Mercedes 2002 Annual Report Download - page 144

138 |Other Notes
Commercial Vehicles. This segment is involved in the devel-
opment, design, manufacture, assembly and sale of vans,
trucks, buses and Unimogs as well as related parts and acces-
sories. The products are sold mainly under the brand names
Mercedes-Benz and Freightliner.
Services. The activities in this segment extend to the
marketing of services related to financial services (principally
retail and lease financing for vehicles and dealer financing),
insurance brokerage, trading and information technology.
In October 2000, the information technology activities were
contributed into a joint venture. The Group’s 49.9% interest in
T-Systems ITS is included at equity subsequent to that date.
In January 2002, DaimlerChrysler exercised its option to sell
to Deutsche Telekom the Group’s 49.9% interest in T-Systems
ITS. The sale was consummated in March 2002 with the
termination of the joint venture.
Other Activities. These activities principally represents the
business MTU Aero Engines and the Group’s equity method
investments in MMC, EADS and Automotive Electronics. Other
Activities also contains corporate research, real estate acti-
vities and holding and financing companies. In April 2001,
DaimlerChrysler completed the sale of 60% of the interest in
its Automotive Electronics activities to Continental AG. The
Group’s 40% interest in the Automotive Electronics activities
(Conti Temic microelectronic) is included at equity from that
date. In April 2002, DaimlerChrysler exercised its option
to sell to Continental AG the Group’s remaining 40% interest
in Conti Temic microelectronic.
The Group’s management reporting and controlling systems
use accounting policies that are substantially the same
as those described in Note 1 in the summary of significant
accounting policies (U.S. GAAP). The Group measures the
performance of its operating segments through “Operating
Profit.” Segment Operating Profit is defined as income (loss)
before financial income included in the consolidated state-
ment of income (loss), modified to exclude pension and
postretirement benefit expenses other than service costs,
to include pretax operating profit (loss) from affiliated and
associated companies, to include financial income (loss) from
related operating companies, to include gains (losses) from
the sale of operating businesses, and to include or exclude
certain miscellaneous items.
Intersegment sales and revenues are generally recorded
at values that approximate third-party selling prices.
Revenues are allocated to countries based on the location
of the customer; long-lived assets are disclosed according
to the physical location of these assets.
Capital expenditures represent the purchase of property,
plant and equipment.
During the year ended December 31, 2002, DaimlerChrysler
sold 18,653 million (2001: 119,290 million) and 149,592
million (2001: 157,372 million) of retail and wholesale receiv-
ables, respectively. From these transactions, the Group recog-
nized gains of 1162 million (2001: 1414 million) and 1201
million (2001: 1182 million) on sales of retail and wholesale
receivables, respectively.
Significant assumptions used in measuring the residual inter-
est resulting from the sale of retail and wholesale receivables
were as follows (weighted average rates for securitizations
completed during the year) at December 31, 2002 and 2001:
In 2002, the Group’s financial services business in North
America developed an asset-backed commercial paper pro-
gram to be used as part of its securitization activities. To
support the asset-backed commercial paper program, several
banks have provided contractually committed liquidity facili-
ties aggregating $3 billion. As of December 31, 2002, no
receivables have been sold into this program and none of the
liquidity facilities have been utilized.
34. Segment Reporting
In 2002, the Board of Management decided to rename the
Mercedes-Benz Passenger Cars & smart segment to Mercedes
Car Group, effective as of January 1, 2003. The decision to
rename the segment was made to reflect the recently
enhanced brand portfolio and did not impact the composition
of this reportable segment. Information with respect to the
Group’s reportable segments follows:
Mercedes Car Group. This segment includes activities relat-
ed mainly to the development, design, manufacture, assembly
and sale of passenger cars and off-road vehicles under the
brand names Mercedes-Benz, smart and Maybach as well as
related parts and accessories.
Chrysler Group. This segment includes the development,
design, manufacture, assembly and sale of cars and trucks
under the brand names Chrysler, Jeep®and Dodge and related
automotive parts and accessories.
(in millions of 3)
Prepayment speed assumption
(monthly rate)
Estimated lifetime net credit losses
(an average percentage of sold
receivables)
Residual cash flows discount rate
(annual rate)
1
0.0%
10.0%
Wholesale
2001200220012002
1
0.0%
12.0%
1.0-
1.5%
2.4%
12.0%
1.0-
1.5%
2.6%
12.0%
Retail
1 For the calculation of wholesale gains, the Group estimated the average wholesale
loan liquidated in 210 days.