and yen. The
disproportionate increase in personnel
expenses, a 16 % increase to DM 26.9
billion, was the result of new hiring at
Mercedes-Benz AG, and the collective
bargaining wage and salary increases
effective April 1st, 1990. Furthermore,
additional unscheduled pension provi
sions totaling DM 250 million were
made, DM 100 million alone on ac
count of the Rent Reform Act of 1992.
New Valuation Methods in Group
Financial Statements Prove Beneficial
Net Income of 1.8 billion has Same
Magnitude as Comparably Computed
Net Income of Last Year
In 1990, sales revenues of the
Daimler-Benz group rose 5.2 %, to DM
85.5 billion, in comparison to the pre
vious year. To facilitate comparision,
we added the sales of MBB to last
year's figures. Total output, as a result
of higher inventories and other cap
italized in-house-output, jumped 11 %,
to DM 88.3 billion; apart from the
first-time inclusion of MBB, the expan
sion of the vehicle leasing business is
also reflected in these figures. Com
pared to the increase of total output,
purchases of goods and services
The change in the valuation methods
in the 1989 consolidated financial
statements, where we have more
closely adapted our accounting policies
to internationally accepted accounting
practices, was positively received both
at home and abroad. For the purpose
of analyzing companies and industries,
the data can now be directly taken
from the Daimler-Benz consolidated fi
nancial statements. Improved compara
bility of our group financials with
other large industrial enterprises oper
ating worldwide has made it easier
during the reporting year to list the
Daimler-Benz shares on important
stock exchanges such as London and
Tokyo. In each instance, we were able
to rely solely on the published annual
financials and we were not required to
submit additional computations for im
portant key figures such as net income
for the year and net equity.
The new valuation of pension provi
sions and inventories in the 1989
group financials had not only impacted
the balance sheet but also the state
ment of income. For this reason, some
basic figures in last year's income
statements are not comparable with
those of 1990. Moreover, we have, for
the first time, included the accounts of
MBB in the earnings statements. In or
der to illustrate the actual develop
ment, we are therefore partly deviating
in the following analysis from the offi
cial presentation of our accounts.
Balanced Group Balance Sheet Ratios
The balance sheet total of the
Daimler-Benz group rose further, by
DM 4.6 billion to DM 67.3 billion, on
account of the larger business volume.
Capital assets, including leasing items,
rose from DM 20.1 billion to DM 23.4
billion. Intangible assets included
goodwill of DM 124 million. Such
goodwill originated subsequent to the
restructuring of the Daimler-Benz
group, and was written off system
atically. The goodwill resulting mainly
from the acquisition of additional
shares in MBB in the amount of DM
591 million was, in contrast, charged
to retained earnings. Fixed asset addi
tions of DM 5.7 billion were offset by
disposals and depreciation totaling DM
4.1 billion. The DM 0.2 billion increase
in financial assets, to DM 1.6 billion,
pertains to new equity investments in
the corporate divisions of AEG, DASA
and debis. The balance sheet amount
of leasing items - largely cars and
commercial vehicles of Mercedes-Benz
- has continued to increase strongly,
from DM 5.0 billion to DM 6.5 billion;
this represents about 10 % of total as
sets meanwhile and nearly 30 % of
capital assets. Excluding leasing vehi
cles, the ratio of capital to total assets
amounted to 25.1 % (24.0 % last year).
Inventories at DM 18.9 billion, almost
Because of the noticably higher vol
ume of investment activities of prior
years, depreciation of fixed assets, in
cluding leasing vehicles, write- downs
and amortization of marketable securi
ties and intangible assets respectively,
climbed further, i.e., by 17 % to DM
5.3 billion. Other operating income is
shown at DM 4.0 billion. Last year,
this income item included to a larger
extent credits resulting from the
change in valuation methods. Other op
erating expenses continued at a high
level even though last year's figure
was likewise influenced by non
recurring expenses.
In the non-operating sector, with
lower annual average liquidity, net in
terest income declined DM 132 million
to DM 989 million. As in prior years,
we have reduced the interest income
earned in the high-inflation countries
of Argentina and Brazil by the inflation
portion. The results from ordinary
business activities dropped to DM 4.2
billion (DM 10.1 billion last year);
comparably computed, it was 10 % be
low the previous year. Due considera
tion must also be given here to the
fact that last year's income taxes were
DM 0.4 billion higher due to the new
method of valuing inventories. Al
though the net income amount of DM
1.8 billion shows a slight increase as
compared to last year's comparably
computed amount of DM 1.7 billion,
much of it is due to lower income
taxes, particularly at some foreign sub
sidiaries.
unchanged from last year, were fi
nanced by advance payments from
customers to the tune of almost 33 %;
the ratio of net inventories in relation
to total assets declined slightly from
19.7 % to 19.5 %. Liquid assets also de
clined, i.e., from DM 14.6 billion to
DM 13.7 billion. This amounted to
20.3 % of total group assets (23.3 %
last year).
On the liability side of the balance
sheet, shareholders' equity - excluding
the amount set aside for dividend pay
ments (unappropriated profit) - rose
DM 0.9 billion to DM 17.3 billion. A
total of DM 1.1 billion of the consoli
dated net income was allocated to re
tained earnings; goodwill amounts
written off here had opposite effects.
The ratio of equity capital, amounting
to 25.6 %, was slightly lower than last
year's figure of 26.2 %. With the simul
taneous increase of the capital asset
ratio, capital assets covered by equity
capital also decreased slightly, from
109 % to 102 %. Leasing vehicles were
not considered here because they are
basically financed through borrowed
capital apart from depreciation and
proceeds from disposals. Our financial
liabilities for the leasing and financing
business amounted to DM 6.2 billion.
Even though provisions rose further,
by DM 0.7 billion to DM 27.4 billion,
their share in terms of the balance
sheet total declined from 42.6 % to
40.6 %. Both capital assets and net in
ventories but also part of the remain
ing current assets are covered by eq
uity capital and long- and medium-
term provisions.
Investment in Fixed and Financial
Assets Again Fully Financed By Cash
Flow
Additions to fixed assets, intangible
assets as well as net additions to fi
nancial investments, totaling DM 6.3
billion, were fully financed in the re
porting year by internally generated
cash-flow which amounted to DM 6.7
billion. Additional funds were derived
from the increase in liabilities, partic
ularly in connection with the refinanc
ing of our rapidly growing leasing
business worldwide.
In the application of funds, the con
tinued vigorous investment activities
of the Daimler-Benz group become evi
dent, with which we wish to enhance
the productivity and competitiveness
of our products.
Activities of the Group Treasury
The concept of centralized financial
management, which was adopted in
connection with the restructuring of
the Daimler-Benz group of companies,
has resolutely been pursued during the
reporting year. With this concept, stra
tegic financial decisions in the group
are made centrally. Operative finance
and liquidity management is also car
ried out in the central finance depart
ment. From time to time, the handling
of individual finance measures can
also be organized decentrally.
With the inclusion of MBB this year,
we essentially concluded the transfer
- of liquid funds and marketable securi
ties from the domestic companies to
Daimler-Benz AG. This transfer was
started last year with the introduction
of our Cash Concentration Program.
The entire liquidity, which at year's
end amounted to DM 13.7 billion, is
being invested in such a way that all
financial requirements derived from
the business purposes of the company
can be met on a short-term basis. The
investment in marketable securities is
in harmony with the figures in the
medium-term investment plan and also
takes into account the prospective in
terest trend. The portfolio is composed
of fixed-interest securities of first-class
issuers. We use new investment in
struments if they fit our general in
vestment strategies.
For the purpose of refinancing our
activities, especially the leasing and
retail financing business, we take ad
vantage of all opportunities which in
ternational money and capital markets
had to offer. Thus, lire 150 billion, A $
100 million and DM 200 million as
Fixed-Reverse-Floaters were raised
through the issuance of Eurobonds via
Daimler-Benz International Finance B. V.
In addition, we, as the first German
company to do so, have initiated a
D-mark based Commercial-Paper-
Program which will primarily serve
our short-term refinancing needs.
In the central foreign exchange
management department, we evaluate
the extensive currency risk of the
group companies, develop in coopera
tion with the corporate divisions indi
vidually designed hedging strategies,
and direct their implementation. It is
the objective of the foreign exchange
management department, depending
on the anticipated exchange rate de
velopment in risk-prone currencies, to
protect through continuing hedging
measures a proportion of the delivery
volume - varying from country to
country - and thus limit and amelio
rate the currency risk.
Financing of Sales and Projects
The indebtedness problems of deve
loping and under-developed countries,
and the huge needs of the new federal
states and of eastern Europe have led
to a strong demand for funds. Taylor-
made programs increasingly gain in
importance here; this is particularly
true for large infrastructure projects in
which our group companies are partici
pating.
Looking at the difficult economic
conditions in the countries of eastern
Europe and the Third World, commer
cial banks are quite reluctant to ex
tend credit. It is for this reason that
governmental development funds,
within the scope of bilateral and multi
lateral cooperation, are becoming more
and more important. Funds which are
thus made available are also of grow
ing importance to our business.
In the export business it was also
our goal during the reporting period to
ascertain all conceivable risks and to
provide sufficient protection. In this re
gard, we have fully utilized the tradi
tional instruments of protection.
*
Our business policy at home and
abroad in 1990, again conformed with
the "OECD-Guidelines for Multinational
Companies."
*) Including carry-forward amounts of companies consolidated for the first time.
The consolidated financial state
ments have been prepared in accor
dance with regulations set forth in the
Accounting Standards Act; the
amounts are shown in millions of
D-marks. The summarized balance
sheet and statement of income items
are separately shown in the notes,
and, where necessary, explained.
Accounting Principles and Valuation
Methods
Accounting principles and valuation
methods were unchanged, after having
been more closely brought in line with
internationally accepted accounting
practice last year. Since the pension
provisions, in this regard, have been
calculated at the tax-allowable interest
rate of 6 %, there exists a variance
against the account of the parent com
pany which based its provision com
putation on an interest rate of 3.5 %.
Assets and liabilities presented in the
consolidated balance sheet - in identi
cal group circumstances - are uni
formly valued. In 1990 as in previous
years, provisions for approved conver
sion, reconstruction, maintenance and
development projects have been set up
or have been systematically continued.
Intangible assets are valued at acqui
sition costs. Beginning with additions
in 1990, goodwill resulting from the
capital consolidation is being amor
tized over five years, which includes
the year of acquisition. Goodwill ac
quired in 1990 totaling DM 591 mil
lion, which was still in connection
with the restructuring to an integrated
technology concern, was charged to
retained earnings as in prior years.
Fixed assets are valued at acquisition
or self-construction costs. The self-
constructed facilities comprise direct
labor direct materials and applicable
manufacturing overhead including
depreciation.
The acquisition costs/self-construc
tion costs for fixed assets are reduced
by scheduled depreciation charges. The
opportunities for special tax-deductible
depreciation allowances were fully uti
lized, i.e. in connection with Section
7d of the Income Tax Act and Section
82d of the Income Tax Regulations
(environmental protection, and re
search and development investments),
Section 14 of the Berlin Development
Law, Section 3 of the Zone Border
Area Development Law Section 6b of
the Income Tax Act and Subsection 35
of the Income Tax Guidelines.
Scheduled fixed asset depreciation
allowances are calculated generally
using the following useful lives: 17 to
40 years for buildings, 8 to 20 years
for site improvements, 3 to 20 years
for technical facilities and machinery,
and 2 to 10 years for other facilities
and factory and office equipment. Fa
cilities used for multishift operations
are depreciated using correspondingly
lower useful lives. Buildings are depre
ciated using straightline depreciation
rates - and where allowable under the
Tax Code - declining rates. Movable
property is depreciated using the
declining-balance-method. For movable
property, we change from the
declining-balance method to the
straightline method of calculating de
preciation allowances when the equal
distribution of the remaining net book
value over the remaining useful life
leads to higher depreciation amounts.
Depreciation allowances on additions
during the first and second half of the
year are calculated using the full year
or half-year rates, respectively, in con
formity with the Tax Simplification
Rules. Assets of little value are ex
pensed in the year of acquisition.
Investments in related companies,
and in other long-term financial assets
are valued at the lower of cost or mar
ket; non-interest bearing or low-
interest bearing long-term receivables
are shown at their present value. Major
investments in associated companies
are valued according to the equity
method.
Leasing equipment is valued at cost,
and is depreciated using the declining-
balance method.
Raw materials, manufacturing sup
plies and goods purchased for resale are
valued at the lower of cost or market
value. Manufactured products are val
ued at production costs which com
prise, apart from direct materials and
direct labor, applicable manufacturing
overheads including depreciation
charges. To the extent that inventory
risks are determinable, i.e. for reduced
usability after prolonged storage or af
ter design changes, reasonable deduc
tions are made, which for manufac
tured goods must not result in a loss
upon sale.
Receivables and other assets - if non-
interest bearing - are reduced to their
present value at the balance sheet
date, and are valued taking into ac
count all known risks. A lump-sum al
lowance for doubtful accounts on a
country-specific scale is deducted from
the receivables in recognition of the
general credit risk inherent in receiv
ables.
Treasury stock and other marketable
securities valued at the lower of cost or
market value at the balance sheet
date.
Provisions for old-age pensions and
similar obligations are actuarially deter
mined on the basis of an assumed in
terest rate of 6 % using the Entry Age
Actuarial Cost Method. The regulations
of the 1992 Pension Reform Act have,
for the first time, been taken into ac
count in calculating the provision
amounts.
Provisions for taxes and other provi
sions are determined on the basis of
fair and reasonable business judge
ments. The obligations in the person
nel and social area are reflected in the
financial statements at non-discounted
values expected to be paid in the fu
ture as benefits are vested.
Liabilities are shown at their repay
ment amount.
Companies Included in Consolidation
One subsidiary, in which we ac
Principles of Consolidation
The companies included in consol
idation encompass, apart from
Daimler-Benz AG, 269 domestic and
foreign subsidiaries.
During the reporting year, 27 com
panies were added to and 23 com
panies deleted from consolidation.
Comparability of financial data with
the previous year has not thereby been
impaired.
Not included are 182 subsidiaries
whose effect on the consolidated finan
cial statements is not material (their
total sales volume is less than 1 % of
consolidated sales) and 12 companies
administering pension funds whose as
sets are solely used for pension pur
poses and are subject to restrictions.
In accordance with Section 296,
Subsection 1, No. 1, of the Commer
cial Code, Deutsche Airbus GmbH is
not consolidated because
Messerschmitt-Bolkow-Blohm GmbH,
with regard to this company, on ac
count of agreements with the Federal
Republic of Germany and of rules in
the bylaws with respect to resolutions,
is restricted in exercising its rights.
quired a majority interest at the end of
1990, was not included in consolida
tion because common management did
not exist and the majority of the vot
ing rights could not be unrestrictedly
excercised. The company was, there
fore, valued according to the equity
method.
In connection with the restructuring
of the Daimler-Benz-group, Daimler-
Benz InterServices (debis) AG was
founded during the middle of 1990.
The restructuring had no material ef
fect on the Daimler-Benz consolidated
financial statements because the com
panies which were assigned to debis
came to a large extent from other cor
porate units, and thus were already in
cluded in the 1989 consolidation.
During the reporting year, the state
ments of income of Messerschmitt-
Bölkow-Blohm GmbH and its subsid
iaries were included in the consolida
tion for the first time. In the previous
year, merely the balance sheets were
consolidated because Deutsche Aero
space AG did not acquire a majority
interest in Messerschmitt-Bolkow-
Blohm GmbH until December of 1989.
Capital consolidation was effected ac
cording to the book value method
where the parent's acquisition costs
are eliminated against the relevant
share capital and retained earnings at
the time of acquisition or first-time in
clusion in consolidation.
The differences resulting from the
capital consolidation are, as far as pos
sible, allocated to the relevant balance
sheet items. For the treatment of the
remaining difference (goodwill) result
ing from additions in 1990, see expla
nation given in the caption "Account
ing Principles and Valuation Methods".
The hidden reserves have been made
active and will be written off over
their useful lives in an effective man
ner.
Profits earned by subsidiaries after
the date of acquisition are added to
consolidated retained earnings. The un
appropriated profit, as shown both in
the separate financial statements of
Daimler-Benz AG and in the consoli
dated financial statements, is thus the
same. In this connection we have
charged the income-affecting consolida
tion measures and the profits/losses
earned by the subsidiaries to consoli
dated retained earnings.
In the consolidated financial state
ments we have included 108
associated companies.
Eleven associated companies as well
as our subsidiaries Deutsche Airbus
GmbH, Hamburg, and Siliconix Inc.,
Santa Clara/U.S.A., have been included
in our consolidated financial state
ments according to the book value
method at equity. Goodwill resulting
from additions in 1990 was capitalized
and is being written off pro rata.
The adjustments made in the in
come statements by our subsidiaries in
Brazil for monetary devaluations have
been retained in the consolidated
statement of income without change,
effectively preventing reflection of in
flationary profits.
The income taxes, which were al
ready geared to the balance sheet date
in the national financial statements,
have been translated at year-end rates.
Items from inflation-adjusted income
statements of our Argentinian com
panies are translated at year-end ex
change rates. Fictitious profits/losses
resulting from the divergence between
the inflationary trend and the changes
in the currency's value have been
eliminated.
The remaining associated companies
Currency Translation
are shown under investments in affili
ated companies at cost of acquisition
and in some instances less write
downs as they are not material to the
consolidated balance sheet, financial
condition and results of operations.
Intercompany receivables and pay
ables have been eliminated; the differ
ences resulting from debt consolidation
have been charged or credited to in
come.
All material intercompany profits
resulting from intercompany sales of
goods and services have been elimi
nated, except items of minor impor
tance. The same holds true for sales of
goods and services by associated com
panies to companies included in con
solidation.
Intercompany sales and other inter
company earnings have been elimi
nated against the relevant costs, or re
classified to "capitalized in-house out
put" or to "increase in inventories",
respectively.
Deferred taxes (assets side) shown in
the consolidated balance sheet result
from income-affecting consolidation ad
justments.
Foreign currency receivables are
translated in the individual financial
statements at the bid price on the day
they are recorded or at the spot rate
on the balance sheet date, if lower.
Foreign currency payables are trans
lated at the asked price on the day
they are recorded or the spot rate on
the balance sheet date if higher.
The accounts of all foreign subsid
iaries are translated to D-marks on the
basis of historical exchange rates for
non-current assets, and at year-end ex
change rates for current assets, bor
rowed capital and unappropriated
profit. Stockholders' equity in D-marks
is the remaining difference between
translated assets less translated lia-
bilites and unappropriated profit. The
difference resulting from the transla
tion of balance sheet items is recorded
in consolidated retained earnings.
Expense and income items are es
sentially translated at average annual
exchange rates. To the extent that they
relate to fixed assets (fixed asset de
preciations, profit or loss from disposal
of fixed assets), they are translated at
historical costs. Net income, additions
to retained earnings, and the unap
propriated profit are translated at year-
end rates. The differences resulting
from the translation at average rates
in effect during the year and the ex
change rates at the balance sheet date
are reflected in other operating ex
penses.
(1) Intangible Assets
Intangible assets, amounting to DM 304 million
(1989: DM 130 million) comprise mostly acquired EDP
Software, patents, and goodwill acquired for valuable
consideration. Moreover, net book value of goodwill aris
ing from the capital consolidation is being shown under
this caption. To a minor degree, this caption also com
prises advance payments made.
(2) Fixed Assets
The increase in property, plant and equipment by DM
1,549 million to DM 15,057 million is derived from in
vestments of DM 5,667 millions and reclassifications of
DM 19 million reduced by disposals of DM 579 million
and depreciation of DM 3,558 million.
Special tax-deductible depreciation allowances amount
to DM 95 million (1989: DM 187 million); depreciation
in excess of scheduled depreciation amount to DM 2
million (1989: DM 60 million).
(3) Financial Assets
A complete listing of our stock ownership will be filed
with the commercial registry office at the county court
house in Stuttgart (Dept. B No. 173). Investments in
long-term securities totaling DM 208 million (1989: DM
233 million) are mostly accounted for by Daimler-Benz
AG. Unscheduled write-downs of investments in affil
iated companies, of investments in related companies
and of other long-term receivables, totaling DM 110 mil
lion (1989: DM 80 million), had to be made.
Because of increased market values, investments in
long-term securities should have been written up by DM
24 million (1989: DM 49 million) in accordance with the
value appreciation doctrine (Section 280, of the Com
mercial Law). However, such a write-up was not made
for reasons of tax law.
(4) Leased Equipment
The increase in leased equipment - almost exclu
sively vehicles - by DM 1,475 million to DM 6,518 mil
lion pertains largely to Mercedes-Benz Credit Corpora
tion, Norwalk, U.S.A., and to Mercedes-Benz Leasing
GmbH, Stuttgart. About 88 % of this balance sheet item
pertains to these two companies.
AEG and Deutsche Aerospace account for nearly 50 %
of the consolidated inventory total.
(6) Advance Payments Received
Advance payments received amounting to DM 5,727
million (1989: DM 6,390 million) were received from
customers almost exclusively for projects and long-term
contracts at AEG, Dornier, MTU and MBB; they were de
ducted from inventories.
Approx. DM 0.9 billion (1989: DM 1.1 billion) of the
receivables from related companies pertain to credit bal
ances at financial institutions, marketable securities and
fixed-interest debt instruments. Other assets include in
vestments of liquid funds in debt instruments not traded
on stock exchanges. They amount to DM 3,866 million
(1989: DM 4,671 million). Also shown here are receiv
ables derived from the business activities of finance and
leasing companies.
In October of 1990 we sold 205,016 shares to our em
ployees (par value DM 10 million = 0.4 % of total out
standing share capital) at a preferential price of DM 346
for each share (in the event one share was purchased)
or DM 392 for each share (in the event two shares were
purchased). On the balance sheet date, we held 111,063
shares of treasury stock (par value DM 6 million = 0.2 %
of total outstanding capital stock), 108,563 shares of
which were purchased in 1988. In August of 1990, a
further 2,500 shares were purchased at an average
price of DM 643 a share.
Other securities largely pertain to fixed-interest-
bearing debt instruments. Pursuant to the value appre
ciation doctrine, they should have been written up by
DM 7 million but such a write-up was not recorded for
reasons of tax law.
(10) Cash
Cash amounting to DM 3,786 million (1989: DM
2,985 million) consists of deposits in banking institu
tions, cash on hand, deposit at the Bundesbank (German
Federal Bank), in post office accounts, and checks on
hand.
(11) Prepaid Expenses and Deferred Taxes
Deferred taxes on income-affecting elimination entries
amount to DM 1,363 million (1989: DM 992 million).
Deferred taxes - a debit amount overall - as shown in
the individual balance sheets of consolidated companies,
are not included.
(12) Stockholders'Equity
The changes in stockholders' equity are as follows:
(13) Capital Stock and Paid-in Capital
Capital stock and paid-in capital pertain to Daimler-
Benz AG.
(14) Retained Earnings
Retained earnings comprise retained earnings allo
cated under statute of DM 160 million, retained earn
ings allocated for treasury stock of DM 61 million
and other retained earnings of Daimler-Benz AG of
DM 7,841 million. Also reflected here are the com
pany's share in the retained earnings and results of
operations of consolidated subsidiaries, insofar as
they have been earned since belonging to the group.
Additionally, this caption takes into account the cu
mulative results from the elimination of intercompany
earnings and from the debt consolidation, as well as
the difference arising from currency translations. The
amount allocated from consolidated net income to re
tained earnings amount to DM 1,230 million.
(15) Minority Interests
The stock ownership of outside third parties in the
subsidiaries included in consolidation pertain mostly
to MBB, AEG, Mercedes-Benz of South Africa, Dornier
and to MTU.
(16) Provisions for Old-Age Pensions and Similar
Obligations
When the assets of the provident funds are added
to the provisions for old-age pensions, the company's
pension obligations are fully covered.
(17) Other Provisions
The provisions for taxes include DM 1,139 million
(1989: 1,589 million) which pertain, to a large extent, to
Daimler-Benz AG for open years pending final assess
ment.
Apart from existing worldwide warranty obligations,
other provisions take into account, above all, obligations
in the personnel and social area, risks for losses inher
ent in pending business transactions, risks arising from
contractual liabilities and pending litigations as well as
devaluation risks in high-inflation countries.
Additional provisions exist for expenditures which are
based on approved change-over, alteration and some de
velopment projects, for possible additional costs in con
nection with completed contracts, and for maintenance
which had been planned for the year under review but
had to be deferred until the following year.
Financial liabilities include approx. DM 6.2 billion in
connection with the refinancing of the strongly expand
ing leasing and sales financing activities for cars and
commercial vehicles.
The liabilities to related companies mostly pertain to
obligations recorded at MBB in favor of joint venture
companies.
Miscellaneous liabilities largely comprise December
accruals for wages and salaries as well as tax liabilities.
Liabilities to financial institutions, notes payable, lia
bilities to related companies, miscellaneous liabilities,
and advance payments received from customers (di
rectly deducted from inventories) are mainly secured
through mortgage conveyance or through assignment of
receivables in the total amount of DM 1,223 million
(1989: DM 1,228 million).
*
Minimum dividend guarantees in favor of co-owners
of three subsidiaries, as well as contractual performance
guarantees could not reasonably be estimated.
Other Financial Commitments
Financial commitments arising from rental, lease and
leasing contracts average approx. DM 557 million annu
ally; the average contract duration is nine years.
For companies not included in consolidation, we have
financial commitments amounting to DM 156 million.
The other financial commitments, particularly pur
chase order commitments for capital investments, are
within the scope of normal business activities.
The obligation arising from stock subscriptions and
from capital subscriptions in close corporations pursuant
to Section 24 of the GmbH Act, amount to DM 9 million.
We are jointly and severally liable for certain non-
incorporated companies, partnerships and joint venture
work groups. In addition, there exist performance con
tracts and miscellaneous guarantees in connection with
ongoing business transactions.
When measured against total output of DM 88,340
million (1989: DM 80,552 million), the ratio of expendi
ture for goods and services amounts to 50% (1989:
49 %).
(24) Personnel Expenses/Employment
In millions of DM
Wages and salaries
Social levies and expenses for
old-age pensions
In comparison to the reporting year, last year's rela
tively large increase in inventories was due to the
change in the valuation method of products in 1989.
(22) Other Operating Income
The income amount included in this caption for the
dissolution of provisions total DM 792 million. Addi
tional income is derived from exchange profits in con
nection with ongoing purchase and payment transac
tions, mostly earned abroad, from costs charged to third
parties, from tax refunds, from security sales, and from
rentals and leases. The reduction of the lump-sum al
lowance for doubtful accounts contributes DM 23 mil
lion. Profits from the sale of capital assets amount to
DM 58 million.
DM 1,412 million of other operating income is attribu
table to prior years. Last year, this caption comprised an
amount of DM 5.5 billion from dissolution of provisions,
of which DM 5.2 billion was derived from a change in
the method of computing pension obligations in 1989 in
compliance with tax regulations.
Both the increased number of employees and the col
lective bargaining wage and salary increases were the
main reason for the higher personnel expenses.
(25) Amortization of Intangible Assets, Depreciation
of Fixed Assets and of Leased Equipment
The depreciation of fixed assets pertains with more
than 50 % to Mercedes-Benz AG. The increase in depre
ciation of leasing equipment results from the growth of
the leasing business of our domestic and foreign financ
ing companies.
The rise in amortization of intangible assets of DM 56
million over last year to DM 112 million is largely due
to the amortization of capitalized goodwill from the capi
tal consolidation.
(26) Other Operating Expenses
This caption comprises additions to provisions, main
tenance expenses, administrative and selling expenses
including sales commissions, rental and lease expenses,
exchange rate losses incurred in the normal course of
business, freight-out, packaging, and the difference re
sulting from the currency translation of income state
ments of foreign subsidiaries. Losses from valuation ad
justments and losses from disposal of fixed and current
assets amounts to DM 644 million. Other operating
expenses amount to DM 12,016 million (1989: DM 12,292
million). Last year, this caption included DM 1.4 billion
in expenses which were caused by special factors in
connection with the restructuring; in 1990, MBB is
included for the first time with expenses amounting
to about DM 1 billion.
Overall, DM 162 million is applicable to prior years.
(27) Net Income from Affiliated, Associated and Re
lated Companies
The decline in taxes is due to the reduction of the
German corporate income tax rate from 56 to 50 % in
the reporting period and to the decrease of the taxable
income of several foreign subsidiaries. In comparison
with the prior year the deferred tax liability set up in
connection with the charge in the valuation method of
inventories in 1989 resulted in a non-recuring expense
of DM 0.4 billion in the prior year.
(31) Net Income
Consolidated net income of DM 1,795 million has pre-
dominantely been earned by the Mercedes-Benz corpo
rate unit. The 1989 net income, comparably adjusted,
amounted to DM 1.7 billion. Special tax depreciation of
fixed assets and tax-allowable write-downs of current as
sets have reduced net income only slightly. Also, future
charges in connection with such write-offs will not be
material.
Other Information/Boards
Under the assumption that the proposed dividend is
ratified by shareholders at the Annual General Meeting
on June 26, 1991, the remunerations paid by the Group
companies to the members of the Board of Management
and to the Supervisory Board of Daimler-Benz AG
amount to DM 13,750,618 and DM 1,990,115 respec
tively. Disbursements to former members of the Man
agement Board of Daimler-Benz AG and their survivors
amount to DM 12,448,571. An amount of DM
91,601,693 was recorded on the books of Daimler-Benz
AG and Mercedes-Benz AG for pension obligations to
former members of the Board of Management and their
survivors. As of December 31, 1990, advances and loans
to members of the Board of Management of Daimler-
Benz AG amount to DM 90,297. Home loans included
herein are not subject to interest; other loans and ad
vances bear interest at 5.5 %. During the year, DM
122,822 was repaid. The stipulated maturities are ten
years for home loans, and one year for other loans and
advances.
The accounting records and the consolidated accounts, which have been audited
in accordance with professional standards, comply with the legal provisions.
With due regard to the generally accepted accounting principles, the consoli
dated accounts give a true and fair view of the assets, liabilities, financial posi
tions and profit and loss of the Daimler-Benz Group. The business review report,
which summarizes the state of affairs of Daimler-Benz Aktiengesellschaft and
that of the Group, is consistent with the accounts of Daimler-Benz Aktien
gesellschaft and the consolidated accounts.
Frankfurt am Main, April 10, 1991
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Zielke
Wirtschaftsprüfer
(Certified Public Accountant)
Dr. Koschinsky
Wirtschaftsprüfer
(Certified Public Accountant)
of both companies retiring on or after
July 1, 1989. The obligations for old-
age pension benefits are actuarially
determined using the Entry Age Actu
arial Cost Method on the basis of an
assumed interest rate of 3.5 %. In com
puting the provision for old-age bene
fits, we have included all eligible em
ployees, taking into account company-
specific fluctuation probabilities. Pen
sion accrual starts with entry age and
ends with the earliest possible age of
retirement as defined in the Pension
Reform Act 1992.
Provisions for taxes and other provi
sions are determined on the basis of
reasonable business judgement.
Liabilities are shown at their repay
ment amounts.
Currency Translation
Foreign currency receivables are
translated in the financial statements
at the bid price on the day they are
recorded or at the spot rate on the
balance sheet date if lower; foreign
currency payables are translated at
the asked price on the day they are
recorded or at the spot rate on
the balance sheet date if higher.
The financial statements of Daimler-
Benz AG have been prepared in accor
dance with regulations set forth in the
Accounting Standards Act. The summa
rized balance sheet and statement of
income items are separately shown in
the supplement. The figures are shown
in millions of D-marks and have been
prepared allowing for the appropriation
of net income.
Accounting Principles and Valuation
Methods
During the reporting year, Daimler-
Benz AG continued with the same ac
counting principles and valuation
methods from last year.
Intangible assets and fixed assets are
valued at acquisition costs which are
reduced by scheduled depreciation al
lowances. The opportunities for special
tax-deductible depreciation allowances
were fully utilized i.e., in connection
with Section 7d of the Income Tax Act
(environmental protection investments)
and Section 6b of the Income Tax Act.
Scheduled fixed asset depreciation
allowances are calculated generally
using the following useful lives: 20 to
40 years for buildings, 10 to 20 years
for site improvements, 3 to 10 years
for technical facilities and machinery,
other facilities as well as factory and
office equipment.
Buildings are depreciated using
straight-line depreciation rates - and
where allowable under the Tax Code -
declining rates. Movable property with
a useful life of four years and more is
depreciated using the declining-
balance-method. We change from the
declining-balance-method to the
straight-line method of calculating de
preciation allowances when the equal
distribution of the remaining net book
value over remaining useful life leads
to higher depreciation amounts.
With reference to the Tax Simplifica
tion Rules, depreciation allowances on
fixed assets additions during the first
and second half of the year are calcu
lated using the full year or half-year
rates, respectively. Assets of little
value are expensed in the year of
acquisition.
Investments in affiliated companies,
in related companies and in other long-
term financial assets are valued at the
lower of cost or market value; non-
interest bearing or low-interest bearing
long-term receivables are valued at
their present value.
Receivables - if non-interest bearing
- are reduced to their present value at
the balance sheet date, taking into ac
count all known risks. An allowance
for doubtful accounts on a country-
group basis is deducted from the re
ceivables in recognition of the general
credit risks inherent in receivables.
Treasury stock and other marketable
securities are valued at the lower of
cost or market value.
Provisions for old-age pensions and
similar obligations have, in accordance
with the drop-down and capital con-
tribition agreements between Daimler-
Benz AG and Mercedes-Benz AG, been
made for pension claims of eligible
vested employees and for pensioners
(1) Intangible Assets
Intangible assets amounting to DM 7 million (1989:
DM 6 million) comprise mostly acquired EDP software.
(2) Fixed Assets
Fixed assets totaling DM 811 million (1989: DM 725
million) pertain largely to the research centers in Ulm
and Frankfurt am Main, the Daimler-Benz head office
building in Stuttgart-Mohringen, the parcel of land on
the Potsdamer Platz in Berlin and the Lammerbuckel
training center situated in the hills of the Schwabische
Alb.
Scheduled depreciation and special tax depreciation
amount to DM 134 million and DM 6 million, respec
tively.
(3) Financial Assets
The investments in affiliated and related companies
amount to DM 15,604 million. Additions of DM 1,106
million pertain most of all to capital stock increases at
Daimler-Benz North America Corporation and to the
newly-founded Daimler-Benz InterServices (debis) AG.
The listing of the shareholdings of Daimler-Benz AG
will be filed with the registry office at the county court
house in Stuttgart.
Because of increased market values, investments in
securities should have been written up by DM 5 million
in accordance with the value appreciation doctrine (Sec
tion 280 of the Commercial Code), but was not done for
reasons of tax law.
Unscheduled write-downs of financial assets, amount
ing to DM 9 million, pertain to write-downs of DM 5
million for investments in affiliated respectively related
companies, and of DM 4 million for investments in secu
rities and receivables.
Receivables from affiliated companies mostly pertain
to loans extended to domestic and foreign subsidiaries.
DM 513 million of the receivables from related com
panies pertain to credit balances at financial institutions,
and DM 211 million to marketable securities and fixed
income debt instruments.
Other assets include investments of liquid funds in
debt instruments not traded on stock exchanges; they
amount to DM 3,064 million. Also shown here are inter
est receivables and tax refund claims.
Together with marketable securities (item 6) and cash
(item 7), Daimler-Benz AG's liquidity amounts to DM
8,967 million (1989: DM 9,857 million).
(9) Paid-in Capital
Paid-in Capital includes the "agio" (net proceeds in
excess of par value) from previous capital stock in
creases and from rights issues not taken up by share
holders. In the year under review DM 3 million have
been appropriated.
(10) Retained Earnings
In millions of DM
Allocated under statute
Balance 12/31/90
unchanged from balance 12/31/89
Allocated for treasury stock
Balance 12/31/89
Transfer to unallocated
160
116
(11) Provisions for Old-Age Pensions
and Similar Obligations
The direct and indirect pension obligations of Daimler-
Benz AG and of Mercedes-Benz AG are actuarially com
puted on the basis of the pension rules valid since Janu
ary 1, 1987. The pension provisions of both companies
rose to DM 9.3 billion (1989: DM 8.5 billion). The assets
of the Daimler-Benz Unterstiitzungskasse GmbH (Provi
dent Fund) amount to DM 3.1 billion (1989: DM 3 bil
lion). The pension obligations of Daimler-Benz AG and
of Mercedes-Benz AG are thus fully covered.
(12) Other Provisions
The provisions for taxes pertain largely to open years
pending final assessment, to the tax portion with re
spect to the special equity reserve reclassified in 1987,
and to the obligations for employee jubilee payments
only temporarily tax deductible.
In October of 1990 we sold 205,016 shares to our em
ployees (par value DM 10 million = 0.4 % of total out
standing share capital) at a preferential price of DM 346
for each share (in the event one share was purchased)
or DM 392 for each share (in the event two shares were
purchased). On the balance sheet date, we held 111,063
common shares (par value DM 6 million = 0.2 % of total
outstanding capital stock), 108,563 shares of which
were purchased in 1988. In August of 1990, a further
2,500 shares were purchased at an average price of DM
643 a share.
Other marketable securities largely pertain to fixed-
interest-bearing debt instruments. Because of increased
market values they should have been written up by DM
7 million in accordance with the value appreciation doc
trine but was not recorded for reasons of tax law.
(7) Cash
Cash amounting to DM 1,714 million (1989: DM
1,164 million) consists almost exclusively of deposits in
banking institutions; in addition, we held small amounts
of cash on hand, deposits at the Bundesbank (German
Federal Bank) and in post office accounts.
The capital stock is unchanged from last year.
Of the authorized share capital totaling DM 500 mil
lion as approved by the shareholders at their meeting
on July 2, 1986, DM 112 million still is available until
June 30, 1991, after having used partial amounts of DM
176 million and DM 212 million at the end of 1986 and
at the end of 1989, respectively.
According to the information received by us under
Section 20, Sub-Section 1, of the Company Act "Deutsche
Bank Aktiengesellschaft", Frankfurt am Main, and "Mer
cedes Aktiengesellschaft Holding", Frankfurt am Main,
each own more than 25 % of our capital stock.
The other provisions take into account, above all,
risks arising from equity investments, from contractual
liabilities and pending litigation, and from obligations in
the personnel and social benefits areas. In addition, pro
visions were made for maintenance expenditures
planned for the reporting year, but which cannot be car
ried out until the following year, as well as for expendi
tures for approved change-over, alteration and mainte
nance projects.
(13) Liabilities Payable to Affiliated Companies
(14) Other Liabilities
The liabilities from purchases of goods and services
declined largely as a result of continuing progress pay
ments for the new administration building in Stuttgart-
Mohringen.
The slightly lower miscellaneous liabilities include -
apart from obligations arising from amounts withheld
from employees for income taxes and social security
payments - mostly loans extended by employees to the
company in connection with the capital formation pro
gram, and obligations arising from property transactions.
The liabilities to affiliated companies pertain largely
to the corporate units Deutsche Aerospace, Mercedes-
Benz, AEG and Daimler-Benz InterServices. They are
largely due to liquidity transfers and intercompany
transactions, within the framework of centralized fi
nance and liquidity management.
Liabilities to financial institutions declined to DM 21
million through scheduled repayments. In 1991, repay
ments will amount to DM 4 million.
A minimum dividend guarantee for 1991 and later,
exists in favor of co-owners of Dornier GmbH that can
not reasonably be estimated. A non-estimative dividend
guarantee was assumed in favor of outside shareholders
of AEG Aktiengesellschaft and of Deutsche Aerospace AG.
Other Financial Commitments
These commitments total DM 929 million; those to af
filiated companies amount to DM 194 million.
The purchase order commitments for capital invest
ments are within the scope of normal business activ
ities.
We are jointly and serve rally liable for two non-
incorporated companies which have profit and loss pool
ing agreements with controlling entities, and for one
partnership by reason of an ownership interest therein.
The losses from pooling agreements pertain with DM
214 million to AEG Aktiengesellschaft; included herein
is a provision in the amount of DM 9 million for outside
AEG shareholders who have been given a dividend guar
antee by Daimler-Benz AG in the amount of 20 % of
their own rate of dividend. The income transfer of DASA
AG amounts to DM 58 million; a provision of DM 6 mil
lion for compensatory payments to outside shareholders
has been deducted therefrom.
Interest expenses comprise credits to domestic sub
sidiaries in the amount of DM 730 million, particularly
for their liquidity transfers to Daimler-Benz AG within
the framework of centralized finance and liquidity man
agement at the holding company.
(17) Other Operating Income
This summary caption comprises, above all, income
from charges for intercompany services and for com
pleted research and development work. Also included
herein is income from the dissolution of provisions
(DM 176 million) and profits from the sale of securities.
Altogether DM 334 million is attributable to prior
years.
(18) Personnel Expenses/Employment
The 1990 personnel expenses reflect, on the one
hand, the transfer of Daimler-Benz AG employees to the
newly-founded corporate unit Daimler-Benz InterSer-
vices, and on the other hand, the 6% union-negotiated
wage and salary increase and the new increase in the
taxable wage base for social security contributions. Ex
penses for old-age pensions for 1990, together with the
amount of DM 986 million shown at Mercedes-Benz AG,
total DM 1,014 million.
(19) Amortization of Intangible Assets
and Depreciation of Fixed Assets
Depreciation allowances of DM 142 million (1989: DM
170 million) pertain with DM 59 million to fixed asset
additions at the research centers and the new adminis
trative building.
(20) Write-Downs of Financial Assets
and of Marketable Securities
The write-down amount of DM 30 million (1989: DM
138 million) is largely due to falling securities prices.
(21) Other Operating Expenses
Other Information/Boards
Under the assumption that the proposed dividend is
ratified by the shareholders at the annual meeting on
June 26, 1991, the remunerations paid to the Board of
Management and the Supervisory Board amount to DM
6,324,508 and DM 1,459,126, respectively. Disburse
ments to former members of the Board of Management
and their survivors total DM 12,448,571. For pension
obligations to former members of the Board of Manage
ment and their survivors an amount of DM 91,601,693
has been provided for i.e., - in accordance with the
drop-down and capital contribution agreement - largely
at Mercedes-Benz AG.
The names of the members of the Supervisory Board
and the Board of Management are listed on pages 2
and 3.
This summary caption comprises, above all, adminis
trative and maintenance expenses, as well as office sup
plies, and light and power. Furthermore, this caption
comprises additions to other provisions, and the interest
portion from the allocation of pension expenses to
Mercedes-Benz AG, for which pension provisions are
maintained at Daimler-Benz AG.
Altogether DM 60 million is attributable to prior
years.
(22) Taxes
Daimler-Benz AG, as the controlling entity, is also lia
ble for taxes of its affiliated companies with whom it
has management and profit and loss sharing agree
ments. These are mainly Mercedes-Benz AG, Deutsche
Aerospace AG and Daimler-Benz InterServices (debis) AG.
Beginning in 1989, there exists an interlocking relation
ship with AEG Aktiengesellschaft with respect to munic
ipal business taxes while the interlocking relationship
with respect to corporate income taxes will not become
effective until 1992. The decline in income tax expenses
to DM 1,937 million (1989: DM 2,148 million) is largely
due to the lowering of the corporation tax rate from 56
to 50 °/o.
(23) Net income
Net income for 1990 of DM 1,120 million is distrib
uted one half each to retained earnings and unappropri
ated profit respectively. We will propose, at the Annual
General Meeting, to pay out, from the DM 565 million
unappropriated profit (including DM 5 million profit car
ried forward), an amount of DM 557 to shareholders and
to carry-forward DM 8 million to 1991.
Tax allowable depreciation of fixed assets does not
materially affect net income. Future negative effects on
net income will not be material.
*
The accounting records, which have been audited in accordance with professio
nal standards, comply with the legal provisions. With due regard to the gener
ally accepted accounting principles, the financial statements give a true and
fair view of the assets, liabilities, financial position and profit and loss of
Daimler-Benz Aktiengesellschaft. The business review report, which summa
rizes the state of affairs of Daimler-Benz Aktiengesellschaft and that of the
Group, is consistent with the financial statements of Daimler-Benz Ak
tiengesellschaft and the consolidated accounts.
Frankfurt am Main, April 10, 1991
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Dr.
Wirtschaftsprüfer
(Certified Public Accountant)
Müller
Dr. Koschinsky
Wirtschaftsprufer
(Certified Public Accountant)
In the five Supervisory Board meet
ings held last year and by means of
written and verbal reports, we have
been informed in detail, and have con
sulted with the Board of Management
on the state of the corporation and on
principal matters of corporate policy.
In particular these discussions cen
tered on questions in connection with
the continuing development of the
company into an integrated technology
concern. Moreover, we dealt with em
ployment trends, results of operations
and medium- and long-term corporate
planning including capital spending
policy. Furthermore, we discussed im
portant individual business transac
tions and made business decisions
which, by law or bylaws, had to be
submitted to us for approval.
We have examined the financial
statements and the business review re
port, which was combined for Daimler-
Benz AG and the group, together with
the recommendations for the payment
of dividends. The financial statements
of Daimler-Benz AG and of the group
as of December 31, 1990, including
the business review report and the ac
counting principles used, were verified
by KPMG Deutsche Treuhand-Gesell-
schaft AG, Wirtschaftsprufungsgesell-
schaft, Frankfurt am Main, and have
been found to be in accordance with
the books and with the pertinent legal
requirements. The Supervisory Board,
in a joint meeting with the Board of
Management on April 22, 1991, noted
the result of the audit with approval.
The result of the examinations made
by the Supervisory Board and the audi
tors has shown no cause for question
ing. We have approved the financial
statements of Daimler-Benz AG as pre
pared by the Board of Management;
they are hereby ratified. We concur
with the recommendations of the
Board of Management regarding the
application of the unappropriated
profit. The financial statements, the
business review report and the exter
nal auditors' report had been available
to the Supervisory Board.
With the conclusion of the Annual
General Meeting on July 4, 1990, Prof.
Dr. Gerhard Tremer resigned from the
Supervisory Board of Daimler-Benz AG
to which he had belonged since July of
1986. During this time, important deci
sions, such as the organizational re
structuring of the concern, the invest
ment in Messerschmitt-Bölkow-Blohm
GmbH and the founding of the fourth
corporate division, were made. His ex
perience and perspicacious advice has
been very valuable to us. We would
like to take this opportunity to express
our gratitude to Prof. Dr. Tremer.
In his place, the shareholders in
their meeting on July 4, 1990, elected
Dr. Gerd Binning, Munich, as member
of the Supervisory Board of our com
pany.
On September 2, 1990, Maria-
Christine Princess von Urach passed
away. As a qualified engineer, she had
been working in the design depart
ment of Daimler-Benz since 1959, and
since 1973 was in charge of organiza
tion and data processing at our Unter-
türkheim plant. She was a member of
the Supervisory Board of Daimler-Benz
AG since 1978, representing manage
ment staff. Her commitment and valu
able advice over three decades have
earned Mrs. von Urach acclaim and
appreciation, also outside the company.
She was a person who earned a great
deal of respect, and we shall remem
ber her with gratitude. In Mrs. von
Urach's place, Mr. Richard Bollmann,
head of Production in the bus sector of
the Mannheim plant, was appointed to
the Supervisory Board of Daimler-Benz
AG as representative of management
employees, effective September 2, 1990.
Messrs. Richard Helken and Willi
Böhm, representatives of employees on
the Supervisory Board of Daimler-Benz
AG resigned their positions effective
October 1, 1990. They thus made it
possible to have a stronger representa
tion of employees on the Supervisory
Board who are working in other areas
than the automobile sector. Mr. Helken
and Mr. Böhm had belonged to the
Board since 1983 and 1973 respec
tively. Both gentlemen had distin
guished themselves through their dedi
cated service and their open-minded
cooperation on the Supervisory Board.
We would like to take this opportunity
to express our acknowledgement and
gratitude to Mr. Helken and Mr. Böhm.
In place of the two departing gentle
men and at the request of the Daimler-
Benz Corporate Labor Council, Messrs.
Siegfried Sauter, deputy chairman of
the Corporate Labor Council of
Daimler-Benz AG and chairman of the
Joint Labor Council of AEG, and Peter
Schonfelder, member of the Labor
Council of Messerschmitt-Bölkow-
Blohm GmbH, were appointed mem
bers of the Supervisory Board by the
Administrative Court of Stuttgart.
Dr. Ing. Rudolf Hörnig resigned
from the Board of Management of
Daimler-Benz AG at his own request
effective at the end of April 1990. He
was responsible for "Research and De
velopment". Dr. Hörnig joined the com
pany in 1956, as a test engineer, and
in 1984 was appointed member of the
Board of Management in charge of the
Research and Development Division.
Dr. Hörnig started establishing the Re
search and Technology Division, so
crucial for our integrated technology
group, with great commitment. We
would like to express our gratitude for
Dr. Hörnig's many years of successful
activity at Daimler-Benz.
The Supervisory Board has appoin
ted Prof. Dr.-Ing. Hartmut Weule
deputy member of the Board of Man
agement effective September 1, 1990.
He took over the functional division
"Research and Technology" from Prof.
Dr. Dr. Niefer who had managed this
division on an interim basis since
Dr. Hörning's departure. Subsequently
thereto and until his admission to the
Board of Management, he had been
chairman and director of the Institute
for Tooling Machines and Industrial
Technology at the Karlsruhe University
of Engineering.
Mr. Heinz Dürr, member of the
Board of Management of Daimler-Benz
AG, asked the Supervisory Board to
approve his resignation from the Board
effective December 31, 1990. He ac
cepted the request of the Federal gov
ernment to become chairman of the
Board of Management of the Deutsche
Bundesbahn (German railway). The Su
pervisory Board has, with due respect,
taken notice and accepted his request.
Mr. Dürr had belonged to the Board of
Management of Daimler-Benz AG since
1986. As chairman of the Board of
Management of AEG Aktiengesell-
schaft, he had made a major contribu
tion during a very difficult phase of
this company's development, which
made AEG into a significant corporate
division of the Daimler-Benz group of
companies. We wish to express our
special thanks to Mr. Dürr for his dedi
cated service and achievements.
Effective January 1, 1991, the Super
visory Board has appointed Mr. Ernst
Georg Stöckl as deputy member of the
Board of Management of Daimler-Benz
AG. He is now responsible for the cor
porate division AEG. Concurrently, the
Supervisory Board of AEG also appoin
ted Mr. Stöckl chairman of the Board
of Management of this corporation. Mr.
Stöckl has belonged to Daimler-Benz
since 1971. His last position was that
of chairman of Freightliner Corpora
tion, our American subsidiary.
Stuttgart-Möhringen
April 1991
March, 1990 reached its high for the
year at 1,969 points, dropped at the
end of September to low for the year
of 1,335. The Daimler-Benz share by
and large moved in parallel with the
overall market, although the weakness
of both the U.S. dollar and the yen had
already adversely affected the perfor
mance of the share during the spring
rally.
In 1990, the Daimler-Benz AG share
was again among the most frequently
traded German blue chips. On the Ger
man stock exchanges alone more than
158 million Daimler-Benz shares, with
a market value of over DM 120 billion,
were traded; representing 7.5 % of all
domestic stock trades. On the new
German options exchange, Daimler-
Benz share also belonged to the most
actively traded issues.
Dividend remains at DM 12
For the business year 1990, a divi
dend unchanged from last year of DM
12 for each eligible share of DM 50
per value will be proposed to the An
nual General Meeting taking place on
June 26, 1991; for shareholders sub
ject to income taxes in Germany, the
dividend thus amounts to DM 18.75
gross. The total payment amount has
Lively Turnover of Daimler-Benz
Shares
The favorable trend on the German
stock exchange, which began in the
autumn of 1989 with the collapse of
the Berlin wall, continued until the
summer of 1990. Because of the crisis
in the Persian Gulf, the situation dete
riorated dramatically as from the be
ginning of August. The German Stock
Index (DAX), which at the end of
Stable Shareholder Structure
With three large shareholders, which
together hold more than two-thirds of
our capital stock, Daimler-Benz AG has
a reliable and manageable shareholder
structure. This assures our indepen
dence and prevents any takeover at
tempts; at the same time, it enables us
to carry out those capital related meas
ures which appear reasonable in the
interest of our entrepreneurial flex
ibility.
Deutsche Bank, which holds 28 % of
our share capital, has been a large
shareholder of Daimler-Benz since the
late twenties. The Mercedes-Benz Ak-
tiengesellschaft Holding (MAH), Frank
furt am Main, has held a 25.23 % stake
since it was founded in 1975. Stern
Autombil-Beteiligungsgesellschaft und
Stella Automobil-Beteiligungsgesell-
schaft each hold a 25 % stake in MAH.
Stern and Stella enjoy an institu
tional following who consider their in
vestments on a long-term basis. The
remaining 50 % of the MAH shares are
broadly distributed and belong to
about 50,000 shareholders. This en-
sures that no single shareholder is
able to dominate the MAH.
The third largest shareholder is the
government of Kuwait, whose equity
stake amounts to about 14 %. After the
end of the Gulf war, it has again been
speculated that Kuwait would have to
sell substantial portions of its large-
scale shareholdings for the purpose of
financing the continuing burden of re
construction. The Kuwait Investment
Office, which is domiciled in London
and which also is administering the
Daimler-Benz package, has let us know
that a sale of Daimler-Benz shares is
not being contemplated.
The remaining 33 % of our share
capital is widely held by about
300,000 investors both at home and
abroad. If the scattered ownership of
MAH is taken into account as well,
about 45 % of our share capital is then,
directly or indirectly, broadly distrib
uted.
slightly increased over that of last
year, from DM 555 million to DM 557
million, on account of lower treasury
stock holdings. We continue to proceed
according to the principle that share
holders should participate in the suc
cess of our company in an appropriate
manner, and to gear the dividend pay
ment to the earnings results; that is,
to the longer-term trend in earnings.
Daimler-Benz Shares are a Good
Long-term Investment
All investments in marketable secu
rities must take into account possible
price declines against the purchase
price. A common share cannot deny its
characteristics as a risk instrument
over the longer term, however, it is
paritcularly this kind of instrument
which offers total return opportunities
which cannot be achieved with fixed-
income securities. An investment
made in Daimler-Benz shares 12 years
ago has thus achieved, despite market
declines during the last four years, a
total return of 11.9 % annually. We
have hereby assumed that the
amounts realized from the sale of sub
scription rights and the cash dividends
received (without tax credit) were rein
vested in Daimler-Benz shares without
having to make additional cash pay
ments.
Presence on Foreign Stock Exchanges
Apart from the German stock ex
changes, the Daimler-Benz share has
been listed on the Swiss stock ex
changes in Basel, Geneva and Zurich
since 1976.
We shall pay even more attention in
the future to increasing market global
ization, also in the procurement of
funds, and will introduce Daimler-Benz
shares to the world's import stock ex
changes. With the official introduction
of our shares in Tokyo, London and
Vienna, we have already made consid
erable headway in this regard.
Since the listing in Tokyo in Sep
tember 1990, average monthly trades
totaled 150,000 Daimler-Benz shares.
Our share thus enjoys a top position
among foreign shares traded on the
Tokyo exchange. At the end of Febru
ary, nearly 600,000 Daimler-Benz
shares had been registered with the
Japanese Securities Clearing Corpora
tion (JSCC); proof of the lively interest
in our share.
International Shareholders' Fair in
Dusseldorf
For the first time, the International
Shareholders' Fair (ISF) took place
from August 30, to September 1, 1990
in Dusseldorf. More than 18,000 visi
tors informed themselves about shares
as an investment alternative. The spe
cial lure was the combination of both
fair and convention. Daimler-Benz used
this opportunity to introduce itself to a
broad public. At our stand, we gave
potential shareholders support for an
investment decision in Daimler-Benz
shares. Our "Fair Quiz", in which more
than 10,000 visitors participated, met
with a lively response.
The International Shareholders' Fair
was also the forum for our meeting
with analysts from the German Asso
ciation for Financial Analysis and In
vestment Advice (DVFA). About 90 an
alysts, bankers and investment adiv-
sors took advantage of the opportunity
to inform themselves about the current
business situation of the Daimler-Benz
group.
On the seventh of December 1990,
the Daimler-Benz share was officially
listed on the International Stock Ex
change in London, even before this
Daimler-Benz was actively traded elec
tronically (SEAQ). Already in the first
two months after introduction, about
1,4 million Daimler-Benz shares were
traded on the International Stock Ex
change in London. The listing on the
Viennese Stock Exchange took place
on February 25, 1991.
Investor Relations Activities Inten
sified
Both the development from an auto
mobile company to an integrated tech
nology conglomerate and the increas
ing presence on foreign stock ex
changes have led to a growing interest
in Daimler-Benz. We are meeting the
growing need for information con
nected therewith by expanding our in
vestor relations activities. In addition
to the information media such as
shareholders' meetings, annual reports
and regular interim reports, through
which we address all our shareholders,
we make increasing use of company
presentations for financial analysts and
institutional investors in all major fi
nancial centers. Last year, we made
such presentations in Zurich, Madrid,
Boston and New York but also on the
occasion of the stock exchange listings
in Tokyo, London and Edinburgh. In
February of this year, we presented
our company to financial analysts and
professional investors in Vienna, Aus
tria.