Mercedes-Benz Group AG | Annual Report 1992

Automotive | Mercedes-Benz Group AG

Supervisory Board

DIPL.-ING. RICHARD BOLLMANN *)

Mannheim

Senior Manager , Deputy Chairman

of the Senior Managers' Committee,

Mercedes-Benz AG

DR. RER. POL. WOLFGANG ROLLER

Frankfurt am Main

Speaker for the

Board of Management,

Dresdner Bank AG

HERMANN J. ABS

Frankfurt am Main

Honorary Chairman,

Deutsche Bank AG

Honorary Chairman

PROF. DR.-lNG. E.H.

WERNER BREITSCHWERDT

Stuttgart

SIEGFRIED SAUTER *)

HILMAR KOPPER

Frankfurt am Main

Member of the Board of

Management,

Deputy Chairman of the Corporate

Labor Council, Daimler-Benz AG

Chairman of the Joint Labor Council,

AEG Aktiengesellschaft

DR. RER. POL. HORST I. BURGARD

Frankfurt am Main

Member of the Board of

Management,

Deutsche Bank AG

Chairman

DR. JUR. ROLAND SCHELLING

Stuttgart

KARL FEUERSTEIN *)

Deutsche Bank AG

Mannheim

Attorney at Law

Chairman of the Corporate Labor

Council, Daimler-Benz AG

Chairman of the Joint Labor Council, Chairman of the Labor Council,

Mercedes-Benz AG

HELMUT FUNK *)

Stuttgart

PETER SCHONFELDER *)

Augsburg

Member of the Labor Council,

Deutsche Aerospace AG

Untertlirkheim Plant and Main

Office,

Mercedes-Benz AG

Deputy Chairman

PROF. DR. JUR. JOHANNES SEMLER

Kronberg/Taunus

Member of the Board of

Management,

Mercedes Aktiengesellschaft

Holding

PROF. DR. RER. NAT. GERD BINNIG

Munich

Head of IBM Physics Group

ERICH KLEMM *)

Calw

Member of the Labor Council,

Sindelfingen Plant,

Mercedes-Benz AG

MARTIN KOHLHAUSSEN

Frankfurt am Main

Speaker for the

Board of Management,

Commerzbank AG

FRANZ STEINKUHLER *)

Frankfurt am Main

First Chairman,

Metal-Workers' Union

HERMANN-JOSEF STRENGER

Leverkusen

Chairman of the

Board of Management,

Bayer AG

RUDOLF KUDA *)

Frankfurt am Main

Departmental Manager within the

Board of Management,

Metal-Workers' Union

BERNHARD WURL *)

Mainz

Departmental Manager within the

Board of Management,

Metal-Workers' Union

HUGO LOTZE *)

Reinhardshagen

Chairman of the Labor Council,

Kassel Plant, Mercedes-Benz AG

DIPL.-ING. HANS-GEORG POHL

Hamburg

Deutsche Shell AG

*) Elected by the employees.

Board of Management

EDZARD REUTER

DR. RER. POL. GERHARD LIENER

Stuttgart

Finance and Materials

Stuttgart

Chairman

JURGEN E. SCHREMPP

Munich

Deutsche Aerospace (DASA)

PROF. DR.-ING. E.H. DR. H.C.

WERNER NIEFER

Stuttgart

Mercedes-Benz

ERNST G. STOCKL

Frankfurt am Main

AEG

Deputy Chairman

DR. JUR. MANFRED GENTZ

Berlin/Stuttgart

Daimler-Benz InterServices

HELMUT WERNER

Stuttgart

Mercedes-Benz

(debis)

DR. JUR. HANS-WOLFGANG

HIRSCHBRUNN

Stuttgart

PROF. DR.-ING. HARTMUT WEULE

Stuttgart

Research and Technology

Personnel

The Corporate Principles of Daimler-Benz

Our work at Daimler-Benz

serves people and their en•

vironment. We aim to offer the

world's most advanced products,

systems and services.

This requires a continual com•

mittment to technical, business,

and social innovation as well as

a corporate culture characterized

not by complacency, but by

creative unrest.

Our customers are the focus

of our efforts. We must strive

not just to meet their expecta•

tions, but to exceed them. Co•

operation and the open exchange

of know-how throughout all areas

of our companies are central to

meeting this goal.

Just as we are accountable

to our customers, we are equally

responsible to the companies'

owners as well as to the public.

This means we must be willing to

provide feedback to others and to

assess ourselves openly and hon•

estly.

In a world increasingly com•

plex, with promising opportunities

but also risks - even minor

events can take on consequences

of major proportions. Therefore,

we must carefully weigh our every

action.

We owe it to future genera•

tions to use our natural resources

prudently and sparingly. This sense

of responsibility must be reflected

in all our thoughts and activities

throughout the Group.

We aim to learn better and

faster than our competitors.

To achieve this, we need not

only flexible organizational struc•

tures but also employees who

think entrepreneurial^.

Key to our success are em•

ployees with a sense of respon•

sibility, independence, creativity,

drive, teamwork, and openness to

new ideas. We therefore promote

every employee's personal devel•

opment to the best of our abilities.

Daimler-Benz does business

in all corners of the globe.

Furthermore, we are active in

certain specialized areas, such as

applied microelectronics, domestic

appliances, selected financial ser•

vices, and countertrading, where

we aim to be highly competitive.

To a great extent, these activities

interlink our core business areas.

Each of our business areas

falls under the responsibility of one

of our four corporate units. Thus,

Mercedes-Benz, AEG, DASA, and

Daimler-Benz InterServices (debis)

work together under the umbrella

of Daimler-Benz, the managing

holding company of our group.

We are convinced of the advan•

tages to everyone of open trade

borders throughout the world.

Therefore, we view competition as

a welcome proving ground. The

measure of our success is the re•

cognition our work receives, and

economic success is an undenia•

ble part of this recognition.

Inherent to our philosophy is

respect for other cultures. As an

international company, we reject

all forms of discrimination. This

principle applies, moreover, to the

filling of management positions,

where we will extend equal oppor•

tunities to every employee regard•

less of nationality.

Our cooperation

aims to:

Combine know-how and

experience to create new

dimensions - Responsibly

promoting progress for

everyone

Daimler-Benz is an integrated

technology group. This means

that our various business areas are

linked by cross cutting technolo•

gies and system structures. We

place a special emphasis on our

know-how and experience in traffic

management systems and trans•

portation technologies.

We are proud to continue a

distinguished tradition guided

by these principles.

Our core businesses include

vehicles for passenger and freight

transportation, rail systems, aero•

space, propulsion systems, de•

fense systems, automation, power

transmission and distribution, and

information-technology services. In

these areas, Daimler-Benz strives

to be a world leader.

Executive Management and Daimler-Benz Group Representatives

Executive Management and

Daimler-Benz Group

Representatives

Daimler-Benz Group

Representatives

Berlin

DR. JUR. BOY-JURGEN ANDRESEN

PETER-HANS KEILBACH

Englerallee 40

Personnel and Social Policy

D-1000 Berlin 33

HANSJORG BAUMGART

Daimler-Benz Art Possessions

Bonn

MARTIN BERGER

ALFONS PAWELCZYK

Friedrich-Ebert-Allee 26

D-5300 Bonn 1

Annual Accounts and Disclosure

DR. RER. POL. ROLF A. HANSSEN *)

Corporate Planning and Controlling

Brussels

DR. IUR. HANNS R. GLATZ

MATTHIAS KLEINERT *)

Public Relations and Economic

Policy

133, Rue Froissart - Bte 29

B-l 040 Brussels

Hong Kong

DR.-ING. MICHAEL KRAMER

(until December 31, 1992)

Research 1

KLAUS B. BEHRENDT

th Floor Ruttonjee House

1 Duddell Street, Central

DR. RER. NAT. VOLKER LEHMANN

Research 2

Hong Kong

WERNER POLLMANN

Tokyo

Technology, Environmental Officer

Daimler-Benz

RAINER JAHN

SVAX TT Building

JORG SEIZER

Subsidiaries and Affiliated

Companies

3-11-15 Toranomon

Minato-ku, Tokyo 105

Japan

KONRAD STRAUB

Washington D.C.

Corporate Auditing

RICHARD H. IMUS

Suite 800, 1350 I Street, N. W.

Washington D. C. 20005

U.S.A.

DR. OEC. PUBL. PAUL WICK *)

Finance and Taxes

DR. IUR. SOLMS WITTIG *)

Staff Lawyer

GERD WORIESCHECK

Personnel Development

for Senior Executives

*) With general power of procurement.

To the Stockholders and Friends of our Company

for the international business cycle

1993 will also bring far more

to recover from its slump and once

again spur export opportunities. As

a result, we find that almost all our

West European trade partners are

also suffering from this economic

downturn. Moreover, public con•

tracts and orders have dropped off

sharply, while politicians respon•

trials and tribulations than we could

have foreseen at the start of 1992.

For the way things stand now, an

upturn in the economy will not come

about as quickly as had been hoped.

We can expect exports to pick up in

the second half of the year at the

earliest, but even then it will be too

sible seem unsure about which basic soon to hope for an increase in do•

future sourcing policies to pursue.

Finally, the turmoil the European

mestic demand. In addition, recon•

struction of the new Eastern German

Monetary System is undergoing has states is making demands on all of

Up until the middle of the 1992

financial year, we were firmly con•

vinced that our corporate approach

dramatically worsened the situation

of the German economy.

us that are greatly above and beyond

that which has already been pro•

The key fields of activity of your vided. On the whole, it looks as if

would again lead to strong growth in company have not been spared by

much of what German business and

industry could just manage to mas•

our operating results. But things

have turned out much differently

than anyone could have expected.

What happened, and why?

these upheavals. In particular, the

demand for passenger cars and com• ter in the past few years now simply

mercial vehicles has plunged, hurt•

ing us seriously.

overstrains its capacities.

In every respect, therefore, 1993

A number of unforeseeable

With the inclusion of Deutsche

will not be easy. But even given to•

events occurred in 1992; a constella• Aerospace Airbus, now consolidated day's much more difficult scenario,

tion of circumstances that affected

not only us, but nearly all of German was projected for more than DM

industry.

One of the major incidents here

has been the drastic decline, since

mid-1992, in domestic demand in

for the first time, Group turnover

we still have reason to be confident.

We have made excellent progress to•

105,000,000,000. As it was, we just wards reaching our strategic goals of

missed reaching the magic number

of DM 100 billion. It was expected

that consolidated net income of the

internationalization, of honing our

competitive edge on the European

home market, of refurbishing and

supplementing our product ranges.

the Federal Republic of Germany. At Group, as well as operating results,

the same time, we are still waiting

would rise strongly, but instead they Then there are the many measures -

fell by 25%. One sign of this is that

Group income and revenue tax ex•

penditures did not increase, but de•

creased by more than DM 450 mil•

lion. But what is especially disheart•

ening is that in the course of the

whether planned or already imple•

mented - to reduce costs and render

our processes, procedures and or•

ganizational structures more flexible.

992 fiscal year, we had to reduce

our workforce in Germany by over

8,000 people.

To maintain these overall

A further major component of

our corporate culture is working in

small groups. For example, by 1995,

group work will be extended to in•

corporate about half of those work•

ing in production at Mercedes-Benz.

Naturally, we expect this manufac•

turing method to also reduce costs

significantly, especially since it will

be subject to constant, painstaking

cost-benefit analyses.

We were among the first to fore•

see coming trends and to adapt our

strategies and structures accor•

dingly. Since then, others have also

realized that the present short-term

positive income trends, we have

been working very hard since the

mid-1980's to cut costs and improve

efficiency. In the motor-vehicle divi•

downswing merely reflects phenom• sion alone, these comprehensive ef•

ena long in the making; namely, the forts have meant annual savings of

sweeping changes in the structure of several billion marks. Similar pro•

the automotive industry. Your com•

pany is aware of these transforma•

tions and is prepared for them.

Against the backdrop of today's

critical situation, the advantages of

our new structure are thrown into

high relief. For example, fully con•

solidating Deutsche Aerospace

grams have been initiated in every

division of the Group, and include

exploiting productivity reserves to

the fullest. Given present economic

These processes entail major al•

stagnation, cost-efficient procedures terations in long-standing structures

and processes must and will be con• and conventional behavior. But since

tinued and intensified.

Where corresponding staff re•

Airbus has had a very positive effect duction has been unavoidable, we

we had decided to undertake these

steps years ago voluntarily, and not

because a changed economic reality

have been able to do so in a manner forced us to, we are certain that we

acceptable to all parties. Unfor•

will harvest the fruits of our labors

tunately, future interests of the

ahead of others. But even more im•

Group as a whole may at some time

portant, the men and women work•

necessitate active measures above

ing for your company are helping

and beyond this.

implement these occasionally pain•

ful changes - an attitude that is not

part and parcel of every company.

One of our primary strategic

on the operating results for the

Group as a whole. This is only one

example, albeit the most important

one, of how your company's new

structure can balance out and com•

pensate for economic swings.

We believe this justifies our pro•

posal that dividends be maintained

at last year's level. It is our belief

that you, the shareholders, should

continue to enjoy the benefits of

your company's long-term earnings

trends, regardless of the occasional

setback.

In addition, we have launched

broad-based measures to make our

organizational structures more flex•

ible. Consequently, your company is goals is to globalize your company.

already benefitting from leaner cen• Only thus can we benefit from the

tral offices, fewer levels of hierarchy, advantages of specific business and

higher performance, profit centers

with decentralized decision-making

authority, a heightened sense of the

industry locations; only thus can we

strengthen our products' compet•

itiveness. Moreover, the global ap•

individual's responsibility, and more proach prevents us from becoming

room for entrepreneurial creativity.

These policies are not empty

too dependent on haphazard fluctua•

tions in currency exchange rates.

For although our hedging measures

to stabilize exchange rates made up

for some of the loss, in the closing

months of 1992 such movements

lowered our sales proceeds by about

one billion Deutschmarks.

phrases, but are quickly becoming

the reality of our day-to-day opera•

tions. They are key components of a

corporate culture characterized by

creative unrest and intradivisional,

intrahierarchical cooperation.

As noted, we have made good

progress in internationalizing pro•

duction structures. We have inten•

sified our collaboration with Ssang

Yong, the South Korean automobile

manufacturer, and have stepped up

However, we are expanding our

1992 also saw the collaboration

worldwide activities not only in pro• of debis and Cap Gemini Sogeti bear

duction and supply. Global sourcing, fruit; in fact, this cooperation will

design centers, and research field of• soon enable us to provide compre•

fices are part of the picture, as is the hensive information processing

strategic extension of our worldwide services Europe-wide.

our operations in Mexico by opening communications networks to im•

Of course, we can continue im•

plementing our strategies only if we

have internationally-experienced

managers and co-workers. To ensure

that the men and women working in

our first passenger-car assembly

plant on the North American conti•

nent and by establishing a new pro•

duction plant for city and regional

buses. International activities like

prove our public relations work.

The annual report also reflects

the growing internationalization of

your company, for we are now in•

cluding the same kind of supplemen• our integrated high-technology

group understand and identify with

nual reports. For this reason, we are our global perspective, we have

these give us solid footing on growth tary information found in U.S. an•

markets of the future.

A completely different kind of

business opportunity is our joint

venture between debis and Gas-

prom, the Russian natural-gas sup•

plier. Our strategic alliances also

serve to help internationalize

Daimler-Benz; just a few examples

include our active cooperation with

Mitsubishi, as well as DASA and

Tupolev's joint study on hydrogen

propulsion systems for aircraft.

concentrating on the consolidated

financial statements, instead of pub•

lishing both that and the complete

annual statement of accounts of

drawn up a set of guidelines entitled

"New, Productive Syntheses of

Knowledge and Experience: For Con•

scientious Progress for Everyone".

Daimler-Benz AG as well. Of course, These guidelines set high standards

you may also obtain the annual

statement of accounts on request,

and it will be available for your per•

usal at the Annual General Meeting

as well.

Much progress has been made

in Europe. Along these lines, by

acquiring the majority interest in

Fokker, the Dutch aircraft firm,

DASA will be able to offer a full

for our integrated high-technology

Group. But they also outline exciting

perspectives for shaping the future

of our company, and for all those

who think in global dimensions and

are ready and willing to work to•

gether to find answers to today's and

tomorrow's problems. And given the

men and women who work in your

company, we are sure that we can

range of products and services in the meet the challenges facing us in the

promising field of regional aircraft.

This acquisition also makes DASA

Europe's largest aeronautics and

aerospace company. At the same

time, we have completed our re•

structuring, including the integra•

tion under company law of

current financial year as well. By

maintaining our strength and conti•

nuity in difficult times, we can pre•

pare for a later upswing and take

part in its prosperity even more

fully.

Messerschmitt-Bolkow-Blohm and

Telefunken Systemtechnik with

DASA. This marks an important step

towards restructuring Germany's

aeronautics and aerospace industry

into an internationally competitive

entity.

Disappointing World

Economic Trends

Daimler-Benz:

Sales of over DM 98 Billion

trations fell to 130,300 vehicles

(-10%). New registrations of our

S-class in its first full year of avail•

ability increased by 12% to 22,400

vehicles. Our SL convertible, with

11,900 (1991: 7,500) registrations,

remained highly popular.

Exports of Mercedes-Benz cars,

at 288,500, were 2% up on those of

1991. Exports to European Commu•

nity countries almost matched those

of the previous year. While substan•

In many industrial countries,

Consolidated sales of Daimler-

economic activity was influenced by Benz totaled DM 98.5 billion (+ 2%)

the continued low level of demand

for consumer and capital goods.

Only in the U.S. did a long-awaited

in the 1992 financial year. Sales in

the European Community totaled

DM 65 billion as in the previous

economic recovery take place during year, of which DM 42.6 billion

the year under review. In the West

European countries, the economic

indicators for the most part showed

(1991: DM 42.7 billion) was gener•

ated in the German market. We re•

corded sharp increases, 8% in each

a downturn in the second half of the case, in the U.S. (DM 13 billion) and tial increases were achieved in the

year, with capacity underutilization

and a rise in unemployment in al•

most all countries. The Japanese

economy too declined in 1992.

In Germany, the economic slow• Aerospace for 17% and debis for 6%

down in the middle of the year came of consolidated sales.

about surprisingly suddenly and was

unexpectedly fierce. High interest

levels played a considerable part in

this. In contrast to past economic cy•

cles, it was not possible to compen•

sate for the reduced domestic de•

mand by means of increased foreign increase in sales in major car mar•

trade. Furthermore, the rise in the

value of the Deutschmark within the about. In Western Europe and the

European Monetary System made

the price of German products in EC

markets considerably less competi•

tive. In the face of rising unit labor

costs and dwindling profit margins,

many companies were forced to

modify their investment plans, with

in other exports markets (DM 21 bil• United Kingdom, Spain and above all

lion). Excluding intragroup business, Portugal, declines were recorded in

Mercedes-Benz accounted for about

two thirds, AEG for 11%, Deutsche

Italy, France and other EC countries,

due to prevailing economic condi•

tions.

Business in the U.S. showed a

gratifying increase; despite the diffi•

cult general market situation we

sold 63,300 cars (+ 8 %). The 1992

award of the U.S. Environmental Pro•

tection Agency went to our S-class;

this series increased its share of

the "high luxury segment" to 41%

(1991:37.5%).

Mercedes-Benz:

Worldwide Sales of 527,500 Cars

In the absence of stimuli at the

wider economic level, the expected

kets in 1992 largely failed to come

Mercedes sales were among

those to suffer from the slowdown in

the Japanese car market. With

U.S., the markets remained static,

while Japan experienced a substan•

tial decline. With the end of the

post-reunification boom, market-

depressing factors won the upper

hand in the German car market too.

Demand in Germany slowed up con•

29,600 new registrations (- 13%)

however, the company remained the

leading import marque. Our busi•

ness in the Far East outside Japan

made extremely positive progress.

Due to the sharp fall in car de•

mand in Germany, which intensified

considerably during the course of

the year and, in contrast to earlier

cycles, was also felt in the luxury

car segment, Mercedes-Benz cut

back its car production to 529,400

units (1991: 578,000).

consequences also for projects in the siderably, particularly in the second

new Federal States. Despite the con• half of the year.

tinuing difficulties and a further fall

in employment, the gross domestic

product of East Germany rose in

At Mercedes-Benz too, car

business did not meet expectations.

Worldwide sales fell by 5% to

1992 for the first time following

27,500 units.

sharp declines.

In Germany 239,000 (1991:

70,400) Mercedes-Benz cars were

newly registered, 10,100 (1991:

,700) or 4% of these in the new

Federal states. Business on the die-

sel side remained relatively stable,

with 83,300 registrations (1991:

9,200). In the last year prior to the

model change in the compact series,

4,000 of these cars were newly reg•

istered in Germany, the most popu•

lar cars being the entry-level 190 D

and the 190 E 1.8. Mid-series regis•

Note:

The Business Review is combined for

Daimler-Benz AG and for the Group.

Mercedes-Benz:

Commercial Vehicle Business

Becomes More Difficult Still

Due to this generally unsatisfac•

tory market situation, production

at our German factories had to be

reduced by 13% from the extremely

high level of the previous year, to

164,600 vehicles.

At 112,800 commercial vehicles 16% to DM 7.4 billion. New export

(+ 5%), the production volume of the orders fell by 6%.

foreign companies of the group was

higher than ever before. In the U.S.,

Incoming orders totaled DM 12.1

billion in the year under review, an

increase of 6% on the comparable

figure for 1991. This increase was

achieved only in the German mar•

ket, where demand increased by

In the commercial vehicle mar•

kets too, conditions were generally

difficult in the year under review.

The downward trend in demand for

commercial vehicles continued in

almost all the West European coun•

tries. The U.S. market however saw

the start of a recovery, while in

Mexico and Argentina the volume

of business increased further.

The Rail Systems field of activity

recorded a particularly large in•

Freightliner increased its production crease of more than 60% in orders.

by 33% to 33,300 trucks and in the

fiercely contested market for heavy

Category 8 trucks (upwards of 15 t

gvw), moved into the lead for the

Numerous large orders received by

MAN GHH Schienenverkehrstechnik

GmbH for low-floor streetcars and an

order for 90 locomotives by the

Due to the unfavorable condi•

tions in the West European commer• first time, with a market share of

cial vehicle markets, Mercedes-Benz 23%. Our companies in Mexico,

Deutsche Bundesbahn/Deutsche

Reichsbahn placed with the newly

acquired AEG Schienenfahrzeuge

GmbH contributed in large measure

to this. In the automated manufac•

was unable to maintain the positive

business trend of 1991. New regis•

trations of Mercedes-Benz commer•

Argentina and Turkey also in•

creased their production and sales.

Mercedes-Benz do Brasil on the

cial vehicles in Germany fell by 10% other hand was forced to cut back its turing, process engineering, environ•

to 109,800. Vans from 2 to 6 t and

trucks over 6 t were both affected by due to difficult conditions in the

production schedules substantially

mental technology and postal auto•

mation markets, the Automation

domestic market. The general weak• field of activity received numerous

ness of the West European market orders despite the unfavorable mar•

was not without consequences for ket conditions in the plant and engi•

Mercedes-Benz Espana; production, neering industry. In the Electro-

this. The trend in buses however

was positive. 2,800 new Mercedes-

Benz buses were registered, 35%

more than in the previous year. At

1%, the company maintained its

which had increased in the previous technical Systems and Components

share of the West European market

year by 26%, had to be reduced by field of activity, orders did not quite

for trucks over 6 t at last year's high 6% to 26,500 vans.

match the high level of 1991,

level, despite the intensified compe•

tition. However, our total new regis• commercial vehicles were produced

In the group as a whole, 277,300 since the economic trend led to a

pronounced decline in orders for

motors. In Microelectronics, TEMIC

TELEFUNKEN microelectronic

GmbH, a joint venture formed by

AEG and Deutsche Aerospace AG,

was included on a 50% basis in the

financial statements of AEG as of

luly 1, 1992; comparably calculated,

incoming orders showed an

trations in Western Europe were

% down on 1991.

during the year under review.

The share of foreign production

companies in this increased to

41% (1991: 36%).

AEG:

Concentration of Forces as a

Result of Structural Adjustments

increase.

The difficult economic conditions

caused output in the West German

electrical engineering industry to

fall by almost 5%. Nevertheless,

business of the AEG corporate unit

increased in important areas of ac•

tivity, particularly Rail Systems and

Power Transmission and Distribu•

tion.

Deutsche Aerospace Concludes

Integration Process

inclusion of Deutsche Aerospace

Airbus and TEMIC (comparably cal•

culated), Deutsche Aerospace

slightly increased its consolidated

sales during the year under review.

The increase was chiefly due to the

invoicing of large satellite projects.

The trend in incoming orders

Despite more difficult

conditions, consolidated

sales rose by 2% to over

DM 98 billion.

In the year under review, the

activities of Messerschmitt-Bolkow-

Blohm (MBB) and Telefunken Sys-

temtechnik (TST) were combined

with those of the old Deutsche Aero•

space. The newly created Deutsche

Aerospace will form the core com•

pany for the operative business of

the aerospace corporate unit of the

Daimler-Benz group. With this step,

the company will substantially im•

prove its capacity for action and co•

operation on the international mar•

kets and will also achieve greater

clarity and efficiency of operation.

Due to a decision of the GATT

panel, Daimler-Benz AG decided in

negotitations with the German gov•

ernment to forego exchange rate

support for Deutsche Airbus GmbH.

In return it was agreed, in addition

to other considerations, that DASA

should acquire the 20% stake held

by Kreditanstalt fur Wiederaufbau

earlier than originally planned. This

transfer allowed the subsidiary

The largest increases,

was heavily influenced by the

8% in each case, were

Airbus programs; however, the com•

parable figure for the group, at DM

12.5 billion, was down on the 1991

level of DM 15.1 billion.

recorded in the U.S. and

other foreign markets

outside the EC.

debis: Further Increase

in Total Output

debis again achieved a sharp

increase in total output in the year

under review. The divisions System-

haus, Financial Services and Trading

made above average contributions to

growth. The Financial Services divi•

sion remained the mainstay of busi•

ness with a share of 72%.

debis obtained 48% of its total

business in Germany, 12% in the EC

partner countries, 31% in the U.S.

market and 9% in other markets.

79% (1991: 77%) of total output in the

year under review related to customers

outside the Daimler-Benz group.

In addition to further growth

from within, the inclusion of the for•

mer German Cap Gemini SCS com•

panies had a positive effect at debis

Systemhaus.

Deutsche Airbus GmbH, Hamburg,

which was previously not fully con•

solidated, to be integrated fully into

the group retroactively from January

1, 1992. Since October 1, this com•

pany has been operating under the

name Deutsche Aerospace Airbus

GmbH.

In parallel with this restructur•

ing, the process of organizational

streamlining and cost reduction con• Particularly the companies in Ger•

Dynamic growth in the Financial

Services division continued in 1992.

tinued, particularly in the central

administrative departments.

many, the U.S., the United Kingdom,

the Netherlands and Italy contrib•

uted to this gratifying trend. The fi•

nancing and leasing of Mercedes-

Benz vehicles was the unchanged

focus of activities. The newly formed

companies debis Leasing GmbH

in Germany and debis Financial

Services Inc. in the U.S. began oper•

ation in the year under review, pro•

viding financing for products other

In mid 1992, DASA transferred

its microsystems and vehicle safety

activities to TEMIC TELEFUNKEN

microelectronic GmbH, a joint ven•

ture in which Deutsche Aerospace

and AEG each have a 50% stake. In

this new company, all the activities

of the Daimler-Benz group in the

fields of semiconductors, micro•

systems and vehicle equipment have than motor vehicles, debis Aviation

been grouped together. After the

Leasing GmbH, Stuttgart, will do

business with customers beginning

in 1993.

The organizational restructuring Employment

of insurance activities in the

Increased International

Purchasing Activities

in the Daimler-Benz Group

Daimler-Benz group and in the ex•

ternal industrial client sector under

the roof of debis Assekuranz Ver-

mittlungs GmbH was concluded in

the year under review.

The Trading division, with its

companies debis International Trad•

At the year-end, the Daimler-

Benz group employed 376,467

people (1991: 388,696), 302,464

(1991: 317,461) of them in Ger•

many.

The Daimler-Benz group pur•

chased goods and services from

around the world to the value of DM

55.7 billion (1991: DM 55.4 billion).

Mercedes-Benz accounted for almost

three quarters of this, AEG for

10.7%, Deutsche Aerospace for

14.8% and debis for 4%.

At the end of December,

ing GmbH and debis Industriehandel Mercedes-Benz employed 222,482

GmbH, substantially improved its

people, AEG 60,784, DASA 81,872

market position. The development of and debis 8,258. Daimler-Benz AG

the Marketing Services division was (Holding) had 3,071 employees,

Our purchasing activities were

affected to a large degree by the dif•

impaired by the economic downturn some 555 of them in corporate man• ficult economic situation. Overall,

in Germany in the year under

review. The pleasing growth of busi• research activities and 1,229 in

ness with customers outside the

service sectors working for the cor•

Daimler-Benz group continued, how• porate units and for the Mohringen

ever.

offices.

Since the start of trial service In Germany, employment at the

agement functions, 1,287 in central

prices of goods and services pur•

chased remained virtually static.

With our global sourcing strat•

egy, we continued to further interna•

tionalize our purchasing. Our pur•

chasing departments in Germany

corporate units was generally unsat• are assisted in important procure•

isfactory due to the downturn in the

ment markets by corporate co•

economy. At our foreign companies

ordinating offices. We expect to find

however, capacity was for the most

new opportunities in the East Asia

part fully utilized.

region and particularly in South

for the Dl and D2 networks in the

second half of 1992, debitel, as a

private telephone company, has

provided access to these mobile

communications services coupled

with competent, individual advice to

customers.

Due to the unsatisfactory level of China, with its extremely rapid pace

of economic development.

The new structure of Daimler-

Benz, based on performance centres

orders in the vehicle sector, there

was an increasing need for adjust•

ments at the domestic plants of

Mercedes-Benz AG. At AEG, employ• and leaner management, promotes

ment in 1992 was generally satisfac• and intensifies the integration of the

tory. During the last months of the

year however, production had to be

adjusted to the poor trend, partic•

ularly in Germany, in demand. The

employee numbers of Deutsche

Aerospace reflect the inclusion for

the first time, on a pro rata basis, of

Eurocopter and TEMIC and the full

suppliers into our planning and

permits further progress to be made

towards ensuring the complete-

systems capability of suppliers. With

these competent partners who

contribute their know-how from the

earliest evolution of the product,

and also through low costs and high

consolidation of Deutsche Aerospace quality, we shall together be able to

Airbus. Changes in government

budgets however resulted in capac•

ity of Deutsche Aerospace being

inadequately utilized in the year

keep pace with the demands of the

market. In these activities we give

the highest priority to meeting our

environmental responsibilities. We

under review. The increase, compar• also, along with other West German

ably calculated, in employee num•

bers at Daimler-Benz InterServices

companies, support the idea of a

(debis), was due to the inclusion of

the German subsidiaries of CAP

Gemini.

purchasing drive for the new Federal

States, as instigated by the German

government. By helping East German (excluding the first time contribution

Additions to fixed assets

amounted to DM 1.1 billion at DASA

suppliers to become fully competi•

tive and by increasing the volume of space Airbus), DM 0.8 billion at AEG

goods and services we obtain from

and DM 0.2 billion each at both

the new Federal States substantially debis and the holding company. At

of DM 1.4 billion by Deutsche Aero•

in the coming years, we intend to

make our contribution to the eco•

nomic upturn in that part of Ger•

many.

the operative level, the funds were

chiefly used in order to develop new

products and to further increase

productivity.

Additions to leased equipment

increased from DM 4.2 to DM 5.2

billion. The leasing business is fi•

nanced by depreciation and disposal

charges and by sequential additions

to liabilities. Borrowing to finance

the leasing and sales financing

companies totaled DM 11 billion

Investment Remains

at a High Level

During the year under review,

we again invested substantial sums

to safeguard the future of the

Daimler-Benz group of companies.

Additions to fixed assets totaled

DM 7.8 billion (1991: DM 6.5 billion)

and intangible assets rose by DM 0.2

billion; the net additions to financial

assets amounted to DM 0.3 billion

(1991: DM 8.1 billion).

DM 9.3 Billion Spent

on Research and Development

(

1991: DM 2.3 billion), depreciation

The spending of the Daimler-

Benz group on research and develop•

ment in 1992 totaled DM 9.3 billion

(1991: DM 9.0 billion). Contract

research, almost exclusively at

and disposals of fixed and intangible

assets to DM 5.5 billion.

Mercedes-Benz again accounted

for DM 4.2 billion of the investment

in fixed assets; DM 3.6 billion (1991: Deutsche Aerospace, accounted for

DM 3.3 billion) of this sum was de•

DM 4.4 billion. More than 36,000

ployed in Germany. As in past years, people are employed worldwide in

the emphasis was on the Passenger

Car division. DM 2.7 billion was in•

vested in efficient, modern manufac•

the research, development and

testing sectors of Daimler-Benz.

The central division "Research

turing facilities, in new products and and Technology" is engaged in a

in preparations for future tasks. The permanent dialogue with the four

car assembly plant in Rastatt, along

with preparations for the new com•

pact series, were at the forefront of

these activities. Investment in the

Commercial Vehicle division totaled mendations are made or specific

DM 1.1 billion, of which DM 0.6 bil•

lion, around half, was spent at the

plants in Germany and was directed propulsion technology, vehicle

towards additions and renewals in

the product ranges, modernization of opment of new materials and mate•

manufacturing plant and the intro•

duction of new technologies.

corporate units of the Daimler-Benz

group, in order to assess and an•

alyse their requirements for new

technologies. Following this, recom•

innovation projects launched. Focal

points of group-wide research are

design, transport technology, devel•

rials technologies, information tech•

nology and the environment.

Mercedes-Benz spent DM 3.1

billion (1991: DM 3.2 billion) on

research and development in its

Passenger Car and Commercial

Vehicle divisions in 1992.

the "O 100 City" minibus. This

Fighter Aircraft; the most notable

event on the helicopter side was the

completion of development work on

the German-French Tiger anti-tank

and escort helicopter. In the Space

Systems group, research and

lowfloor bus with a fiber-glass rein•

forced synthetic body is tailored to

future trends in urban line-service

operation. A further addition to the

At the Detroit Auto Show in Jan• bus range for Europe was the 0 340

uary, 1992, the Passenger Car divi•

sion presented the new 600 SEC top-

built by our Turkish subsidiary.

In the Unimog product sector,

development work concentrated on

the various ESA programs and the

of-the-range model. With this coupe, the new light and medium model se• Ariane program. In the Defense and

which combines advanced design

with the highest levels of comfort

and safety, Mercedes-Benz now of•

fers the largest range of any manu•

facturer catering to the luxury car

market. Our co-operation with AMG

resulted in the course of the year in

further individualization of the pas•

senger car range and led to AMG

versions being offered for almost all

our model series. In June 1992, our

sales organization presented the

new Mercedes-Benz 600 SL to the

public. With the new generation of

ries were introduced on the market.

Civil Systems group, work on the

The completely new U 90 to U 140 L Trigat anti-tank system continued.

models replace the most successful

Unimog series to date, the U 600 to

U 1150 L, in the 4.8 to 8.5 t perm.

GVW category.

In the Commercial Vehicle divi•

sion, design plays an important role

in sales and as an instrument of

In the civilian sector, increased em•

phasis was placed on radio and tele•

vision transmitters and on traffic

management systems. In the Propul•

sion Systems group, major efforts

were undertaken to ensure a

further expansion of non-military

competition. The commercial vehicle aero-engine business in the long

study "EXT", which was shown in

May 1992 at the Hanover Commer•

cial Vehicle Show, is intended for

long-haul operation and features a

design which is highly innovative

for this sector.

term; on the diesel engine side, the

focus was on development of a new

product generation. In the field of

medical systems, work centered on

further development of existing

lithotripters and on new ultrasound

systems.

-valve gasoline engines and an

extended range of standard and op•

tional appointments, our mid-series

AEG spent DM 754 million on

models now offer even greater value. research and development in 1992;

Further innovations were presented

at the Paris Motor Show in October,

this was 12% more than in the pre•

vious year (DM 672 million) and was DM 1.45 Billion

equivalent to more than 6% of AEG

Consolidated Net Income:

1992, with the gasoline-driven

00 SE 2.8 and, new to Europe, the

sales. Focal areas of research during

the year under review were decen•

tralized automation equipment, run• 1992 shows a net income of DM

ning gear and drive systems, trans•

port systems, systems and software

The consolidated income state•

ment of the Daimler-Benz group for

highly economical 300 SD diesel.

During the year under review,

new products joined the Mercedes-

Benz commercial vehicle range and

product improvements were intro•

1.45 billion. The fall of DM 0.5 bil•

lion from the previous year's figure

technology, pattern recognition, very resulted primarily from the onset of

duced. One of the outstanding events high frequency microelectronic com• unexpectedly difficult conditions for

ponents and high-temperature su•

perconductors.

At DASA, DM 5.2 billion (1991:

5.0 billion), equivalent to 30% of

vehicle business in the third quarter

of the year and from the changed op•

erating environment for major areas

of the aerospace industry. Results

from ordinary business activities fell

by one third to DM 2.5 billion.

of the year was the start of produc•

tion of all the models in the new

404 generation of touring coaches.

At the beginning of 1992, the low-

floor articulated O 405 GN also went sales, was spent on research and

into production. The Hanover Inter•

national Commercial Vehicle Show

saw the presentation of an innova•

tion with a most promising future,

development; DM 4.3 billion of this

was spent on externally commis•

sioned projects. Projects financed by

DASA itself again totaled DM 0.9 bil•

lion. In the Aircraft group, the main

activities relevant to the aircraft

business were the Airbus A 330/

A 340 programs, the Dornier 328

and the European

As in previous years, the largest

contribution - albeit a substantially

lower one in 1992 - to consolidated

earnings was made by the vehicle

The interest expense of our leas•

ing and sales financing companies

was slightly below last years' level

at DM 0.4 billion. Excluding the this

sector. The abrupt fall in demand for interest expense our net interest in•

both cars and commercial vehicles

in Germany and the absence of the

expected recovery in major foreign

markets had a substantial influence

on this decline. The situation was

further aggravated by the fall in the

value of currencies of major Euro•

come amounted to DM 1.0 billion

(1991: DM 1.1 billion); the decline

was due to reduced liquidity. The

monetary adjustments made by our

subsidiaries in high-inflation coun•

tries in their financial statements

have been retained in the Daimler-

pean partner countries which signifi• Benz financial statements, effec•

cantly impaired the competitiveness tively preventing the reflection of

of our product prices.

inflationary profits.

Following the extremely high ex•

penses of the previous year in prepa• Sound Balance Sheet Structures

ration for the withdrawal from office

and communication systems, AEG

The balance sheet total rose by

achieved break-even group results in DM 10.5 billion to DM 86.2 billion.

992, whereas operating results re•

This was mainly attributable to the

fact that Deutsche Aerospace Airbus

was fully consolidated for the first

time. On the assets side of the con•

solidated balance sheet, both non-

current and current assets increased

in roughly the same proportion as

the balance sheet total.

On the liabilities side, the equity

ratio fell from 30 % to 28 %; the pro•

portion of non-current assets cov•

ered by stockholders' equity fell

from 89 % to 81 %. Neither of these

figures include the financial services

mained negative and did not reach

last years' level. Here too, business

was handicapped by static or down•

ward economic trends in important

sales markets, particularly in the

second half of the year.

Deutsche Aerospace has made

extensive preparations for the ad•

justments which will be necessary

due to the fall in orders already evi•

dent in the year under review, par•

ticularly in the defense sector. Pre•

liminary outlay relating to future

business also depressed results. The business, which is largely financed

high positive contribution of

by borrowings. Taking into account

medium and long-term provisions,

particularly pension provisions, long

and medium-term capital amount to

61% of the consolidated balance

sheet total. This is sufficient to fully

cover both non-current assets and

inventories.

Deutsche Aerospace Airbus, which

was fully consolidated for the first

time, was not able to compensate

completely for the negative factors.

The contribution of debis to the

consolidated result was similar to

that of the previous year. This was

due above all to the again favorable

trend in earnings of the Financial

Services division. Earnings of the

Systemhaus division were nega•

tively influenced by intensified com•

petition in the information technol•

ogy sector.

Allocation of Earnings

From the net income of Daimler- exchange rate factors, we must be

prepared to have to reduce output at

our German plants. The slightly bet•

ter conditions in overseas markets

on the other hand will make it possi•

ble to increase our foreign commer•

cial vehicle production, but not suffi•

Benz AG, DM 101 million will be

The net income of Daimler-Benz transferred to the retained earnings

AG totaled DM 5,193 million. This

figure includes extraordinary in•

come of DM 4,490 million resulting

from valuation adjustments of pen•

sion provisions and inventories at

Daimler-Benz AG and Mercedes-

of the holding company, in accord•

ance with Paragraph 58 of the

Companies Act. At our Annual Gen•

eral Meeting on May 26, 1993, we

shall propose that an unchanged div• ciently to compensate for the down•

idend of DM 13 be paid per share of

turn in domestic output.

Benz to bring them into line with the DM 50 par value. The total dividend

In order to keep pace with in•

creasingly fierce competition,

the Daimler-Benz consolidated state• duction in treasury stock, to DM 604 Mercedes-Benz will be redoubling

practice which has been followed in

amount will increase, due to the re•

ments since 1989.

million.

the efforts already underway to re•

duce costs and improve productivity.

This will include a further reduction

in workforce numbers.

This means that the same ac•

counting and valuation methods are

on the whole now used at the differ•

ent levels and within each area of

the Daimler-Benz group. This in•

creases "transparency" and ensures countries is uncertain. In the U.S.,

comparability. At the same time,

segmental reporting as required for

the future listing of our shares on

the New York Stock Exchange is

Outlook

At the start of 1993, the eco•

For the current year, AEG ex•

nomic outlook in most industrialized pects a slight increase in its volume

of business; business in foreign mar•

kets will grow somewhat more than

that in Germany. An increase in

a further upturn in demand is ex•

pected, while in Japan recovery is

not likely before the end of the year. business is expected particularly in

Economic trends in the West Euro•

the Power Transmission and Distri•

pean countries will differ widely, the bution and Microelectronics fields of

activity. Research and development

covery being in the United Kingdom work will be stepped up, as will in•

also facilitated.

At our Annual General Meeting, strongest chance of an economic re•

we shall propose that the profits

arising from the valuation adjust•

ment be transferred in their entirety

to retained earnings and so remain

in the company.

Calculated excluding income

from valuation adjustments, net in•

come fell from DM 1,194 to DM 703 cantly below expectations. Thus

million. As in previous years,

Mercedes-Benz AG made by far the

largest contribution. While debis

and France. In Germany, an upturn

cannot be expected before the se•

cond half of the year at the earliest.

In the first two months of 1993

sales in some areas of both commer•

cial vehicles and cars were signifi•

vestment in fixed assets. In addition,

further co-operation and acquisitions

are planned, with a view to an all-

round strengthening in the position

of AEG.

Deutsche Aerospace expects to

achieve a sales volume similar to

that of 1992. Higher revenue can be

short-time working could not be

avoided. The increase in value added expected in the Aircraft group

with the deliveries of the first Airbus

also contributed a positive result and in the tax-relevant usefull life of cars A 340 aircraft to customers. Also,

tax in 1993 as well as the increase

AEG broke even, a loss had to be as• led to many purchases in the Ger•

sumed from Daimler-Benz Luft-und

Raumfahrt Holding AG.

the joint venture TEMIC will make a

substantially larger contribution to

the volume of business of DASA. In

the Space Systems group, we ex•

pect a sharp sales rise in the Ariane

program. No other major projects

are due to be invoiced in the near

future however, so that sales will

fall considerably short of the excep•

tionally high level of 1992. In the

man market being brought forward

to 1992. For the remainder of 1993

we expect positive stimuli for the

entire car range from the introduc•

tion of the new compact class in the

middle of the year.

In the European Community,

there will be a decline not only in

our car sales but also in sales of

commercial vehicles from our Ger•

man factories. Against the back•

ground of continued depressed mar•

kets and increased prices of our

products in foreign markets due to

Defense and Civil Systems group

solutions. The Insurance division,

too, it is likely that business will fall debis Assekuranz, will increasingly

substantially as a result of the con•

tinuing unfavorable trend in orders.

In the Propulsion Systems group,

be establishing offices of its own in

the coming years not only in West•

ern Europe but also in the American

sales of civilian aero-engines will not and South East Asian regions, debis

yet be able to compensate for the

substantial fall in military business.

An important aim of DASA in

Risk Consult and debis Marketing

Services GmbH also plan to expand

their business, debis Handel will in•

the current year is to adapt capacity crease its activities, particularly in

as quickly as possible to the ex•

pected fall in orders, a trend which

is likely to be considerably more

pronounced in the coming years,

particularly in the defense sector,

than was originally expected. Since

production schedules in the Aircraft

and Space Systems groups are also

the area of barter trade, through the

establishment of additional foreign

offices in important counter-trade

markets, debis expects to substan•

tially increase its total output in

1993.

With the help of the joint ven•

tures which were formed in 1992,

declining and are beset by consider• it is our intention to improve our

able uncertainties, appropriate ad•

performance, to reduce costs and to

justment of employee numbers in all offer new products on the market.

areas will be unavoidable.

We expect these joint ventures to

exhibit a high level of growth in the

Following lengthy negotiations,

we concluded an agreement with the coming years. This applies partic•

Dutch government in February,

993, allowing us to acquire a 51%

ularly to the field of transport and

traffic management systems, where

majority holding in aircraft manufac• intelligent, future-oriented solutions

turers Fokker.

Daimler-Benz InterServices will

further increase its business with

are increasingly in demand.

We shall continue the cost-

cutting programs already underway;

customers outside the Daimler-Benz the high wage levels in Germany

group, a focal area being the System- compel us to introduce leaner pro•

haus division, where software activ• duction structures. The expansion of

ities will be stepped up, for the most production capacity abroad will

part in collaboration with CAP

therefore assume increasing impor•

Gemini. The Financial Services divi• tance.

sion is aiming to assume a leading

role as a supplier of integrated

The number of hierarchical

levels within the companies of the

group is being reduced, with the aim

of shortening decision-making pro•

cesses and increasing the motivation

of our employees. Overall, we expect

sales to remain static in the 1993

financial year, with a further decline

in earnings.

Corporate Unit Mercedes-Benz

At Mercedes-Benz, as through•

out the automotive industry, adjust

In the Commercial Vehicle division,

our worldwide investment again

ments in employment numbers had to totaled more than DM 1 billion. DM

be made, in response to the eco•

0.6 billion, over half the total, was

nomic and structural difficulties fac• invested at the factories in Germany.

ing the world automotive industry at Here we concentrated on additions

the present time. At the year-end, the to our product range and on the in•

number of employees in the group

had fallen to 222,482 (1991:

troduction of new technologies. Out•

side Germany, the emphasis was on

renewal of the vehicle ranges and on

a modernisation and expension of

237,442), 10,752(1991: 11,104) of

whom were apprentices and

*) 1992 figure comparable.

trainees. The workforce of Mercedes- our production plants.

Benz AG declined by 14,981 to

A total of DM 3.1 billion (1991:

69,080 employees. The car plants,

the commercial vehicle plants, the

Due to the unfavorable business

environment, Mercedes-Benz was

unable to maintain its positive trend

of the previous years. Consolidated

sales were 1% below those of the

previous year, at DM 66.5 billion.

Sales revenue of the Commercial

Vehicle division fell by 3% to DM

DM 3.2 billion) was spent on re•

search and development in the Pas•

sales division and the administrative senger Car and Commercial Vehicle

headquarters all saw a fall in

employee numbers.

divisions, much of this, as in the

past, in the environmental and

In order to respond more quickly safety fields.

and more flexibly to changes in the

company's operating environment

and to more intensive competition,

Due to the difficult conditions in

the most important markets, a slight

recovery is the most that can be ex•

26.9 billion, whereas that of the

Passenger Car division matched its

high level of the previous year at

DM 39.6 billion.

Mercedes-Benz produced plans for a pected for sales of the Mercedes-

revised management structure,

implementation of which began in

January 1993. With the creation of

product and service centres, each of

which is accountable for its own

Benz cars in the second half of 1993.

For commercial vehicles, we expect a

further decline in demand in Western

Europe, while the growth in our

Sales of Mercedes-Benz in the

European Community fell by 5% to

DM 41.5 billion. This result was in•

fluenced by the unfavorable trend in

the German market, where sales fell

by 5% to DM 29.2 billion. In coun•

tries outside the EC, the volume of

business increased by 6% to DM

overseas sales and production will

results, all areas of the company are probably continue.

being geared more closely to the

market and to the needs of the

customers.

Mercedes-Benz invested DM 4.2

billion (1991: DM 4.1 billion) in

fixed assets in 1992; DM 3.6 billion

24.9 billion. Large increases were

recorded in South East Asia, the

United States and Central America.

(1991: DM 3.3 billion) of this spend•

ing took place at locations in Germany.

As in past years, the emphasis was

on the Passenger Car division,

where at DM 2.7 billion the substan•

tial investment volume of the

previous year was maintained.

Federal Republic of Germany:

Fall in Demand Accelerates

During the Year

Increased Foreign Sales

Export sales of Mercedes-Benz

increased by 2% to 288,500 cars; in

Germany's partner countries of the

European Community, they almost

matched those of 1991. Although

our sales in Italy fell by 8%, 1992

After record volumes in 1991,

swollen by exceptional factors, the

German car market rapidly lost mo•

mentum during the year under re•

view. New registrations nevertheless was our second best year for busi•

totaled approximately 3.9 million

ness in this market. Our sales in

cars (- 6%), the fall being attributable France were 5% below the previous

Depressed World Car Markets

exclusively to the West German

States. This volume, which was still

year's level, while in the United

Kingdom we achieved an increase of

The recovery in important car

markets which had been expected

for 1992 did not come about, due to

the low level of world economic

activity. In Western Europe and the

U.S., sales were static, while in

Japan new registrations fell. The post-

reunification boom in the German

market came to an end and the mar•

ket has returned to a normal level.

Although world production of

passenger cars matched the volume

of the previous year, plant utilization

declined further, due to the con•

tinued build-up of manufacturing

capacity. Increasing employment

problems, falling profits and fiercer

worldwide competition in all market

segments set the tone for the world

car industry.

high on a long-term comparison, was more than 8% despite the continuing

overshadowed however by a plunge

in domestic orders from the early

summer onwards and by a build-up

of stocks of new and used vehicles.

recession. In Spain too, our car sales

were gratifying, continuing the up•

ward trend which has been main•

tained ever since 1985.

With sales of 63,300 Mercedes-

Benz cars (+ 8%), the trend in our

U.S. business was generally pleasing.

Our S-class was awarded the 1992

U.S. Environment Prize by the

Mercedes-Benz:

Slight Increase in Car Sales

Despite the unfavorable overall

conditions, car sales of Mercedes-

Benz increased slightly in 1992 to

Environmental Protection Agency;

this series increased its share of the

DM 39.6 billion. Growth momentum "high luxury" segment to 41%

came chiefly from overseas markets, (1991:37.5%).

the volume of business in the EC

being 2% below the level of the

previous year.

Mercedes-Benz was unable to

escape the general downward trend

in the German vehicle market. New

registrations of Mercedes-Benz cars

fell to 239,000 units (1991: 270,400

units); the new Federal States

accounted for 4% of this total, or

0,100 units (1991: 7,700 units).

74,000 (1991: 96,100) Mercedes

compact models were newly regis•

tered in Germany. New registrations

of the mid-series fell to 130,300 ve•

hicles (-10%). New registrations of

our S-class increased by 12% to

22,400 vehicles. Our SL models too

continued to enjoy high popularity

in Germany, with 11,900(1991:

7,500) cars sold. The new S-class

coupes only became available on the

market towards the end of the year

under review.

We too were affected by the

downturn in the Japanese car mar•

ket, although we nonetheless main•

tained our position as the leading

imported marque. Our business in

the Far East outside Japan showed a

very positive trend. We also

Also in Paris, our S-class was voted

"The World Car 1992" by an inter•

national jury of motoring journalists

from Western Europe, Japan and

the U.S.

Highest Safety Levels

achieved relatively high growth in

the Middle East and Australia.

Due to the low overall level of

as Standard Specification

The high active and passive

demand, Mercedes-Benz cut back its safety standards of our vehicles

car production to 529,400 units

1991: 578,000 units). The reduced

were raised still further by a number

of measures during the year under

review. Since autumn, 1992, all

Mercedes-Benz passenger cars have

been fitted as standard with the

driver's airbag. On account of the

considerably superior protection it

provides, we fit a "full-size" airbag

in our vehicles and not the smaller

(

production particularly affected the

compact series (- 17%), where a

model change was imminent. 7%

fewer mid-series vehicles were

produced, while production of the

S-class, the coupes and the SL

models increased by 6%.

"Euro-airbag". On various models,

Additions to the Model Range

the front passenger's airbag too is

included in the standard specifica•

tion. Further improvements in safety

are being developed as a matter of

utmost priority.

The outstanding newcomers to

the Passenger Car division were the

00 SEC and 600 SEC S-class

coupes, which made their world de•

but at the Detroit Auto Show in Janu• DM 2.7 Billion Invested

ary 1992. At the 77th Paris Motor

Show, the 300 SE 2.8 and 300 SD

S-class models, the 600 SL, the 400

E and the enhanced mid-series

models with new 4-valve engines

were presented to the public.

to Safeguard the Future

In 1992, we invested DM 2.7 bil•

lion in the Passenger Car division to

secure the company's future opera•

tions in the long term, the highest

spending level in the history of the

company. Principal objects of invest•

ment were the car assembly plant in

Rastatt, preparations for production

of the new compact series and the

-valve gasoline and diesel engines

and introduction of water-based

paints in further areas of our manu•

facturing.

On May 25, 1992, the Rastatt

plant, third car assembly plant of

Strong Performance

in the German Touring Car

Mercedes-Benz AG was inaugurated. Championships

This forward-looking move will safe•

guard the long-term competitiveness

of our German-based operations. In

terms of productivity, flexibility,

product quality and environmental

compatibility, the Rastatt plant will

serve as a model for all the other

Mercedes-Benz plants.

1992 was a year of records in

the German Touring Car champion•

ship. More spectators and wider re•

porting than ever before were proof

of the popularity of this series.

Mercedes-Benz played a leading role

in the 1992 season, winning 16 of

Weak

24 races. Klaus Ludwig, in the AMG

Commercial Vehicle Markets

in Western Europe

Further Progress Towards Shorter Mercedes-Benz 190 E took the

Development Cycles

Championship title, followed by Kurt

Thiim and Bernd Schneider, a suc•

cess unrivalled by any other compet•

itor in this fiercely contested series.

Conditions were generally diffi•

cult in the most important commer•

cial vehicle markets in 1992. The

markets in Italy, the United Kingdom,

France and Scandinavia were partic•

ularly weak; competition on prices

and terms again intensified. In con•

trast to the generally declining trend

in Europe, a recovery took place in

commercial vehicle business in the

US, particularly in the heavy-duty

segments. The markets in Mexico

and Argentina continued to grow. In

Brazil however, continuing political

and economic uncertainty led to a

considerable fall in demand. Al•

though the worldwide production of

the commercial vehicle industry in•

creased by 3% to 12.5 million vehi•

cles, production in Western Europe

of trucks over 6 t fell by 10% to

In addition to price and quality,

the traditional components of com•

petition, questions of time-scale and

innovation are now also acquiring

ever greater importance. Using

Outlook

modern development management

methods with a strong emphasis on

an interdisciplinary approach we are pect at the most a slightly more posi•

in a position to face these chal•

lenges.

Given the difficult conditions in

almost all major car markets, we ex•

tive trend in sales of Mercedes-Benz

cars in the second half of 1993. The

first two months of 1993 were sub•

Close coordination takes place

between the research, development, stantially below our expectations for

sales, marketing, production engi•

car sales in Germany. The introduc•

neering, materials management and tion of our new compact series

business management sectors when should lend sustained impetus to

new products are designed. In the

development phase, teams are set

up for the various components of the

vehicle, in which development and

production engineering staff work

side by side. The result is shorter

development times compared with

the previous sequential ordering of

the development and production

engineering processes.

our sales.

299,000 units.

End of Post-Reunification

Boom in Germany

The post-reunification boom in

Germany which continued into the

first part of 1992 came to an abrupt

end in the middle of the year. Due to

the buoyancy of the first half of the

year however, the market showed an

increase for the eighth consecutive

year, with new registrations of com•

mercial vehicles totaling 337,100

units (+ 1%). The growth was largely

fuelled by the market for vans and

trucks up to 6 t. In the truck seg•

ment over 6 t, however, 98,700 vehi• tion in the West European markets

cles were newly registered, 6% fewer and the fall in demand in Germany,

than in 1991.

Due to the unsatisfactory situa•

Group commercial vehicle

production of Mercedes-Benz fell in

1992 by 6% to 277,300 units from

the high level of the previous year.

Our foreign companies increased

their share of production from 36%

we had to reduce production at our

German factories by 13% from the

exceptionally high level of the pre•

Mercedes-Benz Maintains Market

Position in Western Europe

vious year, to 164,600 vehicles. The to 41%.

adjustments in production levels

Leading Manufacturer

Due to the unfavorable condi•

tions in important markets,

affected particularly the Worth and

Diisseldorf assembly plants but also, of Buses Over 8 t

Mercedes-Benz was unable to main• after a time-lag, Mannheim,

tain its positive trend of 1991.

Gaggenau and Kassel, which build

Sales of the Commercial Vehicle major assemblies for commercial

In 1992, group production of

Mercedes-Benz buses and bus

division fell by 3% during the year

under review to DM 26.9 billion.

Business in the German market fell

by 10% to somewhat below DM 11

billion, while business abroad rose

to DM 15.9 billion (1991: DM 15.5

billion). With worldwide sales of

vehicles.

chassis totaled 29,000 units (1991:

28,600 units). We thus maintained

our position as the world's leading

manufacturer of buses over 8 t

permissible gross vehicle weight.

Mercedes-Benz buses in this cate•

gory set a new record in 1992 for

registrations in Germany, at 2,500

Benz group reached its highest level units (+ 40%). At our Mannheim

ever. Our American company

plant, the last O 303 model left the

assembly line after a production run

lasting 18 years. 38,000 O 303's

were sold, making this the world's

most successful touring coach. Pro•

duction of the new O 404 coaches

started at the beginning of 1992.

Increased Production

at Foreign Companies

With an increase of 5% to

112,800 units, production at the

foreign companies in the Mercedes-

94,000 trucks (1991: 109,400

trucks) over 6 t, we maintained our

position as world market leader in

this segment.

Due to the low level of demand

in the second half of the year, new

Mercedes-Benz registrations in

Germany fell to 109,800 commercial market for heavy Category 8 trucks

vehicles, 10% below the record

volume of 1991.

Freightliner, whose production in•

creased by 33% to 33,300 trucks,

made a substantial contribution to

this. In the fiercely contested U.S.

(upwards of 15 t gvw), Freightliner

moved into the lead for the first

time, with a market share of 23%.

Exports from our German facto•

ries fell by 2% to 78,200 units. Nev•

Increased Unimog Sales

A pleasing trend in business

ertheless, we held our West European was also recorded at our companies

Our Unimog sales rose during

the year under review to 4,600 units

(1991: 4,100 units). Major orders,

notably from China and Greece,

more than compensated for the fall

in sales in Germany and important

world markets due to economic con•

ditions. 650 (1991: 550) of the 2,300

(- 5%) vehicles sold in Germany were

supplied to customers in the new

market share for trucks over 6 t

at the previous year's high level

of 31%.

in Mexico, Argentina and Turkey.

Due to the unfavorable situation in

its home market, Mercedes-Benz do

Brasil had to cut back production

substantially, despite increased

exports.

Mercedes-Benz Espafia was hit

by the weakness of the West

European markets; following an

increase of 26% in the previous year, Federal states.

production had to be cut back

by 6% to 26,500 vans.

New Products and

Product Improvements

Increased Collaboration with

SsangYong Motor Company

During the year under review,

new products joined the Mercedes-

Benz commercial vehicle range and

product improvements were intro•

duced. The overall philosophy is to

Mercedes-Benz AG and South

Korea's fourth-largest vehicle manu•

facturer, the SsangYong Motor Com•

pany (SYMC) concluded an agree•

ment on co-operation in October,

offer at all times the very latest state 1992. This means that in addition to

of the art in environmentally com•

license production of diesel engines

patible, economical and individually- and vans as provided for in an earlier

tailored transport solutions.

The outstanding event of the

year in the bus sector was the start

agreement, SYMC will as of 1994 be

able to produce Mercedes-Benz gaso•

line engines under license. By this

of production of all the models in the long-term cooperation, which was

new 0 404 generation of touring

initiated in 1991, it is our intention

coaches, which was presented at the to create an improved position from

end of 1991. Reactions from cus•

tomers have been universally posi•

tive. At the beginning of 1992, the

low-floor articulated 0 405 GN also

went into production. The Hanover

International Commercial Vehicle

Show saw the presentation of an in•

novation with a most promising fu•

which to serve the South East Asian

market. To reinforce the partnership,

Daimler-Benz AG has acquired a 5%

holding in the capital stock of SYMC.

From 1994, more than 100,000

Mercedes-Benz gasoline and diesel

engines will be produced annually

on jointly designed production facili•

ture, the "0 100 City" minibus. This ties at the Changwon plant.

completely new low-floor bus, devel•

oped in cooperation with a Dutch

design and development center, is

tailored to future trends in urban

line-service operation. A further

addition to the bus range for Europe

was the 0 340 built by our Turkish

subsidiary.

Outlook

The prospects for the commer•

cial vehicle markets at the begin•

ning of 1993 are not good. Only a

substantial recovery in the West

European volume markets and over•

seas markets would be capable of

compensating for the continuing

slowdown in the German economy,

where we experienced marked sales

In the Unimog sector, the 1992

financial year saw the production

and market launch of the new light

and medium Unimog series. From

the outside, these models are distin• declines in the first two months of

guished by the new spacious safety-

design driver's cab, with an engine

hood which slopes more sharply on

the driver's side to give a better

view when working.

1993.

The Mercedes-Benz Commercial

Vehicle division faces still fiercer

competition due to the Single

European Market. In the coming

years, we shall therefore have to

exploit all possible means of pre•

serving and strengthening the

competitiveness of our German-

based operations.

We hope to improve on the

record 112,800 units produced by

the foreign commercial vehicle com•

panies of the Mercedes-Benz group

in 1992 and further strengthen our

position as the world market leader

for trucks over 6 t.

Corporate Unit AEG

activity improved on the profits of

the previous year. In Industrial

Automation, the motors sector and

in Nuremberg. Large-scale invest•

ment also took place at TEMIC for

the production of integrated circuits

Microelectronics, earnings remained in Heilbronn and airbag production

negative or worsened, due in part,

to considerable burdens.

in Aschau.

The AEG group spent DM 754

Provisions contained in the 1991 million on research and develop•

financial statements for the with•

drawal from office and communica•

tion systems could in part be cred•

ited to income, thus contributing to

an increase of DM 63 million in the

result from ordinary business activ•

ity, which stood at DM + 8 million.

Incoming orders of the AEG

ment in 1992, a rise of 12% on the

comparably calaculated figure for

the previous year. Focal areas of

research in the year under review

were decentralized automation

equipment, running gear and drive

systems, transport systems, systems

and software technology, pattern

recognition, very high frequency

microelectronic components and

Despite the weakness of the

West German electrical engineering

market, the AEG group recorded an

increase in the volume of business

in important areas of operation, par•

ticularly Rail Systems and Power

Transmission and Distribution.

Sales of the AEG group rose by

group totaled DM 12.1 billion in the

year under review, an increase of

over 6% on the comparable figure for high-temperature superconductors.

1991. This increase was achieved

On July 1, 1992, AEG's subsid•

iary TELEFUNKEN electronic GmbH,

Heilbronn, and its affiliated com•

panies were brought into TEMIC

TELEFUNKEN microelectronic

GmbH together with the micro•

electronics activities of Deutsche

Aerospace AG (DASA). AEG and

DASA each have a half share in this

company, which they are consolidat•

solely in the German market, where

demand increased by 16% to DM 7.4

billion. Export orders fell by 6%.

8% on the comparable figure for the

previous year to DM 11.6 billion.

At the end of 1992, AEG

Revenue from sales in Germany rose employed 60,784 people around the

by 11% to DM 6.8 billion, while for•

eign business increased by only 3%.

The earnings trend of the AEG

group did not come up to expecta•

tions. This was due to static or reces•

sive economic conditions in impor•

tant sales markets, particularly in

the second half of the year. Overall

therefore, operating results did not

match the level of 1991. Postal

Automation made a substantial

profit; the Electrotechnical Systems

and Components field of activity

improved on its good position and

achieved positive results; Rail Sys•

world, 46,559 of them in Germany.

50% of the employees of TEMIC

TELEFUNKEN microelectronic

GmbH are included in this figure.

As in 1991, AEG invested a total ing on a pro rata basis in their

of some DM 1.8 billion in intangible

assets, fixed and financial assets,

research and development and

training, equivalent to 15% (1991:

13%) of total output.

financial statements.

For the current year, 1993, AEG

expects to slightly increase its vol•

ume of business, particularly in the

Power Transmission and Distribu•

Including the non-current assets tion and Microelectronics fields of

activity.

taken over from newly acquired

companies, investment by AEG in

1992 totaled DM 916 million (1991:

DM 943 million). The additions to

tems improved its earnings substan• fixed assets, which totaled DM 765

tially and almost broke even, while

the Domestic Appliances field of

million (1991: DM 872 million),

include DM 113 million (1991: DM

70 million) of additions outside

Germany. DM 98 million (1991: DM

3 million) was invested in related

companies. Investment activity fo•

cused on factory renewal at AEG

Starkstromanlagen Dresden and

AEG Schienenfahrzeuge in Hennigs-

dorf, modernization of the Sickin-

genstraBe site in Berlin and the

completion of rehabilitation work at

MAN GHH Schienenverkehrstechnik

National Institute of Standards and

Schaltgerate GmbH, Berlin, and the

Polish company MEFTA sp.z.o.o.,

Technology". In a competition in

which all the major suppliers of sys• Mikolow, the transformers sector

tems for the automatic reading of

handwriting were represented, AEG

won two first prizes for upper and

lower case characters.

was strengthened substantially. In

the Components division, increases

were achieved in the area of power

supplies for data processing and

In the current financial year, we telecommunications, emergency

expect the Automation field of activ• power supply systems and unit-type

The Automation field of activity

comprises Industrial Automation -

with the three divisions Products

and Basic Systems, Systems Tech•

nology and Support, Industrial

Systems - and Postal Automation.

Business volume matched the high

level of the previous year.

ity to achieve a similar volume of

business to that of 1992.

heating power stations, power me•

ters and lighting systems. On the

other hand, the difficult market af•

fected sales of electrical machinery.

With effect from July 1, 1992, AEG

acquired Starkstrom-Anlagenbau

Magdeburg GmbH.

Electrotechnical Systems

and Components:

Substantial Increase in Sales

In October 1992, the new AEG

Automation Centre, the "Geamatics

House", was opened in Frankfurt-

Niederrad. The Geamatics House

serves as a know-how focus for the

entire field of activity and as a co•

ordinating center for international

activities.

The Electrotechnical Systems

and Components field of activity

expects the level of business to in•

crease slightly in 1993.

The Electrotechnical Systems

and Components field of activity

comprises the divisions Power Trans•

Rail Systems:

Sharp Rise in Business Volume

In Industrial Automation, MODI- mission and Distribution and Compo•

CON, based in Andover/U.S. and

Seligenstadt, further increased its

business in the field of programm•

able logic control (PLC) systems. In

the US, MODICON received the

nents. Once again, the volume of

business increased, although some

important markets remained

depressed.

Sales of the Power Transmission

and Distribution division exceeded

those of 1991 substantially, while

incoming orders matched the high

The Rail Systems division com•

prises the divisions Integrated Rail

Systems, Mainline Railroads, Mass

Transit and Railcars and Mass Transit

and Railcars America. Business vol•

"NEMA Renewal Award" for the

most successful innovation in PLC

technology and for its modern, rati•

onal manufacturing. In the Industrial level of that year. In high-voltage

Systems division, AEG presented the systems, activity focused on enlarge• ume increased by 48% during the

"Geamatics P/E/N" control system

ment of the product range. As busi•

ness became increasingly interna•

year under review. This sharp rise is

partly a reflection of successful per•

formance in an expanding market,

for the automation of processes,

power supply systems and networks, tionalized, the new plant of AEG's

along with the corresponding "View- affiliate E.I.B. in Dison, Belgium, was while the acquisition of AEG Schie-

star 750" operating and viewing sta• opened in May. Investment in the

nenfahrzeuge GmbH in Hennigsdorf

on January 1, 1992, has also re•

sulted in a strengthening of busi•

ness. AEG played a large part in the

further expansion of the ICE high•

speed system introduced in Germany

in 1991, supplying products

and systems both for the trains and

for track installations. For the new

Shanghai metro, a German consor•

tium headed by AEG supplied the

first of an ordered 16 metro trains,

each consisting of six parts, along

tion. The new system met with a

good response from the market. In

Postal Automation, AEG Electrocom

GmbH (AEC) further strengthened

its leading market position in the

US, Canada and Western Europe in

new plant totaled some DM 40 mil•

lion. Besides medium-voltage sys•

tems, the company produces high-

voltage switchgear and circuit

breakers. With the acquisition of

AEG TRO Transformatoren und

1992 and expanded its position in

the Far East and Latin America. Tes•

timony to the outstanding status of

AEC technology is provided by two

awards conferred by the American

with traction contact systems and

power substations. Low-floor street•

car business continued to flourish.

In the field of automated people

mover systems, the group was able

to improve on its leading world

position once again.

Microelectronics Activities

Transferred to TEMIC

Business in the Rail Systems

field of activity is expected to remain

The Microelectronics field of

at the previous years' level in 1993. activity comprises TEMIC TELE-

EUNKEN microelectronic GmbH, a

Domestic Appliances:

Slowdown in Growth

joint venture between AEG and

Deutsche Aerospace AG, and the

Opto- and Vacuum Electronics divi•

sion. Sales showed a slight rise on

the previous year. More information

about TEMIC is contained in the

chapter "Joint Ventures".

Business in the Opto- and Vac•

uum Electronics division was unsat•

isfactory. This was mainly due to the

considerable decline in demand for

AEG Domestic Appliances in•

creased its sales by 2% to DM 2,653

million in the year under review. In

Germany, further growth in business defense technology. In response to

was recorded, assisted particularly

this, activity was stepped up in new

by the newly launched range of floor fields of work, including large-

vacuum cleaners and microwave

format liquid-crystal displays, identi•

equipment and also the high-quality fication systems for the registering

front-loader washing machine series. and recognition of masses and a

Sales by Regions

AEG Group

DM 11.6 Billion (1991: DM 10.8 Billion)

AEG increased its market share in

high-performance battery, at present

these product areas. In line with the intended primarily for use in the

general market trend, export sales

fell slightly short of their 1991 level.

In June, 1992, AEG Aktiengesellschaft

and the Swedish group Electrolux

AB approved plans for long-term co•

operation in the field of electrical do•

mestic appliances. With this cooper•

ation, the partners are aiming above

all to substantially improve their

cost structures and thus strengthen

their competitive position.

automotive sector.

For 1993, the division is aiming

to increase sales on the basis of

innovative products such as energy-

saving washing machines and refrig•

erators and a floor vacuum cleaner

made of recycled materials.

Corporate Unit Deutsche Aerospace (DASA)

In mid 1992 we transferred our

microsystems and vehicle safety ac•

tivities to TEMIC TELEFUNKEN mi•

croelectronic GmbH, a joint venture

in which Deutsche Aerospace and

AEG each have a 50% stake. We con•

tinued during the year under review

to pursue intensively our aim of in•

creased collaboration with the CIS

countries in the field of aviation and

of participation in the ESA's planned

space programs.

Substantial Decrease

in Sales and Orders Received

in the Aircraft Group

*) 1991 including the employees of the

Eurocopter Group (626 people).

Sales in the Aircraft group at

DM 7.5 billion, nearly reached the

volume of the previous year. At DM

In February 1993 we reached an

agreement with the Dutch govern•

ment to acquire a 51 % majority

5.0 billion orders received, however,

In the year under review, the

were substantially below last year's

level.

stake in the aircraft manufacturing

activities of Messerschmitt-Bolkow-

company Fokker. As an integral part

Blohm (MBB) and Telefunken Sys-

The Deutsche Aerospace Airbus

produces and delivers assemblies

within the framework of the European

Airbus program. In the year under

review, the Airbus consortium

chalked up orders for 136 aircraft;

on the other hand there were also

cancellations of orders. The order

backlog of 836 aircraft, however, is

still satisfactory.

of the Aircraft group of Deutsche

temtechnik (TST) were combined

Aerospace, Fokker will take over

with those of the old Deutsche Aero•

space. The newly created Deutsche

Aerospace AG (DASA) will form the

core company for the operative busi•

ness of the aerospace corporate unit

of the Daimler-Benz group. Further•

more, we acquired the 20% stake

held by the Kreditanstalt fur Wie-

deraufbau in Deutsche Aerospace

Airbus GmbH earlier than originally

planned and were able to integrate

this company, which was previously

consolidated at equity, fully into the

group, retroactively as of January 1,

the systems management for the

segment of the 65 to 120 seater

regional jets.

At DM 17.3 billion, consolidated

sales of Deutsche Aerospace in•

creased by 3 % in the year under

review. The group results for the

year declined to DM -341 billion. At

DM 12.5 billion, orders received

were substantially below last year's

value of DM 15.1 billion.

The final assembly start-up for

the first Airbus A321 on June 15,

1992 in Hamburg represents a

major milestone in expanding the

Deutsche Aerospace Airbus capa•

bilities. The Airbus A330, the

world's largest twin-engine medium/

long-haul airliner, performed its

maiden flight on November 2, 1992.

The four-engine A340 is designed

for extreme long hauls with ranges

from 12,500 to 14,000 km. Subse•

quent to type certification, the first

A340 was delivered to the German

airline Lufthansa in early February

of 1993.

In 1992 we invested DM 1.1

billion (1991: DM 1.0 billion) in

fixed assets. DM 5.2 billion (1991:

DM 5.0 billion), representing 30 % of

sales, was spent on research and de•

velopment work, of which externally

commissioned projects accounted for

DM 4.3 billion. At the end of the

year, the DASA group employed

992.

In parallel with this restructur•

ing, we also continued the process of

organizational streamlining and cost

reduction. In the civilian energy and

industrial systems division similar

activities of Dornier, MBB and TST

were combined; the structural con•

cept for the Space Systems group

was fully implemented.

81,872 people (1991: 83,605). The

fall largely reflects the unfavorable

trend in business in virtually all

areas.

It was a good business year for

the Aircraft Service Center (ASC) in

Lemwerder, where the focus was on

product support for the Airbus

family.

In the current financial year, we

expect the DASA group to achieve a

sales volume similar to that of 1992.

Higher revenue can be expected

particularly in the Aircraft group. In

the Space Systems as well as the

Defense and Civil Systems groups,

sales will be considerably lower.

An important aim in the current

year is to adapt capacity as quickly

as possible to the expected further

fall in orders.

The military aircraft division

focused once again on the EFA and

Tornado programs. The first Euro•

pean Fighter Aircraft body prototype

was completed in Manching in the

first half of 1992. Technical develop•

ment and logistics support is the

main focus in the Tornado program.

Further progress was made in

Strong Increase in Sales

at the Space Group

Defense and Civil Systems

Group: Further Decline

of Orders Received

1992

Sales (Millions of DM)

3,624

the German-American Experimental

Program X-31A. Another future-

oriented project is the development

of the Fan Ranger, a light jet trainer vious year to DM 1.9 billion. Orders

designed to train future pilots.

received reached a level of DM 1.7

The regional aircraft division de• billion.

livered 10 (1991: 18) Dornier 228's

in the year under review. Prepara•

tion for the series-production start•

up of the Dornier 328 in early 1993

has been for the most part con•

cluded. The aircraft product support

focussed on the service-life-

prolongation program for the Bell

UH ID helicopter. In the year under

review, 37 helicopters were retro•

fitted.

The product line of the Eurocop- objects. We are responsible for the

ter group ranges from single-engine German share in this ESA project

light helicopters through twin-

engine light and medium-weight

helicopters on to heavy transport

helicopters.

One outstanding event in 1992

was the signing of the development

contract for the tactical transport

and naval helicopter NH90. Larger

orders were under way in the pro•

grams AS 355 Fennec and PAH-1.

Test flights were continued on

schedule with the first prototype of

the Tiger, a Franco-German escort

helicopter currently in the develop•

ment phase.

Sales proceeds from the year

under review were up 27 % from the

comparatively low value of the pre•

In 1992, the entire group

was marked by a substantial

decrease in orders; compared to the

previous year's level a reduction of

14 % to DM 2.4 billion (1991: DM

2.8 billion) was recorded. Sales, on

the other hand, increased by 6 % to

DM 3.6 billion.

The outstanding scientific pro•

grams are currently the ERS-2 and

Cluster satellite projects. In both

programs Dornier, functioning as

Major impulses were rendered

by the Stinger program, for which

systems manager, is responsible for the preparatory phase was con•

the development and construction of cluded and settled, and by the Ro•

subsystems for the scientific payload land anti-aircraft systems, of which

as well as for satellite integration.

we produced further units for the

The European Infrared Space Ob• German Air Force and Navy. Major

servatory ISO is designed to meas•

ure the infrared radiation of cosmic

sales revenues were also recorded

by the Milan and Hot as well as

Trigat anti-tank systems.

We received an order from

and have developed the focal instru• British Aerospace for a fiber gyro

we developed. It was the first order

placed for the series-production of

such a product worldwide.

In the field of Broadcasting and

Bay (PEB), which comprises systems Television Transmitters a number of

that are important to the operation of long-term projects in Spain and the

ment Isophot.

In the Polar Platform ESA pro•

ject we are participating in the de•

velopment of the Payload Equipment

the accompanying payloads.

Near East are underway. We again

manufactured and delivered a large

number of mobile HF/VHF commu•

nications intelligence systems for

the German and Dutch armed forces.

In the European Ariane 4

launcher program we manufacture

liquid fuel supplementary.rockets,

the second stage engine as well as

the thrust chambers in the HM7 en• Thanks to a contract concluded with

gine for the launcher's third-stage

engine.

Eureca (European Retrievable

Carrier), Europe's first free-flying,

retrievable experiment platform,

was prepared for launch in the year

under review and transported into

the Ministry of the Interior of Baden-

Wlirttemberg in 1992, we managed

to become a participant in the prom•

ising civil sector of official communi•

cations with the fast adaptive radio

communications system Farcos.

The most significant sales in the

space in late July by the space shut• Command and Information Systems

tle Atlantis. Integration work for the division were once again made by

Spacelab-D2 mission was concluded the series-deliveries of the drone CL

on schedule, so that it will be

equipped for launch in the first

quarter of 1993.

289 reconnaissance system to the

French and German armies.

In the area of Environmental

Technology we continued to expand

our activities in regional and envi•

ronmental planning, environmen•

tal monitoring and information sys•

tems, waste-water technology and

the disposal of hazardous military

materials from the past.

MTU Maintenance GmbH main•

tains and repairs large civil engines

as well as stationary gas turbines.

Parts repairs are also effectuated.

MTU Friedrichshafen is a lead•

ing supplier of complete propulsion

systems, primarily for ships, rail ve•

hicles, electrical generation systems

and heavy trucks and construction

equipment.

A focal point in engine sales was

once again the universal Series 396

diesel engine. In the field of propul•

sion systems for ships we are, for

example, currently outfitting ships

from the Australian, New Zealand,

Norwegian and German navies. In

the railroad sector we modernized

twenty ex-GDR locomotives, each ve•

hicle receiving two twelve-cylinder

Series 396 diesel engines.

We renewed the lighting and

power supply for the main runway

at the Berlin-Schonefeld airport, and

it was under our systems manage•

ment that the world's largest

runway-lighting system was in•

stalled at the new Munich 2 airport.

Positive Development in Sales

in the Propulsion Systems

Group

Sales by Regions

DASA Group

In 1992Kuhnle, Koppund

DM 17.3 Billion (1991: DM 16.8 Billion)

Kausch Aktiengesellschaft sold con•

siderably more turbochargers than

in the preceding year. Also matching

the high level of the previous year's

business results were the injection

systems for medium- and high-speed

diesel engines produced by L'Orange

GmbH.

At DM 3.6 billion, sales in

the Propulsion Systems group

were slightly above the level

of 1991. The DM 2.8 billion level of

orders received was considerably

lower than that of the previous year.

In the PW305 program a jet en•

gine for business airplanes, MTU

Munchen already delivered over 130

low-pressure turbine modules to

Pratt & Whitney Canada by the end

of 1992.

Medical Systems as the Focus

of Other Activities

At DM 256 million (1991: DM

267 million) sales in medical sys•

tems remained below last year's

level. A declining trend for lithotrip-

An important contributor to

sales in 1992 was the engine family ters was contrasted by an increase

CF6 from General Electric, for whom in our ultrasonic and laser business.

we manufacture parts of the high-

pressure turbine and the com•

pressor. These engines are used in

aircraft from Airbus Industrie,

Boeing and McDonnell Douglas.

Series-production of the Tornado

engine RBI 99 was phased out in

late 1991, resulting in a substantial

decrease in sales in this program in

comparison to the previous year.

United Airlines ordered 100

Towards the end of the year we in•

troduced a new ultrasonic color im•

aging device into the market.

The activities of TEMIC are cov•

ered in the chapter "joint Ventures".

Airbus A320's with V2500 jet en•

gines during the year under review.

All in all, this major contract encom•

passes 222 jet engines.

Corporate Unit Daimler-Benz InterServices (debis)

The positive trend in earnings of the

Financial Services division was

largely responsible for this; inten•

The strategic alliance with the

French software group Cap Gemini

Sogeti which entered into effect in

sified competition in the information the year under review lent strong

technology sector exerted a negative impetus to the internationalization

influence.

Our investment in fixed assets,

largely data processing equipment,

of our business activities. With the

amalgamation of the software pro•

ject and product activities of System•

fell during the year under review by haus and the German Cap Gemini

5% to DM 173 million; some of the

SCS at the turn of 1991/1992, the

spectrum of services has been

extended and our proximity to the

customer and ability to provide

integrated system solutions further

improved.

With the start of the 1992 finan•

cial year, the full spectrum of infor•

mation technology (IT) services was

grouped into three subdivisions;

hardware was financed by leasing.

The additions to leased equipment,

at DM 5,939 million, were 21%

higher than in 1991. The sharp

increase in financial assets to DM

1,434 million was chiefly due to the

34% holding acquired in the French

company Sogeti S.A.

debis increased its total output

in the year under review by 33% to

DM 7.9 billion. This figure com•

prised sales revenue of DM 7.3 bil•

lion and interest income from sales

financing of DM 0.6 billion.

The debis group employed a to•

The growth was generated above tal of 8,258 people at the 1992 year- debis Systemhaus CCS Computer-

all by the Systemhaus, Financial Ser• end, 7,343 of these in Germany and

Communication-Services contains

the non sector-specific, horizontal IT

services. These include computer

center and network operation, instal•

vices and Trading divisions; at 72%,

the largest contribution to business

was once again made by the Finan•

cial Services division.

915 in other countries.

The services industry will con•

tinue to grow in 1993 and as a sup•

plier of integrated systems solutions, lation and support of distributed sys•

tems, backup or business continuity

business volume in Germany, 12% in continue to enjoy good opportunities services and maintenance services.

debis generated 48% of its total

debis therefore expects that it will

other EC countries, 31% in the U.S.

market and 9% in other markets.

Business with external customers

accounted for 79% (1991: 77%) of

total business in the year under

review. In addition to the Financial

Services division, which is tradi•

tionally involved to a great extent on

the external market, the other divi•

sions too increased their turnover

with companies outside the Daimler-

Benz group.

for developing its business and for a In the Cap debis Software und Sys•

tems subdivision, the software activ•

further growth in total output.

ities of debis Systemhaus and the

former German Cap Gemini SCS are

grouped together. The third subdivi•

sion, Diebold management and tech•

nology consultancy, completes the

spectrum with strategic, organiza•

tional and informatics consultancy.

Market Position of the

Systemhaus Division Strengthened

debis Systemhaus increased its

total output from DM 1.2 billion to

DM 1.5 billion. In addition to growth

from within, the inclusion of the

former German Cap Gemini SCS

companies played a role in this.

The contraction in world mar•

From 1993, Computer-Commu•

nication-Services will also be active

in major European markets. In order

to gear our activities more closely

still to customer requirements,

At DM 122 million (1991: DM

23 million), the consolidated net in• kets and the worsening economic

come of debis for 1992 approached

the high level of the previous year.

climate in Germany had perceptible

sector-specific centres were formed

consequences for debis Systemhaus in the CAP debis Software und

and its subsidiaries, whose growth

slowed particularly from the middle

of the year onwards. Nevertheless,

business with customers outside the

Daimler-Benz group showed a

Systeme subdivision to coordinate

our services for major customers and

the various sectors.

further increase. The share of total

output accounted for by these cus•

tomers grew particularly sharply in

1992 to 41% (1991: 27%). At the

same time, the volume of services

supplied internally within the

Daimler-Benz group also increased.

International Growth

for debis Financial Services

The newly formed companies

debis Leasing GmbH in Germany

and debis Financial Services Inc. in

Trading: Accelerated Growth

The debis Trading division has

taken over the task for the Daimler-

Benz group of concentrating and

coordinating the know-how for barter

trading with countries short on for•

The dynamic development of the the US, which finance products

Financial Services division con• other than motor vehicles, com•

tinued in 1992. This was due partic• menced operation in the year under

ularly to sharp growth in Germany,

the US, the United Kingdom, the

review. In their first financial year,

they have already financed or leased eign exchange. In addition to that,

Netherlands and Italy. New business products to a total value of DM 221

increased by more than 20% to over

million.

60,000 units, with a volume of DM

0.6 billion. Reasons for this gratify• Insurance: National Expansion

we want to make these markets

more transparent for the Daimler-

Benz group and other companies in

order to develop them, for example,

as alternative procurement sources.

Despite strong fluctuation in the

political sphere, the Trading division

was able to sustain the steady

ing growth were the improved and

more extensive range of services

offered by our leasing and financing

companies, changed buying habits,

precisely in the above-mentioned

countries (financing instead of cash

payment) and also the introduction

and International Presence

The centralization of all the

group's insurance activities in the

Insurance division and the concen•

tration of know-how produce

upward trend of the preceding years

by flexibly responding to current

synergy effects which we pass on to market requirements. Our supporting

of new Mercedes-Benz products, par• our commercial customers in the

ticularly the new S-class. The focus

form of intelligent, sound risk

of our financing activities is still the management concepts and to our

motor vehicle business. With the

private customers through broker•

conclusion of some 98,000 contracts age of individualized insurance

services underpinned export busi•

ness totaling DM 546 million to

countries weak in foreign exchange.

Total output rose in the year under

review to DM 436 (1991: 105) mil•

lion.

for new passenger cars and 36,000

for new trucks, financing makes an

increasingly large contribution to

supporting the sale of Mercedes-

Benz vehicles. The total number of

contracts outstanding rose accord•

ingly to 381,000 units of a value of

DM 18.5 billion (+29%).

programs.

We established our own office in

Further markets were opened up

in the Middle and Far East and in

Central and South America, so that

the number of countries with which

counter-trading is possible was con•

siderably enlarged and made a sta•

ble basis. In addition, we expanded

and reduction of risk through techni• in particular the joint venture agreed

cal analysis - the significance of

to in 1991 between the Russian

debis Risk Consult, a unit of debis

natural gas supplier Gasprom and

Japan in 1992 from which to look

after the companies of the Daimler-

Benz group operating there.

Owing to the growing impor•

tance of risk engineering - the pro•

vision of advice concerning control

Total output, including interest

income from sales financing, in•

creased to DM 5.7 billion, a rise of

8%.

Assekuranz (the Insurance division), debis International Trading.

Business of our Japanese leasing is also growing, debis Risk Consult

The 50% share acquired in MG

and financing company got off to a

successful start in the year under

review.

provides risk analysis and evalua•

tion as well as consultancy in reduc• under review represents another

NE-Produkthandel GmbH in the year

ing and managing risk in matters of

the environment, fire protection,

product liability, quality assurance

and income loss risk.

milestone in the development of the

debis Trading division. MG NE,

which before we acquired this inter•

est was a wholly owned subsidiary

With 273 employees we bro•

kered a worldwide total premium

volume of over DM 500 million

in the 1992 financial year and

generated total output of some

DM 44 million.

With an expansion of the prod•

uct range, we see good growth pros•

pects for the Insurance division in

1993.

of Metallgesellschaft, will increas•

ingly allow us the use of its interna•

tional service network and barter

trade for the market activities of

debis Trading.

debitel: Promising Entry into

Mobile Communications Services

In the second half of 1992, the

two operators of the new digital mo•

bile communications networks in

Germany, Deutsche Bundespost

Telekom and Mannesmann Mo-

bilfunk, opened their Dl and D 2

networks for trial service. Normal

public service of the D2 network be•

Marketing Services:

A Year of Consolidation

The difficult economic environ•

ment in the Federal Republic of

Germany also influenced business of gan in December, 1992; of the Dl

debis Marketing Services GmbH

dMS). In spite of this, the total out•

put of DM 205 million (1991: DM

network, at the beginning of Janu•

ary, 1993. As a private telephone

company, debitel has since then of•

(

214 million) was only slightly below fered user-oriented access to these

the level of the previous year, which mobile communications networks

was one of strong growth.

Our complete spectrum of

services extends from customer-

and competent individual profession•

al advice to customers. During trial

service we already acquired more

specific marketing consulting, media than 10,000 customers. Despite the

planning and marketing communi•

cation to the organization of trade

fairs and exhibitions, debis Market•

ing Services division is thus a

company with a range of services

which far exceeds the usual.

delay in the original plans for entry

into service of the mobile communi•

cations networks, total output of deb•

itel in the year under review

amounted to DM 16 million.

In the 1992 financial year, we

A focal point in the year under

expanded our sales organization and

review was the further development the existing distribution channels

of the Media subdivision, whose task and integrated important partners

is the placing of advertisements for

customers in the printed media and

in the electronic media. With the

interest acquired in the Hamburg-

based G.F.M.O. Gesellschaft fur

Media-Optimierung mbH in the

into our marketing network, espe•

cially from the mobile communica•

tions trade. Since the end of 1992,

our customers can avail themselves

of more than 1,000 debitel sales

outlets throughout Germany. In the

year under review, by the beginning current financial year, we shall

of 1993 debis Marketing Services

had become one of Germany's six

largest media agencies. This partner•

ship will round off the existing range

of services of dMS in the fields of

television and radio, the printed

media and poster advertising.

be expanding this service network

further.

The Marketing Services division

will purposefully continue to expand

its activities in the four subdivisions.

Qualitative growth will take priority

over purely quantitative growth.

Joint Venture Companies

TEMICTELEFUNKEN

microelectronic GmbH founded

Heilbronn concerning flexible, auto•

With Mercedes-Benz Charter-

Way, we are the first leading manu•

facturer of commercial vehicles to

avail ourselves systematically of the

opportunities afforded by the

contract hire market.

mated production of 6-inch wafers

proceeded according to schedule.

Also, the setting up of a worldwide

semiconductor sales organization

was concluded.

On July 1, 1992, AEG and

Deutsche Aerospace combined their

microelectronics and vehicle

equipment activities in TEMIC TELE-

FUNKEN microelectronic GmbH,

which is based in Heilbronn. AEG

and DASA each have a 50% holding

in this company. By combining these

two companies' know-how, TEMIC is

able to offer the entire spectrum of

the microelectronics processing

chain, from semiconductor chips and

microsystems technologies to

complete-system solutions such as

ABS and the airbag. The company

comprises the following areas:

semiconductors, microsystems and

vehicle equipment.

In the microsystems and vehicle

equipments fields, the activities of

AEG and DASA were rapidly inte•

grated. The market has already

reacted positively to the expanded

capabilities of TEMIC* as is shown

for example by the increased orders

of ABS systems. In Mexico, TEMIC

carried out its first orders for vehicle

subassemblies; in the Czech Repub•

lic and Hungary, there was an

overall expansion in production

activities. At the same time, new

customers were acquired, so that the

company now has business relations

with around half of the world's 30

leading vehicle manufacturers.

Traffic Management by Intertraffic

During the year under review,

ITF Intertraffic Gesellschaft fur

integrierte Verkehrsmanage-

mentsysteme was formed, in which

all corporate units of the Daimler-

Benz group hold an interest;

Daimler-Benz Luft- und Raumfahrt

Holding AG has a stake of 50.2%,

Mercedes-Benz 25.2%, AEG 14.6%

and debis 10.0%. The new company,

under the managerial control of

DASA, encompasses the know-how

of the Daimler-Benz group in the

fields of traffic management sys•

tems, transport systems and infor•

mation technology. Intertraffic's ac•

tivities will comprise planning, con•

sultancy, design and implementation

of integrated traffic management

systems. These will be offered world•

wide for solving problems in the

field of transport by land, water and

air.

Sales of TEMIC in the first

incomplete financial year totaled

DM 0.7 billion; foreign business

accounted for 50% of this. At the

year-end, the company employed

Mercedes-Benz CharterWay -

A New Concept in Transport

11,179 people.

In the semiconductors field, it

was possible to compensate only

partially for the weakness of the

entertainment electronics market,

which has been depressed since

In the 1992 business year,

Daimler-Benz InterServices (debis)

AG and Mercedes-Benz AG estab•

lished Mercedes-Benz CharterWay

companies in Germany, Belgium,

France, the United Kingdom and the

Netherlands as joint ventures, each

with a 50% holding, for the purpose

1991. The situation was aggravated

The new company also took over

the leading role in the implementa•

tion of the traffic management sys•

tem "STORM". Interdisciplinary re•

search into resolving traffic prob•

changed over the life of the contract. lems in the Stuttgart conurbation

along with trials of new technology

have been taking place for a number

by the migration of customers for

these semiconductor products from

Europe to the Far East, as well as by of long-term leasing of commercial

falling prices, the unfavorable dollar vehicles at prices which remain un•

exchange rate and high domestic

production costs. To safeguard

TEMIC's semiconductor activities in the chassis with all superstructures

The price includes the financing of

the long term, more and more pro•

duction activities are being trans•

ferred to the Far East, especially

the Phillipines.

With its power MOS technology, plus all vehicle-dependent expenses Baden-Wlirttemberg and the City of

which leads the market, the subsid•

and attachments, service and repairs of years now in the framework of

for the complete vehicle, including

this pilot project, which was in•

the necessary vehicle management,

itiated by Daimler-Benz AG in con•

the provision of substitute vehicles,

junction with the Federal state of

such as taxes, insurance, registra•

Stuttgart.

iary Siliconix Inc., Santa Clara/U.S.A., tion and inspection fees.

achieved above-average successes;

good business was also recorded by

the affiliates Matra-MHS, Nantes/

France, and Dialog Semiconductor,

Swindon/United Kingdom. The

research activities grouped in

Research and Technology

New Impetus

in Strategy Development

I The gasoline engine. Even after

one hundred years of develop•

ment, the causes of noxious

nent libraries. In order to evaluate

significant product characteristics

such as levels of safety, fuel con•

emission formation have not yet sumption and comfort along with

driving characteristics, ease of oper•

ation and costs, the various calcula•

The continuing development of

the central division Research and

Technology was accompanied

been adequately determined. In

addition to analysing the com•

throughout the year under review by

a systematic, comprehensive pro•

cess of strategy development. This

involved employees from every sec•

tor and from all levels of manage•

ment. We regard such an intensive

form of internal strategy communi•

cation as the expression of a com•

pany culture characterised by cre•

ativity, ambition, cooperative team•

work and an entrepreneurial spirit.

Within this strategy development

scheme,

bustion process, research is also tion systems must be integrated and

providing new approaches, supplemented by data banks. In fu•

developing tools for optimisation ture, the as yet insufficiently devel•

and producing improved compo• oped linkage of individual methods

nents and processes in the form and process stages will considerably

of prototypes.

i The diesel engine. This drive

system's nitrogen oxide and par•

reduce the time and costs incurred

prior to the definitive choice of design.

ticulate emission levels are to be The Objectives

further reduced, with no compro• of Vehicle Systems Technology

mise regarding its favorable fuel

consumption.

• The two-stroke engine. The

It is only the integration of indi•

vidual components as a system

development potential of various which provides benefits for the cus•

the long-term orientation of

research activities has been

determined,

a technology strategy was devel•

oped for the entire group, and

numerous management-related

processes within the division

have been promoted.

two-stroke designs is being

demonstrated in the form of

prototypes.

tomer. The "Vehicle Systems Tech•

nology" research field is therefore

pursuing such aims as the following:

Electric traction. Electrically

powered vehicles can help re•

duce levels of noxious emission

and noise on urban roads. To•

gether with Mercedes-Benz AG's

Advanced Design sector, re•

search is being carried out into

existing maintenance-free bat•

teries along with direct-current

and three-phase drive systems

regarding their suitability for

use in an electrically powered

vehicle.

& Hydrogen: As part of the "Hy-

passe" project subsidized by the

Federal Ministry of Research,

investigations are being carried

out into the feasibility of a low-

pollutant local transport system

The establishment of systems

concepts for future vehicle

functions,

The retention of integrated

system capability for electronic

functions relevant to competi•

tion,

The development of safety

functions for complex systems,

The production of hardware/

software technology for the rapid

conversion of ideas into systems

suitable for vehicular applica•

tion.

In addition to refining our

methods, we have extended our dia•

logue with the four corporate units

of the Daimler-Benz group in order

to analyse and assess their require•

ments for new technologies. The

results have been transformed into

recommendations and specific inno•

vation schedules.

Improvements

to Drive Technology

The Human and the Automobile

High cognitive and emotional de•

mands are placed on today's driver.

Safe driving does not simply mean

accident-free driving: it also extends

to the subjective perception of safety

and comfort. The driver's physiologi•

cal reactions, his behaviour and per•

sonal experience of driving are be•

ing investigated by an inter-discipli•

nary research team comprising

The reduction of fuel consump•

tion and of noxious emission levels

are the principal objectives being

pursued in the continued improve•

ment of drive technology and in the

search for alternative solutions. The

research sector has divided the

free of C02.

Vehicle Design:

Methods and Tools

The market-orientated design of

vehicles starts with basic product

ideas, which are followed by a series

of design variants. Computer simula•

tion is indispensable here. With

modifications to only a few parame•

ters, new variants can be rapidly

produced from model and compo•

topics into five "strategic projects":

engineers and behavioral scientists

using state-of-the-art methods and

instruments. The findings can be put

to use in even better adapting tech•

nologies to the driver's requirements.

Transport Technology

Development Continuing

on Target

ments throughout the various prod•

uct divisions provides considerable

synergy potential, which is being

reinforced through the transfer of

Environmentally Compatible

Energy Technology

The research being carried out

With increasing densities, trans• DASA materials laboratories to the

into new rational, environmentally

port must be increasingly organized Research and Technology division of compatible technologies for energy

as an integrated system. This calls

for an appropriate distribution of re• concentrated on interdisciplinary

Daimler-Benz AG. The activities are

conversion and storage touches

upon many areas of the group's

activities. At the centre of attention

are electro-chemical processes which

promise particularly high efficiency

factors and low levels of pollutant

emission.

sponsibilities amongst the different

types of transport, their optimal in•

terconnection and an overall trans•

port management. To this end, sce•

narios for transport in densely popu•

lated areas, conducted jointly within

an interdisciplinary work group

involving the corporate units and

Corporate Planning, have been

developed and consequences for the

group derived.

In the European PROMETHEUS

program, Daimler-Benz's Research

sector is concerned with retaining

mobility on European roads while

increasing not only safety and effi•

ciency, but also the environmental

compatibility of transport. The cur•

rent phase is primarily concerned

with the further development of

technological projects such as the

following:

Together with the Anglo Ameri•

can Corporation, AEG is developing

the "Zebra" battery for electrically

powered vehicles, on the basis of

sodium/nickel chloride. In order fur•

ther to increase the efficiency and

These research projects are typ• service life of such batteries, re•

search is concentrated on improving

the electro-chemical components

ically concerned with such matters

as the use of ceramics and graphite

in the engine, with new, highly rigid and on new design concepts and

materials.

The high-temperature fuel cell is

particularly well suited for independ•

aluminium alloys, the weaving and

braiding of composite fibre struc•

tures and the manufacture of dia•

mond layers as heat conductors or - ent power supply. The energy from

in the more distant future - as elec•

promising technologies and the uni• tronic materials.

combustion gases such as hydrogen

or natural gas is converted in the

fuel cells directly into electrical

energy in a highly efficient process.

We have succeeded in producing

very compact flat-cell batteries on a

laboratory scale.

fication of individual systems and

components into an integrated trans• Automation

port system. This is being realised in and Drive Technology

such projects as STORM (Stuttgart

Transport Operation by Regional

Management) and IFMS (Integrated

Fleet Management Systems).

Decentralised automation

systems are being adapted for the

optimal implementation of complex,

Successful Work

spatially distributed processes. Inter• in Components and Microsystems

Interdisciplinary Development

of Materials and

Material Technologies

connected via fibre-optic cables, the

automation apparatus stores the

transmitted processing data in a uni• quency components and circuits, we

In the sector of very high fre•

form manner, so that all automation

equipment can refer to the one data

model. This provides efficient sup•

port for project planning, installation materials gallium arsenide and

and maintenance.

have been continuing concentrated

research into so-called heterostruc-

tures based on the semiconductor

In addition to exercising a deci•

sive influence on the efficiency,

quality and cost of our products,

materials and material technologies

provide the basis of numerous inno•

silicon. In the course of this work,

we have succeeded in realising the

world's most rapid silicon-based

transistor.

In the sector of rail-bound vehi•

vations. A certain degree of uniform• cles, intensified competition is in•

ity regarding material require•

creasingly focusing on ride comfort

and wear resistance. Single-wheel

running gears with intelligent drive

and regulating systems promise de•

cisive advantages over previous sys•

tems incorporating wheels rigidly

connected via a common axle.

The zero-loss conductance of

electricity in high-temperature

superconductors paves the way for

Together with AEG Electrocom,

Daimler-Benz's Research division

participated in a competition staged

For the detection of indentations

and other irregularities in the sur•

face of bodywork components, new

sensors and algorithms have been

developed which optically recognise

and describe shape faults even at

even more powerful, smaller compo• by the US National Institute of

nents suited for application espe•

cially in very high frequency appli•

cations. The feasibility of new types

of system solutions is currently be•

Standards and Technology for the

automatic reading of handwriting.

Against some forty competitors from the pressed part stage, prior to

throughout the world, the intelligent painting. A further objective of re•

ing demonstrated, for example in the systems from our institutes in Ulm

form of EHF spectrometers for re•

won two first prizes for upper and

mote sensing satellites. Applications lower case characters and third

search in this area is the integration

of optical measurement data into

CAD systems.

in energy technology are also being

investigated.

prize for numerals.

Along with considerations of

Research being carried out into

economy, production technology

The principal activity of the

"Interaction between Man and the

must also address ecological require•

Microsystems Technology" strategic Machine" is investigating the oppor• ments to an increasing extent. How•

tunities provided by new interaction ever, methods and instruments pro•

and visualisation techniques in such viding a holistic evaluation of prod•

research field is silicon technology,

in particular micro-mechanics; this

extends to processes for develop•

fields as rail systems and automa•

ucts and their environmental impact

ment, simulation and system design. tion. Technological applications such throughout their life cycle are yet to

A family of acceleration sensors de•

veloped in conjunction with Tele-

funken Microelectronic GmbH has

as speech input or the integration of be developed. The sector "Production

mobile communication are being

Research and the Environment" is

tested and analysed for an individual currently drawing up the necessary

already been introduced in the prod• work station and its entire scope of

fundamentals.

uct sector, and we have put the first

functioning microlaser prototypes

into operation in the laboratory.

activities.

The procedures developed by

the Ulm "Software Quality" research An Interdisciplinary

The Urban Living Environment -

group for the evaluation of already

installed software has proved suc•

cessful in practical application at

Research Project

New Software Technologies

Under the auspices of the "Tech•

nology and Society" research group

in Berlin, scientists from various

disciplines are working together in

the research association "The Urban

Living Environment" on the future-

orientated development of expertise

for solving a key problem of all in•

dustrial societies, namely the con•

flict of aims between quality of life

The complexity of technical sys• Mercedes-Benz AG and Cap debis.

tems is increasing, while develop•

ment cycles are becoming shorter.

This calls for high-performance

development tools and innovative

information processing systems.

We are currently developing

methods of assessing the quality of

software in the early stages of its

development.

Fuzzy logic" and "neuronal net• Environmental Protection -

works" are examples of such pro•

jects; on the basis of specific applica•

tions they have been investigated,

further developed and incorporated

Right From Product Development

The shortening of product devel• and the efficient functioning of a

opment and manufacturing cycles

large city. This research association

into the Automation field of activity. will be the decisive developments of is sponsored by the Gottlieb Daimler

In the area of expert systems,

we have produced a so-called "ex•

pert system shell", a development

tool for configuration tasks which

the years to come. A significant role and Karl-Benz Foundation. We are

is being assumed by the continuous, uniting the necessary scientific

integrated flow of information en•

compassing all development and

skills of engineers, administrative

experts, planners and sociologists.

has been tested in four pilot projects manufacturing processes relating to The development and assessment of

for the preparation of tenders and

for project planning.

a product. With five pilot projects,

exemplary approaches are being

tested in all corporate units, using

innovative information technologies

and "simultaneous engineering"

concepts.

the options available is of strategic

significance to the integrated

technology group.

Environmental Protection

Integrated environmental

environmental regulations, the as• To keep air pollution from our

protection as a corporate principle sessment of draft legislation and the production facilities below critical

preparation of reports on environ•

The Daimler-Benz group is com• mental matters.

levels, we have devised an emission

level network for Mercedes-Benz

AG's Untertiirkheim plant in which

particulate and gaseous emission

readings from 28 different measur•

ing points are continuously evalu•

ated and documented.

mitted to integrated environmental

protection, whereby pollution is

addressed at the root of the problem

and all environmental effects of

manufacturing and of the products

The Environmental Officers,

whose activities within the group

are conditioned by legal require•

ments, ensure compliance with all

environment-related legislation in

themselves are incorporated into the addition to monitoring the group's

group's decision-making process.

We have formulated our basic

principles in the form of environ•

mental protection guidelines which

are binding for all employees. The

core of this philosophy is summed

up in the statement "Environmental

own environmental guidelines. They Environmentally

are directly responsible to the plant

managements of the respective

corporate units.

Through the functions of

"Chief Environmental Officer"

and "Environmental Officer", the

Relevant Information

In addition to technological de•

velopments, active environmental

protection calls for comprehensive

documentation of the primary and

auxiliary materials used throughout

the group and of their whereabouts.

To this end, an environmental infor•

mation system is currently being

developed which can call up the

relevant data for the plant concerned,

the corporate unit or the entire

protection and efficiency are not mu• Daimler-Benz group is setting

tually exclusive; they condition each standards far more stringent than

other." These guidelines are geared

towards maintaining our natural

basis of life and minimizing the

burden on the environment. We are

pursuing a policy of comprehensive,

open information which enables all

employees to play an active role in

our endeavors.

those prescribed by legislation.

Interdisciplinary Projects

With interdisciplinary projects

in the field of environmental protec•

tion engineering, the Daimler-Benz

group has devised technologies and

planning concepts which go far

beyond mere compliance with

currently valid legislation.

group. This information is also of

assistance in the maintenance of an

"environmental balance sheet".

The diversity of activities con•

Environmental officers

ducted throughout the Daimler-Benz

group provides the basis for highly

Projects already initiated include efficient material usage; this also

applies to waste materials. Investiga•

tions are currently being carried out

In order to ensure implementa•

tion of our "Environmental Protec•

an exhaust treatment unit for sta•

tion Guidelines", Chief Environmen• tionary diesel engines, by means of

tal Officers for the group's four cor•

porate units and for the executive

holding company were appointed in

which particulate and nitrogen oxide as to which production waste mate•

emissions can be reduced to a level

rials can be reused at different loca•

far below the more stringent limits

tions within the group. A corporate

likely to be introduced in Europe in

materials exchange is being estab•

the future.

lished to provide systematic access

to these materials.

1991. They report directly to the

Chief Executive Officers of their

respective corporate units and

co-ordinate their activities within

the corporate "Environment" work

group.

Together with Mercedes-Benz,

AEG and DASA, a schedule has been

drawn up for the development of a

factory free of waste water. This

project is being implemented in the

various construction phases of the

new passenger car manufacturing

plant in Rastatt.

It is of utmost importance to us

that each and every employee bears

responsibility for the environment.

Our second Corporate Forum was

therefore staged under the title of

"Environmental Protection". At this

forum, speakers from within and

outside the company discussed the

political and technological conditions

applying to environmental protec•

tion. By means of specific programs,

we shall convey these findings to all

employees within the framework of

the continuous training scheme.

The Chief Environmental

Officers promote environmentally

compatible processes and products,

advise the various corporate units

and motivate all employees towards

integrated environmental protection.

The activities of the corporate "Envi•

ronment" work group include the

planning, approval and implementa•

tion of measures for the drafting of

Employees

Focal Points of Personnel Policy

In Germany, the employment

situation in the individual corporate

units was on the whole unsatisfac•

At Deutsche Aerospace, the

worldwide workforce numbered

81,872 (1991: 83,605) at the end of

1992, including 75,404 (1991:

80,191) people in Germany. Behind

this change are some contradictory

Development, implementation

and follow-up of new work and man• tory. Particularly due to declining

agement structures in the individual economic activity in the second half

corporate units and in the Daimler-

Benz holding company were the

focuses of group personnel policy

in 1992. Restructuring and adjust•

ments, establishment of perfor•

of 1992, the situation in Germany

took a substantial turn for the worse. tendencies. A rise in personnel

By contrast, outside Germany the

employment situation in the

resulted from the pro rata inclusion

of Eurocopter S.A. and TEMIC, and

from full consolidation of Deutsche

Aerospace Airbus GmbH. On the

other hand, the changed interna•

tional security situation and the

shrinking budgets of government

Daimler-Benz group was largely

mance centers, corporate integration stable.

and the further internationalization

of business required the review of

organization and personnel policy.

In a year which was further charac•

terized by employment problems as

Mercedes-Benz had an overall

workforce of 222,482 at the end of

1992, including 170,137 (1991:

185,154) employees in Germany. At agencies had the consequence that

52,345, employment at the foreign

Deutsche Aerospace capacity utiliza•

a consequence of structural changes production and sales companies was tion in the year under review was on

in the markets, as well as by grow•

ing economic difficulties, the person•

nel departments were faced with the

frequently difficult task of striking a

balance between the different expec•

tations of the workforce and the

economic exigencies confronting

the company.

on the previous year's level. Scaled-

the whole unsatisfactory. In all divi•

down production schedules necessi• sions of the company, manpower

tated a reduction of the workforce in was adjusted by making use of natu•

all German plants with the exception ral attrition and early retirement

of Rastatt. This was achieved by na•

plans. Moreover, in the second half

tural attrition and non-renewal of lim• of 1992 short-time work became

ited employment contracts. Excess

staff then remaining was trimmed

by increased granting of leave, non-

work shifts, and early retirement.

Short-time work is planned for the

first half of 1993 in all German car

and commercial vehicle factories.

necessary.

Daimler-Benz InterServices

debis) had a total of 8,258 (1991:

(

Employment Situation

Deteriorates

6,203) employees at the end of

1992. The primary reason for the

larger workforce was the inclusion

of CAP Gemini in the group.

Daimler-Benz AG (holding com•

pany) had a total of 3,071 employees

At the end of the year, the

Daimler-Benz group employed a

workforce of 376,467 (1991:

At AEG, the employment situa•

tion in 1992 was satisfactory on the

88,696), including 302,464 (1991:

whole, although activity in the latter at year-end, of whom some 555 held

half of the year in some areas of the

group management functions, 1,287

317,461) employees in Germany.

Automation field of activity, in Com• were involved in group research

ponents and in Microelectronics was activities, and 1,229 worked in

affected, in some cases sharply, by

the economic slowdown. At the end

of 1992, the AEG group had a world

services for the various corporate

units and for the Mohringen location.

In the new Federal German

workforce of 60,784(1991: 58,642), states, at the end of the year 1992

including 46,559 (1991:43,975)

some 10,300 persons were

employees in Germany. The number employed by companies of the

of employees in Germany increased,

above all due to inclusion of the

units acquired in the new Federal

states. The inclusion of TEMIC TELE-

FUNKEN microelectronic GmbH

only on a pro rata basis caused a re•

duction in the number of employees

Daimler-Benz group.

particularly outside Germany.

New Work and Management

Structures in the Group

will take independent responsibility of 1993, was agreed. This special

for their business in future. The

remuneration can be set off against

group's headquarters will concen•

equivalent voluntary company pay•

trate on managerial planning and

ments. As agreed in a phased plan,

In all corporate units and in the

Daimler-Benz holding company

control as a steering unit, with about in the new German states the stand•

greater efforts are being undertaken 200 employees. Tasks formerly per• ard wages and salaries were raised

to meet future requirements in inter• formed by head office will be trans• to 70% of the amounts which were

national competition through mod•

ferred to the fields of activity or con• paid in 1991 in the metal-working

ern, integrated forms of work organi• centrated in service units. This will

and electrical industries of the old

zation. Shorter communication chan• be supplemented by development of Federal German states.

nels and speedier decision-making

processes will raise efficiency.

Mercedes-Benz is facing up to

the challenges of competition with

all-around further development of its space was merged with the MBB and

organizational structures. The

planned reorganization into product

and service centers has the purpose

of gearing organization in all areas

of the enterprise more strongly to

a management concept for the AEG

group which includes organization

in the operative units.

Personnel and

Social Welfare Expenditure

The previous Deutsche Aero•

Group personnel expenditure

rose by 9% to DM 32 billion. In

Germany, the increase was due pri•

marily to rises in standard wages

and salaries and a renewed rise in

social welfare contributions.

TST companies in the year under

review. The administrative depart•

ments of the various headquarters

were streamlined by combining the

previous staff functions of the

the needs of the market and the cus• divisions Aircraft, Space Systems,

A central element of the social

tomers. The heart of this new man•

agement structure is a large-scale

decentralization of responsibility

and decision-making power. This not

only strengthens personal respon•

sibility, but in logical consequence

also reduces the number of hier•

archical levels.

Defense and Civil Systems as well as benefits provided by the Daimler-

Propulsion Systems with those of the Benz group are the company pen•

new DASA. These measures are

intended to improve the capacity for

action and cooperation and to in•

crease transparency and efficiency.

In the Daimler-Benz holding

sions. In 1992 it was decided to

increase the pension tables for

employees of Daimler-Benz AG and

Mercedes-Benz AG by 6% with effect

from January 1, 1993. Daimler-Benz

company a new management struc•

AG and Mercedes-Benz AG paid a

ture was approved which will be put total of DM 318 million to some

49,400 pensioners, widows and chil•

into practice beginning in 1993. Its

essential elements are short commu• dren in the year under review. A to•

Introduction of group work in

the plants and performance centers

of the company is designed to im•

prove the basis for employees to be• nication channels, fewer manage•

tal of DM 623 million was allocated

to pension provisions at Daimler-

Benz AG and Mercedes-Benz AG.

These expenses are calculated -

bringing them into line with the

practice used in the Daimler-Benz

consolidated statements since 1989

come more actively involved in and

to assume greater responsibility for

company operations and to make

work more interesting and more

efficient.

ment levels, and appreciably en•

larged spans of control for top-level

executives.

Collective Bargaining

Agreements for 1992

1991 having been a year in

on the basis of the fiscal stipula•

which fundamental decisions were

made concerning the future strategic

orientation of the AEG group, in the

year under review further steps

were initiated to change the man•

agement structure and improve the

cost structure. The operative units

tions of Section 6a of the Income Tax

Law, that is to say using a notional

interest rate of 6% instead of the pre•

vious 3.5%. AEG disbursed DM 107

million and DASA DM 96 million to

recipients in the year under review.

A total of DM 1.5 billion was allo•

cated in the group to company

pension schemes.

In the old Federal German

states, the accords for the metal-

working and electrical industries

brought an increase in wages and

salaries of 5.4% effective April 1,

1992, and a further 3% increase

effective April 1, 1993. The contract

runs for 21 months, ending on

December 31, 1993. In addition, an

increase in contractually guaranteed

special remuneration to 55% of

monthly pay for 1992, and to 60% as

Private Capital Formation

supplemented by 15 special pro•

grams for school leavers, above all at

the professional academy. As in the

years before, these programs enjoy

rising popularity.

Advanced training has great sig•

nificance in the Daimler-Benz group,

also in times of economic troubles.

All the corporate units offer a com•

prehensive program consistent with

the individual areas of activity. The

senior managerial staff training

scheme was further extended in

Assistance in forming private

capital was also provided in 1992.

Employees of the domestic plants

had the opportunity to purchase

shares of Daimler-Benz AG and Mer•

cedes Aktiengesellschaft Holding at

a preferential price. In all, about

20,500 employees took advantage

of this offer, subscribing to some

46,000 Daimler-Benz shares and

5,200 MAH shares.

992. Expenditure for basic voca•

Managerial Development

and Planning

tional training and advanced train•

ing came to some DM 834 million in

the year under review.

A difficult business environment

creates new situations for manage•

ment. Demands grow on managers

to deal with complex, fast-changing

tasks. The available human re•

Preventive Health Care

and Occupational Safety

Medical care for our employees

sources in the company must be op• is traditionally an essential facet of

timally utilized through systematic

our personnel and social policies.

personnel development. Serving this The medical services of the various

purpose are also the uniform guide•

corporate units employ a staff of

lines for filling senior-level manage• 250, including 50 doctors.

ment positions, which have been

adopted in all corporate units, and

which aim, amongst other things,

at greater internationalization of

management.

A particular concern in the year

under review was the integration of

newly added companies in manag•

erial development and planning

programs.

Throughout the group in Ger•

many, 200 full-time safety experts

were responsible for on-the-job

safety. The success of their work is

reflected in the further reduction in

the number of accidents in all corpo•

rate units.

Thanks to Our Workforce

We would like to express our

gratitude to all our employees for

their commitment and hard work in

a year in which reorganization of the

Company Training Activities

At the end of 1992, 13,314

young people were undergoing voca• group was continued and which was

tional training within the domestic

also characterized by special chal•

group. 3,850 young men and women lenges and in some cases greatly

commenced training in the year

under review. Of the 3,835 who suc•

cessfully completed their courses,

changed market conditions. We also

appreciate the trust and cooperation

demonstrated by the representatives

on the various labor councils and

committees at all levels of our group.

2% were given jobs within the

group. Training is offered in almost

0 technical trades and 10 business

professions in all. This training is

Finance

Group Valuation Methods

Standardized Extensively

Sales revenues in 1992 rose 4 %

to DM 98.5 million; on a comparable duced the interest income earned in

basis, the increase amounted to 2 %. the high-inflation countries by the

The positive trend in the domestic

marketplace during the first six

As in prior years, we have re•

With the changes in valuation

methods made in 1989, Daimler-

Benz adapted its accounting policies months was nearly compensated for ordinary business activities dropped

inflation portion.

The results of operations from

more closely to internally accepted

accounting policies because capital

markets only rely on financial state• nomic situation. With DM 101 bil•

ments thus prepared. The valuation

methods traditionally applied in the

automobile business has been con•

tinued in the individual accounts of

both Daimler-Benz AG and

in all markets during the following

period because of the difficult eco•

by 37 % to DM 2.5 billion. Operating

results (results from ordinary busi•

ness activities less financial results

less other taxes), declined to an even

greater extent, namely by 59% to

DM 1.0 billion. Of decisive influence

here was the unexpected deteriora•

tion of the automobile business be•

ginning in the third quarter, the

changing climate for important sec•

tors of the aero- and space travel in•

lion, total output exceeded the DM

100 billion mark. Since the cost of

materials remained nearly un•

changed, its share in terms of total

output declined to 48.7 % (1991:

50.2 %). In contrast, the ratio of per•

sonnel expenses noticeably rose to

Mercedes-Benz.

In 1992, we have adapted the

valuation methods for pension provi• 31.7 % (1991: 29.8 %) as a result of

sions and for inventories to the prac• the first-time inclusion of companies dustry and the burdens resulting

tices used in the consolidated ac•

counts. We are thus applying the

same accounting principles and val• increases effective April 1, 1992,

with labor-intensive manufacturing.

Union-negotiated wage and salary

from the devaluation of several Euro•

pean currencies. Net income fell dis-

proportionally by 25 % to DM 1.45

billion, while income taxes, on ac•

count of substantial losses incurred

by consolidated companies, notice•

ably declined also.

uation methods at the different

levels and within each area of the

Daimler-Benz group. This will in•

crease comparability of the individ•

ual corporate sectors among them•

selves and of other companies with

the Daimler-Benz group as a whole.

At the same time, we thus improve

our information by segments, which

is an important part of U.S. publica•

tion requirements.

further increased expenses; offset•

ting this were generally lower an•

nual average employment figures.

Depreciation allowances climbed

18 % to DM 7.2 billion on account of

higher investments in fixed assets

and in leased equipment.

Balance Sheet Picture of the

Group Characterized by Financial

Services Business

The consolidated balance sheet

is more influenced by the strongly

expanding leasing and financing

business than is apparent in the

statement of income. Our leasing

contracts are ordinarily designed in

such a way that the assets are

shown in the books of the lessor;

leased items are valued at acquisi•

tion or manufacturing costs reduced

by scheduled depreciation al•

lowances. They are shown sep•

arately under fixed assets. Deferred

taxes resulting from the elimination

of intercompany profits are shown

on the asset side of the balance

sheet under deferred taxes.

Net Income Declined

to DM 1.45 Billion

The financial statements were

impacted, sometimes substantially,

by changes in the circle of consoli•

dated companies. While some com•

panies of the AEG group were re•

moved, Deutsche Aerospace Airbus

GmbH - on account of the uniform

control existing now - was fully

consolidated for the first time.

Net interest expense of our leas•

ing and sales financing companies

remained nearly unchanged at DM

0.4 billion, just slightly below the

previous year's level. The offset

amount to the interest expenses that

are necessary for the financing of

the leasing business are the reve•

nues which are included in the leas•

ing rates and thus in total sales. Ex•

cluding the interest expense from the

leasing and sales financing, consoli•

dated interest income amounted to

DM 1.0 billion (1991: DM 1.1 billion).

The sales financing business is a

pure credit business; it increases

both sides of the balance sheet

because receivables from customers Group Balance-Sheet Total

and liabilities from refinancing are

simultaneously shown. Moreover,

deferred leasing income and special

lease payments are shown under

deferred credits on the liability side

of the balance sheet.

Noticeably Increased

The group's balance sheet total

(assets/stockholders' equity and lia•

bilities) rose 14 % to DM 86.2 billion

on account of the larger business

volume and the first-time inclusion

in consolidation of Deutsche Aero•

Within the Daimler-Benz group

we use the financial services

business as a flexible tool to support space Airbus GmbH. Long-term as•

our global sales strategy. The effect

that the financial services business

has on the consolidated balance

sheet is illustrated by the table

below. Here it was assumed that the ciation allowances of DM 4.7 billion

funds bound by the financial sevices and disposals of DM 0.4 billion. Also

sets, including leased vehicles and

equipment, climbed by 15 % to DM

33.6 billion. Fixed asset additions of

DM 7.8 billion were offset by depre•

business are available for the un•

scheduled repayment of liabilities.

The changes in stockholders' equity

result, in particular, from consolida•

tion methods.

in 1992, leased vehicles and equip•

ment increased disproportionately

by 21 %; their share in terms of total

assets rose to 11.3 %. Excluding

leased vehicles and equipment, the

ratio of fixed assets to total assets

remained nearly unchanged at

27.7 %. Receivables from sales

financing activities climbed 45 % to

DM 6.2 billion. Inventories,

which strongly increased over the

previous year, were financed to the

tune of 25 % through advance

Statement of Cash Flow

In the course of a further inter•

nationalization of our account pre•

sentation, our statement of cash flow

has been closely geared to the U.S.

Financial Accounting Standard

payments received from customers.

Liquidity declined to 11.4 % (19 91:

13.9%) of total assets.

On the liability side of the bal•

ance sheet, shareholders' equity -

excluding the amount set aside for

dividend payments (unappropriated

profit) - rose by DM 0.3 billion to

DM 19.1 billion. Because of the no•

ticeably higher business volume, the

ratio of net equity to total capitaliza•

tion fell to 22.2 % (1991: 24.9 %). Ex•

cluding the financial services com•

panies, the net equity ratio in terms

of total capitalization amounted to

(SFAS) No. 95.

The basic difference between

SFAS 95 and the method heretofore

applied consists in the unequivocal

attribution of the payment streams

to the three segments (business

activities, investment activities and

financing activities). In contrast,

our presentation hitherto has only

shown sources of funds and applica•

tion funds separately. Besides this

Expense Structure in Terms

27,9 % (1991: 29.9 %). The coverage

the cash flow figure currently shown of Total Output

from business activities is purely a

financial indicator.

of long-term assets (excluding

leased vehicles and equipment) fell

to 81 % (1991: 89%).

Daimler-Benz Group

DM 100.9 Billion (1991: DM 98.6 Billion)

In comparision to the previous

year this figure decreased by 25% to

DM 5.9 billion. This resulted from a

decline in operating liabilities of

DM 1.6 billion against an increase of

DM 1.7 billion in 1991. The cash

flow from investment activities was

also below that of the previous year

at DM 9.0 billion; this was affected

mainly by the first-time consolida•

tion of Deutsche Aerospace Airbus

GmbH. As the internally generated

liquidity did not suffice to finance

various investments and we took on

less debt as in 1991, our liquidity

declined to DM 9.8 billion (1991:

DM 10.6 billion). Also in the years to

come we expect investments of the

Daimler-Benz Group to be at a high

level. The leasing and sales financ•

ing business in particular require

the injection of additional capital.

Depending on favorable stock mar•

ket condition we intend to secure for

corporate growth also through tak•

ing on new equity.

The liabilities attributable to our

financial services companies

amounted to DM 11.0 billion (1991:

DM 8.1 billion). Their change ac•

counted for about 75 % of the in•

crease in total liabilities. Also, provi•

sions increased far above average,

i.e. by 24 % to DM 34.7 billion; the

main cause for this was the change

in the circle of companies included

in consolidation; provisions ac•

counted for 40.3 % (1991: 37 %) of

total capitalization. Long-term assets

(excluding leased vehicles and

equipment) and net inventories are

fully covered by net equity and long-

and medium-term provisions.

Activities of the Group Treasury

As in prior years, the task of the approval practices for credit insur•

ance. In contrast, the financing

opportunities available in Latin

foreign exchange management con•

sisted in limiting the currency risks

During the year under review,

we have continued to further de•

velop, both objectively and instru-

of the operating sectors, particularly America have improved depending

with regard to the USD, JPY, GBP,

on the economic improvement of

some countries.

mentally, our "cash-management" in CHF and ESP, through suitable for•

connection with the inclusion of

Deutsche Aerospace Airbus GmbH

and the establishment of a foreign-

currency based domestic "cash-

pooling". We were able to increase

the flexibility and efficiency of our

treasury activities through more in•

tensive use of the commercial-paper-

programs, particularly in Germany

and the U.S.A.

eign exchange hedging measures.

Also in the future, we will be guided developed countries of Africa, Asia

by continually updated currency rate and Latin America are only able to

expectations and then employ the

financial instruments individually

depending on the currency and

business field.

Within the scope of the above-

mentioned treasury activities, we

also avail ourselves of derivative

The newly-developing and

finance capital investments if funds

from subsidized programs of public

institutions are available. This is

particularly true for East European

countries and CIS. With respect to

future project financing, systems for

aid and rehabilitation programs are

already in place. Making use of such

systems will become of considerable

Through active portfolio manage• capital market instruments. They

ment we have again invested long-

term funds - depending on interest

rate and interest income expecta•

tions - primarily in fixed-interest

instruments of first-class issuers.

Investments in stocks represent a

small portion of our portfolio.

serve the purpose of limiting the

group's financial risks overall and of importance in financing our

optimizing results of operations.

products.

In the solution of these tasks,

the company will, also in the future,

minimize financing risk inherent in

Sales and Project Financing

The worldwide sales of our prod• sales activities. The company will, at

The continued growth of our

leasing and sales financing business standardized financing programs

ucts is increasingly supported by

the same time, keep open its financ•

ing options.

has further increased the demands

placed on our centrally managed

refinancing tasks.

In order to enlarge our investor

basis, we floated a Euro-Medium-

Term-Note-Program in 1992, with a

volume objective of two billion U.S.

dollars. This instrument, which can

be used by Daimler-Benz Interna•

and individually-tailored financing

solutions.

It is becoming more and more

necessary to find new solutions for

our companies that carry on busi•

ness in the infrastructure sector. In

this area, private financing models

must increasingly be offered. In or•

der for the private sector to be able

In 1992, our business policy at

home and abroad again conformed

with the "OECD-Guidelines for Multi•

national Companies". Our intercom•

pany pricing policy is based on the

"dealing-at-arms-length" principle.

tional Finance B.V., Daimler-Benz of to take over these tasks, the public

North America and Daimler-Benz sector in the buyer country must ful•

United Kingdom pic - companies al• fill certain yield and risk standards.

ready well known and active in the

Euromarket - allows us to use the

Moreover, the burden of risk must

not - as is frequently requested by

capital markets to the fullest extent. public contractors - be limited to the

producer of capital equipment.

In the traditional export financ•

ing field, we have again in 1992

fully utilized all opportunities of ex•

isting financing and hedging instru•

ments. The sometimes dramatic de•

terioration of economic conditions in

some African countries and in east•

ern Europe resulted in restrictive

Key Figures of Major Subsidiaries

of Daimler-Benz AG

The Daimler-Benz Share

Statistics per Common Share

By the end of February 1993,

the price of the Daimler-Benz stock

jumped 11 %, while the DAX index

only increased 9 %.

Investor Relations-Activities

With our investor relations activ•

ities, both at home and abroad, we

are trying to respond to the increas•

Again in 1992, our stock be•

longed to the most frequently traded ing interest in the Daimler-Benz

shares on German stock exchanges;

a total of 228 million shares were

traded, amounting to DM 153.5 bil•

lion. This amount represented 11 %

of all domestically traded stocks.

On the German futures exchanges,

Daimler-Benz options again be•

longed to the most actively traded

issues.

technology group. We not only talk

to financial analysts and institu•

tional investors, but also quite con•

sciously to individual investors. We

regularly inform all our shareholders

by means of the annual shareholders

meeting, the annual report and peri•

odical interim reports. In Stuttgart,

in May of 1992, we informed the

members of the German Financial

Analysts Society (DVFA) about our

actual economic situation. Further•

more, we gave presentations in

Zurich, Vienna, Paris, Milan, Boston,

New York, Tokyo, London and

Stock Exchange Development

After an overall satisfactory

development during the first six

months, German stock exchanges

Market Price of the Daimler-Benz

suffered a severe backlash following Share

the surprise increase in the discount

rate. Particularly the stocks of auto•

mobile manufacturers, favored up to

that point, often had to accept heavy

losses. The Daimler-Benz share

Edinburgh.

dropped from a yearly high of DM

Second International

Stockholders' Fair in Dusseldorf

15.50 at the beginning of June to

DM588.50.

During the following period,

Trade on Foreign Stock

Exchanges

The second international stock•

holders' fair (IAM) took place in

Dusseldorf from August 27, to Au•

gust 30. More than 13,000 visitors

informed themselves in the booths

profit expectations for most German

companies had to be noticeably low•

ered as domestic business activities

weakened dramatically and the

Other than the German stock

exchanges, the Daimler-Benz stock

is traded on seven foreign stock ex•

D-mark's value rose within the Euro• changes (Basel, Geneva, Zurich, Lon• of 105 exhibitors, and in roughly

pean currency system. The German

stock index (DAX) reached a yearly

low of 1,420 points in October.

don, Paris, Tokyo and Vienna): With

the listing on these exchanges, we

also show in financial markets the

150 presentations about all aspects

of investments in stocks.

We have made use of the IAM to

While the DAX index rose 9 % by the international orientation of our com• show what the Daimler-Benz share

end of the year, the Daimler-Benz

pany. Long-term, moreover, we wish stands for. We met with a good re•

share dropped further to DM 538.50. to be less dependent on the develop• sponse both during our daily special

ment of a single capital market.

Trading in London in 1992 was

particularly active. Total turnover

amounted to 16.5 million Daimler-

Benz shares.

events and our "contest", in which

more than 10,000 visitors partici•

pated.

At the beginning of the year we

continued talks with the Securities

and Exchange Commission (SEC)

with the aim of introducing our

shares to the New York Stock

Exchange. The results to date have

made us very confident that

Daimler-Benz shares can already be

traded in the course of this year on

the worlds' most important stock

exchange.

Investment in Daimler-Benz Shares; Investment Amount DM 10,000

Dividend"

Dividend unchanged

at DM 13

Daimler-Benz Shares Are a Good

Long-Term Investment

For the business year 1992, a

dividend of DM 13 for each eligible

share of DM 50 per value, will be

proposed to the annual general

meeting taking place on May 26,

The past year has shown that an

investment in stocks offers both op•

portunity and risk. A six-year invest•

ment and a three-year investment

both show negative results, due to

993. For shareholders subject to in• the high prices at the time of pur•

chase and the share price decline

Total Divident Amount

In Millions of DM

come taxes in Germany, the gross

dividend thus amounts to DM 20.31. during last year. Investments made

Total dividend payout of DM 604

million (1991: DM 603 million) is

slightly higher because of lower

inventories in treasury stock.

in currencies other than the D-mark

increase the risk further. Longer

term, however, stocks offer returns

that cannot be achieved with fixedin-

The net income of Daimler-Benz come securities. A twelve-year

increased solely on account of the

investment in Daimler-Benz shares,

revaluation recorded on the books in as is typical for our shareholders,

1992. Even though the income por•

shows a positive return of 12.8 %.

tion derived from ordinary business

activities is noticeably lower in

comparison to the previous year, we issues and cash dividends (excl. tax

In this calculation we have as•

sumed that the proceeds from rights

Share Price Development

Allowing for the 1989 Increase in Capital

have maintained the dividend rate.

Continuity in serving our stock•

holder will remain our long-term

policy.

credit) were reinvested in Daimler-

Benz stocks and that no additional

payments were made by share•

holders.

Financial Statements

Consolidated Balance Sheet

Consolidated Statement of Income

Consolidated Statement of Non-Current Assets

Notes to the Consolidated Financial Statements

Principles and Methods

The consolidated financial state• over the relevant useful life, the one

ments have been prepared in accord• relating to the restructuring is

ance with regulations set forth in the charged to retained earnings.

Investments in related com•

panies, and in other long-term finan•

cial assets are valued at the lower of

cost or market; non-interest bearing

or low-interest bearing receivables

are shown at their present value.

Commercial Code; the amounts are

shown in millions of D-marks. The

items, which are summarized in the

balance sheet and the statement of

Fixed assets are valued at acqui•

sition or manufacturing costs. The

self-constructed facilities comprise

direct costs and applicable materials Major investments in associated com•

income, are separately shown in the and manufacturing overheads, in•

panies are valued according to the

book value method at equity.

notes and, where necessary,

cluding depreciation allowances.

explained.

The acquisition/manufacturing

Leased equipment is valued at ac•

Deviating from the previous

year, we additionally show in the

consolidated financial statements -

apart from the caption "leased vehi•

cles and equipment" - the captions

costs for fixed assets are reduced by quisition or manufacturing costs,

scheduled depreciation charges. The and is depreciated using the

opportunities for special tax-

declining-balance method. We

deductible depreciation allowances

change from the declining-balance

were fully utilized, i.e. in connection method to the straight-line method

"receivables from sales financing"

with Section 7d of the Income Tax

of calculating depreciation al•

and "liabilities from leasing and

Act (environmental protection in•

lowances when the equal distribu•

sales financing", in order to accomo• vestment), Section 6 b of the Income tion of the remaining net book value

date the pecularities of the financial

services business.

Tax Act, Section 4 of the Regional

over the remaining useful life leads

Development Law and Subsection 35 to higher depreciation amounts.

of the Income Tax Guidelines.

The opportunities for tax-deductible

depreciation allowances were fully

utilized, i.e. in connection with

Subsection 35 of the Income Tax

Guidelines.

Accounting Principles and

Valuation Methods

Scheduled fixed asset deprecia•

tion allowances are calculated gener•

ally using the following useful lives:

17 to 50 years for buildings, 8 to 20

years for site improvements, 3 to 20

During the year under review,

we have continued to apply the

Raw materials and supplies as

same accounting principles and val• years for technical facilities and ma• well as goods purchased for resale

uation methods. Assets and lia•

bilities presented in the consolidated facilities and factory and office

chinery, and 2 to 10 years for other

are valued at the lower of cost or

market. Finished goods are valued at

equipment. Facilities used for multi- manufacturing costs which com•

balance sheet - in identical group

circumstances - are uniformly val•

ued. In 1992, as in previous years,

provisions for approved conversion,

reconstruction and maintenance pro•

jects have been set up, or have been

systematically updated.

shift operations are depreciated

using correspondingly lower useful

lives. Buildings are depreciated

prise, apart from direct material and

direct labor, applicable material and

manufacturing overheads including

using straight-line depreciation rates depreciation charges.

and where allowable under the

To the extent that inventory

risks are determinable, i.e. for

reduced usability after prolonged

storage or after design changes, rea•

Tax Codes - declining rates. Mov•

able property with a useful life of

four years or more is depreciated

Intangible assets are valued at

acquisition costs and are written off

over the respective useful lives.

Goodwill resulting from the capital

using the declining-balance method. sonable deductions are made, which

For movable property, we change

are calculated based on a loss-free

valuation.

consolidation, if derived from the ex• from the declining-balance method

tension of the group, is in principle

amortized over five years; goodwill

relating to the restructuring of the

group is charged to retained earn•

ings. Goodwill which arose from the

creation of strategic alliances,

to the straight-line method of calcu•

Receivables and other assets - if

lating depreciation allowances when non-interest bearing - are reduced

the equal distribution of the remain• to their present vaue at the balance

ing net book value over the remain•

sheet date, and are valued taking

ing useful life leads to higher depre• into account all known risks. A

ciation amounts. Depreciation

allowances on additions during the

first and second half of the year are

lump-sum allowance for doubtful

accounts on a country-specific scale

is deducted from the receivables in

is split. The portion relating to

the group's expansion is written off

calculated using the full year or half- recognition of the general risk inher•

year rates, respectively. Low-value

items are expensed in the year of

acquisition.

ent in receivables.

Treasury stock is valued at the

Deutsche Aerospace Airbus

Principles of Consolidation

expected selling price to employees

GmbH and its subsidiaries were

of the Daimler-Benz group. Securities fully consolidated in the consoli•

Capital consolidation was ef•

fected according to the book value

method where the parent's acquisi•

tion costs are eliminated against the

relevant share capital and retained

earnings at the time of acquisition or

first-time inclusion in consolidation.

This applies analogously to the joint

are valued at the lower of cost or

market value at the balance sheet

date.

Provisions for old-age pensions

and similar obligations are actu•

arially determined on the basis of an Paragraph 1 of the Commercial

assumed interest rate of 6 % using

the Entry Age Actuarial Cost

dated accounts effective January 1,

1992. Up to 1991, Deutsche Aero•

space Airbus GmbH was only con•

solidated at equity in conformity

with Section 296, Subsection 1,

Code. After the transfer by the

Kreditanstalt fur Wiederaufbau of its venture companies that were in•

Method. The regulations of the 1992 20 % stake in Deutsche Aerospace

Pension Reform Act have been taken Airbus GmbH to DASA, this limita•

into account in calculating the provi• tion with respect to excercising its

cluded pro rata.

The differences resulting from

the capital consolidation (debit

sion amount.

rights no longer applies, which, on

account of agreements with the

Federal Republic of Germany and of

rules in the bylaws, had existed up

to that point.

The first-time consolidation of

the Deutsche Aerospace Airbus

group effected both the consolidated methods". The remaining goodwill

balance) are, as far as possible, allo•

cated to the relevant balance sheet

items and are written off to income

over their useful lives. For the treat•

ment of the remaining differences

(goodwill), see explanations under

"accounting principles and valuation

Provisions for taxes and other pro•

visions are determined on the basis

of fair and reasonable business judge•

ments. The obligations in the per•

sonnel and social area are reflected

in the financial statements at non-

discounted values expected to be

paid in the future as benefits are

vested.

balance sheet and the consolidated

statement of income. These effects

resulting from the addition of the

joint venture companies of the Euro-

Liabilities are shown at their

repayment amounts.

are explained under the relevant bal copter group is shown under "intan•

gible assets"; the portion applicable

to the group's expansion will be

amortized over a useful life of 10

years. The other portion was

ance sheet and statement of income

captions.

In 1991, only the balance sheet

items of the Eurocopter companies

Companies Included in

Consolidation

were proportionally included in con• charged to retained earnings in

1992, without affecting income.

The companies included in con•

solidation encompass, apart from

Daimler-Benz AG, 271 (1991: 255)

domestic and foreign subsidiaries

and 7 joint venture companies.

During the year under review,

solidation because of their relatively

short affiliation with the group; in

1992, they were included in the

statement of income as well.

Because income and expense

items relative to the German heli•

copter activities were still included

in the 1991 accounts, comparability

of group financial statements with

the previous year is not materially

26 companies have, for the first

time, been added to consolidation.

Moreover, one joint venture com•

pany was included pro rata, for the

first time, pursuant to Section 310 of affected.

the Commercial Code. A total of 10

subsidiaries and one joint venture

company were deleted from consol•

idation.

Not included are 248 subsid•

iaries, whose effect on the assets,

liabilities, financial position and re•

sults of operations of the group is

not material (their total sales volume

is less than 1 % of consolidated

sales), and 11 companies adminis•

tering pension funds whose assets

are subject to restrictions.

A difference (credit balance)

resulting from the capital consolida• payables have been eliminated; the

tion is shown under the balance differences resulting from debt

sheet caption "other provisions" ear• consolidation have been charged or

Intercompany receivables and

uity in D-marks is the remaining dif•

ference between translated assets

less translated liabilities and unap•

propriated profit. The difference

resulting from the translation of

marked as "difference from capital

consolidation with reserve charac•

teristics".

Profits earned by subsidiaries

after the date of acquisition are

credited to income.

All material intercompany profits balance sheet items is recorded

resulting from the intercompany

sales of goods and services have

been eliminated, except items of

in consolidated retained earnings.

Expense and income items are

essentially translated at average an•

nual exchange rates. To the extent

that they relate to fixed assets (fixed

asset depreciation, profit or loss

from disposal of fixed assets), they

are translated at historical costs. Net

income, additions to retained earn•

ings, and the unappropriated profit

are translated at year-end rates. The

difference resulting from the transla•

tion of annual net income, between

annual average rates and the

added to consolidated retained earn• minor importance. This also applies

ings. The unappropriated profit

shown in the financial statements

corresponds to the dividend payout

proposed by Daimler-Benz AG. For

this reason we have charged the

income-affecting consolidation

adjustments and the profits earned

by our subsidiaries to consolidated

retained earnings.

to sales of goods and services by

associated companies to companies

included in consolidation.

Intercompany sales and other

intercompany earnings have been

eliminated against the relevant

costs, or reclassified to "capitalized

in-house output" or to "increase in

inventories", respectively.

The consolidated financial state•

ments include 127 associated com•

panies.

At year-end, 13 associated com•

panies have been included in our

Deferred taxes (debit balance)

shown in the consolidated balance

sheet result from income-affecting

consolidation adjustments.

exchange rates at the balance sheet

date, is reflected in other operating

income (1991: other operating ex•

penses).

consolidated financial statements ac• Curreny Translation

cording to the book value method at

The adjustments made in the in•

come statements by our subsidiaries

equity.

Foreign currency receivables are in Brazil for monetary devaluations

translated in the individual financial have been retained in the consoli•

The remaining associated com•

panies are shown under investments statements at the bid price on the

in affiliated companies at acquisition day they are recorded or at the spot

costs - in some instances less write• rate on the balance sheet date if

dated statement of income without

change, effectively preventing reflec•

tion of inflationary profits. The

downs - as they are not material to

lower. Foreign currency payables

the consolidated assets, liabilities, fi• are translated at the asked price on

nancial position and results of opera• the day they are recorded or at the

income taxes, which were already

geared to the balance sheet date in

the national financial statements,

tions.

spot rate on the balance sheet date if have been translated at year-end

rates.

Items from inflation-adjusted in•

The 34 % stake in Sogeti S. A.,

Grenoble, which was acquired by

Daimler-Benz AG in December of

higher.

The accounts of all foreign com•

panies are translated to D-marks on

come statements of our Argentinian

companies are translated at year-end

exchange rates. Fictitious profits/

losses resulting from the divergence

between the inflationary trend and

the changes in the currency's value

have been eliminated.

991, was transferred to debis AG in the basis of historical exchange

rates for non-current assets, and at

992, Sogeti was included in consol• year-end exchange rates for current

assets, borrowed capital, and unap•

propriated profit. Stockholders' eq•

October 1992. As of December 31,

idation at equity according to the

book value method. However, only

the 1991 accounts were used be•

cause Sogeti's 1992 financials had

not been available at the time the

Daimler-Benz consolidated financial

statements were prepared. The good•

will of DM 355 million will be amor•

tized over 15 years.

Notes to the Consolidated Balance Sheet

Intangible Assets

Intangible assets, amounting to

payments made. The decrease

DM 611 million (1991: DM 774 mil• against the previous year is largely

lion) comprise goodwill arising from due to amortizations of goodwill

the capital consolidation and from

individual company financial state•

ments, acquired EDP software, pat•

ents and, to a lesser extent, advance

charged to income and to the write•

off of Eurocopter's goodwill to

retained earnings.

Fixed Assets

The increase in property, plant

re-classifications of DM 17 million,

and equipment by DM 2,680 million disposals of DM 433 million, and

to DM 19,254 million is derived

from additions of DM 7,829 million,

depreciation allowances of DM 4,699

million. Special tax-deductible

of which DM 1,410 million represent depreciation allowances amount to

net book values that are to be in•

cluded within the scope of the first-

time full consolidation of the Deut•

DM 163 million (1991: DM 77

million); depreciation allowances in

excess of scheduled depreciation

sche Aerospace Airbus group. These amount to DM 21 million (1991:

additions are reduced by

DM 39 million).

Financial Assets

A complete listing of our stock

ownership will be filed with the

commercial registry office at the

county court house in Stuttgart un•

der the number HRB 15,350.

Investments in non-current as•

sets should have been written up by

DM 7 million in accordance with the

value appreciation doctrine (rein•

statement of original values, Section

280 of the Commercial Code). How•

ever, such a write-up was omitted

for tax reasons.

Unscheduled write-downs,

largely of investments in associated

companies and of other long-term

receivables totaling DM 83 million

(1991: DM 115 million) had to be

made.

Leased Equipment

The increase in leased equip•

Benz Leasing GmbH, Stuttgart.

ment - almost exclusively vehicles - About 85 % of the balance sheet total

by DM 1,685 million to DM 9,777

million, pertains largely to

Mercedes-Benz Credit Corporation,

Norwalk, U.S.A., and to Mercedes-

pertains to these two companies.

Special tax-deductible depreciation

allowances amount to DM 3 million

(1991: DM 10 million).

Inventories

Mercedes-Benz and Deutsche

Aerospace account for the majority

of consolidated inventories. The in•

crease over last year is, with rough•

ly DM 1,150 million, derived from

the Mercedes-Benz corporate divi•

sion, particularly from Mercedes-

Benz AG and its foreign sales com•

panies and with about DM 1,250

million from the DASA corporate

division and DM 1,650 million as a

result of the first-time, full consolida•

tion of the Deutsche Aerospace

Airbus group.

Advance Payments Received

Advance payments received

amounting to DM 5,549 million

1991: DM 5,827 million) were al•

most exclusively for projects and

long-term contracts at AEG, DASA

AG, Dornier, Eurocopter and MTU;

they were deducted from inven•

tories.

(

Receivables from Sales

Financing

This caption pertains to accounts million), of which DM 2,804 million

receivable from customers totaling

DM 6,166 million (1991: DM 4,255

(1991: DM 2,699 million) mature

after more than one year.

Receivables

Other Assets

Approx. DM 0.4 billion (1991:

DM 0.3 billion) of the receivables

from related companies pertain

mainly to fixed-interest debt instru•

ments and securities.

Other assets include invest•

ments of liquid funds in debt instru•

ments not traded on stock ex•

changes. They amount to DM 437

million (1991: DM 2,564 million).

10 Securities

During the year under review,

we purchased 225,511 common

shares (par value DM 11.3 million =

We owned 122,287 common

shares on the balance sheet date

(par value DM 6.1 million = 0.26 %

0.48 % of the total outstanding share of the total outstanding share capi•

capital) at an average price of DM

tal).

09 a share.

In November of 1992, we sold

45,990 shares to our employees

par value DM 7.3 million = 0.31 %

of the total outstanding share capi•

Other securities pertain mainly

to fixed interest securities.

Within "current assets" there

would have been a revaluation of

DM 26 million necessary under the

(

tal) at a preferential price of DM 469 revaluation obligation. This did not

for each share (in the event that one take place due to tax law.

share was purchased) or DM 520 for

each share (in the event that two

shares were purchased).

11 Cash

Cash amounting to DM 2,968

Liquid funds, shown among

million (1991: DM 2,010 million)

various balance sheet captions, total

consists of deposits in financial insti• DM 9.8 billion (1991: DM 10.6

tutions, cash on hand, deposits at

the Bundesbank (German Federal

Bank), in post office accounts, and

checks on hand.

billion).

12 Prepaid Expenses and

Deferred taxes on income-

a debit balance overall - as shown

Deferred Taxes

affecting elimination entries amount in the consolidated individual

to DM 1,329 million (1991: DM

balance sheets are not included.

,596 million). Deferred taxes -

13 Stockholders' Equity

4 Capital Stock and Paid-in

Capital stock and paid-in capital

pertain to Daimler-Benz AG.

Capital

15 Retained-Earnings

Retained earnings comprise re•

insofar as they have been earned by

tained earnings allocated under stat• them since their affiliation with the

ute of DM 160 million, retained

group. Additionally, this caption

earnings allocated for treasury stock takes into account the cumulative

of DM 33 million, and other retained results from the elimination of inter•

earnings of Daimler-Benz AG of DM

,534 million. Also reflected here

are the company's share in the re•

company earnings and from debt

consolidation, as well as the differ•

ence arising from currency transla•

tained earnings and results of opera• tions.

tions of consolidated subsidiaries,

Minority Interests

The stock ownership of outside

third parties in the subsidiaries in•

cluded in consolidation pertain

mostly to Daimler-Benz Luft- und

Raumfahrt Holding AG, AEG,

Mercedes-Benz of South Africa,

Dornier, MTU and Eurocopter.

7 Provisions for Old-Age Pen•

Pension provisions rose to DM

When the assets of the provident

funds are added to the provisions

for old-age pensions, the company's

pension obligations are fully

covered.

sions and Similar Obligations 12,217 million (1991: DM 10,790

million). DM 499 million of the

DM 1,427 increase pertains to the

change in the circle of consolidated

companies.

The provisions for taxes include

DM 764 million (1991: 645 million)

which pertain, to a large extent, to

Daimler-Benz AG for open years

awaiting final assessment.

The difference amount with re•

serve characteristics resulting from

the capital consolidation originates

from the first-time consolidation of

one subsidiary; this amount will be

available to offset potential extraor•

dinary expenses during the start-up

years.

Additional provisions exist for

expenditures which are based on ap•

proved change-over, alteration and

some development projects, for pos•

sible additional costs in connection

with completed contracts, and for

maintenance which had been

planned for the year under review

but had to be deferred until the fol•

lowing year. In addition, provisions

have been recorded for future obliga•

tions in connection with restructur•

ing activities.

Apart from existing warranty

obligations, other provisions take

The DM 5,239 million increase

pertains with DM 4,028 to the

into account, above all, obligations in Deutsche Aerospace Airbus Group

the personnel and social area, risks

for losses inherent in pending busi•

ness transactions, and risks arising

from contractual liabilities and pend•

ing litigation.

which was consolidated via DASA.

19 Liabilities From Leasing

and Sales Financing

The liabilities from leasing and

Miscellaneous liabilities com•

sales financing serve the refinancing prise loans payable, and interest ac•

of leased vehicles and equipment

and of receivables derived from

sales financing. The caption deben•

tures comprises commercial paper

cruals in connection with sales

financing.

The liabilities due to leasing and

Sales financing are secured by

denominated in U.S. dollars; they are pledging redeemable bonds in the

shown at the issue price plus ac•

crued interest.

order of DM 45 million (1991: DM

11 million).

Accounts Payable Trade

21 Other Liabilities

Of the liabilities to related com•

Miscellaneous liabilities largely

panies, about DM 130 million (1991: comprise December 1992 accruals

DM 370 million) pertain to liabilities for wages and salaries as well as tax

to financial institutions. Excluding

those, they pertain mainly to obliga•

liabilities.

Liabilities to financial institu•

tions by Deutsche Aerospace Airbus tions, notes payable, liabilities to af•

GmbH to Airbus Industrie G.I.E.,

Toulouse, as well as to liabilities at

filiated and related companies and

miscellaneous liabilities are largely

DASA relating to project companies. secured by mortgage conveyance,

Debentures pertain to commer•

cial paper issued in D-marks; they

liens and assignment of receivables

in the order of DM 1,091 million

are shown at the issue price plus ac• (1991: DM 1,231 million).

crued interest.

Contingent Liabilities

In addition, we are liable for

non-estimable compensatory pay•

ments, guaranteed by Deutsche

Aerospace AG for 1993 and future

years. For outside shareholders of

AEG Aktiengesellschaft and of

Daimler-Benz Luft- und Raumfahrt

Holding AG, there exist claims for

non-estimable compensatory pay•

ments.

Moreover, there exist contrac•

tual performance guarantees that

could not reasonably be estimated.

Other Financial Obligations

Other financial obligations aris•

ing from rental, property lease and

leasing contracts average approx.

DM 748 million annually; the aver•

age contract duration is 8 years.

For companies not included in

consolidation, we have other finan•

cial obligations amounting to

Executive (government office in

charge of Airbus); this guarantee was

taken over by Deutsche Aerospace

Airbus GmbH - to the extent of its

share interest - without restriction.

Deutsche Aerospace Airbus GmbH

considers the obligation arising

therefrom fully covered by the rele•

vant agreements for the financing

and execution of the development

work.

DM 102 million; the average con•

tract duration is 9 years.

In connection with the fiduciary

settlement by Deutsche Aerospace

Airbus GmbH of the federally guar•

anteed serial credits, the effective

amount cannot be determined until

Beginning in 2002, the profit

sharing agreement provides that the

federal government will share in the

profits of Deutsche Aerospace

the beginning of 1995 when the fed• Airbus GmbH to the tune of 40 %.

eral government's last tranche of

This rule, in its economic effect,

DM 1 billion is due; this also applies stipulates the sequence of the

to the reorganization profit received

in 1989.

Within the scope of the

government-supported Airbus-

Development-Program, Deutsche

government's repayment demands.

The remaining financial obliga•

tions, particularly purchase order

commitments for capital invest•

ments, are within the scope of nor•

Aerospace Airbus GmbH has agreed mal business activities.

to assume performance portions

itself. DM 331 million thereof relate

to the time after the balance sheet

date, to the extent that they are not

already reflected in the annual ac•

counts.

All assets acquired by Deutsche

Aerospace Airbus GmbH with sub•

sidy funds have been conveyed to

the Federal Republic of Germany as

security.

The obligation arising from stock

subscriptions and from capital sub•

scriptions in close corporations pur•

suant to Section 24 of the GmbH

Act, amount to DM 14 million.

We are jointly and severally lia•

ble for certain non-incorporated com•

panies, partnerships and joint ven•

ture work groups. In addition, there

exist performance contracts and

miscellaneous guarantees in connec•

tion with ongoing business transac•

tions.

With reference to the develop•

ment work for the Airbus program,

Airbus Industrie G.I.E. has given a

performance guarantee to Agence

Notes to the Consolidated Statement of Income

Sales

Increase in Inventories and

Other Capitalized In-House

Output

24 Other Operating Income

The income amount included in

shown under other operating

this caption for the reversal of provi• expenses. In addition, income is

sions totals DM 1,519 million.

1991: DM 893 million). Additional

income is derived from exchange

derived from costs charged to third

parties, from security sales, and

from rentals and leases.

(

profits in connection with ongoing

Altogether, DM 2,226 million of

purchase and payment transactions, other operating income is attributa•

mostly earned abroad; exchange

losses against such income are

ble to prior years.

25 Cost of Materials

in relation to a total output of

DM 100,879 million (1991: DM

8,566 million), the ratio of cost of

materials amounted to 49 % (1991:

0 %).

26 Personnel Expenses/

Employment

The 1992 employment figures

In addition, 12,072 people are

employed in the joint venture com•

pany Eurocopter.

for the first time include the em•

ployees of Deutsche Aerospace

Airbus GmbH and its subsidiary.

Amortization of Intangible

Assets, Depreciation of Fixed

Assets and of Leased Equip•

ment

The depreciation of fixed assets

pertains with more than 50 % to

Mercedes-Benz AG. The increase in

depreciation of leasing equipment

results from the growth of the

leasing business of our domestic and

foreign finance companies.

Other Operating Expenses

This caption comprises additions out, packaging, and the expenses in

to provisions, maintenance ex•

penses, administrative and selling

expenses including sales commi-

sions, rental and lease expenses, for•

connection with the currency re•

valuation at our Brazilian subsidiary

companies.

Overall, DM 161 million is appli•

eign exchange losses incurred in the cable to prior years.

normal course of business, freight-

29 Income from Affiliated, Asso•

ciated and Related Companies

Net Interest Income

The net interest expense balance at the leasing and financing com•

from leasing and sales financing be• panies amounts to DM -421 million

fore the elimination of group inter•

nal interest income and expenses

(1991: DM -446 million).

Write-Downs of Financial

Assets and of Securities

Extraordinary Results

Taxes

The decline in tax expenses is

largely due to a decline in income in

the domestic circle of companies in•

cluded in the interlocking relation•

ship with respect to taxes.

Net Income

Consolidated net income of DM

,451 million has predominantely

been earned by the Mercedes-Benz

corporate unit. Special tax depre•

ciation of fixed assets and tax-

allowable write-downs of current

assets have reduced net income only

slightly. Also, future charges in

connection with such write-offs will

not be material.

Other Information/Boards

Under the presumption that the

proposed dividend is ratified by the

shareholders at the Annual Meeting

on May 26, 1993, the remuneration

paid by the group companies to the

members of the Board of Manage•

ment and the Supervisory Board of

Daimler-Benz AG amounts to DM

Benz AG for pension obligations to

former members of the Board of

Management and their survivors. As

of December 31, 1992, advances and

loans to members of the Board of

Management of Daimler-Benz AG

amounted to DM 220,741. Home

loans included herein are not subject

to interest; other loans and advances

7,002,148 and DM 2,157,079, re•

spectively. Disbursements to former bear interest averaging 5.5 %. Dur•

members of the Board of Manage•

ment of Daimler-Benz AG and their

ing the year, DM 71,468 was repaid.

The stipulated maturities amounted

survivors amount to DM 10,247,694. to ten years for home loans; they did

An amount of DM 75,954,745 has

been provided for on the books of

Daimler-Benz AG and of Mercedes-

not exceed one year for other loans

and advances.

Independent Auditors' Report

The accounting records and the consolidated accounts, which have been

audited in accordance with professional standards, comply with the legal

provisions. With due regard to the generally accepted accounting principles,

the consolidated accounts give a true and fair view of the assets, liabilities,

financial position and results of operations of the Daimler-Benz group. The

business review report, which summarizes the state of affairs of Daimler-

Benz Aktiengesellschaft and that of the group, is consistent with the finan•

cial statements of Daimler-Benz Aktiengesellschaft and the consolidated fi•

nancial statements.

Frankfurt am Main, March 24, 1993

KPMG Deutsche Treuhand-Gesellschaft

Aktiengesellschaft

Wirtschaftsprüfungsgesellschaft

Zielke

Dr. Koschinsky

Wirtschaftsprüfer

(Certified Public Accountant)

The annual financial statements of Daimler-Benz AG as of December 31,

992, show an unappropriated profit of DM 5,094,165,653. It will be proposed

to the Annual General Meeting that this amount be applied as follows:

Stuttgart-Mohringen, March, 9, 1993

The Board of Management

Report of the Supervisory Board

In the four Supervisory Board meet•

The result of the examinations

made by the Supervisory Board and

the auditors showed no cause for

questioning. We approved the finan•

cial statements of Daimler-Benz AG

ings held last year and by means of

written and verbal reports, we were

informed in detail about the state

of the corporation and principal

matters of corporate policy, and dis• as prepared by the Board of Manage•

cussed these issues with the Board

of Management. In particular, dis•

cussions centered on questions in

connection with the development of

ment; they are hereby ratified.

We concur with the proposal of the

Board of Management regarding the

application of the unappropriated

the company into an integrated tech• profit. The financial statements, the

nology group. We also concerned

ourselves with the trend in employ•

ment and earnings and with corpo•

rate planning, including investment

policy. In addition, we discussed im•

portant individual business transac•

tions and made business decisions

which, by law or company bylaws,

had to be submitted to us for

business review and the external

auditors' report were available to

the Supervisory Board.

Stuttgart-Mohringen

April 1993

The Supervisory Board

approval.

We examined the financial state•

ments and the business review com•

piled for both Daimler-Benz AG and

the group, as well as the proposal for Chairman

the application of unappropriated

profit. The financial statements of

Daimler-Benz AG and of the group

as at December 31, 1992, including

the business review and the

accounting principles used, were

verified by KPMG Deutsche Treu-

hand-Gesellschaft AG, Wirtschafts-

prüfungsgesellschaft, Frankfurt

am Main, and found to be in

accordance with the books and with

the pertinent legal requirements.

The Supervisory Board, in a joint

meeting with the Board of Manage•

ment on April 2, 1993, approved the

result of the audit.

From the Daimler-Benz Collection

Günter Scharein

1949

Sehnsuchtstriptychon, 1987/88

Oil on hard foam panel

24 x 330 cm

The paintings of Günter Scharein,

with their living, vibrant, "breath•

ing" colors which appear to bathe in

an unreal light, hinting at unfathom•

able depths, evoke a mystic, medita•

tive mood strongly reminiscent of

modern altar pictures. Light and

dark graduations of the same color,

honed with meticulous care, are the

objective foundation for a highly

emotional color "experience" which

transcends empirical dimensions.

Annual General Meeting

May 26, 1993

10.00 o'clock

Hanns-Martin-Schleyer-Halle

Mercedesstraße 69

7000 Stuttgart 50 (Bad Cannstatt)

Daimler-Benz AG

BPA

Postfach 80 02 30

D-7000 Stuttgart 80

(as of July, 1, 1993: 70546 Stuttgart)

Phone number 0711-1 79 22 87

Telefax number 0711-1 79 41 16

This report has

been printed on

environment-friendly

paper bleached without

the use of chlorine.