R&D Expenditure

(in millions JPY)	FY2006	FY2005	FY2004
Fuel-injection devices for diesel engines	1,552	1,637	1,804
Brake systems for passenger vehicles	998	1,516	1,535
Automotive electronics and powertrain	438	286	396
Total	2,989	3,440	3,736

<R&D by Segment>
Fuel-injection devices for diesel engines
- The Company launched initiatives to introduce high-performance Piezo-type injectors from Europe. It also worked on developing high-pressure common-rail systems that comply with tighter emission standards coming into effect.
- R&D was also focused on Diesel Particulate Filters (DPF) and Selective Catalyst Reduction (SCR) for NOx. These are important technologies for controlling emissions from diesel-powered vehicles. It started supplying the SCR DXTRONIC-1, a urea-SCR (selective catalytic reduction) technology, and conducted development of injection equipment for alternative fuels such as Dimethyl Ether.

Brake system for passenger vehicles
1) Modular product segment
- Active safety systems for next-generation applications such as ABS, Traction Control System (TSC), and Electric Stability Program (ESP) that are more compact and lighter in weight, but which cost less to manufacture per unit.
- Modular and scalable ABS and TCS units combined with ESP are intended to streamline installation.
- ECDs for automatic speed control, Hill Hold Control (HHC) that assists vehicles climbing hills, and various brake support capabilities compatible with Adaptive Cruise Control (ACC) made possibly by applying modular technology
- VDM (Vehicle Dynamic Management) system, which work in harmony with other automotive systems.
- In 2006, the Company established its DA&CAPS division, which will focus on making driver assistant systems and combined active and passive safety systems (CAPS) that cater to the needs of the Japanese car industry.
- Regenerative brakes for hybrid cars
- ABSs for motorcycles

2) Actuation segment
- Completed developing smaller, lighter, and lower-cost boosters and master cylinders for next-generation actuation applications, further increasing applications on cars.
- It also developed volt vacuum boosters and started mass production of them.
- The Company is working on developing products based on its research on braking in terms of feel.


Technical Contracts (Dec, 2006)

Company name	Items	Contracts	Contract term
Robert Bosch GmbH (Germany)	- In-line/distributor type fuel injection pumps for diesel engines - Fuel injection electronic control units	Granting license to use patents; Provision of technical information	1993.11.24-2007.12.31
	- High-pressure distributor type fuel injection pumps		1996.04.01-2007.12.31
	- Common rail fuel injection pump systems for diesel engines		1999.07.20-2008.12.31
	- Second generation common rail fuel injection pump systems for diesel engines		2001.09.01-2008.12.31
	- ABSs, ESCs, brake boosters, and disc brakes		2003.01.01-2007.12.31
	- Next generation ABSs and ESCs		2004.01.13-2012.12.31
	- Electronic control units for airbags and seatbelt tensioners		1987.11.12-2007.06.30
	- Control units for transmission hydraulic control equipment and electronic control devices		2000.09.07-2009.06.30
Robert Bosch Corporation (U.S.A.)	- Vacuum boosters and cartridge master cylinders	Granting license to use patents; Provision of technical information (cross-license)	2003.01.01-2007.12.31
Robert Bosch GmbH (Germany) and Robert Bosch Corporation (U.S.A.)	- Vacuum boosters and cartridge master cylinders		2005.05.16-2009.12.31

Capital Investment

in million JPY	FY2006	FY2005	FY2004
Capital Investment	10,049	9,675	11,478

Fuel-injection devices for diesel engines
Investment focus was on enhancing manufacturing equipment at Higashi Matsuyama Plant No. 1. Total amount of capital spending reached 4,733 million yen in FY2006.

Brake systems for passenger vehicles
The Company invested mainly to rationalize and upgrade production facilities at the Musashi plant. Investments at the sector totaled 2,689 million yen in FY2006.

Automotive electronics and powertrain
The focus of investments was manufacturing facilities for new products, streamlining operations, and improving quality, mainly at the Tomioka plant. Capital spending at the segment totaled 1,864 million yen in in FY2006.

New equipment installation

Plant	City	Segment	Equipment to be installed	Estimated amount of investment (million yen)	Period of the project
					From	To
Higashi Matsuyama Plant No. 1	Higashi Matsuyama City, Saitama Prefecture	Fuel-injection devices for diesel engines	Equipment to manufacture new fuel injection devices	7,100	January 2006	December 2009
Tochigi Plant	Nasu Shiobara City, Tochigi Prefecture	Brake systems for passenger vehicles	Equipment to manufacture ABSs and ESCs	2,120	January 2006	January 2009

- Bosch Corporation plans to enhance production operations for transmission products and ECUs (engine control units) at the Tomioka Plant. The annual production capacity of linear solenoid valves, control parts used in automatic transmissions (ATs), will be doubled to 6 million units within this year. The new ECU line with an annual production capacity of 500,000 units will be built as well. Both plans are aimed to switch from the products currently supplied by other Germany-based Bosch Group operations to those made in Japan. The company expects these efforts will raise the profit ratio of the plant, projecting to double it in three years compared to the current level. (From an article in the Nikkan Jidosha Shimbun on Jan. 24 2006)