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Innovation for Sustainable Mobility
Annual Report 2008

Table of contents

  • Page 1
    Innovation for Sustainable Mobility Annual Report 2008

  • Page 2
    ...effects of currency translation and changes in the consolidated group, decrease in revenue of 1%. Cover: Mercedes-Benz showed the way ahead in environmentally responsible electro-mobility in January 2009 by presenting its near-series Concept BlueZERO at the North American International Auto Show in...

  • Page 3
    Divisions 2008 Amounts in millions of â,¬ 2007 2006 08/07 % change Mercedes-Benz Cars EBIT Revenue Return on sales Investment in property, plant and equipment Research and development expenditure thereof capitalized Unit sales Employees (Dec. 31) 2,117 47,772 4.4% 2,246 2,994 1,060 1,273,013 ...

  • Page 4
    Daimler at a Glance. Fiscal Year 2008.

  • Page 5
    ... engineering, we feel inspired and obliged to continue this proud tradition with groundbreaking technologies and high-quality products. Our philosophy is clear: we give of our best for customers who expect the best - and we live a culture of excellence that is based on shared values. Our corporate...

  • Page 6
    ... on pages 10 to 33. The Management Report includes a description and analysis of the Group's financial position, liquidity and capital resources, and profitability. Other sections provide information on our divisions, the issue of sustainability and corporate governance, as well as the detailed...

  • Page 7
    ... Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other 216 - 220 Additional Information 216 218 219 220 Ten-Year Summary Glossary Index International Representative Offices Internet | Information | Addresses Daimler Worldwide Financial Calendar 2009 Annual Report 2008...

  • Page 8

  • Page 9
    ... of car markets. For the year as a whole, however, we gained market share in key markets. The Mercedes-Benz S-Class defended its worldwide leadership in the luxury segment. And for smart, 2008 was the best year ever. Daimler Trucks achieved modest increases in unit sales and revenue. In 2008 it...

  • Page 10
    ... the impact of the financial crisis significantly dampened market growth in the second half of the year, our vans still achieved the second-highest annual unit sales in their history. Daimler Buses set a new unit-sales record in 2008. Once again, we maintained our worldwide leadership in the bus...

  • Page 11
    ... on our way to emissionfree driving. We will launch limited editions of an electric smart and a MercedesBenz with fuel-cell drive this year. A short time later, we will produce the first Mercedes-Benz with battery-electric drive. We are now directly involved in the development and production of the...

  • Page 12
    Board of Management Günther Fleig | 60 Human Resources & Labor Relations Director Appointed until 2009 Bodo Uebber | 49 Finance & Controlling, Daimler Financial Services Appointed until 2011 Dieter Zetsche | 55 Chairman of the Board of Management, Head of Mercedes-Benz Cars Appointed until 2010...

  • Page 13
    Andreas Renschler | 50 Daimler Trucks Appointed until 2010 Thomas Weber | 54 Group Research & Mercedes-Benz Cars Development Appointed until 2010 Rüdiger Grube | 57 Corporate Development Appointed until 2010 Overview of the Group | Board of Management | 9

  • Page 14

  • Page 15
    20,000,000,000 kilometers are driven every day in worldwide personal transport: on the way to work, to school, or back home to the family. More than

  • Page 16
    Mercedes-Benz S 400 BlueHyBRid The intelligent, high-performance engine management reacts very subtly; it optimally adjusts the drive system combining gasoline engine and electric motor for varying requirements. This achieves significant reductions in fuel consumption and emissions.

  • Page 17
    ...research and development engineers face the challenge of making future mobility safe and sustainable with innovative products. in the field of passenger cars, we are pursuing this goal with our "Road to the Future." An important milestone on the way to sustainable mobility is the Mercedes-Benz S 400...

  • Page 18

  • Page 19
    40,000,000 tons of goods are transported solely on the roads of Europe. Whether the goods are fruit, vegetables, clothing, construction materials or other industrial goods - we depend on fresh and timely deliveries. Every day, approximately

  • Page 20
    Mercedes-Benz Actros BlueTec The world champion: With each liter of diesel fuel saved, it reduces CO2 in the atmosphere by 2,640 grams. Today, more than 200,000 Mercedes-Benz trucks are on the road with BLUETEC technology.

  • Page 21
    ... fuel-efficient 40 ton truck." That saves money for logistics companies and fleet operators in times of high fuel prices, and is also good for the environment. Because the new Mercedes-Benz Actros reduces CO2 emissions to 20.5 grams per ton of payload per kilometer (g/t/km), making it the CO2 world...

  • Page 22

  • Page 23
    280,000 new buses went on the roads around the world in 2008. They connect employees and employers, pupils and schools, students and universities, and take us to our destinations safely and costefficiently. Approximately

  • Page 24
    Orion Vii Hybrid Bus The biggest fleet of hybrid buses in the world covers more than 72,000 kilometers every day in New York. Compared to their predecessors, the buses' lithium-ion batteries now have much longer lifetimes.

  • Page 25
    ...conserving resources On the way to an emission-free commercial vehicle, daimler has started the "Shaping Future Transportation" initiative. Urban buses such as the Orion Vii Hybrid or the Fuso Aero Star Eco Hybrid are already helping to reduce fuel consumption and emissions around the world. A big...

  • Page 26

  • Page 27
    5,500,000,000 people around the world are actively or passively involved in transport: as pedestrians, cyclists, bus, truck or car drivers or passengers. More than

  • Page 28
    Mercedes-Benz E-Class The standard equipment of the new E-Class includes the active hood, with which Mercedes-Benz demonstrates the active role it plays for pedestrian protection: If an accident occurs, a spring system lifts the hood within milliseconds by five centimeters, thus expanding the ...

  • Page 29
    ...traveling safely The vision of accident-free driving motivates daimler to make future mobility as safe as possible for all road users. With the new Mercedes-Benz E-Class, we once again demonstrate our pioneering role in the field of safety. ATTENTION ASSIST helps drivers to recognize their ...

  • Page 30

  • Page 31
    ...000,000,000 euros each year in research and development projects: in new, fascinating automobiles, economical commercial vehicles, environmentally friendly drive technologies, innovative safety systems - in convincing solutions for safe, individualized and sustainable mobility. daimler invests more...

  • Page 32
    Mercedes-Benz Sprinter Plug-in-Hybrid On the way towards the future: The world's biggest test fleet of vans with hybrid drive has a star on the hood. The Sprinter Plug-In-Hybrid is in use as a box van or combination van, as a delivery or service vehicle or as a shuttle bus, and is thus tested in ...

  • Page 33
    ..., and it runs on electricity: the new Sprinter Plug-in-Hybrid. in summer 2008, Mercedes-Benz started customer trials with the second generation of this innovative concept for a hybrid commercial vehicle - with the world's biggest fleet of vans with hybrid drive. This van gets its energy not only...

  • Page 34

  • Page 35
    9,600 apprentices secure our future. An investment in training yields the best interest - for our employees and for the Group. Mobility of the future places high demands on our employees and offers interesting prospects for our apprentices. Approximately

  • Page 36
    Highly trained employees apply their knowledge and skills in our plants and ensure maximum quality and efficiency.

  • Page 37
    ... in 2008. We are convinced that we can only satisfy our customers with outstanding products and services when we are the employer of choice for the best employees today and in the future. Because it is our employees who constantly drive the Group's ongoing development. In our training center in...

  • Page 38
    ... volume market under a new brand name. Daimler becomes a key shareholder in Tognum. Daimler AG takes a 22.3% equity interest in Tognum AG. This acquisition is intended to secure long-term supply relations. Additional Tognum shares are later acquired on the stock exchange. June Mercedes-Benz Bank...

  • Page 39
    ...the best quality shipped worldwide. And the trade magazine "Production" awards it the title of "Factory of the Year" for excellent quality management. Daimler Truck North America presents its plan for optimization and repositioning. With this comprehensive program, the Group is reacting to sustained...

  • Page 40
    ... Shares. Global financial crisis causes high stock-market volatility. Daimler's share price falls sharply in a difficult environment. Dividend reduced to â,¬0.60 per share. Comprehensive investor relations activities. Development of Daimler's share price and relevant indices End of 2008 End of 2007...

  • Page 41
    ... trading strategies. For example, many investors who had financed their shareholdings in Daimler with borrowed capital were forced to sell some or all of their Daimler shares with high losses because their banks demanded repayment of their loans. At the end of 2008, Daimler's share price closed...

  • Page 42
    Statistics End of 2008 End of 2007 08/07 % change Capital stock (in millions of â,¬) Number of shares (in millions) thereof treasury shares Market capitalization (in billions of â,¬) Number of shareholders (in millions) Weightings in share indices DAX 30 Dow Jones Euro STOXX 50 Long-term credit ...

  • Page 43
    ... management with large majorities. Comprehensive investor relations activities. Once again in the past year, the Investor Relations department provided timely information on the development of the Group to institutional investors, analysts, rating agencies and private shareholders. Our communication...

  • Page 44
    ... (2007: â,¬4.0 billion). The main reasons for the lower earnings were not only the dramatic effects on automotive markets of the worldwide financial and economic crisis, but also the very high level of raw-material prices on average over the year, weak currencies and charges relating to Chrysler...

  • Page 45
    ...performance measures Value added Statements of income Dividend Research and development Workforce Procurement Information technology (IT) Risk management system Economic risks Industry and business risks Financial market risks Liquidity risks Risks connected with pension plans Risks from changes in...

  • Page 46
    ...from all parts of the Group. Of Daimler's total revenue of â,¬95.9 billion in the year 2008, 49% was generated by Mercedes-Benz Cars, 27% by Daimler Trucks, 9% by the Daimler Financial Services division and 15% by the Vans, Buses, Other segment. At the end of 2008, Daimler employed a total workforce...

  • Page 47
    ... Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other 49% 27% 9% 15% The Daimler Financial Services division supports the sales of the Daimler Group's automotive brands in more than 40 countries. Its product portfolio mainly comprises tailored financing and leasing...

  • Page 48
    ... Corp," which has the goal of further developing fuel cells for automotive applications and making them marketable. In the case of a change of control of Daimler AG, the agreement allows the right of termination by the other main shareholder, Ford Motor Company, as well as a put option for the...

  • Page 49
    ... we align the Group with the four strategic focus areas and develop a shared culture of excellence. We have included the key elements of the excellence process in the programs currently running in our business operations, for example the GoFor10 program at Mercedes-Benz Cars, the Global Excellence...

  • Page 50
    ... excellent service quality of the Mercedes-Benz dealerships in Germany was confirmed several times by various organizations last year. This demonstrates the success of our long-term quality and customer-satisfaction offensive in the Mercedes-Benz Cars division. And at Daimler Trucks, the new Actros...

  • Page 51
    ... range of services for our Mercedes-Benz and Setra omnibuses. - Development and innovation of new businesses in related areas. We will make targeted use of the results of the work done by our research and development departments, our attractive customer base and our strong brands to utilize new...

  • Page 52
    ... of trucks for export markets is also planned. In June 2008, Daimler AG acquired a 22.3% equity interest in Tognum AG from EQT, a Swedish financial investor, and purchased a further 6.1% of Tognum' shares on the stock exchange. The total price paid amounted to â,¬702 million. In the past two years...

  • Page 53
    ... some of the emerging markets despite weakening towards the end of the year, worldwide unit sales of commercial vehicles decreased slightly. As a result of the economic downturn and the severe financial crisis, the US market for automobiles and so-called light trucks slumped during 2008. Whereas 16...

  • Page 54
    ... our worldwide market position in the premium-car segment. However, the development of business was impacted by the rapid deterioration in economic conditions during 2008, leading to massive drops in unit sales in major markets in the second half of the year. Unit sales of the Mercedes-Benz brand...

  • Page 55
    ...(+58%) and the Middle East (+9%) (see page 94). Mercedes-Benz Vans increased its market share in the segment of medium-sized and large vans and further extended its leading position. In terms of unit sales, the number of 287,200 vans sold in 2008 did not quite match the record prior-year figure (289...

  • Page 56
    ... the rest of the world, we expanded our business volume by 8% to â,¬28.8 billion. Growth was particularly strong in Asia, the Middle East and Eastern Europe. Revenue 2008 Amounts in millions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other 95,873...

  • Page 57
    ... Financial Services and the Mercedes-Benz Vans and Daimler Buses units. Earnings in both years were affected by special items, as shown in the following table. Vans, Buses, Other Sale of real estate (2008: Potsdamer Platz; 2007: Wohnstätten Sindelfingen) Gains relating to the transfer of shares...

  • Page 58
    Return on Sales in % 10 8 6 4 2 0 Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses 2006 2007 2008 Return on Equity in % 25 20 15 10 5 0 Daimler Financial Services 2006 2007 2008 The EBIT of â,¬2,117 million reported by Mercedes-Benz Cars for the year 2008 was significantly lower ...

  • Page 59
    ... pension funds of the industrial business are considered with the opposite sign. Value Added = Profit Measure - Net Assets x Cost of Capital (%) Cost of Capital Alternatively, the value added of the industrial divisions can be determined by using the main value drivers return on sales (ROS...

  • Page 60
    ... prior year relating to the transfer of EADS shares. However, the MercedesBenz Vans and Daimler Buses units were able to increase their value added as a result of higher earnings. Cost of capital 2008 in % Group, after taxes Industrial divisions, before taxes Financial Services, before taxes 8 12...

  • Page 61
    Value added 2008 Amounts in millions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other (1,147) 860 847 95 (2,311) 1,380 3,892 1,447 33 988 2007 08/07 % change . -78 -41 +188 . Reconciliation to net operating profit 2008 Amounts in millions of â,¬ ...

  • Page 62
    ... Revenue Cost of sales Gross profit Selling expenses Administrative expenses Research and non-capitalized development costs Other operating income (expense) Share of profit (loss) from companies accounted for using the equity method Other financial income (expense) Earnings before interest and taxes...

  • Page 63
    ... In addition, the Group incurred lower expenses in connection with its legal proceedings in 2008. In 2008, our share of profit (loss) from companies accounted for using the equity method was a net loss of â,¬1.0 billion (2007: net profit of â,¬1.1 billion). The sharp decrease is primarily related to...

  • Page 64
    ... related to the reimbursement of costs to our joint-venture Beijing Benz-DaimlerChrysler Automotive which incur as a result of the transfer of a majority interest in the Chrysler activities (see Note 2 of the Notes to the Consolidated Financial Statements for further information). The prior-year...

  • Page 65
    ... the end of the year 2008, 18,900 persons were employed in Daimler's research and development departments around the world (2007: 18,000). Of that total, 11,600 persons were employed at Group Research & Development Mercedes-Benz Cars (2007: 11,000), 5,300 at the Daimler Trucks division (2007: 5,200...

  • Page 66
    ..."Road to the Future" strategy, in 2008 we started to launch our Mercedes-Benz "BlueEFFICIENCY" models, which achieve fuel savings of up to 12%. Many of our BLUETEC trucks already fulfill the strict Euro 5 limits that come into force in October 2009. Since market launch in the year 2005, MercedesBenz...

  • Page 67
    ... in 2008. The numbers of persons employed decreased at the Mercedes-Benz Cars and Daimler Trucks divisions and at MercedesBenz Vans. At Daimler Buses, the headcount rose by 5% as a result of the positive business development. In the Sales & Marketing Organization and the Daimler Financial Services...

  • Page 68
    ...of three main departments: Procurement Mercedes-Benz Cars and Vans, Procurement Daimler Trucks and Buses and International Procurement Services for non-production materials. With approximately 2,000 employees, Daimler's procurement organization is present at more than 50 locations all over the world...

  • Page 69
    ... from unauthorized access. Due to the increasing risks for data security and growing legal requirements, we carry out regular training courses throughout the Group on the correct approach to corporate information. New IT systems support production processes at MercedesBenz Cars. We created...

  • Page 70
    ... the capitalization of financial services companies, production, distribution and financing companies are based on the principles of costoptimized liquidity and capital resources. The levels of equity of Group companies also depend on refinancing conditions in local banking markets. In addition, it...

  • Page 71
    ...with the use of export-credit insurance, first-class bank guarantees and letters of credit. In addition, a committee sets and restricts the level of hard-currency credits granted to financial services companies in risk countries. Additional information on the management of market price risks, credit...

  • Page 72
    ...Mercedes-Benz Cars were advance expenditures for the new E-Class and CLK, which are to be launched in 2009. Important investment projects at the Daimler Trucks division were in the areas of truck platforms and globally used engines. The purchase and sale of securities related to liquidity management...

  • Page 73
    ...,967) 1,761 (53,206) (36,151) 2007 08/07 Change (8,719) (333) (9,052) (3,670) 170 (3,500) (12,552) Daimler Group Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other 3,559 2,246 991 41 270 2,927 1,910 766 29 241 Management Report | Liquidity and Capital Resources | 69

  • Page 74
    ... mainly through the issuance of commercial paper and bonds and with bank credit. In addition, Daimler made use of its surplus liquidity at the end of 2007, which was related to the transfer of a majority interest in Chrysler in August 2007, to refinance and repay funds raised on the capital market...

  • Page 75
    ... car and truck markets and Moody's expectation of negative impacts on the operating performance of the company. On June 13, 2008, Fitch changed the outlook for Daimler AG's A- long-term issuer default rating to positive from stable reflecting the improvements in Daimler's financial profile in 2007...

  • Page 76
    ...mainly for the production and assembly plants in Germany. In the year 2008, the main areas of investment were for the new E-Class at the Mercedes-Benz Cars division and new engines and transmissions at the Daimler Trucks division. Equipment on operating leases and receivables from financial services...

  • Page 77
    ... is primarily due to the development of warranty costs and the lower obligations in the area of personnel and social benefits reflecting lower bonus and profit-sharing payments for the year 2008. There was an opposing effect from an increase in pension obligations. Financing liabilities increased by...

  • Page 78
    ... the end of the year. Another factor was that due to the ongoing debate about CO2 emissions and the effects of the very high fuel prices in the middle of 2008, the structure of demand in the industrialized countries shifted away from our key market segments of premium automobiles and sport-utility...

  • Page 79
    ... the risk management system in terms of its fundamental suitability for the early recognition of developments that could jeopardize the continued existence of the Group. Management Report | Overall Assessment of the Economic Situation | Events after the End of the 2008 Financial Year | Risk Report...

  • Page 80
    ... and commercial vehicles. The economy of Western Europe was not immune to the effects of the slowdown in global growth or the financial market crisis, and expanded in 2008 at well below its long-term growth trend. Most of the major European economies were in recession by the end of the year. In...

  • Page 81
    ...to lower price levels on used-vehicle markets and thus to falling residual values for leased vehicles. A shift in the model mix towards smaller vehicles with lower margins would also place an additional burden on the Group's financial position, cash flows and profitability. Management Report | Risk...

  • Page 82
    ...was decided upon in 2008, is another important step to secure the profitability of Daimler Trucks. Risks related to the leasing and sales-financing business. Daimler's financial services business primarily comprises the provision of financing and leasing for the Group's products. In particular, this...

  • Page 83
    ... profit from the range of courses offered by the Daimler Corporate Academy and from the transparency created by LEAD, our uniform worldwide performance and potential management system. Demographic developments present the Group with the particular challenge of managing the changes relating...

  • Page 84
    ... use of derivative financial instruments. As part of the risk management process, Daimler regularly assesses these risks by considering changes in key economic indicators and market information. Any market-sensitive instruments, including equity and interest-bearing securities held in pension funds...

  • Page 85
    ... capital markets. Unfavorable developments, in particular relating to equity prices and fixed-interest securities, could negatively affect the market value. Both higher obligations and reduced plan assets or a combination of the two would have a negative impact on the financing status of our benefit...

  • Page 86
    ... operative planning of the Daimler Group for the years 2009 and 2010 as dealt with by the Supervisory Board at the beginning of December 2008. But due to the dramatic changes in global conditions that have occurred in recent months and great uncertainty concerning the future development of the world...

  • Page 87
    ...of product ranges to include fuel-efficient and environmentally friendly vehicles and transport solutions. The focus will increasingly be on new concepts for sustainable mobility. Whoever wants to successfully meet these challenges and grasp the opportunities offered by future developments must make...

  • Page 88
    ... its product range of leasing, financing, fleet-management and insurance products. In addition, Daimler Financial Services constantly strives to improve customer and dealer satisfaction. On the basis of our assumptions concerning the development of automotive markets and the divisions' planning, we...

  • Page 89
    ... currently very unfavorable market situation. These measures include the repositioning of Daimler Trucks North America with a focus on the core brands Freightliner and Western Star and the expansion of our presence in global growth markets. At Mercedes-Benz Vans, in the context of our change process...

  • Page 90
    ...as for new products. Investment in property, plant and equipment 2008 Amounts in billions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other 3.6 2.2 1.0 0.04 0.3 9.4 5.9 2.7 0.1 0.7 2009-2010 Research and development Capital expenditure In light of...

  • Page 91
    ... regulations. New products will also be launched, such as a new truck platform for worldwide application and a light-duty truck. The further development of engines to comply with future emission standards is another important area of R&D work at Mercedes-Benz Vans and Daimler Buses. New products and...

  • Page 92
    ... of heavy-duty and medium-duty trucks. Daimler Buses increased its unit sales by 4%, while Mercedes-Benz Vans did not quite match its high prior-year level. Daimler Financial Services' business developed positively considering the circumstances, with worldwide contract volume increasing by 7%.

  • Page 93
    ... Financial Services - Strategic focus on efficiency - New organization of US business - Start of financial services business in Romania - EBIT of â,¬0.7 billion higher than prior-year level 100 - 101 Vans, Buses, Other 94 - 97 Daimler Trucks - Unit sales up slightly despite shrinking core markets...

  • Page 94
    ... with the world's first gasoline engine with direct fuel injection. This new technology makes the car 14% more fuel efficient than the C 350 with conventional fuel injection. In December 2008, Mercedes-Benz then launched the first-ever Market developments negatively impact unit sales and earnings...

  • Page 95
    ... Mercedes-Benz's new, extremely fuel-efficient four-cylinder diesel engine. The GLK was launched in October 2008 and has met with a very positive response. The CLC expands the Mercedes-Benz coupe family to include a model series that fulfills young customers' desire for a car offering outstanding...

  • Page 96
    ...from Mercedes-Benz and smart, but is also servicing the vehicles. The first cars will be in use in Berlin at the end of 2009. RWE is responsible for developing, creating, and operating a network of charging stations. Because "e-mobility Berlin" will play an important role in helping to secure future...

  • Page 97
    ... 1 Group sales (including leased vehicles) 2 The figure for 2008 includes 8,200 Mitsubishi vehicles manufactured and/or sold in South Africa. The new Mercedes-Benz E-Class offers comprehensive safety, maximum comfort and up to 23 percent better fuel consumption. Divisions | Mercedes-Benz Cars | 93

  • Page 98
    ...in the Middle East increased by 90% to 11,300 vehicles. A new sales record of 43,400 vehicles (2007: 38,100) was also achieved in Latin America, due to very favorable business developments in Brazil. However, capacity bottlenecks caused Mercedes-Benz's share of the heavy-duty truck market to decline...

  • Page 99
    ... its customers reliably in an environmentally friendly and fuel-efficient manner. In California, the ports of Long Beach and Los Angeles have ordered more than 230 natural-gas-powered trucks from Daimler Trucks North America. This is an important step in the state-supported "Clean Truck Program" for...

  • Page 100
    ... unit sales of 197,700 trucks and buses were 5% higher than in the prior year. Further sales growth was posted in Indonesia, the Middle East, Eastern Europe and Turkey. Trucks Asia continues to be the market leader for light-duty trucks in Indonesia and Taiwan. Unit sales developed negatively in...

  • Page 101
    ... December 2008, Daimler AG entered into a strategic partnership with Russian truck manufacturer Kamaz and secured a 10% equity interest in the company. Daimler agreed to pay US $250 million in December 2008 and to make a one-time payment of up to US $50 million in 2012 if the business development of...

  • Page 102
    ... important vehicle market. With the new financial services business in Romania, Daimler Financial Services now promotes the sale of our vehicle brands locally. The company provides private and commercial customers with loans, leasing, insurance and dealer financing. In Germany, Mercedes-Benz Bank...

  • Page 103
    ...the new Operations Center for Mercedes-Benz Financial and Daimler Truck Financial. Daimler Financial Services received a major order from the ports of Long Beach and Los Angeles during the year under review. The Truck Financial unit provided financing for environmentally friendly commercial vehicles...

  • Page 104
    ... competition for Commercial Vehicle of the Year, underscoring its tremendous popularity with customers. The Vans, Buses, Other segment essentially comprises the Mercedes-Benz Vans and Daimler Buses business units and our equity interests of 22.5% in the European Aeronautic Defence and Space Company...

  • Page 105
    ... parts. The center's new warehouse management system will significantly improve spare-part availability and customer service. Market launch in India. In India, Daimler Buses now cooperates with Sutlej Motors on the production and distribution of buses. As the first joint project, a new Mercedes-Benz...

  • Page 106
    ... our customers with the lasting excellence of our products when we combine economic success with social concerns and effective environmental protection. So our actions are always based on the principle of sustainability - no matter where in the world Daimler researches, develops, purchases, produces...

  • Page 107
    ... employee deployment - Expansion of our diversity management activities - International CAReer program secures recruitment and retention of high-potentials - Approximately 9,600 apprenticeships worldwide 112 - 113 Social Responsibility - Support for charitable institutions and projects - Promotion...

  • Page 108
    ... from Board of Management level all the way down to the individual employees. To structure its activities, the Corporate Sustainability Board has defined nine key areas, including climate protection, vehicle safety, compliance, employee responsibility, stakeholder dialog, and community relations...

  • Page 109
    ... - Corporate Environmental Protection - Global Diversity Council Topical integration of business units: - Mercedes-Benz Cars - Daimler Trucks - Vans, Buses, Other - Daimler Financial Services Integration of relevant sectors: - Development - Global Service & Parts - Sales & Marketing - Production...

  • Page 110
    ... employed at Corporate Research and the development departments of Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, and Daimler Buses (2007: 18,000). The Group's innovative power is demonstrated by our 2,400 inventions registered in 2008, which resulted in more than 1,800 patent applications...

  • Page 111
    ...700 Orion-brand buses on the road in North America, and the new-generation Mercedes-Benz Sprinter is in customer trials in Germany and the United States. The prioritized development of hybrid technologies is being pursued by our Daimler Trucks Global Hybrid Center, which was opened in August 2008 at...

  • Page 112
    ...systems, which, like the Mercedes-Benz occupant protection systems, are based on real accident data. - The new Adaptive Highbeam Assist continuously adjusts the intensity and direction of headlights in line with actual driving conditions. - Night View Assist uses infrared headlights to significantly...

  • Page 113
    .... That makes Daimler the global market leader for hybrid buses. Furthermore, since the introduction of BLUETEC technology in series-produced commercial vehicles four years ago, well over 200,000 Mercedes-Benz BLUETEC trucks have been sold all over the world. The Mercedes-Benz Actros, which consumes...

  • Page 114
    ... management activities. International CAReer program secures recruitment and retention of highpotentials. Approximately 9,600 apprenticeships worldwide. 2008 Employees (December 31) Daimler Group Mercedes-Benz Cars Daimler Trucks Daimler Financial Services Vans, Buses, Other Sales Organization...

  • Page 115
    ...to safeguard our long-term competitiveness, we employed 7,929 apprentices in Germany at year-end 2008 (2007: 7,945) and 9,603 worldwide (2007: 9,300). In addition, we support life-long learning with numerous programs. The Daimler Corporate Academy provides training for Group employees and executives...

  • Page 116
    ... funding for the promotion of young talent by organizations such as the German National Music Council, which offers various forms of support for talented young musicians. And Mercedes-Benz Turkey has launched a program to help Turkish girls to discover their talent and enthusiasm for technical...

  • Page 117
    ...childcare centers close to our plants and to the promotion of education and training programs. We can count on our employees' voluntary involvement in numerous projects. During the annual Day of Caring at Daimler Financial Services, the firm and its employees spent a day working on socially oriented...

  • Page 118
    ... supervision. In this way, we aim to fulfill the legitimate demands of our shareholders. On the following pages, the Board of Management and the Supervisory Board explain Daimler's internationally oriented system of corporate governance. Further information can be found on our website at www.daimler...

  • Page 119
    ... the Supervisory Board 138 - 139 Report of the Audit Committee 122 - 127 Remuneration Report - Principles of Board of Management remuneration - Board of Management remuneration in the year 2008 - Commitments upon termination of service - Remuneration of the Supervisory Board Corporate Governance...

  • Page 120
    ... and the key contractual elements was returned from the Audit Committee to the plenum of the Supervisory Board due to changes in the German Corporate Governance Code that were made in the summer of 2008. The Supervisory Board also reviews the individual and consolidated annual financial statements...

  • Page 121
    ... with the Board of Management. In addition, it makes recommendations to the Supervisory Board, concerning for example the appropriation of distributable profits and capital measures. Finally, the Audit Committee approves services provided to Daimler AG or to companies of the Daimler Group by the...

  • Page 122
    .... The Chairman of the Supervisory Board has regular contacts with the Board of Management to discuss not only the Group's strategy and business development, but also the issue of risk management. The Corporate Audit department monitors adherence to the legal framework and Group standards by means of...

  • Page 123
    ...dealings. In 2008, the transactions in shares of Daimler AG or related financial instruments listed in the table below took place involving members of the Board of Management and the Supervisory Board (and, pursuant to the provisions of the German Securities Trading Act, involving persons in a close...

  • Page 124
    ... by means of close organizational links with Corporate Compliance in Stuttgart. The local compliance managers regularly report on the status and progress of the compliance programs in their business units. As part of the further development of the Legal & Compliance department, the two existing...

  • Page 125
    ... or management in his or her area of responsibility is not transferrable and is part of the day-to-day business in the same way as other tasks. Compliance is therefore an integral and long-term component of Daimler's corporate culture. Daimler provides its employees and executives with support in...

  • Page 126
    ... share price and to additional parameters. The details of the system are as follows: The base salary is fixed cash remuneration relating to the entire year, oriented towards the area of responsibility of each Board of Management member, and paid out in twelve monthly installments. The annual bonus...

  • Page 127
    ...to cost of capital. Value when awarded: Determined annually in relation to a market comparison; for 2008, approximately 2 to 2.5 times the base salary. Range of goal accomplishment: 0 - 200%, i.e. the plan has an upper limit and may also be zero. During the four-year period, the phantom shares earn...

  • Page 128
    ... active members of the Board of Management for the year 2008 compared with 2007. German Accounting Standard DRS 17, which is valid as of the year 2008, was used for the first time in the presentation of the figures for both years. In line with DRS 17, the long-term share-based remuneration is shown...

  • Page 129
    ... upon termination of service Retirement provision. Until the year 2005, the pension agreements of the German Board of Management members included a commitment to an annual retirement pension, calculated as a proportion of the base salary and depending on the number of years of service. Those pension...

  • Page 130
    .... The new regulations for Supervisory Board remuneration approved by the Annual Meeting in April 2008 specify that the members of the Supervisory Board receive, in addition to the refund of their expenses and the cost of any value-added tax incurred by them in performance of their office, fixed...

  • Page 131
    ...2007) and meeting fees (for 2008) in connection with their respective positions on the Board of Directors of EADS N.V. amounting to â,¬46,375 and â,¬178,109. Since EADS is consolidated at equity, these payments are not considered in the calculation of Supervisory Board remuneration. 2 These employee...

  • Page 132
    ... 161 of the German Stock Corporation Act (AktG) requires the Board of Management and the Supervisory Board of a listed stock corporation to declare each year that the recommendations of the "German Corporate Governance Code Government Commission" as published by the Federal Ministry of Justice in...

  • Page 133
    ... Supervisory Board relating to the company's long-term success (Code Clause 5.4.6 Paragraph 2, Sentence 2) We refer to the comments made under I. 2. with regard to the introduction of performance-related remuneration. Stuttgart, December 2008 The Supervisory Board The Board of Management Corporate...

  • Page 134
    ... Baldauf Helsinki Former Executive Vice President and General Manager of the Networks Business Group of Nokia Corporation (since February 11, 2008) Other supervisory board memberships / directorships: Hewlett-Packard Company Sanoma OY F-Secure Corporation CapMan OYj Jörg Hofmann* Stuttgart German...

  • Page 135
    ... Leader Mercedes-Benz Research and Development, Member of the Works Council, Sindelfingen Plant, Daimler AG (since April 9, 2008) William A. Owens Kirkland Former President and Chief Executive Officer of Nortel Networks Corporation, Chairman of AEA Capital Asia Other supervisory board memberships...

  • Page 136
    ... AG - Chairman Loewe AG Douglas Holding AG Heidelberger Druckmaschinen AG - Chairman Bernhard Walter Frankfurt am Main Former Spokesman of the Board of Management of Dresdner Bank AG Other supervisory board memberships / directorships: Bilfinger Berger AG - Chairman Deutsche Telekom AG Henkel AG...

  • Page 137
    ... San Francisco Giants (retired December 31, 2007) Presidential Committee Dr. Manfred Bischoff (Chairman) Erich Klemm* Dr. Manfred Schneider Dr. Thomas Klebe* Gerd Rheude* Wörth Chairman of the Works Council, Wörth Plant, Daimler AG (retired April 9, 2008) Wolf Jürgen Röder* Frankfurt am Main...

  • Page 138
    ... Commercial Code (HGB), the formation of a budget also in the 2008 financial statements to buy back a maximum of 10% of the outstanding shares as of April 9, 2008, during the period until April 8, 2009, the date of the next Annual Meeting. As proposed by the Board of Management, due to the changed...

  • Page 139
    ... and marketing strategy to secure sustainable mobility. In October, the Supervisory Board approved a budget to optimize and reposition the business operations of Daimler Trucks North America, which had become necessary due to the development of the North American commercial vehicle market. It...

  • Page 140
    ... with questions of the structure, orientation and qualification profile of the Supervisory Board members representing the shareholders. As in previous years, the Mediation Committee, a body required by the provisions of Germany's Codetermination Act, had no occasion to take any action in 2008. The...

  • Page 141
    ... Mr. Wilfried Porth (49) as Board of Management Member for Human Resources and Labor Relations Director for a period of three years, rounded up to the end of the month, i.e. until April 30, 2012. Mr. Porth will take up his position after the Annual Meeting in 2009 and will succeed Mr. Günther...

  • Page 142
    ... attended by the external auditors in February 2008, the Audit Committee reviewed the annual company financial statements and the annual consolidated financial statements as well as the management reports of Daimler AG and the Group for the year 2007, the annual report according to Form 20-F, the...

  • Page 143
    ...annual company financial statements and the annual consolidated financial statements for 2008 with the respective management reports, including the annual report on Form 20-F, and the proposal made by the Board of Management on the appropriation of profits. The audit reports and important accounting...

  • Page 144
    ...of Daimler AG and its subsidiaries, which is presented in the following, have been prepared in accordance with International Financial Reporting Standards (IFRS). The Consolidated Financial Statements also include all additional requirements set forth in Section 315a(1) of the German Commercial Code...

  • Page 145
    ...of the Board of Management and the Supervisory Board 214 36. Principal accountant fees 215 37. Additional information 168 10. Property, plant and equipment 169 11. Equipment on operating leases 170 12. Investments accounted for using the equity method 172 13. Receivables from financial services 175...

  • Page 146
    ... with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group management report includes a fair review of the development and performance of the business and the...

  • Page 147
    ... additional requirements of German commercial law pursuant to § 315a (1) HGB (Handelsgesetzbuch; German Commercial Code) are the responsibility of the parent company's management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report...

  • Page 148
    ... of â,¬ 2008 2008 2008 Revenue Cost of sales Gross profit Selling expenses General administrative expenses Research and non-capitalized development costs Other operating income (expense), net Share of profit (loss) from companies accounted for using the equity method, net Other financial income...

  • Page 149
    ...2007 Note in millions of â,¬ Assets Intangible assets Property, plant and equipment Equipment on operating leases Investments accounted for using the equity method Receivables from financial services Other financial assets Deferred tax assets Other assets Total non-current assets Inventories Trade...

  • Page 150
    ...directly in equity Deferred taxes on income and (expenses) recognized directly in equity Total income for period Dividends Share-based payment Issue of new shares Acquisition of treasury shares Issue of treasury shares Retirement of own shares Other Balance at December 31, 2007 Net profit Income and...

  • Page 151
    ... from sales of securities (other than trading) Change in other cash Cash provided by (used for) investing activities Change in short-term financing liabilities Additions to long-term financing liabilities Repayment of long-term financing liabilities Dividends paid (including profit transferred from...

  • Page 152
    ... in the Commercial Register of the Stuttgart District Court under No. HRB 19360 and its registered office is located at Mercedesstrasse 137, 70327 Stuttgart, Germany. The consolidated financial statements of Daimler AG are presented in euros (â,¬). The Board of Management authorized the consolidated...

  • Page 153
    ... income is presented using the costof-sales method. Commercial practices with respect to certain products manufactured by the Group necessitate that sales financing, including leasing alternatives, be made available to the Group's customers. Accordingly, the Group's consolidated financial statements...

  • Page 154
    ... strategic financial and operating decisions. Significant associated companies and joint ventures are accounted for using the equity method. The excess of the cost of Daimler's initial investment in equity method companies over the Group's proportionate ownership interest is recognized as investor...

  • Page 155
    ...financial services is recognized using the effective interest method. When loans are issued below market rates, related receivables are recognized at present value and revenue is reduced for the interest incentive granted. The Group offers an extended, separately priced warranty for certain products...

  • Page 156
    ...in share of profit (loss) from companies accounted for using the equity method, net. Income taxes. Current income taxes are determined based on respective local taxable income of the period and tax rules. In addition, current income taxes include adjustments for uncertain tax payments or tax refunds...

  • Page 157
    .... The Group is a lessee of property, plant and equipment and a lessor of its products, principally passenger cars, trucks, vans and buses. It is evaluated on the basis of the risks and rewards of a leased asset whether the ownership of the leased asset is attributed to the lessee (finance lease) or...

  • Page 158
    ... from financial services, trade receivables, receivables from banks, cash on hand, derivative financial assets and marketable securities and investments. Financial assets at fair value through profit or loss. Financial assets at fair value through profit or loss include those financial assets...

  • Page 159
    ...is equal to their positive or negative market value. If a market value is not available, fair value is calculated using standard financial valuation models such as discounted cash flow or option pricing models. Derivatives are carried as assets when the fair value is positive and as liabilities when...

  • Page 160
    ... plan that has either commenced implementation or been announced. Provisions are regularly reviewed and adjusted as further information develops or circumstances change. The provision for expected warranty-related costs is established when the product is sold, upon lease inception, or when a new...

  • Page 161
    ... a three-month time lag using the equity method and allocates the proportionate results to Vans, Buses, Other. Dispositions Chrysler activities. On May 14, 2007, the Board of Management of Daimler AG decided to transfer a majority interest in Chrysler and the related financial services business in...

  • Page 162
    ... distributes Mercedes-Benz passenger cars and Chrysler vehicles in China. In connection with the transfer of the majority interest in Chrysler in 2007, Daimler, Chrysler and Cerberus agreed on a framework dealing with the future business model at BBDC. Under the framework agreement, the final terms...

  • Page 163
    ...statement of income. 2008 in millions of â,¬ 2007 2006 Revenue Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs Other income and other expenses Profit (loss) before income taxes Income taxes Profit (loss) of Chrysler activities, net of...

  • Page 164
    ... and leasing business Interest from the financial services business Sales of services 85,787 6,704 3,009 373 95,873 89,976 6,328 2,715 380 99,399 91,199 5,141 2,538 344 99,222 In connection with the new management model, charges for employee severance of â,¬58 million were recorded in 2008 (2007...

  • Page 165
    ...pension and net post-employment benefit cost are included in the following line items within the consolidated statements of income (see Notes 7 and 21): 2008 in millions of â,¬ 2007 2006 Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs...

  • Page 166
    ... 2006, of which â,¬226 million is included in gains on sales of businesses. Interest and similar income Interest and similar expenses Expected return on pension and other plan assets Interest cost for pension and other post-employment benefit plans 729 (681) 915 782 (480) 992 285 (529) 897 (898...

  • Page 167
    ... following: 2008 in millions of â,¬ 2007 2006 For German companies, the deferred taxes, were calculated using a federal corporate tax rate of 15% (2006: 25%), a solidarity tax surcharge of 5.5% for each year on federal corporate taxes plus a trade tax of 14% (2006: after federal tax benefit rate...

  • Page 168
    ..., for instance tax-free gains included in net periodic pension costs at the German companies and tax-free results of our equity method investments. Moreover, the line also includes the following effects: In 2008 and 2007, Daimler realized a largely tax-free gain due to the transfer of interest in...

  • Page 169
    ... of equity Deferred tax expense (benefit) on derivative financial instruments charged or credited directly to related components of equity Income tax expense (benefit) for deduction in excess of compensation expense for equity-settled employee stock option plans Disposal of Chrysler activities...

  • Page 170
    ... of â,¬ Development costs (internally generated) Other intangible assets (acquired) Total Acquisition or manufacturing costs Balance at January 1, 2007 Additions due to business combinations Other additions Reclassifications Disposal of Chrysler activities Other disposals Other changes 1 Balance...

  • Page 171
    ...Group's reporting segments amounted to: MercedesBenz Cars in millions of â,¬ Daimler Trucks Daimler Financial Services Vans, Buses, Other Total 2008 2007 180 191 367 385 29 31 84 86 660 693 Non-amortizable intangible assets are primarily comprised of goodwill as well as development costs...

  • Page 172
    ...office equipment Advance payments relating to plant and equipment and construction in progress Total Acquisition or manufacturing costs Balance at January 1, 2007 Additions due to business combinations Other additions Reclassifications Reclassification to assets held for sale Disposal of Chrysler...

  • Page 173
    ... leases Equipment on operating leases developed as follows: Non-inventory related assets in millions of â,¬ Inventory related assets Total Acquisition or manufacturing costs Balance at January 1, 2007 Additions due to business combinations Other additions Reclassifications Disposal of Chrysler...

  • Page 174
    ... residual values of leased vehicles in light of the worsening global economy, the Group recorded impairment charges of â,¬465 million in cost of sales and allocated these charges to the Mercedes-Benz Cars segment. The impairment charges are included in the line item "Additions" within "Depreciation...

  • Page 175
    ...to 22.5% at year end. In 2007 and 2006, however, the at-equity accounting for the Group's interest in EADS was based on a 24.9% and 33% equity interest, respectively. We accounted for all derivatives relating to EADS shares as derivative financial instruments with changes in fair value subsequent to...

  • Page 176
    ... presents summarized IFRS financial information for Chrysler, which was the basis for applying the equity method in the Group's consolidated financial statements: 2008 in millions of â,¬ 2007 Income statement information 1 Sales Net profit (loss) Balance sheet information 2 Total assets Equity...

  • Page 177
    ... loans for floor financing programs for vehicles sold by the Group's automotive businesses to dealers or loans for assets purchased by dealers from third parties, primarily used vehicles traded in by dealers' customer or real estate such as dealer showrooms. Other receivables mainly represent non...

  • Page 178
    ..., 2008 < 1 year in millions of â,¬ 1 year up to 5 years > 5 years Total < 1 year 1 year up to 5 years At December 31, 2007 > 5 years Total Contractual future lease payments Unguaranteed residual values Gross investment Unearned finance income Gross carrying amount Allowances for doubtful accounts...

  • Page 179
    ...) form part of the Group's liquidity management function. Available-for-sale financial assets. Equity instruments comprise the following: Financial assets at fair value through profit or loss comprise the following: 2008 in millions of â,¬ At December 31, 2007 Trading securities 2008 in millions...

  • Page 180
    ... after more than one year (2007: â,¬25 million). Allowances. Changes in the allowance account for trade receivables were as follows: The production cost of inventories recognized as expense in 2008 is included in cost of sales and amounts to â,¬63,526 million. In 2007, production cost of â,¬64,143...

  • Page 181
    ... as collateral for the related financial liabilities. 19. Equity See also the consolidated statements of changes in equity. The capital stock is allocated into no-par value shares. All shares are fully paid up. Each share grants one vote at the Annual Meeting of Daimler AG and an equal portion...

  • Page 182
    ...in the annual financial statements of Daimler AG (parent company only) in accordance with the German Commercial Code (Handelsgesetzbuch). For the year ended December 31, 2008, the Daimler management will propose to the shareholders at the Annual Meeting that â,¬556 million (â,¬0.60 per share) of the...

  • Page 183
    ... recognized in equity: Before taxes in millions of â,¬ Taxes 2008 Net of taxes Before taxes Taxes 2007 Net of taxes Before taxes Taxes 2006 Net of taxes Financial assets available for sale: Fair value changes recognized in equity (Income) / expenses reclassified through profit or loss...

  • Page 184
    ... the years 2005 to 2008 are determined on the basis of the year-end quoted price of Daimler Ordinary Shares and the estimated target achievement. Stock Option Plans. In April 2000, the Group's shareholders approved the Daimler Stock Option Plan (SOP), which grants stock options for the purchase of...

  • Page 185
    ...of five years after leaving the Group. Exercises, and therefore the potential issue of new common shares, could cause an increase in the share capital of Daimler, similar to exercises of stock options by current Daimler employees. As of December 31, 2008, inactive Chrysler employees held 2.3 million...

  • Page 186
    ... issued to the members of the Board of Management is as follows: Dr. Dieter Zetsche Number of stock options in millions 2008 Average exercise price â,¬ per share Number of stock options in millions 2007 Average exercise price â,¬ per share Number of stock options in millions 2006 Average exercise...

  • Page 187
    ... 43.61 43.61 5.8 years Thomas W. LaSorda Number of stock options in millions 2008 Average exercise price â,¬ per share Number of stock options in millions 2007 Average exercise price â,¬ per share Number of stock options in millions 2006 Average exercise price â,¬ per share Balance at beginning of...

  • Page 188
    ... for as defined benefit plans and are funded partially with assets. Starting in 2008, the majority of the active employees are entitled to pay-related defined pension benefits. Under these plans, employees earn benefits for each year of service. The benefits earned per year of service are based on...

  • Page 189
    ... Chrysler, the Group's provisions for pension benefits and the corresponding plan assets decreased significantly. The funded status developed since 2005 as follows: Total in millions of â,¬ At December 31, 2008 NonGerman German plans plans Total At December 31, 2007 NonGerman German plans plans...

  • Page 190
    ... January 1 Current service cost Interest cost Contributions by plan participants Actuarial (gains)/losses Past service cost/(income) Curtailments Settlements Pension benefits paid Disposal of Chrysler activities Currency exchange-rate and other changes Present value of the defined benefit obligation...

  • Page 191
    ...a part of the benefit formula. 5.9 3.5 1.8 5.4 3.1 1.9 5.0 3.3 - 5.3 4.6 - The following weighted average assumptions were used to determine net periodic pension cost: 2008 in % 2007 German Plans 2006 2008 Non-German Plans 2007 2006 Discount rates Expected long-term returns on plan assets...

  • Page 192
    ... plans are primarily related to government-run pension plans. In 2008, the total cost from payments made under defined contribution plans amounted to â,¬1.0 billion (2007: â,¬1.2 billion; 2006: â,¬1.1 billion). Other post-employment benefits Certain foreign subsidiaries of Daimler in North America...

  • Page 193
    ...as follows: Product warranties in millions of â,¬ Sales incentives Personnel and social costs Other Total Balance at December 31, 2007 Thereof current Thereof non-current Additions Utilizations Reversals Addition of accrued interest and effects of changes in discount rates Currency translation...

  • Page 194
    ...88 million). Liabilities from finance leases relate primarily to leases of property, plant and equipment which transfer substantially all risks and rewards to the Group as lessee. Future minimum lease payments under finance leases at December 31, 2008 amounted to â,¬637 million (2007: â,¬655 million...

  • Page 195
    ... of â,¬ At December 31, 2008 Non-current Total Current At December 31, 2007 Non-current Total Derivative financial instruments used in hedge accounting Financial liabilities recognized at fair value through profit or loss Liabilities from residual value guarantees Liabilities from wages and...

  • Page 196
    ..., emissions, fuel economy, financial services, dealer, supplier and other contractual relationships, intellectual property rights, product warranties, environmental matters, and shareholder matters. Some of these proceedings allege defects in various components in several different vehicle models or...

  • Page 197
    ... in the 2008 and 2007 amounts are guarantees, which the Group issued for the benefit of Chrysler in connection with the transfer of a majority interest in the Chrysler activities. These guarantees relate to Chrysler's pension obligations and certain other financial obligations of Chrysler. For...

  • Page 198
    ... Daimler Financial Services AG, Deutsche Telekom AG and Compagnie Financière et Industrielle des Autoroutes S.A. (Cofiroute) entered into a consortium agreement in order to jointly develop, install, and operate under a contract with the Federal Republic of Germany (operating agreement) a system...

  • Page 199
    ...Future minimum lease payments under non-cancelable long-term lease agreements are due as follows (nominal amounts): 29. Financial instruments Carrying amounts and fair values of financial instruments The following table shows the carrying amounts and fair values of the Group's financial instruments...

  • Page 200
    ... and discounts or through option pricing models. Hedging instruments for equities in 2007 also include instruments for listed investments, which are accounted for using the equity method. - Trading securities. The trading securities measured at fair value were measured using quoted market prices at...

  • Page 201
    ... the fair values of these financial instruments. Financing liabilities. The fair values of bonds are calculated as the present values of the estimated future cash flows. Market interest rates for the appropriate terms were used for discounting. On account of the short terms of commercial papers and...

  • Page 202
    ... losses from derivatives of companies which are accounted for using the equity method. The consolidated net profit for 2008 includes net gains (before income taxes) of â,¬2 million (2007: â,¬6 million; 2006: â,¬4 million) from the valuation of derivative financial instruments which were ineffective...

  • Page 203
    ...). Daimler regularly evaluates its financial risks with due consideration of changes in key economic indicators and up-to-date market information. Any market sensitive instruments, including equity and debt securities, that the pension and other post-employment benefit plans hold are not included in...

  • Page 204
    ... adapted to market conditions. Trade receivables. Trade receivables are mostly receivables from worldwide sales activities of vehicles and spare parts. The credit risk from trade receivables encompasses the default risk of customers, e.g. dealers and general distribution companies, other corporate...

  • Page 205
    ...the lease and financing business and the working capital and capital expenditure requirements. According to internal guidelines, the refunding of the lease and financing business is generally carried out with matching maturities of cash flows. At year-end 2008, the Group had short-term and long-term...

  • Page 206
    .... As part of its risk management system, Daimler employs value at risk analyses as recommended by the Bank for International Settlements. In performing these analyses, Daimler quantifies its market risk exposure to changes in foreign currency exchange rates, interest rates and equity prices on...

  • Page 207
    ... degree compared to the Mercedes-Benz Cars and Daimler Trucks segments. In addition, through its proportionate share in the results of its equity investment in EADS, Vans, Buses, Other is indirectly exposed to transaction risk. Cash inflows and outflows of the business segments are offset if they...

  • Page 208
    ...of its day-to-day operations. A substantial volume of interest rate sensitive assets and liabilities results from the leasing and sales financing business which is operated by the Daimler Financial Services segment. The Daimler Financial Services companies enter into transactions with customers that...

  • Page 209
    ...as long-term investments in its equity price risk assessment. Also not included in this assessment are equity derivatives used to hedge the market price risk of investments accounted for using the equity method. The remaining equity price risk in the years 2008 and 2007 was not, and is not currently...

  • Page 210
    ... sale of trucks under the brand names Mercedes-Benz, Freightliner, Western Star and Mitsubishi Fuso, as well as related parts and accessories. Daimler Financial Services. The activities in this segment primarily comprise the marketing of financial services in the area of retail and lease financing...

  • Page 211
    ...for the years ended December 31, 2008, 2007 and 2006: Mercedes-Benz Cars in millions of â,¬ Daimler Trucks Daimler Financial Services Vans, Buses, Other thereof Mercedes-Benz Vans Total Segments Reconciliation Consolidated 2008 Revenue Intersegment revenue Total revenue Segment profit (loss...

  • Page 212
    ... for the incremental benefit payments under early retirement agreements concluded in 2006 resulted in pre-tax charges of â,¬216 million. Associated with the decisions to terminate the production of the smart forfour and to realign the business model for smart, EBIT of Mercedes-Benz Cars for 2006...

  • Page 213
    Vans, Buses, Other. EBIT of Vans, Buses, Other includes the Group's share in the net profit (loss) of EADS of â,¬177 million (2007: â,¬13 million; 2006: â,¬(193) million). In addition, EBIT comprises gains related to the transfer of portions of the Group's equity interest in EADS (2008: â,¬130 ...

  • Page 214
    ... capital management amounted to 8% after taxes. For information about the ordinary shares which the Group bought back in 2008 and 2007 to optimize its capital structure see Note 19. 2008 average in millions of â,¬ 2007 Mercedes-Benz Cars Daimler Trucks Daimler Financial Services 1 Vans, Buses...

  • Page 215
    ... with the stock option plan were not included, because the options' underlying exercise prices were higher than the average market prices of Daimler ordinary shares in those periods. 34. Related party relationships Associated companies and joint ventures. Most of the goods and services supplied...

  • Page 216
    .... Major other goods and services supplied by the Group relate to McLaren Group Ltd., an associated company. Within the context of the Group's Formula 1 activities, Daimler provides the McLaren Group with Mercedes-Benz Formula 1 engines for use and supports their research and development activities...

  • Page 217
    ... the negative share-price development. The amounts stated for fixed and short-term performance-related remuneration for the years 2007 and 2006 also include payments to Board of Management members who resigned from their positions in the context of the Chrysler transaction. For 2007, those Board of...

  • Page 218
    ... rate of return, at present 6%. This pension is payable at the age of 60 at the earliest. In the year 2008, the pension provision was increased by service costs of â,¬2.5 million (2007: â,¬2.2 million; 2006: â,¬4.0 million). No severance payments are foreseen for Board of Management members in...

  • Page 219
    ...- Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH* - Taunus-Auto-Verkaufs GmbH - Zweite DC Immobilien GmbH & Co. Projekt Wörth KG German Corporate Governance Code. The Board of Management and the Supervisory Board of Daimler AG have issued a declaration pursuant to Section 161 of the German Stock...

  • Page 220
    ... assets Inventories Liquid assets Other current assets Total assets Stockholders' equity thereof Capital stock Equity ratio Long-term liabilities Short-term liabilities Net liquidity industrial business Net assets (annual average) 2000 2001 2002 2003 2004 2005 2006 2007 2008 148,243 26,158...

  • Page 221
    ... Chrysler. For our stockholders who are taxable in Germany. There is no tax credit from 2001 due to a change in the corporate income tax system. Periods before 2002 not adjusted for the effects of inventory-related receivables from Financial Services. Additional Information | Ten-Year Summary...

  • Page 222
    ... company. The structure of corporate governance at Daimler AG is determined by Germany's Stock Corporation Act, Codetermination Act and capital-market legislation, as well as international capital-market laws and stock-exchange listing regulations. Cost of capital. The cost of capital is the product...

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    ... Code Investor Relations Liabilities Net assets Net profit Pension obligations Portfolio changes Profitability Ratings Remuneration system Revenue ROE - Return on Equity ROS - Return on Sales Segment reporting Share buyback Shareholders' equity Shares Strategy Sustainability Unit sales Value added...

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    ...Offices...23 5400 Fax +33 1 39 23 5442 Germany, Berlin Tel. +49 30 2594 1100 Fax...887 7002 Fax +36 1 887 7001 India, Pune Tel. +91 20 2750 5800... 2246 8811 Fax +603 2246 8812 Mexico, Mexico City Tel. +52 55 4155 2400 Fax +52 55... 2492 94909 Fax +42 1 2492 94919 South Africa, Pretoria Tel. +27 12 677 1502 Fax...

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    ... | Addresses Information on the Internet. Special information on our shares and earnings development can be found in the "Investor Relations" section of our website. It includes the Group's annual and interim reports, the company financial statements of Daimler AG, and reports to the US Securities...

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    Daimler Worldwide Mercedes-Benz Cars Sales Organization Automotive Daimler Businesses Financial Services Daimler Trucks Vans, Buses, Other Europe Production locations Sales outlets Revenue in millions of â,¬ Employees 10 - 28,092 86,352 7 - 11,595 32,756 - 3,758 - 41,636 - 40 4,833 4,358 11 11,...

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    Financial Calendar 2009 Annual Press Conference February 17, 2009 Analysts' and Investors' Conference Call February 17, 2009 Presentation of the Annual Report 2008 February 27, 2009 Annual Meeting April 8, 2009 10:00 a.m. CEST | 4:00 a.m. EST Messe Berlin Interim Report Q1 2009 April 28, 2009 ...

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    Daimler AG Stuttgart, Germany www.daimler.com