Mercedes 2006 Annual Report Download - page 79

Management Report | Financial Position | 63
The Group’s total assets, amounting to €190.0 billion,
decreased by 6% compared with the prior year. The financial
services business accounted for €95.5 billion of the balance
sheet total (2005: €99.6 billion), or 50% of the DaimlerChrysler
Group’s total assets and liabilities (2005: 49%).
The decrease in total assets resulted primarily from the depre-
ciation of the US dollar against the euro compared with the prior
year. The assets and liabilities of our US companies were trans-
lated into euros using the exchange rate of €1 = US $1.3170
as of December 31, 2006 (prior year: €1 = US $1.1797 as of
December 31, 2005). The depreciation of the dollar led to
correspondingly lower balance sheet amounts in euros. €13.2
billion of the decrease in total assets resulted from currency
translation effects. Adjusted for these effects, total assets
increased by €1.6 billion.
In addition to currency effects, when compared with the prior year,
the balance sheet was primarily affected by the improved funding
status of pension obligations as well as the adoption of changed
accounting regulations for pensions and similar obligations
(SFAS 158). In particular, these regulations prescribe full balance
sheet consideration of obligations not covered by fund assets.
Furthermore, they restrict the recognition of assets related to
such obligations. In total, intangible assets decreased by €2.4
billion and prepaid expenses increased by €1.2 billion due to these
aforementioned factors, whereas accruals for pensions and
similar obligations increased by €3.1 billion to €18.6 billion.
On the asset side of the balance sheet, property, plant
and equipment decreased by 7% to €34.0 billion as a result of
currency translation.
Leased equipment increased by €2.7 billion to €37.0 billion due
to the growth of the operating lease business. This was partially
caused by a shift from sales-financing contracts, which are
classified as receivables from financial services, to operating
lease contracts. Offsetting effects from currency translation
amounted to €3.0 billion.
Inventories net of advance payments received decreased to
€17.8 billion (2005: €19.1 billion). In addition to currency effects
of approximately €1.0 billion, the decrease was attributable to
the reduction of finished goods.
Receivables from financial services amounted to €52.3 billion
as of December 31, 2006 (December 31, 2005: €61.1 billion).
In addition to currency translation effects, the decrease was
caused by the shift to operating lease contracts as well as
increased sales of receivables.
€1.4 billion of the increase in other assets from €8.7 billion to
€11.4 billion resulted from higher positive market values of
derivative financial instruments. These financial transactions
were concluded in order to hedge against currency risks and
to hedge the price risks of EADS shares. In addition, retained
interests from the sale of receivables increased by €0.5 billion
as a result of the increase in the volume of receivables sold com-
pared with the prior year (see also Note 33 of the Notes to
the Consolidated Financial Statements).
Total liquidity increased to €13.1 billion. Cash and cash equivalents
decreased by €0.6 billion while marketable securities increased
by €1.0 billion.
Net deferred tax assets and liabilities increased by €2.3 billion
compared with the prior year primarily due to the changed
accounting regulations for pensions and similar obligations.
With the completion of the sale in 2006, the assets and liabilities
of the off-highway activities, which were separately summarized
and classified in the balance sheet as held for sale in 2005,
are no longer reported.
On the liability side, stockholders’ equity amounted to €34.2
billion (2005: €36.4 billion). The decrease was mainly due to
changed accounting regulations for pensions and similar obliga-
tions, distribution of the 2005 dividend and currency translation
effects. There were offsetting effects from the positive net income
and the valuation of derivative financial instruments (which had
no effect on the income statement). The equity ratio, adjusted for
Financial Position
2006
5% 5%
25%
6%
25%
54%
41%
190 190202
6%
40%
53%
23%
18%
202
2005 2005 2006
Fixed assets Stockholders’ equity
and minority interests
Accrued liabilities
Liabilities
of which:
Financial liabilities
Non-fixed assets
of which: Liquidity
Other assets Other liabilities
(in billions of €)
Balance sheet structure
4%
7%
54%
42%
41%
53%
24%
18%