Mercedes 2004 Annual Report Download - page 39

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Accrued liabilities increased by €2.4 billion to €41.6 billion.
The development of other accrued liabilities was primarily due to
higher accruals for product guarantees, partly related to the
quality actions and recall campaigns at MFTBC and the quality
offensive at the Mercedes Car Group. Conversely, other accrued
liabilities were reduced by currency translation effects. The
increased accruals for pension obligations and health care were
mainly caused by the reduced discount factors and the full con-
solidation of MFTBC. The development was partially offset by
opposing effects from currency translation and contributions to
the pension funds.
The Group’s financial liabilities reached €76.6 billion as of the
balance-sheet date (2003: €75.7 billion). This development is
related to the increased funding requirements of the leasing and
sales-financing business. The increase in financial liabilities was
partially offset by currency translation effects.
Trade liabilities and other liabilities increased by €1.2 billion to
€21.6 billion, primarily due to the full consolidation of MFTBC.
Financing of pensions and similar obligations
At the end of 2004, the Group’s pension obligations of €34.4
billion (2003: €32.1 billion) were covered by fund assets of €27.8
billion (2003: €26.3 billion). This led to an underfunded status
of €6.6 billion at the end of the year (end of 2003: underfunded
by €5.8 billion). The decrease in the financing status resulted
primarily from an increase of the pension obligations due to the
decrease of the discount rate in 2004 and the first-time con-
solidation of MFTBC, partially offset by the increase of the plan
assets due to further contributions totaling €1.6 billion (2003:
€2.1 billion) and ongoing good performance of the stock markets
in 2004. The realized yields on the Group’s German and foreign
plan assets in 2004 were 8.2% and 13.7%, respectively (2003:
14.6% and 23.0%). Taking into consideration the balance sheet
pension accruals of €5.6 billion (2003: €5.0 billion), pension
obligations were underfunded at the end of 2004 by €1.0 billion
(end of 2003: underfunded by €0.8 billion).
The other postretirement benefit obligations totaled €14.4
billion at the end of 2004 (end of 2003: €14.9 billion), and were
covered by fund assets in an amount of €1.6 billion (2003: €1.5
billion). The financing status was thus undercovered by €12.8
billion (2003: €13.4 billion). The improvement compared with the
prior year was primarily a result of the reduced obligations due to
the effects of the Medicare Act in the US. There was an opposing
effect from the decrease of the discount rate and the adjust-
ment of assumed inflation rates in 2004, and also from the normal
annual increase of obligations less payments to beneficiaries.
Taking into consideration the balance sheet accruals of €8.0
billion (2003: €8.2 billion), the postretirement benefit obligations
were underfunded by a total of €4.8 billion at the end of 2004
(end of 2003: €5.2 billion).
Additional information on pension plans and similar obligations
can be found in Note 25a to the consolidated financial state-
ments.
Property, plant and equipment
Other fixed assets
Inventories
Receivables
Liquidity
Deferred taxes and prepaid
expenses
Liabilities
Deferred taxes
and income
2004 2003 2003 2004
Accrued liabilities
Stockholders’ equity
95 95 95 95
In billions of €
Balance Sheet Structure of the Industrial Business
36%
15%
16%
17%
11 %
34% 27%
40%
32%
26%
43%
31%
17%
14%
18%
13%
5% 4% 1% 0%