Mercedes 2003 Annual Report Download - page 122
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Please find page 122 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Financial Reporting | Overview | Analysis of the Financial Situation | Statement by the Board of Management | Independent Auditors’ Report | Financial Statements
1. Summary of Significant Accounting Policies
General. The consolidated financial statements of DaimlerChrysler
AG and subsidiaries (“DaimlerChrysler” or the “Group”) have
been prepared in accordance with generally accepted accounting
principles in the United States of America (“U.S. GAAP”). All
amounts herein are presented in euros (“€”) and, for the year 2003
amounts, also in U.S. dollars (“$”), the latter being unaudited and
presented solely for the convenience of the reader at the rate of
€1 = $1.2597, the Noon Buying Rate of the Federal Reserve Bank
of New York on December 31, 2003.
Certain amounts reported in previous years have been reclassi-
fied to conform to the 2003 presentation and to reflect presenta-
tion requirements with respect to discontinued operations (see
Note 10).
Commercial practices with respect to certain products manufac-
tured by DaimlerChrysler necessitate that sales financing, includ-
ing leasing alternatives, be made available to the Group’s cus-
tomers. Accordingly, the Group’s consolidated financial statements
are also significantly influenced by activities of its financial ser-
vices business. To enhance the readers’ understanding of the
Group’s consolidated financial statements, the accompanying
financial statements present, in addition to the audited consolidat-
ed financial statements, unaudited information with respect to the
financial position, results of operations and cash flows of the
Group’s industrial and financial services business activities. Such
information, however, is not required by U.S. GAAP and is not
intended to, and does not represent the separate U.S. GAAP finan-
cial position, results of operations or cash flows of the Group’s
industrial or financial services business activities. Transactions
between the Group’s industrial and financial services business
activities principally represent intercompany sales of products,
intercompany borrowings and related interest, and other support
under special vehicle financing programs. The effects of transac-
tions between the industrial and financial services businesses have
been eliminated within the industrial business columns.
Use of Estimates. Preparation of the financial statements in
conformity with U.S. GAAP requires management to make estimates
and assumptions related to the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported
amounts of revenues and expenses for the period. Significant
items related to such estimates and assumptions include recover-
ability of investments in equipment on operating leases,
collectibility of sales financing and finance lease receivables,
realizability of investments in associated companies, warranty
obligations, sales incentive obligations, valuation of derivative
instruments, and assets and obligations related to employee
benefits. Actual amounts could differ from those estimates.
DaimlerChrysler’s financial position, results of operations, and
cash flows are subject to numerous risks and uncertainties. Fac-
tors that could affect DaimlerChrysler’s future financial statements
and cause actual results to vary materially from expectations
include, but are not limited to, further adverse changes in global
economic conditions; overcapacity and intense competition in the
automotive industry; the concentrations of DaimlerChrysler’s rev-
enues derived from the United States and Western Europe; the sig-
nificant portion of DaimlerChrysler’s workforce subject to collec-
tive bargaining agreements; fluctuations in currency exchange
rates and interest rates; significant legal proceedings and environ-
mental and other government regulations.
Principles of Consolidation. The accompanying consolidated
financial statements include the financial statements of Daimler-
Chrysler AG and all of its material, majority-owned subsidiaries
and certain variable interest entities, to the extent required at
December 31, 2003, for which DaimlerChrysler is determined to
be the primary beneficiary (see section “New Accounting
Standards” and Note 2).
All significant intercompany transactions and balances relating
to these majority-owned subsidiaries and variable interest entities
have been eliminated.
Notes to Consolidated Financial Statements – Basis of Presentation