Research and Development - Creating Value Added for Customers

• Technological Leadership Asserted
• Launch of One-Button Service in Three Format Categories
• Prinect's Key Stand-Alone Feature: New Applications

We secure our leading position as the industry's leader in quality and technology by continually investing in research and development. As the overview in the illustration on the right shows, investments in the development of our complex mechatronic systems, in software development, and in the series maintenance of our product portfolio during the financial year were below the prior year's figures. 
 
New Products Exhibited (Not Only) at drupa 2008: Just the Right Product for Each Target Group
At drupa 2008, we introduced new products that we developed in line with our medium- and long-term development roadmap. For example, during the financial year, we completely replaced the control platform of all sheetfed offset printing presses with Sheetfed Control, which is in every respect technologically state-of-the-art. The total costs of Heidelberg's own development of Sheetfed Control were considerably less than the cost of acquisition of a comparable solution. This underscores the considerable expertise of our staff in the development and production areas. Sheetfed Control makes it possible to use the most modern analytical tools. It offers a highly automatic one-button function, which we are simultaneously launching in the market for the Speedmaster models XL75, XL105, XL145, and XL162. We presented the one-button maintenance eCall, a new component of our remote services, for the first time in the autumn of the financial year at the Graph Expo trade show in Chicago, where it became one of the 'must-see' products at the show. Thanks to this Internet-based service platform, we can largely prevent printing press downtimes and failures. At the same time, service and maintenance becomes considerably less expensive for both the customer and for us.

Highly Qualified Employees: 158 New Patents Registered
For good reason, our stand-alone feature Prinect has high priority in research and development. Nearly 400 R&D employees were active in the software area during the financial year. A total of 1,582 employees are active in research and development, as in the past accounting for approximately eight percent of the overall staff. Their work priorities are spread evenly over mechanical and electrical engineering, the software area, and supporting activities. Over half of the R&D employees have a university degree. To ensure that our employees always remain up to date, we offer them diverse specialized training opportunities. We invite
professors to present lecture series, with a preference for universities with which we work together within the framework of research and development partnerships. We organize in-house training programs on special topics, such as the application of CAD systems. Specialized and advanced training programs are offered externally. As clear evidence of our employees' performance, we registered a total of 153 new patents
in the prior year and 158 during the reporting year. Overall, as of March 31, 2008 Heidelberg held over 5,400 registered and granted patents throughout the world.
 
R&D Partnerships with Institutions and Suppliers
The number of our patents reflects only part of the knowledge and experience to which Heidelberg has access. We work together very closely on a long-term basis with our systems partners, including these suppliers in the development processes at an early stage. Based on economic viability analyses, in some cases we acquire expertise from outside suppliers, make investments in attractive companies, or we conclude other R&D partnerships. For competitive reasons, we protect our partners and generally do not disclose information concerning joint projects. Partnerships with universities and institutes augment our internal basic research, in which we invest approximately five percent of our R&D expenses.

As at: October 2008