Financial overview

(in million euros)

	FY2009	FY2008	Rate of Change(%)	Factors
Overall
Sales	38,174	45,127	(15.4)	1)
EBIT	(1,151)	1,515	-	-
Automotive Technology
Sales	21,716	26,475	(18.0)	2)

Factors
1)
-The global economic crisis had a serious impact on the business developments of the Company. In the first quarter of 2009, sales were down by more than 25 percent year on year. The recovery that began to take hold in mid-2009 was in no way sufficient to compensate for this slump.

<Asia>
-Although the financial and economic crisis affected its business activities in all regions at the start of 2009, the Company benefited considerably from the dynamic economic activity that developed in the Asian markets - first in China and then in India - in particular from the middle of the year onward. In China, the Company increased its sales by 29 percent in euros and 21 percent in local currency terms. In India, sales grew by around one percent in euros and a good 6 percent in local currency terms.

-In Asia Pacific as a whole, its sales fell nominally by around 2 percent (and by around 6 percent in local currencies) to 7,700 million euros. This was largely due to the weak development of sales in Japan.

-Sales in Asia Pacific accounted for 20 percent of its total sales for the first time.

<Europe and the Americas>
-Although the markets in Europe and the Americas picked up in the second half of the year, sales for 2009 as a whole remained well below their 2008 figure as a result of the steep decline in the first half of the year. The Company's sales in Europe were down 20 percent to 2,380 million euros. In local currencies, the decrease was 18 percent. Following a considerable drop in sales in North America in 2008, 2009 saw a further drop of 11 percent to 5,300 million euros, or 13 percent after adjusting for currency effects.

-In South America, sales fell by 16 percent to 1,400 million euros, or 13 percent after adjusting for currency effects.

2)
Automotive Technology
-In the first quarter, sales were down by around one-third year on year. Business began to pick up again halfway through 2009. Nonetheless, sales were down 18 percent year on year, or 19 percent after adjusting for currency effects.

-Nearly all the areas in which Automotive Technology does business were affected by the steep market decline, particularly those with a high proportion of commercial-vehicle business, most notably the Diesel Systems and Starter Motors and Generators divisions and its Steering Systems joint venture.

Contracts

Maker/ Model	Products
Toyota Venza	Electronic stability control (ESC)
GM Chevrolet Traverse	Electronic stability control (ESC), Transmission electro-hydraulic control module (TEHCM)
GM Chevrolet Equinox	Electric Power Steering (EPS)
BMW 7 Series	ESP(R) premium, Control unit
BMW (zero-emission vehicles)	Lithium-ion battery cell
BMW X5d	Diesel common rail system powered by piezo-inline technology
Opel Insignia	Parking assistant technology "Park Steering Information"
Ford Lincoln MKT	Gasoline direct injection
Ford Lincoln MKS	Gasoline direct injection
Ford Flex	Gasoline direct injection
Volkswagen	Hybrid system
Volkswagen CC 2.0T	Gasoline direct injection
Volkswagen GLI 2.0L FSI Turbo	Gasoline direct injection
Audi A4	Gasoline direct injection
Audi Q7 TDI	Diesel common rail system powered by piezo-inline technology
Audi TT Coupe	Electric power steering (EPS)
Daimler Mercedes ML350 BlueTEC	Diesel common rail system powered by piezo-inline technology
Porsche	Hybrid system

-The Company produced its 200 millionth brake control system in 2009.

-The Company announced the cumulative shipment of its start-stop starters has reached one million units since the production started in 2007. The starter reduces fuel consumption and CO2 emissions by up to 8 percent in the NEDC urban driving. (From a press release on Aug. 28, 2009)

-The Company produced its one-hundred millionth hot-film air-mass meter (HFM) in October 2009. The Company began manufacturing HFM for production vehicles in 1989. At present, the Company manufactures the product at five locations. The lead plant is located in Eisenach, Germany, and other facilities are in Saratov (Russia), Daejeon and Kunpo (both in South Korea), and Shanghai, China. (From a press release on Oct. 22, 2009)

Recent Developments outside Germany

<Poland>
-The Company announced that it has agreed with Denso Corp. to discontinue their joint venture to develop and produce diesel particulate filters (DPF). They founded Advanced Diesel Particulate Filters Sp.zo.o. 50/50 joint venture, Wroclaw, Poland in July 2007, which was to manufacture DPF substrates using cordierite ceramics from 2009. With the European market downturn triggered by the worldwide recession started 2008's fall, however, the expected demand cannot be anticipated any more. The Company will take up the plant building under construction with no plan to manufacture DPF independently. (From an article in the Nikkan Jidosha Shimbun on May 21, 2009)

<USA>
-Bosch North America has relocated its Chassis Systems Control division to its Plymouth Technical Center in Michigan, USA. The facility now centrally houses sales, quality, and engineering teams among four Bosch Automotive Technology divisions - Chassis Systems Control, Automotive Electronics, Starter Motors and Generators, and Electrical Drives. The divisions' physical proximity will help Bosch strengthen its development activities for safety technologies such as Adaptive Cruise Control (ACC), Predictive Collision Warning (PCW), Emergency Brake Assist (EBA), and Automatic Emergency Braking (AEB). (From a press release on Aug. 26, 2009)

<India>
-The Company started production at its first local ABS manufacturing facility in India in 2009.

<Koria>
-A joint-venture, SB LiMotive Co. Ltd. of Korea will establish a lithium-ion battery plant in Ulsan City.
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Acquisitions

-The Company announced that it will make a takeover bid to acquire all the shares it doesn't already own in Pacifica Group Limited (Pacifica), an Australian automotive brake supplier. The Company is the largest shareholder in Pacifica and currently holds approximately 76.6% of the shares. (From a press release on Jun. 16, 2009)

Joint Ventures

-The Company, Deutz, and Eberspaecher have signed an agreement to set up a joint venture in the area of diesel exhaust control technology. The joint venture will offer modular-based diesel exhaust aftertreatment systems for construction and agricultural machinery, as well as for commercial vehicles. The new entity is to be known as "Bosch Emission Systems GmbH & Co. KG" and to be headquartered in Stuttgart, Germany. It will start operations in January 2010. Series production will likely start in the third quarter of 2010. (From a press release on Dec. 10, 2009)

Divestitures

-The Company and Akebono Brake Industry Co., Ltd. announced that they are now in talks to transfer part of the Company's brake business in North America to Akebono. Akebono is likely to buy the Company's foundation brake business in the region, which includes disc brake and drum brake parts. The Company is the second largest shareholder of Akebono next to Toyota Motor Corporation, holding a more than 10 percent equity share in the Japanese brake supplier. In addition to having capital ties, it has also been licensing out technology to Akebono. Since there is surplus capacity for brake foundation products in North America, the Akebono-Bosch alliance is working on integrating their business so as to optimize their supply capacity in the market. (From an article in the Nikkan Jidosha Shimbun on Aug. 31, 2009)

Restructuring

-The Company announced that the Company plans to have some 10,000 associates fewer at the end of 2009 than it had at the beginning of 2009. The workforce in its automotive businesses will drop from 168,000 to some 160,000. (From a press release on Sep. 15, 2009)

R&D Expenditure

(in million euros)

	FY2009	FY2008	FY2007
Overall	3,603	3,889	3,583
Automotive Technology	2,862	3,250	2,899

 

R&D Structure

-Around the world, the Company has more than 33,000 research and development associates.
-Of this total, more than 1,300 were employed in the corporate sector Research and Advance Engineering.

R&D Facilities

	Location	Activities
Regional centers	U.S., Russia, Singapore, China, Japan	-Monitor local trends and analyze market opportunities.

-The Company has invested approximately 8 million USD to upgrade its vehicle test track in Flat Rock, Michigan, USA. Since 1989, the location has served as a key tool in Bosch's development of crash avoidance technologies. (From a press release on Jul 13, 2009)

-The Company, the Reutlingen University of Applied Sciences, the University of Stuttgart, and the state of Baden-Wuerttemberg are to establish a center for power electronics studies and research. The Baden-Wuerttemberg state government has given the project the go-ahead. Power electronics includes modules, components, and systems that are used in areas such as hybrid vehicles, but also in the renewable energy field, where they are part of photovoltaic systems. This alliance is the first research and teaching network of its kind in Germany. Over a ten-year period, the Company and the German state of Baden-Wurttemberg will invest more than 25 million euros in new teaching posts and infrastructure. The Robert Bosch Center for Power Electronics is to be based in Reutlingen and Stuttgart. (From a press release on Nov. 3, 2009)

Patents

-The Company filed 3,870 patent applications in 2009.

Technological Alliance

-The Company announced that it has signed an alliance agreement with a German company Infineon Technologies AG in the field of power semiconductors for automotive technology. The Company will be granted a license to use Infineon's technology to manufacture low-voltage power MOSFETs (metal-oxide-silicon field-effect transistors). The cooperation between the two companies also includes a second-source arrangement. In parallel to the Company semiconductor manufacturing in Reutlingen, Germany, Infineon will supply components developed in accordance with these processes to the Company. (From a press release on Mar. 23, 2009)

-The Company, BMW Forschung und Technik GmbH, Continental AG, Daimler AG and Infineon Technologies AG have formed the "Radar on Chip for Cars"(RoCC) technology cooperation project. The companies are engaged in joint research with the aim to make radar sensor systems available in all vehicle classes. Short-range automotive radar sensors in use today use ultra-wide band technology at 24GHz. This frequency, however, is licensed in Europe only up until 2013. In the RoCC project, the five companies will work together to develop radar sensor systems in the frequency range of 76-81GHz for both long-range systems (covering distance of up to 250 meters) and short-range systems (covering distances between 5 centimeters and 20 meters). The three-year project has a budget of more than 17 million euros, supported by a financial grant of 8.3 million euros from the German Federal Ministry of Education and Research (BMBF). (From a press release on May 28, 2009)

R&D Activities

-The Company firmly believes that while the automobiles of the future will be powered by electricity, the conventional internal-combustion engine will remain the dominant drive technology for the next 20 years. The Company therefore continues to develop its technology for gasoline and diesel engines while at the same time pressing ahead with its work on hybrid and electric vehicles.

-The Company is currently working on a common-rail system for high-performance engines. This uses injection pressures of over 2,000 bar and piezo valves to atomize the diesel fuel even more finely. These systems can be configured to comply with the Euro 6 emission regulation, which is set to come into effect in 2014.

-The Company is poised to develop a fuel injection system for the diesel engine to be installed on low priced vehicles, which are expected to grow in new emerging markets. Based on the conventional common-rail system, the new fuel injection system is designed exclusively for modest price cars through modifications of its functions like reducing injection pressure 40 to 50 percent to 1,100 to 1,200 bar. Emissions regulations in China and India are likely to stay for the time being at the levels of the European Standards "Euro3 that were effective before 2000. The Company, therefore, decided it possible to meet the requirements even at a lower injection pressure. It intends to increase cost competitiveness of its products by taking advantage of mitigated requirements for hardness as a result of lower injection pressure. (From an article in the Nikkan Jidosha Shimbun on June 16, 2009)

-The Company has compiled a long-term strategy on automotive technology development for CO2 emission reduction, improved safety systems and their expansion. The Company expects larger applications of electric drive systems in CO2 reduction. It will therefore work to solve such problems as reduction of the secondary battery cost, which is the biggest factor of the high prices of electric and hybrid vehicles. Considering the cost-performance balance, however, the Company predicts that internal-combustion engines should continue to be the mainstream powertrain for the next twenty years. It will therefore seek for a more sophisticated downsizing technology which will make a fuel-efficient, small emission engine with the same power level as higher-grade engines. With these efforts, the Company aims to develop a fuel-efficient, middle-class vehicle with limited CO2 emission below 100g/km. (From an article in the Nikkan Jidosha Shimbun on June 18, 2009)

Product Development

Solenoid injectors
-In 2009, new solenoid injectors with pressure-balanced valves went into production. As these injectors open and close more quickly, the intervals between the individual injections are very short, and this makes for better combustion.

Diesel engines
-The Company has established the technology of downsizing diesel engines (DE), by which the 1.5-liter class DE achieves the 2.0-liter class output. The Company aims to incorporate the technology in commercially available vehicles in five to six years. The technology has been developed by making the fuel injection pressure higher and improving the turbo-charger control. While diesel engines are superior to gasoline engines in fuel efficiency with less CO2 emission, their disadvantages have been heavier weight and comparatively higher prices. The new technology, however, will downsize the displacement and solve these problems. If cost reduction on exhaust emission post treatment becomes tangible, spread of diesel engines in markets other than Europe, its major market, can also be expected. The Company, therefore, plans to promote the technology extensively as a promising environment-responsive unit. (From an article in the Nikkan Jidosha Shimbun on Jan. 19, 2009)

Electronic Stabilization Program (ESP) sensor
-The Company has developed SMI540 - a new Electronic Stabilization Program (ESP) sensor which measures yaw rate and acceleration simultaneously. The product is set to go into large-scale series production from the second quarter of 2010. (From a press release on Sep. 4, 2009)

Airbag control unit "AB plus"
-The Company developed a new airbag control unit "AB plus" with integrated inertial sensors for ESP(R) electronic stability program. In addition, further acceleration sensors and yaw rate sensors can be added, allowing vehicle movement along all axes to be measured. The AB plus offers all the conventional crash-sensing functions for passive safety: as well as sensing head-on, side, and rear crashes, a rollover sensor function is also available as an option. Moreover, an active pedestrian protection system can also be integrated. This product recently debuted in a production car made by a Japanese automaker. (From a press release issued in Dec. 2009)

Capital Expenditure

(in million euros)

	FY2009	FY2008	FY2007
Overall	1,892	3,276	2,634
Automotive Technology	1,165	2,195	1,808

Investments Outside Germany

<Vietnam>
-The Company and KEFICO of Korea will establish an auto parts plant in the Dai An Industrial Zone in Haiduong Province, northern region of Vietnam, through a joint investment. Total investment in this project is expected to reach 60 million US dollars. (From a press release on Jul. 24, 2009)

<Koria>
-SB LiMotive Co. Ltd. of Korea, which is a joint-venture company between the Company and Samsung SDI, will establish a lithium-ion battery plant in Ulsan City. The plant, which is scheduled to be completed in 2011, will supply lithium-ion batteries to BMW and other customers. (From a press release on Aug. 27, 2009)