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Pioneers of Sustainable Mobility.
Annual Report 2009.

Table of contents

  • Page 1
    Pioneers of Sustainable Mobility. Annual Report 2009.

  • Page 2
    ...Group 2009 Amounts in millions of â,¬ Revenue Western Europe thereof Germany NAFTA thereof United States Asia thereof China Other markets Employees (December 31) Investment in property, plant and equipment Research and development expenditure thereof capitalized Cash provided by (used for) operating...

  • Page 3
    ... development expenditure thereof capitalized Unit sales Employees (Dec. 31) Daimler Trucks EBIT Revenue Return on sales Investment in property, plant and equipment Research and development expenditure thereof capitalized Unit sales Employees (Dec. 31) Mercedes-Benz Vans EBIT Revenue Return on sales...

  • Page 4
    Daimler Brand Portfolio

  • 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
    ... and safe mobility. The Management Report describes and analyzes the Group's business development, including its financial position, liquidity and capital resources, and profitability. Other sections provide information on our divisions, the issue of sustainability, corporate governance and...

  • Page 7
    ...German Corporate Governance Code 170 - 251 Consolidated Financial Statements 172 173 174 175 176 177 178 179 118 - 133 Divisions 120 124 128 130 132 Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services Responsibility Statement Independent Auditors' Report...

  • Page 8
    » The situation in 2009 was exceptional, but so was our determination. «

  • Page 9
    ... conditions for future success - in terms of our strategy, our technology, and also, of course, our products. For example, the E-Class series has been available in all four model versions since the beginning of 2010; this gives us a lead over the competition. We will follow that up as the year...

  • Page 10
    ... and all other Daimler products have a shared ambition: to be "best in class": - with rationally convincing and emotionally fascinating premium cars, - with first-class trucks, vans and buses that offer their customers optimal economic benefits, and - with services that fully match this...

  • Page 11
    ... example, will be produced for America in America. In the area of commercial vehicles, we deepened our partnership with Russian truck manufacturer Kamaz in 2009 and increased our equity stake in it this year. In Chennai, India, we are building a new truck plant. Regardless of what may change...

  • Page 12
    Board of Management Wilfried Porth | 51 Human Resources & Labor Relations Director Appointed until April 2012 Andreas Renschler | 51 Daimler Trucks Appointed until September 2013 Bodo Uebber | 50 Finance & Controlling, Daimler Financial Services Appointed until December 2011 8

  • Page 13
    ... | 49 Mercedes-Benz Cars Production and Procurement, Mercedes-Benz Vans Appointed until February 2013 Dieter Zetsche | 56 Chairman of the Board of Management, Head of Mercedes-Benz Cars Appointed until December 2013 Thomas Weber | 55 Group Research & Mercedes-Benz Cars Development Appointed...

  • Page 14
    ...than 120 years, we have been developing answers to the automotive questions of the time. As the inventor of the automobile, we are just as committed to climate and environmental protection as we are to the safety of our vehicles. This is something our customers - and all other road users - can...

  • Page 15
    Drive systems - Our strategy of "The Road to Emission-free Mobility" brings together the global activities of the Daimler Group with regard to sustainable mobility. The goal is to significantly reduce the fuel consumption and emissions of our cars, trucks, vans and buses already today, and to ...

  • Page 16
    ... emission-free electric mobility with battery and fuel-cell vehicles - Developing alternative fuels and mobility concepts Innovative financing solutions and services are also part of the package. 1969 - 1978 1979 - 1984 1985 - 1996 1997 - 2002 2003 - 2004 1969: First electric test bus...

  • Page 17
    ... stratified charged gasoline combustion 2006: First van in Europe with hybrid technology: Mercedes-Benz Hybrid Sprinter 316 CDI 2006: Start of series production of Fuso Canter Eco Hybrid truck 2007: Orion VII Hybrid buses go "online" in New York 2008: The Freightliner M2E Hybrid proves...

  • Page 18
    Responsibility and pleasure. Optimized internal combustion engines put more efficiency on the road. 14

  • Page 19
    The further improvement of cars and commercial vehicles with internal combustion engines is a key element on our way to sustainable mobility. Impressive performance figures make sure that driving pleasure is not left behind. Pioneering Spirit and Innovative Strength | 15

  • Page 20
    Efficient assembly: Pre-series production of the new and highly efficient six and eight-cylinder gasoline engines has already started at the plant in Bad Cannstatt. Internal combustion engines. Economical with gasoline and clean with diesel. Until the large-scale market launch of emission-free ...

  • Page 21
    ...-rail injection, the new CDI four- cylinder diesel engine sets benchmarks in terms of diesel performance, emissions and economy. This makes it a prime example of intelligent downsizing. Thanks to its compact dimensions, the engine can be used in several Mercedes-Benz model series. It is...

  • Page 22
    .... The development of fuels is inseparable from the development of drive systems. With new sources of energy, we utilize additional potential for reducing fuel consumption and emissions. Regenerative hydrogen is the fuel of the future. Used in fuel- cell vehicles, it guarantees mobility free of...

  • Page 23
    Ecology, economy and practicality as standard equipment: the Mercedes-Benz Sprinter NGT with a bivalent natural-gas drive system. » We accept the challenges of tomorrow with efficient, clean drive systems and alternative fuels. « Pioneering Spirit and Innovative Strength | 19

  • Page 24
    The best of two worlds. Hybrid drive systems for additional efficiency improvements. 20

  • Page 25
    Daimler's unique modular hybrid component system is another pioneering achievement on the way to sustainable mobility that sets technical and economic benchmarks. And proof that more can be moved through a combination of strengths. Pioneering Spirit and Innovative Strength | 21

  • Page 26
    ...diesel engine. Daimler's hybrid buses use serial hybrid. A generator directly connected with the diesel engine supplies the energy for the electric motor. Two-mode hybrids combine those two approaches. Roland Dold developed the Mercedes-Benz Atego BlueTec Hybrid in the Predevelopment department...

  • Page 27
    ... and the Mercedes-Benz ML 450 HYBRID. With city buses from Orion, trucks and vans from Freightliner, and light-duty trucks and buses from Fuso, Daimler has more hybrid commercial vehicles on the road than any other manufacturer. The Baden-Württemberg Environmental Technology Prize 2009 was...

  • Page 28
    ... Hybrid Center in Kawasaki, accelerating the hybrid development of our truck brands Mercedes-Benz, Fuso and Freightliner. The Fuso Canter Eco Hybrid for example is already a great market success with 800 units sold worldwide. Ten of these hybrid trucks are currently participating in Europe...

  • Page 29
    Europe's biggest fleet test of hybrid trucks. Ten Fuso Canter Eco Hybrid trucks are taking part in three-year road tests in London. Pioneering Spirit and Innovative Strength | 25

  • Page 30
    Trendsetters of urban mobility. Electric and locally emissionfree with lithium-ion batteries. 26

  • Page 31
    London, Berlin, Rome. Europe's metropolises are driving into a green future - with less fuel and without local emissions. 100 battery- electric smart fortwo electric drive cars have been on the road in the British capital since 2007. And locally emission-free town cars from Daimler will soon be...

  • Page 32
    ... manufacturers that develops batteries for automotive applications, with our own production planned as of 2012. The sale of such batteries to third parties is also planned for the future. Lithium-ion batteries are at the heart of future electric drive: from hybrid to electric vehicles, from cars...

  • Page 33
    ... electric van from Mercedes-Benz to be used in road tests with customers in 2010. London. Since 2007, 100 smart fortwo electric drive cars of the first generation have been on the road in Daimler's pilot project for battery-electric drive. An additional advantage in the British capital city...

  • Page 34
    Heading for new horizons. The fuel cell is the driver of locally emission-free mobility. 30

  • Page 35
    With more than 100 Mercedes-Benz vehicles with fuel cells and 4.5 million test kilometers driven, Daimler has the world's best-tested fuel-cell fleet. The high performance of fuel cells is more evidence of this technology's strengths - and of the strength of our innovations. Pioneering Spirit ...

  • Page 36
    ...pioneer of sustainable mobility, we have been focusing on this key technology since 1994 with our first fuel-cell vehicle, the Mercedes-Benz NECAR 1. Today, Daimler's fleet of fuel-cell vehicles is the best tested in the world. We are working on making automotive applications of fuel cells even...

  • Page 37
    ... Germany parallel to the commercialization of fuel-cell vehicles in the context of H2 Mobility by the end of 2011. Apart from Daimler, the initiative includes the companies EnBW, Linde, OMV, Shell, Total and Vattenfall. Green light for local transport without CO2 & Co. Locally emission-free...

  • Page 38
    The Road to Emission-free Mobility. Our inspiration for today and tomorrow. 34

  • Page 39
    ... it. With enthusiasm and passion. We want to secure mobility also for the coming generations with our innovative and sustainable vehicle concepts. With a unique product mix and various drive concepts, we offer solutions for the automotive demands of today and tomorrow. Pioneering...

  • Page 40
    ... in a standard production car for the first time The ABS system developed by Daimler prevents the wheels from locking up under braking. This means the car can be steered even during an emergency stop. 1981: Daimler puts the first ABS for commercial vehicles on the market. 1984: ABS...

  • Page 41
    ...with the vehicle ahead 2008: Active Brake Assist (ABA) presented for the first time in the Mercedes-Benz Travego New in Mercedes-Benz cars: ATTENTION ASSIST drowsiness detection, autonomous emergency stopping in dangerous situations with PRE-SAFE® brakes and Night View Assist PLUS with...

  • Page 42
    Confident with safety. Mastering danger with safety systems from Daimler. 38

  • Page 43
    Our pioneers started the ball rolling in the field of automotive safety. With our Safety Truck, Safety Van and Safety Coach, we continue to pursue the goal of making the mobility of the future safer. Pioneering Spirit and Innovative Strength | 39

  • Page 44
    ... tensioners and seatbelt force limiters give Daimler vehicles a high level of safety. After an accident: Rescuing accident victims quickly and avoiding more serious injuries, for example by automatically switching on the hazard warning lights and switching off the engine and the fuel pump. 40

  • Page 45
    ... automotive company has such a broad range of cars, trucks, vans and buses. The way to the market is made even smoother by Daimler Financial Services. For example, we offer ourcust- omers in more than 20 countries favorable insurance premiums for their new Mercedes-Benz E-Class cars with...

  • Page 46
    ... granted in nearly all cars worldwide. How can even more vehicle safety and even lower fuel consumption achieve perfect harmony? Our ESF 2009 on the basis of a Mercedes-Benz S 400 HYBRID makes it possible to experience the potential of Daimler's research and development work already today, and...

  • Page 47
    ... Full Beam. The adaptive LED head- light will make the night even lighter in the future. Due to the automatic adjust- ment of the headlights to oncoming traffic, the driver can leave the full beam switched on all the time. In addition, a special spot- light function focuses on potential...

  • Page 48
    Pioneering technologies - We set global benchmarks. 44

  • Page 49
    ... from Daimler offer the customer clear benefits. At the same time, they give the Daimler Group crucial competitive advantages for the future. The success of our intensive development work can be seen in our latest research vehicle, the Mercedes-Benz F 800. A multitude of new drive and...

  • Page 50
    ... and Carl Benz were the start of a long tradition - and research and innovation still supply the impetus for our success today. With the creation of trendsetting vehicle concepts, Daimler is shaping the car of the future. Mercedes-Benz research vehicles put new and unusual technologies into tangible...

  • Page 51
    ... unparalleled vehicle architecture is suitable for both fuel-cell drive with a range of nearly 600 kilometers free of local emissions, as well as for use as a plug-in full hybrid which can drive up to 30 kilometers in pure electric mode. So urban and long-distance drivers are mobile without...

  • Page 52
    Visions for the 21st century. New safety concepts for accidentfree driving. 48

  • Page 53
    ... the utmost priority at the Daimler Group. We drive progress forward with groundbreaking ideas for even better active and passive safety - and we are absolutely determined to retain our leading role within the automotive industry also in the future. Pioneering Spirit and Innovative Strength...

  • Page 54
    Q1 Q2 50

  • Page 55
    .... is currently the only manufacturer selling battery-powered vehicles in North America and Europe that are capable of long journeys. Daimler and Tesla intend to cooperate closely on battery systems, electric drive and several vehicle projects. Overview of the Group | Important Events in 2009 | 51

  • Page 56
    ... a customer in Europe. This light-duty truck is equipped with a parallel-hybrid system, which significantly reduces its fuel consumption and emissions. Foundation stone laid for new MercedesBenz plant in Hungary. As of 2012, the successor models to today's A-Class and B-Class cars will be assembled...

  • Page 57
    Q3 Q4 53

  • Page 58
    ... the year, increasing numbers of market players started to anticipate an early recovery of commercial vehicle markets, providing additional support for the shares of commercial vehicle manufacturers and thus also of Daimler AG. Daimler's share price up by 39% in 2009. In the generally negative stock...

  • Page 59
    ... Petroleum Investment Company (IPIC), are investors with a long-term orientation and pursue a strategy of acquiring interests in companies with leading positions in their market segments. In addition to providing an inflow of new equity capital of â,¬1.95 billion, Aabar's entry will help us to...

  • Page 60
    Key figures End of 2009 End of 2008 09/08 % change Share capital (in millions of â,¬) Number of shares (in millions) thereof treasury shares Market capitalization (in billions of â,¬) Number of shareholders (in millions) Weighting in share indices: DAX 30 Dow Jones Euro STOXX 50 Long-term credit ...

  • Page 61
    ...com/investor. The main subject areas for capital-market communication included the current development of the Group and the outlook for fullyear 2009. These investor relations events were supplemented by presentations and test drives with the new Mercedes-Benz E-Class. New look for Internet website...

  • Page 62
    ... with the development of new products and expanded in new sales markets. We were therefore able to start the year 2010 with confidence. Daimler has strong brands, exciting products, the right technologies and a sound financial basis - the best preconditions for us to successfully meet the challenges...

  • Page 63
    ... Events after the End of the 2009 Financial Year EBIT Financial performance measures Statement of income (loss) Dividend Research and development Employment Procurement Information technology 102 - 110 Risk Report 102 102 104 105 109 110 110 88 - 94 Liquidity and Capital Resources Principles and...

  • Page 64
    ... France, South Africa, Brazil, China, India, Vietnam and Indonesia. Worldwide, Mercedes-Benz Cars has 17 production sites at present. In order to extend our model range in the compact-car segment, we have started construction of a new plant in Hungary, which is scheduled to go into operation in 2012...

  • Page 65
    ... customers and dealers, but it also provides services such as insurance, fleet management, investment products and credit cards. The main areas of the division's activities are Western Europe and North America. In 2009, more than 40% of the vehicles sold by Daimler were financed by Daimler Financial...

  • Page 66
    ...financial year beginning on January 1, 2009. The Annual Meeting held on April 8, 2009 once again authorized the Board of Management, with the consent of the Supervisory Board, to increase the share capital of Daimler AG until April 7, 2014 by issuing new registered shares of no par value in exchange...

  • Page 67
    ...perceived value, reliability and environmental compatibility; - commercial vehicles that are the best in their respective competitive environment; and - outstanding service solutions related to these products. This is our mission and represents what we stand for at Daimler. This mission is supported...

  • Page 68
    ... current difficult development of our important markets and market segments, we are on the right track with our strategies for products, services and markets. In the medium to long term, we will significantly increase unit sales at Mercedes-Benz Cars on the basis of new, attractive products. The new...

  • Page 69
    ...as the biggest globally active manufacturer of trucks above 6 tons gross vehicle weight with first-class products and services, also under the currently difficult economic conditions. Mercedes-Benz Vans aims to defend its leading position in Europe and to penetrate new markets. Daimler Buses has the...

  • Page 70
    ...vehicles with battery power and fuel-cell drive systems will make an important contribution to sustainable mobility. We also support the development, production and distribution of clean fuels for combustion engines as well as alternative energy sources for emission-free driving. The radical changes...

  • Page 71
    ... with "Business Leasing Plus" from Mercedes-Benz Bank; this is a complete package of vehicle leasing and auto insurance for a fixed monthly price. Daimler Trucks introduced "TruckWorks," a new services brand. With "TruckWorks" services are effectively tailored to customers' requirements and are...

  • Page 72
    ... to McLaren, but will sell back its equity interest in the McLaren Group. The McLaren Group will buy back the 40% equity interest held by Daimler in two stages; it already bought back 28.6% of the shares in November 2009 and will acquire Daimler's remaining shares at a fixed price by the end of 2011...

  • Page 73
    Global automotive markets Unit sales growth rate 2009/2008 (in %) 30 20 10 0 -10 -20 -30 Total Western Europe Japan USA1, 2 South America 2 China Passenger cars Commercial vehicles 1 Segment passenger vehicles including light trucks 2 Medium and heavy-duty trucks Source: German Association of the ...

  • Page 74
    ...900); 267,200 vehicles were shipped in the other countries of Western Europe (2008: 328,400). Unit sales of Mercedes-Benz automobiles in Japan were below the prior-year figure at 26,100 units, due to generally weak demand. But business developed very positively in some emerging markets; shipments in...

  • Page 75
    ...-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses divisions produce vehicles to order in accordance with customers' specifications. While doing so, we endeavor to flexibly adjust the production capacities of individual models to changing levels of demand. As a result of the worldwide...

  • Page 76
    ... 2006 2007 2008 2009 Market share 2009 in % Mercedes-Benz Cars Western Europe thereof Germany United States Japan Daimler Trucks Medium and heavy trucks Western Europe thereof Germany Heavy trucks NAFTA region Medium trucks NAFTA region Medium and heavy trucks Brazil Trucks Japan Mercedes-Benz Vans...

  • Page 77
    ... of â,¬ Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services Reconciliation Daimler Group (500) (1,001) 26 183 9 (230) (1,513) 2,117 1,607 818 406 677 (2,895) 2,730 2008 09/08 % change . . -97 -55 -99 -92 . Chrysler negatively impacted 2009 Group EBIT by...

  • Page 78
    ... Trucks North America Adjustment of a pension benefit plan Daimler Financial Services Sale of non-automotive assets Reconciliation Sale of real estate (Potsdamer Platz) Gains relating to the sale of shares in EADS Equity-method result Chrysler Other losses relating to Chrysler New management model...

  • Page 79
    Return on sales in % 9 6 3 0 -3 -6 Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses 2006 2007 2008 2009 Return on equity in % 25 20 15 10 5 0 Daimler Financial Services 2006 2007 2008 2009 The Mercedes-Benz Vans division posted EBIT of â,¬26 million, which was significantly below...

  • Page 80
    ...). Value Added = Return on Sales x Net Assets Cost of - Productivity Capital (%) x Net Assets The use of ROS and net assets productivity within the context of a revenue growth strategy provides the basis for a positive development of value added. Value added shows to which extent the Group and...

  • Page 81
    ... following the worldwide fall in demand for transport services. The expenses relating to the repositioning of Mitsubishi Fuso Truck and Bus Corporation were an additional factor for the decrease in earnings. At the Mercedes-Benz Vans division, value added dropped from â,¬0.6 billion in 2008 to minus...

  • Page 82
    Value added 2009 in millions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services (4,644) (1,865) (1,808) (181) 36 (599) (1,147) 860 847 598 249 95 2008 09/08 % change ...-86 . Reconciliation to net operating profit (loss) 2009 in ...

  • Page 83
    ...50 +1 -16 2008 09/08 % change Consolidated statement of income (loss) 2009 in millions of â,¬ Revenue Cost of sales Gross profit Selling expenses General administrative expenses Research and non-capitalized development costs Other operating income Other operating expense Share of profit (loss) from...

  • Page 84
    ... the refund of social-insurance contributions from the Federal Employment Agency, related to the short-time working arrangements at the production plants in Germany. Other operating expense of â,¬0.5 billion was at the prior-year level (2008: â,¬0.5 billion). Further information on the composition...

  • Page 85
    ...billion due to expenses relating to the agreement concluded on Chrysler. Lower discount rates for discounting non-current provisions additionally increased other financial expense in 2009. The Group recorded a negative net interest result of â,¬0.8 billion in 2009 (2008: positive net interest result...

  • Page 86
    ... in efficiency Emission-free driving with fuel cells and battery vehicles Energy for the future Clean fuels for internal combustion engines Energy sources for emission-free driving Research and development Top priority for research and development. Research and development play a key role at...

  • Page 87
    ... 2006 2007 2008 2009 total thereof capitalized The most important projects at Mercedes-Benz Cars were the successor models for the A/B-Class and the M-Class, as well as new-generation engines and alternative drive systems. Total research and development expenditure at Mercedes-Benz Cars amounted...

  • Page 88
    ... Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Sales Organization Daimler Financial Services Other 256,407 93,572 70,699 15,226 17,188 47,625 6,800 5,297 Commercial vehicles with low consumption and emissions. We have also continuously reduced the emissions of...

  • Page 89
    ..., but also deals with possible alternative strategies such as maintaining additional stocks of parts or materials in consultation with the relevant production plants. If required, action plans are developed with which we can react quickly to the danger of supplier insolvencies. Management Report...

  • Page 90
    ... vehicle production to processes in sales and accounting - with innovative systems. To these ends, we make use of more than 5,000 applications and ensure that they are functional at all times. In parallel, we continually optimize and further develop the system landscape: In the year 2009 for example...

  • Page 91
    ... IT systems for sales. As the first automotive financial services company worldwide, Mercedes-Benz Financial last year developed an Apple iPhone application for personalized contract administration, with assistance from our IT organization. This allows our customers to make payments easily and...

  • Page 92
    ... resources. In addition, it is necessary to adhere to various restrictions on capital transactions and on the transfer of capital and currencies. Liquidity management secures the Group's ability to meet its payment obligations at any time. For this purpose, liquidity planning provides information...

  • Page 93
    ...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 94
    ... plans and lower trade payables. Free cash flow of the industrial business 2009 in millions of â,¬ Cash provided by operating activities Cash used for investing activities Changes in cash (> 3 months) and marketable securities included in liquidity Free cash flow of the industrial business 2008...

  • Page 95
    ... of our vehicles and the future of the Group. These projects were then pushed forward vigorously. in millions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services 2,423 1,618 597 113 78 14 3,559 2,246 991 150 117 41 Management Report...

  • Page 96
    ... new syndicated two-year credit line maturing in October 2011. The new facility was unused at the end of the year. The two syndicated credit facilities serve as collateral for commercial-paper drawings and can be used to finance general corporate activities. The carrying values of the main financial...

  • Page 97
    ... 2009. These other financial commitments primarily relate to purchasing commitments and commitments to invest in plant replacement and expansion. The Group has also committed to lease payments in connection with rental and leasing agreements. In addition, particularly Daimler Financial Services has...

  • Page 98
    ...strong business profile. On February 27, 2009, S&P changed its outlook for Daimler's credit rating from stable to negative. This adjustment was made in light of the rapidly weakening demand for cars and commercial vehicles in the world's major markets. On June 18, 2009, S&P downgraded our long-term...

  • Page 99
    ... (â,¬2.4 billion) in 2009 were for new models of the E-Class at Mercedes-Benz Cars and for new main components at Daimler Trucks. Equipment on operating leases and receivables from financial services decreased by â,¬4.1 billion to a total of â,¬57.0 billion (December 31, 2008: â,¬61.1 billion...

  • Page 100
    ... business was 42.6% (December 31, 2008: 42.7%). The 2008 equity ratios are adjusted for the dividend payment for the year 2008. Further information on our financial position is provided in the Notes to the Consolidated Financial Statements. The funded status of the Group's pension obligations...

  • Page 101
    .... Its principal business activities comprise the development, production and distribution of cars, vans and trucks in Germany and the management of the Daimler Group. The vehicles are produced at the domestic plants of Daimler AG, under contract-manufacturing agreements by foreign subsidiaries...

  • Page 102
    ... for purchased goods and services. R&D expenditure primarily related to new technologies and products for the reduction of fuel consumption and emissions. Cars accounted for â,¬2.8 billion (2008: â,¬3.0 billion) and trucks and vans accounted for â,¬1.0 billion (2008: â,¬1.1 billion). Key projects...

  • Page 103
    ... changes in the domestic leasing business. Investment in property, plant and equipment (excluding leased assets, approximately â,¬1.5 billion) was mainly replacement investment for the production of the E-Class and investment in new engine and transmission projects in the area of commercial vehicles...

  • Page 104
    ... to make good use of these opportunities as a technology leader in the field of sustainable mobility. In the year 2009, the Daimler Group's unit sales of 1.6 million vehicles were significantly below the level of the prior year. Revenue decreased by 20% to â,¬78.9 billion. Operating profit (EBIT...

  • Page 105
    ... at the end of 2009, despite the effects of the global financial and economic crisis. In view of the Group's net loss of â,¬2.6 billion, the Board of Management and the Supervisory Board have decided to pay no dividend for the year 2009. This is solely due to last year's business development and...

  • Page 106
    ... and utilizing opportunities in order to secure and strengthen the company's competitiveness. Entrepreneurial opportunities are not reported within our risk management system, but are included in the annual operational planning and followed up during the year in the context of periodical corporate...

  • Page 107
    ... risks of business operations with the Board of Management. The Audit Committee of the Supervisory Board is responsible for the monitoring the internal control and risk management system. The Internal Auditing department monitors whether the statutory conditions and the Group's internal guidelines...

  • Page 108
    ... could be significantly weaker than currently predicted. This would have a negative impact on demand for motor vehicles, with considerable risk potential for the Daimler Group due to the importance of Germany and other countries of Western Europe as major sales markets. The basic economic pattern...

  • Page 109
    ... in the new-vehicle business, but would also lead 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 Daimler's financial position, cash...

  • Page 110
    ... profitability. 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 business involves the risk that the prices realizable for used vehicles at the end...

  • Page 111
    ... process. For example, the Group minimizes potential interruptions of operating routines in the data centers by means of mirrored data sets, decentralized data storage, outsourced archiving, high-availability computers and appropriate emergency plans. In order to fulfill rising requirements in terms...

  • Page 112
    ... for the Group's human resources management. Other industry and business risks. The Group is exposed to a number of risks because it has issued guarantees for and holds an equity interest in the system for recording and charging tolls for the use of highways in Germany by commercial vehicles of more...

  • Page 113
    ...make use of bonds, commercial paper and securitized transactions as well as bank credit in various currencies, primarily to refinance the leasing and sales-financing business. A repeated negative development of the capital markets could increase the Group's financing costs and restrict its financial...

  • Page 114
    ... the capital markets. Unfavorable developments, in particular relating to equity prices and fixed-interest securities, could reduce 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 plans...

  • Page 115
    ... assessments made by renowned economic institutions, and on the targets set by our divisions. The prospects for our future business development presented here reflect the opportunities and risks offered by anticipated market conditions and the competitive situation. We are constantly adjusting our...

  • Page 116
    ... addition to the product range of fuel-efficient and environmentally friendly vehicles and transport solutions. There will be an increasing focus on new concepts for sustainable mobility. Those automobile manufacturers that take an active approach to these changes will have excellent future growth...

  • Page 117
    ... further developed heavy-duty truck Fuso Super Great as well as a new light-duty truck. In addition, we will utilize new growth potential through our continuous involvement in the emerging markets - in particular in the BRIC countries (Brazil, Russia, India and China). Management Report | Outlook...

  • Page 118
    ... development of its worldwide contract volume in the automotive business in 2010. We continue to offer dealerships and customers a comprehensive range of financial services and thus support sales of the Group's vehicles. We intend to continually expand our insurance business. In terms of dealer...

  • Page 119
    ... currently difficult market situation. This includes the repositioning of Trucks NAFTA and Trucks Asia, which we started in October 2008 and May 2009 respectively. These actions have been taken with the aim of achieving appropriate earnings in the future even in times when production and unit-sales...

  • Page 120
    ... and Viano van models. The key projects at Daimler Buses are advance expenditure for new models. Investment in property, plant and equipment 2008 in billions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services 3.6 2.2 1.0 0.2 0.1 0.04...

  • Page 121
    ... statement speaks only as of the date on which it is made. Research and development expenditure 2008 in billions of â,¬ Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses 4.4 3.0 1.1 0.2 0.2 4.2 2.7 1.1 0.2 0.2 9.7 6.1 2.6 0.5 0.4 2009 2010-2011 Management Report...

  • Page 122
    ... at Mercedes-Benz Cars, by 45% at Daimler Trucks, by 42% at Mercedes-Benz Vans and by 20% at Daimler Buses. As a result of the generally low vehicle unit sales, new business at Daimler Financial Services decreased by 15%. After a weak first half of the year, Daimler's general business development in...

  • Page 123
    ... - Unit sales below high prior-year level in a difficult market environment - Stable development of city bus business in Western Europe - Focus on alternative drive technologies - EBIT significantly positive at â,¬183 million 132 - 133 Daimler Financial Services - Stronger market presence despite...

  • Page 124
    .... 2009 Amounts in millions of â,¬ EBIT Revenue Return on sales Investment in property, plant and equipment Research and development expenditure thereof capitalized Production Unit sales 1 Employees (December 31) (500) 41,318 (1.2%) 1,618 2,696 913 1,031,562 1,093,905 93,572 2008 09/08 % change...

  • Page 125
    ... per kilometer. We made important further progress on the road to emission-free mobility during the year under review. As planned, we achieved the milestones we publicly announced for ourselves back in 2007 at the Frankfurt Motor Show. We reduced the CO2 emissions of the cars we sell in the European...

  • Page 126
    ...of all driver license holders in Ulm, have signed up for the program. car2go customers can spontaneously rent one of 200 blue-andwhite smart fortwo cdi models distributed throughout the city at any time, or they can reserve a car by mobile phone or on the Internet. Customers can use a car as long as...

  • Page 127
    ... for Mercedes-Benz Cars. Our measures for improving quality proved very successful during the year under review. For example, our plants in Bremen and East London (South Africa) were cited for their outstanding quality in a survey published in June 2009 by the renowned US market research institute...

  • Page 128
    ... Mercedes-Benz Actros, Axor, and Atego models, the Trucks Europe/Latin America business unit supplies medium-duty and heavy-duty trucks for long-distance haulage, local deliveries, and construction applications. The product range is rounded out by Econic, Zetros, and Unimog special-purpose vehicles...

  • Page 129
    .... And in October, Mercedes-Benz opened one of Europe's most up-to-date commercial vehicle centers in Berlin. This center provides the full range of sales and services for vans, trucks and special vehicles, while also offering customized services under the new "TruckWorks" brand label. Renewed...

  • Page 130
    ... US Department of Energy's decision to include Daimler Trucks North America in its Clean Cities Program. As part of that project, the unit will receive financial support to produce and market more than 600 trucks with hybrid drive and natural-gas drive. Repositioning of business operations at Trucks...

  • Page 131
    ... addition to focusing on the right products and utilizing new growth areas, the emphasis on managing market cycles proved its worth in crisis year 2009. With the new instruments developed by the division, it was possible to flexibly adjust production at the division's plants for commercial vehicles...

  • Page 132
    ...-Benz USA and Canada. US and Canadian customers will therefore be able to purchase vans under the Mercedes-Benz and Freightliner brand names beginning in 2010. Unit sales 2009 2008 09/08 % change Total Western Europe thereof Germany Eastern Europe USA Latin America (excluding Mexico) Other markets...

  • Page 133
    ... and popularity enjoyed by our vans. Investment in the future of Mercedes-Benz Vans. MercedesBenz Vans continued to make important investments to secure its future, despite the difficult economic conditions that characterized the year under review. The focus was on model updates for the Vito/Viano...

  • Page 134
    ... city bus business in Western Europe. Focus on alternative drive technologies. EBIT significantly positive at â,¬183 million. 2009 Amounts in millions of â,¬ EBIT Revenue Return on sales Investment in property, plant and equipment Research and development expenditure thereof capitalized Production...

  • Page 135
    ... on technologies and new products such as the successor generations to our city buses and coaches. In addition, Daimler Buses prepared the delivery of 460 Mercedes-Benz buses for the soccer World Cup in South Africa. And in India, we pushed forward with the expansion of our sales and service network...

  • Page 136
    ...supports not only the refinancing of the leasing and sales-financing business in Germany, but through branch offices also the dealer-financing business in Spain and since May 2009 in the United Kingdom as well. In 2009, Mercedes-Benz Bank successfully launched "Business-Leasing plus," a new mobility...

  • Page 137
    ... market for Mercedes-Benz vehicles in the Middle East. Daimler Financial Services will now provide attractive financial services to customers and dealerships in this market, thus continuing its expansion into important markets of the future. Lower contract volume in North America but growth in South...

  • Page 138
    ... issue. Our business operations are therefore inseparable from our social and ecological responsibilities, irrespective of where in the world we research, develop, purchase and manufacture or sell our products and services. The principle of sustainability is firmly anchored at the Group through the...

  • Page 139
    ... of April in time for the Annual Meeting. Further information on the issue of sustainability can be found on our website at http://www.daimler.com/sustainability. 140 - 141 Human Resources - Personnel capacities adjusted to lower demand - Diversity management anchored in Daimler's corporate culture...

  • Page 140
    ... in various stages - from the start-stop function all the way to fully electric mobility; 3. Emission-free driving with electric vehicles using battery power and fuel cells. In addition, we support the development, production and application of clean and alternative fuels. On the basis of the...

  • Page 141
    ... tested fleet of fuel-cell vehicles. Mercedes-Benz has been manufacturing a small series of the B-Class F-CELL since the end of 2009. We specifically utilize synergy potential within the Daimler Group. One example of how know-how is transferred between the commercial vehicle and car divisions is...

  • Page 142
    ... manufacturing ultramodern lithium-ion batteries. These batteries will be available in suitable form for use in all types of automotive applications - from hybrids to electric vehicles. A glance into the future of drive technology. In January 2009, Mercedes-Benz unveiled the near-series-production...

  • Page 143
    ... employers' liability insurance associations and insurance companies now offer discounts on their premiums if a commercial vehicle is equipped with such safety technologies. By the end of 2009, we had delivered to customers more than 11,300 trucks and buses with the Active Brake Assist emergency...

  • Page 144
    ...'s corporate culture. Various awards for health management activities. Ongoing high standards of training and further training. 2009 Employees (December 31) Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Sales & Marketing Organization Daimler Financial Services...

  • Page 145
    ... association. In-house training is a top priority. We view training and further training as indispensable elements to ensure our company's long-term business success. At the end of 2009, the Group had 9,151 trainees worldwide. In Germany, we took on 2,341 new trainees in the year under review (2008...

  • Page 146
    ...Board of Management and are only permitted for parties in Germany. In the field of educational support, Mercedes-Benz Turkey cooperates with CYDD, a Turkish organization. The prize-winning training program "Each girl is a star" is primarily intended to encourage financially disadvantaged young women...

  • Page 147
    ... numerous projects. They invest their time and efforts in order to advance charitable projects. During the "Day of Caring" established by Daimler Financial Services, our employees were involved in social projects for example in Germany, Canada, Mexico, Poland, South Africa, Thailand and the United...

  • Page 148
    ... 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.com/corpgov/en. 144

  • Page 149
    ... services - Worldwide training and information 150 - 153 Members of the Supervisory Board 154 - 155 Report of the Audit Committee 164 - 167 Corporate Governance Report 156 - 161 Remuneration Report - Principles of Board of Management remuneration - Board of Management remuneration in the year 2009...

  • Page 150
    ... Board meetings, there was an intensive and open exchange of opinions and information concerning the position of the Group, business and financial developments, fundamental issues of corporate policy and strategy, and development opportunities in particularly important growth markets. The members...

  • Page 151
    ... positioning of the Group and its divisions, and the product strategy. Other key points included: - growth opportunities in developing markets, - current strategic issues in the field of commercial vehicles and in other areas, - the technological development of combustion engines, - electric drive...

  • Page 152
    ... with the operational planning for the years 2010/2011, received information on the Group's risk management and the actual risks, and decided on the financing limits for the year 2010. Other issues discussed in the December meeting included personnel matters of the Board of Management and corporate...

  • Page 153
    ...member of the Board of Management of Daimler AG for a term of three years with immediate effect, i.e. February 18, 2010 until February 28, 2013, with responsibility for Production and Procurement Mercedes-Benz Cars and for the business unit Mercedes-Benz Vans. Audit of the 2009 financial statements...

  • Page 154
    ... AG Sari Baldauf Helsinki Former Executive Vice President and General Manager of the Networks Business Group of Nokia Corporation Other supervisory board memberships / directorships: Hewlett-Packard Company F.Secure Corporation CapMan OYj Fortum OYj Jörg Hofmann* Stuttgart German Metalworkers...

  • Page 155
    ... Manager Mercedes-Benz Research and Development; Member of the Works Council, Sindelfingen Plant, Daimler AG Valter Sanches* São Paulo Secretary of International Relations of Confederação Nacional dos Metalúrgicos/CUT Dr. Manfred Schneider Leverkusen Chairman of the Supervisory Board...

  • Page 156
    ... Former Vice Chairman General Electric, President & CEO of the General Electric Group's Industrial Division; Managing Partner, Founder, GenNx360 Capital Partners (since April 8, 2009) Other supervisory board memberships / directorships: PepsiCo Inc. Textron Inc. Appointed by resolution of the...

  • Page 157
    ...Board: Committees of the Supervisory Board: William A. Owens Kirkland Former President and Chief Executive Officer of Nortel Networks Corporation; Chairman of AEA Capital, Asia (retired April 8, 2009... R. Wilson * Representative of the employees Corporate Governance | Members of the Supervisory...

  • Page 158
    ... 2009, the Audit Committee reviewed the annual company financial statements, the annual consolidated financial statements and the combined management report for Daimler AG and the Daimler Group for the year 2008, as well as the proposal made by the Board of Management on the appropriation of profits...

  • Page 159
    ... 2010, the Audit Committee reviewed the annual company financial statements for 2009 and the annual consolidated financial statements for 2009 with the respective management reports. In preparation, the members of the Audit Committee and the other members of the Supervisory Board were provided with...

  • Page 160
    ... the operating profit of the Daimler Group (EBIT), and optionally to other key figures and the individual performance of the Board of Management members in the past financial year. In the year 2009, particular importance was additionally placed on the free cash flow of the industrial business. 156

  • Page 161
    ... - 50% return on equity achieved in relation to cost of capital. Value at grant: Determined annually in relation to a market comparison; for 2009, approximately 2 to 2.5 times the base salary. Range of target achievement: 0 - 200%, i.e. the plan has an upper limit and may also be zero. Value of the...

  • Page 162
    ... Group companies to the members of the Board of Management of Daimler AG is calculated as the total of the amounts of remuneration paid in cash (base salary and annual bonus), the value of the share-based remuneration at the time when granted in February 2008 and 2009 (Performance Phantom Share Plan...

  • Page 163
    ... benefits for the members of the Board of Management worth the following amounts: pension, calculated as a proportion of the base salary and depending on the number of years of service. Those pension rights remain and have been frozen at that level1. Retirement pensions start at request if the term...

  • Page 164
    ... performance-related component of remuneration with a long-term incentive effect is defined by the exercise conditions specified in the respective plans. For the period beginning after the end of the original service period, departing Board of Management members can receive pension payments in the...

  • Page 165
    ..., in particular for advisory or agency services. The remuneration paid in 2009 to the members of the Supervisory Board of Daimler AG for their services to the Group therefore totaled â,¬2.6 million (2008: â,¬2.8 million). Loans to members of the Supervisory Board. In 2009, no advances or loans were...

  • Page 166
    ... Officer reports directly to the Chairman of the Board of Management and regularly provides information to the Audit Committee of the Supervisory Board. The Corporate Compliance Operations department (CCO) defines the annual anti-corruption program and supports its implementation worldwide...

  • Page 167
    ... in the web-based code of conduct training, which has been in place since 2009 and is to be attended each year with a changing focus by all office staff worldwide. In order to further deepen the corruption-related content of this training, 33,000 employees from sales companies and areas that perform...

  • Page 168
    ... for the US capital market can seen be in Item 16G of our Annual Report according to Form 20-F filed by Daimler with the US Securities and Exchange Commission (SEC), which is posted on our website at www.daimler.com/ir/reports. Daimler's corporate bodies Shareholders and Annual Meeting. The company...

  • Page 169
    ... the interim reports with the Board of Management before they are published and reviews the annual financial statements, individual and consolidated, of Daimler AG. The Audit Committee is informed by the Board of Management about the Group's financial disclosure and discusses this matter. It makes...

  • Page 170
    ...daimler.com/dai/bom. The members of the Board of Management and their areas of responsibility are also listed on pages 8 and 9 of this Annual Report. The Board of Management has also given itself a set of rules of procedure, which can be seen on our website at www.daimler.com/dai/rop. In addition to...

  • Page 171
    ...on our website at www.daimler.com/dai/dd/en. Directors' dealings in the year 2009 Date April 1, 2009 Name Gregor Zetsche Function Closely related natural person Type and place of transaction Acquisition of shares, Frankfurt Number 1,425 Price â,¬18.89 Total volume â,¬26,918.25 Corporate Governance...

  • Page 172
    ... with the German Corporate Governance Code Section 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...

  • Page 173
    ... 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 performancerelated remuneration. Stuttgart, December 2009 The Supervisory Board The Board of Management Corporate...

  • Page 174
    ... 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 (HGB). 170

  • Page 175
    ...of the Board of Management and the Supervisory Board 250 36. Principal accountant fees 251 37. Additional information 199 10. Property, plant and equipment 200 11. Equipment on operating leases 201 12. Investments accounted for using the equity method 203 13. Receivables from financial services 205...

  • Page 176
    ... 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 177
    ... of the Company and the Group for the business year from January 1 to December 31, 2009. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to...

  • Page 178
    ... â,¬ 2009 Year ended December 31, 2008 2007 2009 2009 Revenue Cost of sales Gross profit Selling expenses General administrative expenses Research and non-capitalized development costs Other operating income Other operating expense Share of profit (loss) from investments accounted for using the...

  • Page 179
    ... Statement of Comprehensive Income (Loss) 1 2009 in millions of â,¬ 2008 Consolidated 2007 Net profit (loss) Unrealized gains (losses) from currency translation adjustments Unrealized gains (losses) from financial assets available for sale Unrealized gains (losses) from derivative financial...

  • Page 180
    ... 31, 2009 2008 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 receivables...

  • Page 181
    ... at December 31, 2007 Net profit Unrealized losses Deferred taxes on unrealized losses Total comprehensive income (loss) 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, 2008 Net loss...

  • Page 182
    ... related to the transfer of the Chrysler activities Acquisition of securities (other than trading) Proceeds 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...

  • Page 183
    ... provided by (used for) operating activities" in 2009 (2008: decrease of â,¬1,653 million; 2007: increase of â,¬971 million). With this additional reclassification, the Group harmonizes the presentation of the entire sales financing and leasing business in the Group's consolidated statement of cash...

  • Page 184
    ... production started after that date. In 2009, the Group capitalized borrowing costs of â,¬1 million resulting from long-term development projects. With the amendment of IAS 1 Presentation of Financial Statements, the consolidated financial statements contain in addition to the consolidated statement...

  • Page 185
    ... companies, collectability of receivables from financial services, assumptions of future cash flows from cash-generating units or development projects, recoverability of deferred tax assets, useful lives of plant and equipment, warranty obligations, and assets and obligations related to employee...

  • Page 186
    ...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 187
    ...-line basis over the lease term. Among the assets subject to "Operating Leases" there are Group products, which are purchased by Daimler Financial Services from independent third-party dealers and leased to customers. After revenue recognition from the sale of the vehicles to independent third-party...

  • Page 188
    ... and site improvements Technical equipment and machinery Other equipment, factory and office equipment 10 to 50 years 6 to 25 years 2 to 30 years Leasing. Leasing includes all arrangements that transfer the right to use a specified asset for a stated period of time in return for a payment, even...

  • Page 189
    ...including goodwill). Fair value is measured by discounting future cash flows using a risk-adjusted interest rate. Cash flows, which influence the assessment of residual values, are estimated on the basis of the operative planning (two years period) supplemented by additional information to determine...

  • Page 190
    ... of the fair value of an unquoted equity instrument such as investments in German limited liability companies, cannot be made, this instrument is measured at cost (less any impairment losses). Interest earned on these financial assets is generally reported as interest income using the effective...

  • Page 191
    ... at each subsequent reporting date. The fair value of listed derivatives 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...

  • Page 192
    ... 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 warranty program is initiated. Estimates for accrued...

  • Page 193
    ... on sales of nonautomotive assets from the leasing business, see Notes 13 and 18. Chrysler. 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 North America to a subsidiary of the private-equity...

  • Page 194
    ... 2007, Daimler, Chrysler and Cerberus agreed on a framework dealing with the future business model at BBDC. Under the framework agreement, the final terms of future cooperation at BBDC with respect to the manufacturing of Chrysler vehicles should be determined at a later point in time. In June 2008...

  • Page 195
    ... (loss) from discontinued operations for the years 2008 and 2007 is comprised as follows: 2008 in millions of â,¬ 2007 Revenue Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs Other income and other expenses Profit (loss) before income...

  • Page 196
    ... of utilization of leased assets led to charges of â,¬25 million. Costs associated with this plan are included in the following line items within the consolidated statement of income (loss): Sales of goods Rental and leasing business Interest from the financial services business Sales of services...

  • Page 197
    ... in 2009. Based on new information available, the Group decided in 2009 not to proceed with the closing of one truck manufacturing plant, which was originally scheduled for 2010. Relating to this plan, the Group recorded charges of â,¬95 million in 2009 (2008: â,¬233 million). Costs associated with...

  • Page 198
    ...income from employee canteens and other miscellaneous items. In 2009, other miscellaneous income comprises reimbursements of social insurance contributions, granted by the Federal Employment Office related to short-time work in the German production plants (â,¬93 million). Gains on sales of property...

  • Page 199
    ... consists of the following: 2009 in millions of â,¬ 2008 2007 For German companies, the deferred taxes were calculated using a federal corporate tax rate of 15%, a solidarity tax surcharge of 5.5% for each year on federal corporate taxes, plus a trade tax of 14%. In total, the tax rate applied...

  • Page 200
    ...but as a result of the Chrysler transaction, the conditions for using these deferred taxes had changed. Furthermore, as a result of the Chrysler transaction, a valuation allowance on foreign tax credits was required in 2007. In 2009 and 2008, the Group reversed a part of this valuation allowance due...

  • Page 201
    ... 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 202
    ... included in the consolidated statement of income (loss) in the following line items: 2009 in millions of â,¬ 2008 2007 Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs Net profit (loss) from discontinued operations 735 39 50 4 - 828...

  • Page 203
    ... in millions of â,¬ Technical equipment and machinery Other equipment, factory and office equipment Advance payments relating to plant and equipment and construction in progress Total Acquisition or manufacturing costs Balance at January 1, 2008 Additions due to business combinations Other...

  • Page 204
    ...Mercedes-Benz Cars segment. As of December 31, 2009, equipment on operating leases with a carrying amount of â,¬643 million is pledged as security for liabilities from ABS transactions which are related to a securitization transaction of future lease payments on operating leases and related vehicles...

  • Page 205
    ... for using the equity method, which was the basis for applying the equity method in the Group's consolidated financial statements: EADS in millions of â,¬ Chrysler Tognum Kamaz Others 1 Total Income statement information 2 2009 Sales Net profit (loss) 2008 Sales Net profit (loss) 2007 Sales...

  • Page 206
    ... loans granted to Chrysler. The equity results for 2008 and 2007 are based on financial information of Chrysler as of September 30, included with a three-month time lag and adjusted for significant transactions and events that occurred between September 30 and the Group's reporting date of December...

  • Page 207
    ...finance leases to end users of the Group's products who purchased their vehicle either from a dealer or directly from Daimler. Wholesale receivables represent loans for floor financing programs for vehicles sold by the Group's automotive businesses to dealers or loans for assets purchased by dealers...

  • Page 208
    ... of directfinancing leases of vehicles to customers of the Group's independent dealers including leveraged leases of non-automotive assets to third parties. The total expense relating to impairment losses on receivables from financial services amounted to â,¬853 million (2008: â,¬730 million; 2007...

  • Page 209
    ... â,¬ At December 31, 2009 Non-current Total Current At December 31, 2008 Total Non-current Available-for-sale financial assets Thereof equity instruments Thereof debt instruments Derivative financial instruments used in hedge accounting Financial assets at fair value through profit or loss Other...

  • Page 210
    ... realized losses from the sales were â,¬7 million in 2009 (2008: gains of â,¬12 million; 2007: gains of â,¬90 million). As of December 31, 2009, the Group did not intend to dispose of any reported equity instruments carried at cost. Financial assets at fair value through profit or loss comprise the...

  • Page 211
    ...turned over after more than twelve months amounted to â,¬634 million at December 31, 2009 (2008: â,¬583 million) and are primarily spare parts. Based on the requirement to provide collateral for certain vested employee benefits in Germany, the value of company cars included in inventories at Daimler...

  • Page 212
    ...the leveraged lease contracts were included in receivables from financial services. For further information, see Notes 2 and 13. Treasury shares. In 2009, Daimler neither purchased nor reissued Daimler shares to employees in connection with an employee share purchase plan. In 2008 1.5 million (2007...

  • Page 213
    ... intends to use parts of the stock of repurchased and not cancelled shares from the 2008 share buy-back program. As of December 31, 2009, 37.1 million treasury shares repurchased under the resolution issued at the Annual Meeting on April 9, 2008 are still held by Daimler AG. Authorized capital. By...

  • Page 214
    ... from stock option plans with a nominal amount of â,¬64 million had not yet been exercised. The table below shows the changes in other reserves directly recognized in equity: Before taxes in millions of â,¬ Taxes 2009 Net of taxes Before taxes Taxes 2008 Net of taxes Before taxes Taxes 2007...

  • Page 215
    ...20. Share-based payment As of December 31, 2009, the Group has the 2006-2009 Performance Phantom Share Plans (PPSP) and the Stock Option Plans (SOP) outstanding. The Stock Appreciation Rights (SAR) Plan from previous years expired on February 24, 2009 without affecting the consolidated statement of...

  • Page 216
    Expenses / (income) in the consolidated statement of income (loss) resulting from rights of current or former members of the Board of Management are as follows: 2009 in millions of â,¬ 2008 Dr. Dieter Zetsche 2007 2009 2008 Wilfried Porth 2007 2009 Andreas Renschler 2007 2008 PPSP SAR SOP ...

  • Page 217
    ... the end of the four years of service). The number of phantom shares that vest will depend on the achievement of corporate performance goals, based on competitive and internal benchmarks (return on net assets and return on sales). The Group recognizes a provision for awarding the PPSP. Since payment...

  • Page 218
    ... to the current members of the Board of Management is as follows: Dr. Dieter Zetsche Number of stock options in millions 2009 Average exercise price â,¬ per share Number of stock options in millions 2008 Average exercise price â,¬ per share Number of stock options in millions 2007 Average exercise...

  • Page 219
    ... price â,¬ per share 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 Balance at beginning of year Options granted Exercised Disposals/Forfeited Outstanding at year-end Exercisable at year-end...

  • Page 220
    ... members of the Board of Management is as follows: Günther Fleig Number of stock options in millions 2009 Average exercise price â,¬ per share 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...

  • Page 221
    ...- 50.62 50.62 4.3 years Thomas W. Sidlik Number of stock options in millions 2009 Average exercise price â,¬ per share 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 Balance at beginning of...

  • Page 222
    ...pay-related defined pension benefits. Under these plans, employees earn benefits for each year of service. The benefits earned per year of service are dependent on the salary level and age of the respective employees. Funded status. The following information with respect to the Group's pension plans...

  • Page 223
    ... in the consolidated statement of financial position is as follows: Total in millions of â,¬ At December 31, 2009 German Non-German plans plans Total At December 31, 2008 Non-German German plans plans Funded status Unrecognized actuarial net losses Unrecognized past service cost Net amounts...

  • Page 224
    ... date for the Group's net periodic pension cost is generally January 1. The assumptions used to calculate the projected benefit obligations together with long-term rates of return on plan assets vary according to the economic conditions of the country in which the pension plans are situated. 220

  • Page 225
    ... part of the benefit formula. 5.3 - 1.8 5.9 - 1.8 5.1 3.9 - 5.0 3.7 - The Group used the following weighted average assumptions to determine net periodic pension cost: 2009 in % 2008 German Plans 2007 2009 Non-German Plans 2008 2007 Discount rates Expected long-term returns on plan assets...

  • Page 226
    ... Group expects to make pension benefit payments of â,¬0.1 billion under pension benefit schemes without plan assets. Defined pension contribution plans 2009 in millions of â,¬ 2008 2007 Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs...

  • Page 227
    ... costs related to the Group's obligation, under certain conditions, to repurchase a vehicle from a customer. Buy-backs may occur for a number of reasons including litigation, compliance with laws and regulations in a particular region and customer satisfaction issues. The utilization date of product...

  • Page 228
    Based on market conditions and liquidity needs, Daimler may sell certain receivables and future lease payments resulting from equipment on operating leases to third parties. As of December 31, 2009, relating to these transactions, liabilities of â,¬1,330 million (2008: â,¬764 million) are accounted ...

  • Page 229
    ... tax expense (benefit) and the Group's share in the profit (loss) of companies accounted for using the equity method. In addition, the amount in 2008 includes the impairment of certain Chrysler related assets. Consolidated Financial Statements | Notes to Consolidated Financial Statements | 225

  • Page 230
    ... costly actions. On August 17, 2009, the Official Committee of Unsecured Creditors of OldCarCo LLC (formerly Chrysler LLC) filed a lawsuit with the United States Bankruptcy Court, Southern District of New York, against Daimler AG, Daimler North America Corporation and certain (former) board members...

  • Page 231
    ... on the future purchase of vehicles or services. As of December 31, 2009, the maximum potential obligation resulting from these buy-back guarantees was â,¬690 million (2008: â,¬715 million). Residual value guarantees related to arrangements for which revenue recognition is precluded due to the Group...

  • Page 232
    ... Financial Services AG) has provided guarantees supporting the obligations of Toll Collect GmbH towards the Federal Republic of Germany relating to the completion and operation of the toll collection system, which are subject to specific triggering events. In addition, Daimler AG has guaranteed bank...

  • Page 233
    The Group has also entered into non-cancelable operating leases for property, plant and equipment. In 2009, Daimler recognized as expense rental payments of â,¬513 million (2008: â,¬563 million; 2007: â,¬817 million). Future minimum lease payments under non-cancelable long-term lease agreements are ...

  • Page 234
    ...2009 in millions of â,¬ At December 31, 2008 Assets Trade receivables Other receivables and assets Receivables from financial services 1 Loans and receivables Available-for-sale financial assets Financial assets recognized at fair value through profit or loss 2 Liabilities Trade payables Financing...

  • Page 235
    ... from financial services with fixed interest rates are determined on the basis of discounted expected future cash flows. The discounting is based on the current interest rates at which similar loans with identical terms could have been borrowed as of December 31, 2009 and December 31, 2008. Trade...

  • Page 236
    ... the fair values of hedging instruments: 2009 in millions of â,¬ 2008 2007 Financial assets and liabilities recognized at fair value through profit or loss 1 Financial assets available for sale Loans and receivables Financial liabilities measured at cost 2009 At December 31, 2008 (407) 38...

  • Page 237
    ... arising from future transactions. 30. Risk management General information on financial risk Daimler is exposed to market risks from changes in foreign currency exchange rates, interest rates and equity prices, while commodity price risks arise from procurement. In addition, the Group is exposed...

  • Page 238
    .... The operating lease portfolio is reported under "equipment on operating leases" in the Group's consolidated financial statements. In addition, the Daimler Financial Services segment is exposed to credit risk from irrevocable loan commitments to retailers and end customers. At December 31, 2009...

  • Page 239
    ... 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 and private customers. Daimler manages its credit risk from...

  • Page 240
    ... also used to cover financing requirements. In addition, significantly increased customer deposits at Mercedes-Benz Bank in 2009 were used as a further source of refinancing. The funds raised are primarily used to finance the cash needs of the lease and financing business and the working capital and...

  • Page 241
    ...its business operations, which the Group hedges partially through derivative financial instruments. The Group is also exposed to equity price risk. If these market risks materialize, they will adversely affect the Group's financial position, cash flows and profitability. Daimler manages market risks...

  • Page 242
    ... the time of the refinancing. The Group uses appropriate derivative financial instruments to hedge against currency risk. In the operating vehicle businesses, the Group's exchange rate risk primarily arise when revenue is generated in a currency that is different from the currency in which the costs...

  • Page 243
    ... affect future cash flows. The Group's equity position reflects changes in book values due to exchange rates. Daimler does not hedge against exchange rate translation risk. In 2009, 2008 and 2007, currency effects negatively affected our operating results. Interest rate risk. Daimler uses a variety...

  • Page 244
    ... figures for the 2009 and 2008 portfolio of interest rate sensitive financial instruments of the Group, including the leasing and sales financing business. The average values have been computed on an end-of-quarter basis. Period-end in millions of â,¬ High Low 2009 Average Period-end High Low...

  • Page 245
    ... and sells bus chassis. The vehicle segments also sell related spare parts and accessories. The Daimler Financial Services segment supports the sales of the Group's vehicle segments worldwide. Its product portfolio mainly comprises tailored financing and leasing packages for customers and dealers...

  • Page 246
    ... ended December 31, 2009, 2008 and 2007: Mercedes-Benz Cars in millions of â,¬ Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services Total Segments Reconciliation Consolidated 2009 Revenue Intersegment revenue Total revenue Segment profit (loss) (EBIT) Thereof share...

  • Page 247
    ...-Benz Cars in millions of â,¬ Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services Total Segments Reconciliation Consolidated 2007 Revenue Intersegment revenue Total revenue Segment profit (loss) (EBIT) Thereof share of profit (loss) from investments accounted for using...

  • Page 248
    ... million relating to depreciation of property, plant and equipment and amortization of intangible assets, respectively. 2009 in millions of â,¬ 2008 2007 Total segments' profit (loss) (EBIT) Share of profit (loss) from investments accounted for using the equity method 1, 2 Other corporate items...

  • Page 249
    ... and the end of the quarter and are as follows: 2007 2009 in millions of â,¬ 2008 2009 2008 Germany USA Other countries 23,452 8,937 8,861 41,250 21,426 10,759 8,687 40,872 19,542 11,819 8,129 39,490 in millions of â,¬ Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses...

  • Page 250
    ... 2009, 2008 and 2007, do not include stock options for the acquisition of 22.4 million, 11.3 million and 7.8 million Daimler ordinary shares, respectively, that were issued in connection with the stock option plan, because the options' underlying exercise prices were higher than the average market...

  • Page 251
    ... its existing obligations, for example to support McLaren's research and development activities until the end of 2011, with a lump sum payment. In addition, the Group committed to continue supplying McLaren with Formula 1 engines. The agreement between Daimler and McLaren Automotive Ltd., a wholly...

  • Page 252
    ...some of the members of the Supervisory Board or of the Board of Management of Daimler AG or its subsidiaries. From time to time, companies of the Daimler Group purchase goods and services (primarily advertising) from and sell or lease vehicles or provide financial services to companies of the Lagard...

  • Page 253
    ... share-price development. The amounts stated for fixed and short-term performance-related remuneration for the year 2007 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 Management members...

  • Page 254
    ... below the limit for severance compensation of two years' remuneration suggested by the German Corporate Governance Code. The payments made in 2009 to former members of the Board of Management of Daimler AG and their survivors amounted to â,¬16.1 million (2008: â,¬19.1 million; 2007: â,¬67.9 million...

  • Page 255
    ... Code: Name of the company Headquarters of the company Equity interest in % 1 Total equity in millions of â,¬ 2 Net profit in millions of â,¬ 2 Tata Motors Limited Mumbai, India 4.71 881 (386) 1 As of December 31, 2009. 2 Based on national consolidated financial statements for the year ended...

  • Page 256
    ... assets Other current assets Total assets Shareholders' equity thereof share capital Equity ratio Group Equity ratio industrial business Non-current liabilities Current liabilities Net liquidity industrial business Net assets (average) 2001 2002 2003 2004 2005 2006 2007 2008 2009 160,278...

  • Page 257
    ... statements of cash flows 3 Investments in property, plant and equipment Depreciation and amortization Cash provided by (used for) operating activities 2, 5 investing activities 2, 5 financing activities Free cash flow of the industrial business 2001 2002 2003 2004 2005 2006 2007 2008 2009...

  • Page 258
    ...international capital-market laws and stock-exchange listing regulations. Cost of capital. The cost of capital is the product of the average net assets and the cost-of-capital rate. The cost-of-capital rate is derived from the investors' required rate of return (see page 76). CSR - corporate social...

  • Page 259
    ...the cost of capital. When value added is positive, return on net assets is higher than the cost of capital (see page 76). Annual Meeting Capital expenditure Cash flow Change of control CO2 reductions Code of Ethics Compliance Consolidated Group Corporate Governance Dividends EADS Earnings per share...

  • Page 260
    ...Offices... 5400 Fax +33 1 39 23 5442 Germany, Berlin Tel. +49 30 2594 1100 ... 7002 Fax +36 1 887 7001 India, Pune Tel. +91 2135 673 ...2492 94909 Fax +42 1 2492 94919 South Africa, Pretoria Tel. +27 12 677 1502 ...USA, Washington Tel. +1 202 414 6746 Fax +1 202 414 6790 Vietnam, Ho Chi Minh-City Tel. +848...

  • Page 261
    Internet | Information | 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...

  • Page 262
    Daimler Worldwide Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Sales Organization Automotive Businesses Daimler Financial Services Europe Production locations Sales outlets Revenue in millions of â,¬ Employees 10 - 23,223 84,437 7 - 6,559 30,659 4 - 5,404 13,545 7 - 2,...

  • Page 263
    ... EST Messe Berlin Interim Report Q1 2010 April 27, 2010 Interim Report Q2 2010 July 27, 2010 Interim Report Q3 2010 October 28, 2010 The paper used for this Annual Report was produced from cellulose sourced from certified forestry companies that operate responsibly and comply with the regulations...

  • Page 264
    Daimler AG Stuttgart, Germany www.daimler.com