Mercedes 1998 Annual Report Download - page 88

Deferred income tax assets and liabilities are summarized as
follows:
19971998
December 31,
Property, plant and equipment 2,063 484
Equipment on operating leases 1,068 992
Inventories 1,328 1,259
Receivables 527 700
Net operating loss and tax credit carryforwards 1,056 3,367
Retirement plans 3,880 4,601
Other accrued liabilities 4,166 3,761
Liabilities 846 774
Deferred income 1,144 1,049
Other 549 504
16,627 17,491
Valuation allowances (411) (268)
Deferred tax assets 16,216 17,223
Property, plant and equipment 2,743 2,541
Equipment on operating leases 4,252 3,601
Inventories 483 504
Receivables 3,645 3,257
Prepaid expenses 450 908
Retirement plans 2,069 1,891
Other accrued liabilities 367 410
Foreign withholding taxes 297 390
Other 1,059 535
Deferred tax liabilities 15,365 14,037
Deferred tax assets, net 851 3,186
In 1998, DaimlerChrysler entered into an intercompany
transaction to absorb the Group’s Organschaft NOLs in a
manner which resulted in no net tax effect. The transaction
resulted in an increase in deferred tax assets mainly for
property, plant and equipment in an amount equal to the
decrease in deferred tax assets for the German NOLs.
At December 31, 1998, the Group had corporate tax NOLs and
credit carryforwards amounting to € 1,724 (1997: € 6,141) and
German trade tax NOLs amounting to € 2,156 (1997:
€ 6,346). The corporate tax NOLs and credit carryforwards
mainly relate to losses of domestic and foreign non-
Organschaft companies and are partly limited in their use to
the Group. The Group’s consolidated valuation allowances on
deferred tax assets of domestic and foreign operations
increased in the balance sheet by € 143. In future periods,
depending upon the Group’s financial results, management’s
estimate of the amount of the deferred tax assets considered
realizable may change, and hence the valuation allowances
may increase or decrease.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
84
During 1996, the Group’s consolidated valuation allowances on
deferred tax assets decreased by € 538. In 1996, the Group
realized income tax benefits from the utilization of loss
carryforwards of € 344 relating to entities in the Aerospace
division. The tax benefits of such loss carryforwards had been
fully reserved as of December 31, 1995 since the entities had a
history of operating losses prior to 1996 and such losses were
limited as to their use. Tax benefits recognized from other
changes to the valuation allowances in 1996 included the
merger of the former AEG Aktiengesellschaft into
DaimlerChrysler AG during 1996, after which the German loss
carryforwards of AEG Aktiengesellschaft could be utilized by
the Group’s German Organschaft. Prior to the merger such net
operating losses (“NOLs”) were limited as to their use, and
accordingly were fully reserved for in the amount of € 118. In
addition, during 1996 the Group realized tax benefits of € 207
related to investments written down in previous years.