Mercedes 2004 Annual Report Download - page 119

New Accounting Standards Not Yet Adopted. In November
2003 and March 2004, the EITF reached partial consensuses on
EITF 03-1, “The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments.” EITF 03-1 addresses
the meaning of other than temporary impairment and its applica-
tion to investments classified as either available-for-sale or held-
to-maturity under SFAS 115, “Accounting for Certain Investments
in Debt and Equity Securities,” and investments accounted for
under the cost method. The EITF agreed on certain quantitative
and qualitative disclosures about unrealized losses pertaining to
securities classified as available-for-sale or held-to-maturity. In
addition, EITF 03-1 requires certain disclosures about cost
method investments. The recognition and measurement provi-
sions of EITF 03-1 have been deferred until additional guidance is
issued. The disclosures required by EITF 03-1 have been included
in Note 20.
In November 2004, the FASB issued SFAS 151, “Inventory Costs,
an amendment of ARB No. 43, Chapter 4” to clarify that abnor-
mal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage) should be recognized as current peri-
od charges and to require the allocation of fixed production over-
heads to the costs of conversion based on the normal capacity of
the production facilities. SFAS 151 is effective prospectively
for inventory costs incurred during fiscal years beginning after
June 15, 2005. DaimlerChrysler is currently determining the
effect of SFAS 151 on the Group’s consolidated financial state-
ments but does not expect the effect to be material.
In December 2004, the FASB issued SFAS 123 (revised 2004),
“Share-Based Payment” (“SFAS 123R”). SFAS 123R establishes
accounting guidance for transactions in which an entity
exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in
exchange for goods or services that are based on the fair value of
the entity’s equity instruments or that may be settled by the
issuance of those equity instruments. Equity-classified awards
are measured at grant date fair value and are not subsequently
remeasured. Liability-classified awards are remeasured to fair
value at each balance-sheet date until the award is settled. SFAS
123R applies to all awards granted after July 1, 2005, and to
awards modified, repurchased or cancelled after that date using
a modified version of prospective application. DaimlerChrysler
is currently determining the effect of SFAS 123R on the Group’s
consolidated financial statements.
2. Presentation of Receivables from Financial Services in Con-
solidated Statements of Cash Flows
In prior periods, DaimlerChrysler reported the effects of all
receivables from financial services as investing activities for pur-
poses of presentation in the consolidated statements of cash
flows as well as the accompanying information about cash flows
of the financial services business. This policy, when applied to
receivables from financial services related to sales of the Group’s
products to its customers, had the effect of presenting an invest-
ing cash outflow and an operating cash inflow even though there
was no cash flow on a consolidated basis. In the current year,
based on concerns raised by the staff of the “Securities and
115
Exchange Commission”, management has decided to report the
cash flow related effects of those receivables from financial ser-
vices which relate to sales of the products to customers within
operating cash flows in the consolidated statements of cash
flows. This presentation results in the elimination of the inter-
company activity between the industrial business and financial
services business. Management also determined to revise the
presentation in the consolidated statements of cash flows for the
years 2003 and 2002 to achieve a comparable presentation for
all periods presented herein.
The cash flow related effects of receivables from financial ser-
vices that are unrelated to the Group’s inventory or involve
investments in loans or finance leases to retail customers of a
dealer-customer continue to be reported within cash used for
investing activities.
The balance of cash and cash equivalents at December 31, 2003
and 2002 and the total net increase or decrease in cash and
cash equivalents and cash provided by or used for financing
activities for the years ended December 31, 2003 and 2002
remained unchanged. The impact of the reclassification on the
captions within the consolidated statements of cash flows with
respect to the years 2003 and 2002 is:
3. Scope of Consolidation, Certain Variable Interest Entities
and Significant Equity Method Investments
Scope of Consolidation
DaimlerChrysler comprises, besides DaimlerChrysler AG, 485
(2003: 440) German and non-German subsidiaries as well as
4 (2003: 4) companies (variable interest entities) that have been
consolidated in accordance with the requirements of FIN 46R.
A total of 105 (2003: 100) companies are accounted for in the
consolidated financial statements using the equity method of
accounting. During 2004, 74 subsidiaries were included in the
consolidated financial statements for the first time. A total of 29
subsidiaries were no longer included in the consolidated group.
The effects of changes in the Group’s consolidated balance
sheets and the consolidated statements of income (loss), if mate-
rial, are explained further in the notes to the consolidated finan-
cial statements. In addition, 3 (2003: 3) companies administering
pension funds whose assets are subject to restrictions have not
been included in the consolidated financial statements. The
impact of non-consolidated subsidiaries (affiliated companies)
and investments that were not accounted for using the equity
method of accounting (associated companies) on the consolidat-
ed financial position, results of operations or cash flows of the
Group was neither material for individual companies nor in the
aggregate.
Year ended December 31,
2002
2003
18,016
(2,107)
15,909
(12,946)
2,107
(10,839)
16,496
(2,670)
13,826
(16,278)
2,670
(13,608)
Cash provided by operating activities, as previously reported
Amount reclassified from investing activities
Cash provided by operating activities, after reclassification
Cash used for investing activities, as previously reported
Amount reclassified to operating activities
Cash used for investing activities, after reclassification
(in millions of €)