Mercedes 2001 Annual Report Download - page 64

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60 Analysis of the Financial Situation
Due to decreased net operating income and higher
net assets, the DaimlerChrysler Group reported a
negative value added of €4.4 billion (calculated on the
basis of a 9.2% cost of capital after taxes).
Net assets are derived from the consolidated
balance sheet, as shown in the following table.
In view of a series of changes both in the Group’s
capital structure and in the requirements of the capital
markets, capital costs were recalculated beginning with
the year 2002. The various parameters of capital costs
according to the capital-asset-pricing model led to a net
reduction in the Group’s cost of capital rate to 8% after
taxes. This results in a minimum required rate of
return of 13% (before taxes) for the industrial business
activities, and 14% (before taxes) for financial services
activities. The requirements of the business units are
derived by benchmarking them against the best compa-
rable companies. In general, they significantly surpass
the minimum rate of return and are not affected by
changes in capital costs. An adequate cost-of-capital rate
encourages investment in value-adding projects and
utilizes appropriate growth opportunities. The goal of
creating sustained value for our shareholders continues
to be pursued.
Increase in total assets. In 2001, the Group’s total
assets grew by 4% to €207.4 billion. The main reason
for this increase was the higher value of the US dollar
compared with the prior year. The assets and liabilities
of the Group’s U.S. companies were translated on De-
cember 31, 2001 at an exchange rate of €1 = U.S. dollar
0.881 (2000: €1 = U.S. dollar 0.931), which resulted in
correspondingly higher balance sheet positions in
euros. Of the aggregate rise in total assets, €6.2 billion
was explained by currency effects. The sale of the Rail
Systems business unit to Bombardier led to the
deconsolidation of Adtranz in April 2001, and therefore
to a reduction in total assets of €1.9 billion.
The increases in equipment on operating leases
(7%) and receivables from financial services (2%) were
mainly caused by the changes in exchange rates. At
year end, the two positions totaled €85.5 billion or 41%
of our total assets. These asset positions were offset
by financial liabilities of €90.9 billion at the end of the
year. Currency effects caused €3.0 billion of the increase
in financial liabilities.
Net income (loss)
One-time effects
Net income (loss) adjusted for
one-time effects
Minority interests
Interest expense related to industrial
activities, after taxes
Interest cost of pensions related to
industrial activities, after taxes
Net operating income
Reconciliation to Net Operating Income
In millions
(662) 7,894
1,392 (4,413)
730 3,481
(44) 12
422 241
539 649
1,647 4,383
01
€
00
€
1) Represents the value at year-end; the average for the year was
€65.9 billion (2000: €59.5 billion).
2) Adjusted for the effects from the application of SFAS 133.
Net Assets1)
of the DaimlerChrysler Group
In millions
Stockholders’ equity2)
Minority interests
Financial liabilities of the industrial
segment
Pension provisions of the industrial
segment
Net assets
39,184 42,713
417 519
15,701 9,508
12,608 11,114
67,910 63,854
01
€
00
€