Mercedes 2004 Annual Report Download - page 127

5. Functional Costs and Other Expenses
Selling, administrative and other expenses are comprised of the
following:
In 2004, selling expenses include advertising costs of €2,748
million (2003: €2,965 million, 2002: €2,811 million).
In 2003, DaimlerChrysler recognized an impairment charge
amounting to €77 million related to certain long-lived assets
(primarily property, plant and equipment) at a production facility
in Brazil. The charge is included in cost of sales of the Mercedes
Car Group segment.
In 2002, DaimlerChrysler recognized an impairment charge
amounting to €201 million. Moderate demand and strong compe-
tition in the European market for commercial vehicles resulted in
idle capacity at one of the Group’s German assembly plants. Con-
sequently, DaimlerChrysler determined that it does not expect to
recover the carrying value of certain long-lived assets (primarily
manufacturing equipment and tooling) at this plant. The charge
is included in cost of sales of the Commercial Vehicles segment.
In October 2002, DaimlerChrysler entered into an agreement to
sell to GE Capital a significant portion of its portfolio of corporate
aircraft, consisting of finance lease receivables and owned air-
craft currently under operating leases, over a period of approxi-
mately 12 months beginning November 2002. The agreement
contained provisions for DaimlerChrysler to receive a share of
future payments throughout the remaining terms of the contracts
in the portfolio. In connection with the agreement, the Group
classified as held for sale at December 31, 2002, finance lease
receivables with a carrying value of €493 million and equipment
under operating leases with a carrying value of €40 million. The
agreement with GE Capital was not consummated as of Decem-
ber 31, 2002. Due primarily to adverse economic conditions, the
Group reassessed the recoverability of its leasing portfolio as of
December 31, 2002. Based on the results of this reassessment,
the Services segment recognized impairment losses of €191 mil-
lion in other expenses and €20 million in cost of sales. Daimler-
Chrysler consummated the GE Capital transaction in 2003
pursuant to which the Services segment sold finance lease
receivables totaling €113 million and equipment under operating
leases totaling €14 million for cash to GE Capital. During 2004,
the Group also sold finance lease receivables totaling €24 million
(2003: €191 million) and operate leases totaling €17 million
(2003: €5 million) to other investors. At December 31, 2004,
after adjustments for cash received and currency translation
effects, finance lease receivables of €15 million (2003: €98 mil-
lion) are classified as held for sale. At December 31, 2003, equip-
ment under operating leases totaling €17 million are classified as
held for sale. Held for sale and held for use finance lease receiv-
ables and equipment under operating leases are classified in
the December 31, 2004 and 2003 balance sheets as receivables
from financial services and equipment on operating leases,
net, respectively.
123
Notes to Consolidated Statements of Income (Loss)
(in millions of €)
11,981
5,346
40
799
18,166
2002
11,763
5,351
–
658
17,772
11,403
6,008
–
561
17,972
20032004
Selling expenses
Administration expenses
Goodwill amortization and impairments
Other expenses
Year ended December 31,