Mercedes 2008 Annual Report Download - page 76

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Financial Position
Inventories increased by €2.7 billion to €16.8 billion (+19%),
equivalent to 13% of the balance sheet total. The increase resulted
from the sales development, and was only partially offset by
production adjustments in the second half of the year.
Trade receivables increased by 10% to €7.0 billion and trade
payables decreased by 7% to €6.5 billion.
Other financial assets decreased by €1.6 billion to €8.0 billion,
primarily due to the impairment of loans granted to Chrysler and
of receivables due from Chrysler. The decrease was also caused
by the development of securities held in the context of liquidity
management and of assets relating to derivative financial instru-
ments.
Cash and cash equivalents decreased compared with December
31, 2007 by a total of €8.7 billion to €6.9 billion. This change
was related to the cash outflow from the buyback of the company’s
own shares (€4.2 billion), and to the dividend payout in April
(€1.9 billion). Total liquidity had been extremely high at December
31, 2007 following the transfer of a majority interest in Chrysler.
Due to the reduction in cash and cash equivalents, liquidity reached
a level appropriate to the Daimler Group, taking into consider-
ation the current situation in the capital markets.
With the conclusion of the sale of land and buildings at Potsdamer
Platz in Berlin on February 1, 2008, the “assets held for sale”
in the amount of €0.9 billion that were separately reported at the
end of 2007 were derecognized. In 2008, the Group received
a cash inflow from this transaction totaling €1.3 billion.
The Group’s balance sheet total decreased by €2.9 billion to
€132.2 billion compared to December 31, 2007. The financial ser-
vices business accounted for €67.7 billion of the balance sheet
total (December 31, 2007: €62.0 billion), equivalent to 51% of the
Daimler Group’s total assets (December 31, 2007: 46%).
Intangible assets increased to €6.0 billion (December 31, 2007:
€5.2 billion). The increase in capitalized research and development
expenditure is due in particular to the high level of investment
in the development of new models, engines and transmissions.
As capital expenditure exceeded depreciation, property, plant
and equipment increased by 10% to €16.1 billion, 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 increased by 4% to a total of €61.1 billion (December 31,
2007: €58.9 billion). Their share of the balance sheet total amoun-
ted to 46% (December 31, 2007: 44%). Adjusted for the effects
of currency translation, the increase amounted to €2.7 billion.
Financial investments accounted for using the equity
method of €4.3 billion primarily comprise our equity interests in
EADS and Tognum. The increases from our equity interest in
Tognum (€0.7 billion) and the acquisition of shares in Kamaz
(€0.2 billion) were offset by falls in the carrying value of our
investments in Chrysler (€0.9 billion) and EADS (€0.6 billion).
The decrease at Chrysler is the result of our proportionate
share of the company’s loss for the period. The accumulated
losses have fully depleted the carrying value of our investment
in Chrysler. The decrease at EADS primarily reflects changes in
the valuation of derivative financial instruments with no effect
on profit and loss.