Mercedes 2008 Annual Report Download - page 164

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In 2006, Daimler sold its former headquarters in Stuttgart-
Möhringen to IXIS Capital Partners Ltd. for €240 million in cash.
At the same time, Daimler entered into a leaseback arrangement
for the properties sold with non-cancelable lease periods ranging
from ten to fifteen years. At the end of the noncancelable lease
terms, Daimler has renewal options for up to nine years. Also in
2006, the Group sold various other real estate properties no
longer used for operating purposes. From these sales of real estate
properties the Group realized gains of €271 million in 2006,
which were allocated to Vans, Buses, Other.
Off-Highway business. On December 27, 2005, Daimler entered
into a share sale and purchase agreement with the Swedish
investor group EQT regarding the sale of a major portion of its
Off-Highway business, including the MTU-Friedrichshafen
GmbH Group and the Off-Highway activities of Detroit Diesel
Corporation. The sale was consummated in the first quarter
of 2006. The consideration received from the buyer consisted
of €822 million in cash and a note receivable with a fair value
of €58 million due in 2018, subject to customary adjustments.
On October 31, 2006, the parties determined the final con-
sideration, which resulted in an increase of the sales price by €5
million; the note receivable was redeemed by the acquirer for
€78 million in cash. In 2006, the disposal of the Off-Highway
business positively impacted the Group’s net profit from
continuing operations by €205 million and the segment profit
(loss) (EBIT) by €266 million (including a gain on the sale of
€233 million), €253 million and €13 million of which were allo-
cated to Vans, Buses, Other and the Daimler Trucks segment,
respectively.
EADS. For information on the disposal of equity-interests in
EADS, please see Note 12.
3. Revenue
Revenue at Group level consists of the following:
Revenue by segments and regions is presented in Note 31.
4. Functional costs
Daimler Trucks North America. On October 14, 2008, the
Board of Management of Daimler AG adopted a wide-ranging plan
to optimize and reposition the business operations of Daimler
Trucks North America (DTNA). Measures provided for in the plan
include the discontinuation of the Sterling Trucks brand in
2009, a further consolidation of the production network in the
NAFTA-region, capacity adjustments, including the closing
of two manufacturing plants in each of 2009 and 2010, and head-
count reductions of up to 3,500 employees, to be accompli-
shed primarily in 2009 and 2010.
As a result of this plan, the Group recorded charges of €233
million in 2008, of which €44 million is included within cost of
sales, €88 million within selling expenses and €101 million
within general administrative expenses in the consolidated state-
ments of income. The charges primarily relate to the following
matters. Headcount reduction measures resulted in charges
of €106 million. Additional charges of €81 million were recorded
in connection with the termination of agreements with dealers
of the Sterling Trucks brand, as well as sales incentives and inven-
tory write-downs at these dealers. Accelerated depreciation
of assets as a result of the reduction of useful lives led to charges
of €20 million and supplier compensations resulted in charges
of €14 million.
For the measures initiated, the Group recorded an accrual of
€180 million at December 31, 2008, which is included in
provisions for other risks and will lead to payments primarily in
2009 and 2010.
New management model. In January 2006, Daimler announ-
ced the new management model, the primary objective of which
is to install integrated processes and eliminate redundancies
through the global integration of certain administrative functions.
All charges to be incurred under the new management model,
as far as these charges were not part of discontinued operations,
are corporate-level costs, which are not allocated to the seg-
ments but are included in the Group’s corporate items.
In connection with the new management model, charges for
employee severance of €58 million were recorded in 2008 (2007:
€167 million; 2006: €361 million). These charges are included
in the Group’s consolidated statements of income primarily with-
in general administrative expenses. In 2007, expenses of €16
million (2006: €44 million) are included in “net profit (loss) from
discontinued operations.”
2006
20072008
in millions of €
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
Sales of goods
Rental and leasing business
Interest from the financial services
business
Sales of services