Mercedes 1998 Annual Report Download - page 65

ANALYSIS OF THE FINANCIAL SITUATION
61
MARKED INCREASE IN THE BALANCE SHEET TOTAL. The
comparison between the amounts shown in the balance sheet
for December 31, 1998 and year-end 1997 are greatly affected
by the exchange rates applicable to assets and liabilities de-
nominated in currencies other than Euro or D-Mark. For ex-
ample, the exchange rate applicable for converting the US $
balance sheets of the American companies in the Group at the
end of 1998 fell to DM 1.67 compared with DM 1.79 one year
previously. Correspondingly, the exchange rate of the Euro
against the US $ increased from US $ 1.09 to 1.17. This means
that the overall increase in the consolidated balance sheet total,
which rose 9% to € 136.1 billion is somewhat understated
compared to the development of original balance sheets totals
in local currencies. The increase in the balance sheet total
results primarily from the continuing expansion in the leasing
and sales financing business. On the assets side leased equip-
ment increased by € 3.6 billion and receivables from financial
services by € 4.8 billion. Together these items now amount to
€ 41.1 billion, representing approximately 30 % of our total
assets. These are balanced on the liabilities side by financial
liabilities in the amount of € 40.4 (1997: 34.4) billion.
Fixed assets rose by 12% to € 49.6 billion. This was mainly due
to the growth in leased equipment, whereas property, plant and
equipment only rose by 3% to € 29.5 billion. Inventories – less
advance payments received – are recorded as € 11.8 billion in
the consolidated balance sheet. Their share of the balance
sheet total remains almost unchanged at 8.7%. Receivables
from sales of goods and services and other receivables have
fallen by € 0.3 to 18.4 billion overall. In the previous year this
figure included tax receivables in the amount of € 1.5 billion
relating to the special distribution of Daimler-Benz AG. Liquid
assets totaled € 19.1 billion at December 31, 1998 and exceeded
the amount for the previous year by € 1.8 billion.
On the liabilities side, stockholders’ equity increased from
€ 28.0 to 30.4 billion. Despite the negative effects from
currency translation the equity ratio, adjusted for dividend
payments, remains at 21%, the level of the previous year. Ex-
cluding the leasing and sales financing business, the equity ra-
tio amounted to 28% (1997: 28%). Overall the accrued liabilities
recorded on the balance sheet fell by € 1.2 to 34.6 billion due
to the fact that DaimlerChrysler Corporation funded a portion
of its postretirement healthcare and life insurance benefits
liability.
Net income
Non-recurring items1)
Net income adjusted for
non-recurring items
Minority interests
Interest expense related
to industrial activities,
after taxes
Interest cost of pensions
related to industrial
activities, after taxes
Net operating income
6,547
(2.490)
4,057
115
406
674
5,252
Reconciliation to
Net Operating Income 97
€
98
€
4,820
401
5,221
130
476
748
6,576
1) 1998: merger costs (after taxes); 1997: tax reduction due
to the special distribution of € 10.23 (DM 20.00) per share
of Daimler-Benz AG (€ 1,487 million) and reversal of the
valuation allowance on deferred tax assets (€ 1,003 million)
Balance Sheet Structure
In Billions of €
Non-Current Assets
Current Assets
of which: Liquidity
Deferred Taxes and
Prepaid Expenses
Stockholders’ Equity
Accrued Liabilities
Liabilities
of which:
Financial Liabilities
Deferred Taxes
and Income
136
125 125
136
37%
35% 21%
21%
29%
25%
55%
55%
45%
48%
30%
28%
14%
8% 10% 5% 6%
98 97 97 98
14%
in Millions