Financial Position

3.37

Consolidated statement of financial position
  Dec. 31, 2012 Dec. 31, 2011 12/11
In millions of euros     % change
       
Assets      
Intangible assets 8,885 8,259 +8
Property, plant and equipment 20,599 19,180 +7
Equipment on operating leases and receivables from financial services 75,118 68,378 +10
Investments accounted for using the equity method 4,646 4,661 .
Inventories 17,720 17,081 +4
Trade receivables 7,543 7,849 -4
Cash and cash equivalents 10,996 9,576 +15
Marketable debt securities 5,598 2,281 +145
Other financial assets 5,960 4,964 +20
Other assets 5,913 5,903 .
Total assets 162,978 148,132 +10
       
Equity and liabilities      
Equity 45,510 41,337 +10
Provisions 16,557 19,137 -13
Financing liabilities 76,251 62,167 +23
Trade payables 8,832 9,515 -7
Other financial liabilities 8,391 9,693 -13
Other liabilities 7,437 6,283 +18
Total equity and liabilities 162,978 148,132 +10

Consolidated statement of financial position

The balance sheet total increased compared with December 31, 2011 from €148.1 billion to €163.0 billion. Adjusted for the effects of currency translation, the increase amounted to €17.2 billion. The financial services business accounted for €85.5 billion or 52% of the Daimler Group’s balance sheet total (December 31, 2011: €75.6 billion or 51%).

The increase in the balance sheet total is primarily due to the increases in equipment on operating leases, receivables from financial services, liquidity (cash and cash equivalents and marketable debt securities) and property, plant and equipment. This increase is accompanied on the liabilities side primarily by a higher level of financing liabilities and increased equity, while provisions decreased. Current assets account for 41% of the balance sheet total, at the level of a year earlier. Current liabilities account for 36% of the balance sheet total (December 31, 2011: 37%). (See graphic 3.38)

Daimler AR2012 Balance sheet structure Daimler Group

Intangible assets of €8.9 billion (December 31, 2011: €8.3 billion) include capitalized development costs of €7.2 billion (December 31, 2011: €6.7 billion). The increase is mainly accounted for by capitalized development costs at the Mercedes-Benz Cars segment. Capitalized development costs amounted to €1.5 billion, as in the prior year, and account for 26.0% of the Group’s total research and development expenditure (2011: 25.9%). (See Research and development, environmental protection and table 3.27)

3.27

Research and development expenditure by division
  2012 2011 12/11
in millions of euros     % change
       
Daimler-Group 5,644 5,634 +0
thereof capitalized 1,465 1,460 +0
Mercedes-Benz Cars 3,863 3,733 +3
thereof capitalized 1,125 1,051 +7
Daimler Trucks 1,197 1,321 -9
thereof capitalized 180 251 -28
Mercedes-Benz Vans 371 358 +4
thereof capitalized 137 126 +9
Daimler Buses 222 225 -1
thereof capitalized 23 32 -28

Capital expenditure (See table 3.34) was higher than depreciation and caused property, plant and equipment to increase to €20.6 billion (December 31, 2011: €19.2 billion). In 2012, a total of €4.8 billion was invested in the launch of new products, the expansion of production capacities, and modernization - mainly at the sites in Germany.

3.34

Investment in property, plant and equipment by division
  2012 2011 12/11
In millions of euros     % change
       
Daimler Group 4,827 4,158 +16
in % of revenue 4.2 3.9  
Mercedes-Benz Cars 3,495 2,724 +28
in % of revenue 5.7 4.7  
Daimler Trucks  989 1,201 -18
in % of revenue 3.2 4.2  
Mercedes-Benz Vans 223 109 +105
in % of revenue 2.6 1.2  
Daimler Buses 82 103 -20
in % of revenue 2.1 2.3  
Daimler Financial Services 23 21 +10
in % of revenue 0.2 0.2  

Equipment on operating leases and receivables from financial services increased to a total of €75.1 billion (December 31, 2011: €68.4 billion). The increase of €7.9 billion adjusted for exchange-rate effects was caused by the higher level of new business due to growth in unit sales by the automotive divisions. The proportion of total assets is unchanged compared with the prior year at 46%.

Investments accounted for using the equity method of €4.6 billion primarily comprise the carrying amounts of our equity interests in EADS, Engine Holding, the two Chinese joint ventures (Beijing Foton Daimler Automotive in the truck business and Beijing Benz Automotive in the car business), and Kamaz. The decrease from the sale of 7.5% of the shares in EADS in December 2012 (minus €0.9 billion) was offset by capital contributions to Engine Holding (€0.2 billion) and the two Chinese joint ventures (€0.4 billion) and the equity-method earnings from our equity interests (€0.3 billion).

Inventories increased by €0.6 billion to €17.7 billion and account for 11% of total assets (December 31, 2011: 12%). Due to the shift in the regional sales structure, finished goods increased by €0.5 billion to €13.2 billion. Higher stocks of raw materials and manufacturing supplies were offset by lower volumes of work in progress.

Trade receivables decreased by €0.3 billion to €7.5 billion. The decrease compared with the prior year mainly relates to the Asian car and truck markets.

Cash and cash equivalents increased compared with the end of 2011 by €1.4 billion to €11.0 billion.

Marketable debt securities increased compared with December 31, 2011 from €2.3 billion to €5.6 billion. They consist of debt instruments quoted in an active market and are allocated to liquidity.

Other financial assets increased by €1.0 billion to €6.0 billion. They principally comprise investments and derivative financial instruments, as well as loans and other receivables due from third parties. The change was mainly caused by derivative financial instruments.

Other assets of €5.9 billion (December 31, 2011: €5.9 billion) primarily comprise deferred tax assets and tax refund claims.

The Group’s equity increased compared with December 31, 2011 by €4.2 billion to €45.5 billion. Net profit (See table 3.23) of €6.5 billion was partially offset by the distribution of the dividend (See table 3.24) for the year 2011 of €2.3 billion as well as negative exchange-rate effects of €0.5 billion. For the year 2012, a dividend payment of €2.20 per share will be proposed.

3.23

Consolidated statement of income
  2012 2011 12/11
In millions of euros     % change
       
Revenue 114,297 106,540 +7
Cost of sales -88,784 -81,023 +10
Gross profit 25,513 25,517 .
Selling expenses -10,451 -9,824 +6
General administrative expenses -3,973 -3,855 +3
Research and non-capitalized
development costs

-4,179

-4,174

.
Other operating income 1,507 1,381 +9
Other operating expense -291 -355 -18
Share of profit/loss from investments accounted for using the equity method, net
990

273

.
Other financial income/expense, net -501 -208 -141
Earnings before interest and taxes (EBIT)1
8,615

8,755

-2
Interest income 828 955 -13
Interest expense -1,725 -1,261 +37
Profit before income taxes 7,718 8,449 -9
Income taxes -1,223 -2,420 -50
Net profit 6,495 6,029 +8
thereof       
Profit attributable to
non-controlling interest

400

362

+11
thereof      
Profit attributable to
shareholders of Daimler AG

6,095

5,667

+8
1 EBIT includes expenses from the compounding of provisions and effects from changes in discount rates (2012: minus €543 million; 2011: minus €225 million).
Daimler AR2012 Dividend per share

The equity ratio was 26.5% for the Group (December 31, 2011: 26.3%) and 47.8% for the industrial business (December 31, 2011: 46.4%). The 2011 and 2012 equity ratios are adjusted for the paid and proposed dividend payments for the years 2011 and 2012.

Provisions of €16.6 billion were lower than at December 31, 2011 (€19.1 billion) and accounted for 10% of the balance sheet total (December 31, 2011: 13%). The decrease was caused by lower tax liabilities in connection with tax assessments of prior years and warranty obligations. Provisions for pensions were slightly lower than at the end of 2011.

Financing liabilities increased by €14.1 billion to €76.3 billion. The increase of €15.3 billion after adjusting for exchange-rate effects is mainly the result of the growing leasing and sales-financing business. Of the total financing liabilities, 47% are accounted for by bonds, 27% by liabilities to financial institutions, 16% by deposits in the direct banking business, and 7% by liabilities from ABS transactions.

Daimler AR2012 Balance sheet structure industrial business

Trade payables were reduced compared with the prior-year figure to €8.8 billion (December 31, 2011: €9.5 billion).

Other financial liabilities decreased by €1.3 billion to €8.4 billion. They mainly consist of liabilities from residual-value guarantees and wages and salaries, derivative financial instruments and accrued interest on financing liabilities. The change was primarily related to derivative financial instruments.

Other liabilities of €7.4 billion (December 31, 2011: €6.3 billion) primarily comprise deferred taxes, tax liabilities and deferred income. The increase is related to deferred taxes and deferred income.

Further information on the assets presented in the statement of financial position and on the Group’s equity and liabilities is available in the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity and the related notes in the Notes to the Consolidated Financial Statements.

Funded status of pension obligations

The funded status of the Group’s pension benefit obligations, defined as the difference between the present value of the pension obligations and the fair value of pension plan assets, amounts to minus €9.7 billion, compared with minus €6.5 billion at the end of the prior year. At December 31, 2012, the present value of the Group’s pension obligations amounts to €23.9 billion, compared with €19.1 billion a year earlier. The increase resulted primarily from the reduction in the discount rate for German pension plans of 1.6 of a percentage point to 3.1%.

The plan assets available to finance the pension obligations increased mainly as a result of the income earned in the year 2012 (€1.3 billion) from €12.6 billion to €14.2 billion.

With the application of the amended IAS 19 as of January 1, 2013, actuarial losses, which were previously recorded off balance sheet (minus €8.3 billion), have to be entered in the statement of financial position with no effect on the statement of income; this reduces equity by €6.4 billion. We therefore continue to have a sound equity ratio of 22.6% for the Group and 39.7% for the industrial business.

Further information on the effects on the statement of financial position and the statement of income as well as on pensions and similar obligations is provided in Note 1 and Note 22 respectively of the Notes to the Consolidated Financial Statements.

Other financial commitments and off-balance-sheet transactions

In the context of its normal business operations, the Group has entered into other financial commitments in addition to the liabilities shown in the consolidated balance sheet at December 31, 2012. Those other financial commitments primarily relate to purchasing commitments and commitments to invest in property, plant and equipment and other agreements. The Group has also committed to make payments in connection with rental and leasing agreements for the use of production facilities and property, plant and equipment. In addition, Daimler Financial Services in particular has made irrevocable loan commitments within the framework of its business operations.

The table 3.40 provides an overview of these commitments and their maturities.

3.40

Other financial commitments
      Payments falling due:
 
Total
within
1 year
in
1-3 years
in
4-5 years
after
5 years
In millions of euros          
           
Purchasing agreements, investments in property, plant and equipment
and other agreements

10,159

7,290

1,869

700

300
Future lease payments under rental and leasing agreements 2,139 360 575 437 767
Irrevocable loan commitments 1,022 672 176 174 -

The Group’s off-balance-sheet transactions relate to transactions in the context of which Daimler has provided guarantees and thus, in connection with these transactions, continues to be subject to risk. However, they do not include warranties and goodwill the Group provides on its products in the context of its vehicle sales. The guarantees reported by the Group (excluding product warranties) principally constitute financial guarantees. As guarantor, we generally guarantee that we will make the payments due from the principal debtor if it fails to fulfill its financial obligations. The maximum potential obligation resulting from these guarantees amounts to €0.9 billion at December 31, 2012 (end of 2011: €1.4 billion); provisions recognized in this context amount to €0.1 billion at the end of the year (end of 2011: €0.2 billion).

Most of the financial guarantees relate to the situations described as follows: In connection with the transfer of a majority interest in Chrysler, Daimler provides guarantees for Chrysler obligations; at December 31, 2012, these guarantees amounted to €0.3 billion, whereby Chrysler provided €0.2 billion on an escrow account as collateral for the guaranteed obligations. The prior-year figure included a guarantee for payments into the Chrysler pension plans, the term of that guarantee expired in August 2012. Another financial guarantee of €0.1 billion relates to bank loans of Toll Collect GmbH, the operator company of the toll-collection system for trucks in Germany.

Other risks arise from an additional guarantee that the Group provided for obligations of Toll Collect GmbH to the Federal Republic of Germany. This guarantee is related to the completion and operation of the toll-collection system. A claim on this guarantee could primarily arise if for technical reasons toll revenue is lost or if certain contractually defined parameters are not fulfilled, if the Federal Republic of Germany makes additional claims or if the final operating permit is not granted. Furthermore, arbitration proceedings have been initiated against the Group. The maximum obligation that could result from this guarantee is substantial, but cannot be reliably estimated.

Furthermore, the Group has issued a number of smaller guarantees, some of which specify that Daimler guarantees the financial obligations of companies which supply us with parts, vehicle components or services, or which lease production facilities to us.

Buyback obligations arise for the Group from agreements under which we guarantee to customers certain trade-in or resale values for sold vehicles. Most of these guarantees provide the holder with the right to return purchased vehicles to the Group if the customer acquires another vehicle from Daimler. At December 31, 2012, the maximum potential obligation from these guarantees amounted to €0.8 billion (December 31, 2011: €0.7 billion); provisions recognized in this context amounted to €115 million at December 31, 2012 (December 31, 2011: €44 million).

Further information on other financial commitments and contingent liabilities from guarantees granted as well as on the electronic toll-collection system and related risks is provided in Note 29 (Guarantees and other financial commitments) and Note 28 (Legal proceedings) of the Notes to the Consolidated Financial Statements.