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Innovation from Tradition. Annual Report 2010.

Table of contents

  • Page 1
    Innovation from Tradition. Annual Report 2010.

  • Page 2
    ... of euros 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 activities EBIT Value added...

  • Page 3
    ... 2010 Amounts in millions of euros Mercedes-Benz Cars EBIT Revenue Return on sales Investment in property, plant and equipment Research and development expenditure thereof capitalized Unit sales Employees (December 31) Daimler Trucks EBIT Revenue Return on sales Investment in property, plant...

  • Page 4
    Daimler Brands Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services

  • Page 5
    ... industry. At the same time, our thoughts and actions are guided by the principle of sustainable mobility: We aim to successfully shape the mobility of the future. In this way, we want to create lasting added value - for our shareholders, customers, employees and society in general. Dieter...

  • Page 6
    Innovation Close Up. Pioneering achievements at Daimler have always started with attention to detail. That's a tradition at Daimler - and has been for 125 years. In this Annual Report, we therefore present the topic of innovation from a new perspective. On pages 26 to 59, you can get a close-up ...

  • Page 7
    ...Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services 248 - 252 Additional Information 248 250 251 252 Ten Year Summary Glossary Index International Representative Offices Internet | Information | Addresses Daimler Worldwide Financial Calendar 2011 Annual Report 2010...

  • Page 8
    ... MercedesBenz Cars and Mercedes-Benz Vans. Pioneering luxury sedan. With the research vehicle F 800 Style, Mercedes-Benz shows the future of premium automobiles from a new perspective at Geneva Motor Show 2010. Daimler sells its stake in Tata Motors. Daimler AG sells all of its 5.34% equity interest...

  • Page 9
    ... wide-ranging strategic cooperation. The main shared projects are a new architecture for the smart, new three- and four-cylinder engines and small vans. Start of van production in China. The first Mercedes-Benz Viano produced by Fujian Daimler Automotive rolls off the assembly line at the new plant...

  • Page 10
    ... the Company's Board of Management. The new position is a logical step in the further development of the corporate structure and culture. Mercedes-Benz Atego is "Truck of the Year." At the IAA Commercial Vehicles show, trade journalists from 23 European countries recognize the innovative technology...

  • Page 11
    ... in Japan, the new truck will also be made available in Fuso's worldwide export markets in 2011. Start of series production of the Actros at the Aksaray plant. With the availability of its entire product range as well as local assembly, Daimler Trucks makes a long-term commitment to the Turkish...

  • Page 12
    "We look back on an excellent year - and our goals for this year are equally ambitious. 125 years after the invention of Daimler and Benz, we continue to take the lead in shaping the future of the automobile."

  • Page 13
    ... "Truck of the Year 2011." At Fuso we updated nearly the entire model range, and at Freightliner we launched sales of the new Coronado heavy-duty truck. Mercedes-Benz Vans, with a 35 percent increase in unit sales, grew at a similar rate to our trucks division. The Sprinter's market share in Europe...

  • Page 14
    ... of our new compact car family. The replacement of our model range is in full swing also at Daimler Trucks and Daimler Buses: This year, the new-generation Mercedes-Benz Citaro city bus will be launched and the new Fuso Canter truck will be available in Fuso's worldwide export markets. In general...

  • Page 15
    ... driving with zero local emissions. The countdown for large-series production of the electric smart has begun and the A-Class E-Cell will be delivered to customers as of this spring. 2011 is also an important year for fuel-cell drive. Three B-Class cars powered by fuel cells are making a trip around...

  • Page 16

  • Page 17
    ... 52 Human Resources & Labor Relations Director Appointed until April 2012 Andreas Renschler | 52 Daimler Trucks Appointed until September 2013 Wolfgang Bernhard | 50 Manufacturing and Procurement Mercedes-Benz Cars & Mercedes-Benz Vans Appointed until February 2013 Member of the Board of Management...

  • Page 18
    ...continually informed the Supervisory Board, in addition to providing the usual key figures, included: - the Group's profitability and liquidity, - the internal control and risk management system, - the cost of risk in the financial services business, - vehicles' residual values, - the development of...

  • Page 19
    ... 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 important growth markets as well as compliance issues. The members of the Supervisory Board...

  • Page 20
    ...paid out a year later depending on the development of Daimler's share price compared with the index Dow Jones STOXX Automobiles & Parts, which Daimler AG uses as a benchmark for the relative development of its own share price. These changes were reported in the 2010 Annual Shareholders' Meeting. 16

  • Page 21
    ... brand and product strategies. Other key points included: - growth opportunities in the various markets, - analyses of competitors, - the latest trends in customer behavior, also with regard to the future development of urban mobility, - the overall technology and market strategy for safeguarding...

  • Page 22
    ...prepared on the basis of specifications regarding the structure, orientation and qualification profile of the members of the Supervisory Board representing the shareholders and with due consideration of corporate governance requirements. As in previous years, the Mediation Committee, a body required...

  • Page 23
    ... to be made to the shareholders at the Annual Meeting. The preliminary key figures were disclosed at the Annual Press Conference on February 16, 2011. Audit of the 2010 financial statements. The financial statements of Daimler AG and the combined management report for the Company and the Group for...

  • Page 24
    ... of the Frankfurt/Offenbach Dealership, Daimler AG Ansgar Osseforth* Sindelfingen 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...

  • Page 25
    ... from the Supervisory Board: Arnaud Lagardère Paris General Partner and CEO of Lagardère SCA (retired April 14, 2010) Helmut Lense* Stuttgart Chairman of the Works Council, Untertürkheim Plant, Daimler AG (retired December 31, 2009) Committees of the Supervisory Board: Committee pursuant to...

  • Page 26
    ... 6% over 2010 as a whole. But Germany's main index, the DAX, developed very positively with a plus of 16%. In addition to the robust German economy, this reflected the fact that companies with major operations outside Europe were profiting from the weakness of the euro. After US share prices were at...

  • Page 27
    ... analysts' and investors' day in Beijing at the end of May, we explained the strategy of the coming years for Mercedes-Benz Cars and announced an outlook for a sustained profitability target of 10% over our business cycle as of the year 2013. This provided further support for our share price. After...

  • Page 28
    ... trading in Germany in the year 2010 amounted to 1,492 million shares (2009: 1,830 million). In addition, Daimler shares were increasingly traded on newly created multilateral trading platforms and in the over-the-counter market. Resumption of employee share program. In May 2010, eligible members...

  • Page 29
    ... Mercedes-Benz Cars in China. On November 30, 2010, we hosted approximately 160 analysts, investors and bank representatives at our truck plant in Wörth and informed them about the outlook and goals of Daimler Trucks and Daimler Buses in the various regions of the world. Internet website makes use...

  • Page 30
    The success story of motorized and individual transport began 125 years ago with the invention of the automobile by our pioneers, Gottlieb Daimler and Carl Benz. This anniversary is especially significant for Daimler. In the tradition of our company's founders, we have put numerous technical ...

  • Page 31
    Innovation Close Up. Every pioneering achievement begins with attention to detail.

  • Page 32
    ...technology package, the new Mercedes-Benz V6 and V8 gasoline engines achieve outstanding performance combined with low fuel consumption. Clean and efficient internal-combustion engines will form the basis of mobility for a long time to come - also for vehicles with hybrid drive. Mercedes-Benz models...

  • Page 33
    Cylinder liner of the new V6 and V8 engines. Innovation Close Up | 29

  • Page 34
    With its unique design, refined sportiness and maximum efficiency, the all-new Mercedes-Benz CLS has admirers all over the world. 30

  • Page 35
    ... give the new CLS its unique character." Hubert Lee, Creative Director, Mercedes-Benz Research & Development, Advanced Design, Carlsbad, California Design trendsetter and efficiency pioneer. All four V6 and V8 engines available in the Mercedes-Benz CLS offer more power and lower fuel consumption...

  • Page 36
    ... not only with its pioneering design and comfort but also with its engines: The next-generation V6 and V8 technology makes the open four-seater even more powerful, but at the same time cleaner and more economical. So the Mercedes-Benz E-Class convertible is the open-air star of all four seasons. 32

  • Page 37
    A wind of change for more efficiency. Innovative direct gasoline-injection engines in the Mercedes-Benz E-Class convertible provide abundant power while reducing fuel consumption and emissions. Innovation Close Up | 33

  • Page 38
    Honeycomb structure of an SCR catalytic converter as a module for reducing nitrogen oxides. 34

  • Page 39
    ... the future down to the last detail. SCR technology makes economical diesel engines so clean that they fulfill the world's most stringent emission limits. As a pioneer, Daimler introduced this revolutionary exhaust technology under the name of "BLUETEC" in commercial vehicles in 2005 and in cars in...

  • Page 40
    ... in Europe - safely, reliably and economically. In 2009, Schneider took part in tests of SCR technology in everyday conditions with two Cascadias, the flagship of Freightliner's heavy-duty truck class. The transportation company has now ordered additional Cascadias with SCR exhaust systems, to help...

  • Page 41
    ... Trucks with clean SCR technology are on the way up. Strong performance: All new Freightliner Cascadia trucks are available with SCR exhaust treatment systems. In Europe, BlueTec trucks from MercedesBenz have already covered more than 20 million kilometers with the innovative SCR technology...

  • Page 42
    ... combustion engines with electric motors and represent a milestone in the further improvement of automotive efficiency. Daimler has developed a modular hybrid kit that can be used to create many versions of hybrid drive depending on performance and range of application. The Mercedes-Benz Atego...

  • Page 43
    The lacquered copper windings of an electric motor in a hybrid drive system. Innovation Close Up | 39

  • Page 44
    ...Atego BlueTec Hybrid delivers top performance. Also in terms of environmental protection. At the top. As "Truck of the Year 2011," the Mercedes-Benz BlueTec Hybrid impresses customers with its environmentally friendly drive system - but also with its contribution 40 to sustainable local deliveries.

  • Page 45
    ...sold to customers in late 2010. With this environmentally friendly truck, Mercedes-Benz has made progress on commercial vehicles with hybrid drive with a worldwide impact. The series-produced Atego BlueTec Hybrid is regarded as a trailblazer for alternative drive systems in delivery vehicles and was...

  • Page 46
    "Economical, safe, clean. That's the future of public transport - in Hamburg with the Citaro FuelCELL-Hybrid." Günter Elste, CEO of Hamburger Hochbahn (public-transport company), Hamburg 42

  • Page 47
    ... the future of locally emission-free public transport. Benz Citaro FuelCELL-Hybrid is at the forefront of sustainable mobility. The latest generation of environmentally friendly, energy-efficient fuel-cell hybrid buses will set a benchmark for public transport as of spring 2011, also as part of...

  • Page 48
    ...infrastructure. Together with small and medium-sized companies, Daimler has developed a uniform charging plug for all German producers. It makes battery charging and paying for the electricity as safe and easy for customers as using a mobile phone. The Mercedes-Benz Vito E- CELL and the smart fortwo...

  • Page 49
    Detail of the innovative charging plug of an electric vehicle. Innovation Close Up | 45

  • Page 50
    Intelligent battery charging: The Vito E-CELL charges its batteries with green electricity for a better quality of life. Emission-free driving ex-factory. The Mercedes-Benz Vito E-CELL is in use with customers as the world's 46 first series-produced electric van.

  • Page 51
    ... that benefit its owners as well as the environment." Dr. Joachim Wessels, Executive Board Member for Letters, Deutsche Post AG, Bonn E volution in the city. The Mercedes-Benz Vito E-CELL is ringing in a new era of clean urban transport. In 2010, Mercedes- Benz delivered the first E-CELL vans to...

  • Page 52
    "More than ten years ago, the smart changed the face of cities all over the world. Today, we are pioneers of urban mobility - with our smart fortwo electric drive." Maja Affeldt, biotech engineer, and Julian Affeldt, primary school teacher, Kleinmachnow, Berlin 48

  • Page 53
    ... in other major cities of Europe, North America and Asia. As of 2012, the locally emission-free smart fortwo electric drive will be generally available in approximately 40 smart markets, with a production volume in excess of 10,000 units. The fun of driving this car starts with a standard electric...

  • Page 54
    Camera lens of Night Vision Assistant PLUS in the car windscreen. 50

  • Page 55
    ... camera of Night View Assistant PLUS from Mercedes-Benz shows what's going on ahead of the car on a dashboard display. Intelligent assistance systems make the automobile into a partner that can see, think ahead and react. This allows the driver to avoid accidents. Safety at the highest level can be...

  • Page 56
    ... D riving at night will be safer in the future: with the new Active Night Vision Assistant PLUS, another milestone in active safety from Mercedes-Benz. The further developed driver assistance in the S-Class makes night into day. Already since 2009, Active Night Vision Assistant PLUS has been...

  • Page 57
    Drive through the night safely in the epitome of luxurious transport. The Mercedes-Benz S-Class offers even more safety for all road users with the new Active Night Vision Assistant PLUS. In focus: state-of-the-art safety equipment in the Mercedes-Benz S-Class. Innovation Close Up | 53

  • Page 58
    A sign of excellent customer relations. With a future-oriented download application for mobile users, Mercedes-Benz was the world's first auto financer to provide important service functions in this way. The mobile strategy is now going a step further with the Apple iPadTM in the showrooms of US ...

  • Page 59
    The electronic signature function is part of the mobile service strategy. Innovation Close Up | 55

  • Page 60
    New devices make customer service mobile. The advantages are obvious. The iPadTM allows quick and direct access to the MB Advantage dealer system with customers 56 in the showroom.

  • Page 61
    ... the MB Advantage dealer system quickly and easily with the tablet computer. Already during the pilot project in mid-2010, it soon became clear how everyone involved would benefit. From new financing to leasing contracts to the return of leased vehicles, orders can now be processed with greater...

  • Page 62
    We invented the automobile. And we are constantly reinventing it. With enthusiasm and passion.

  • Page 63
    Daimler will safeguard mobility for future generations with innovative and sustainable vehicle concepts, a unique product mix, environmentally friendly drive systems and groundbreaking safety technologies.

  • Page 64
    ... than expected for Daimler. Unit sales by all divisions increased by strong double-digit rates. Revenue grew by 24% to â,¬97.8 billion and operating result (EBIT) reached â,¬7.3 billion (2009: EBIT of minus â,¬1.5 billion). We anticipate a generally positive development of business in the year 2011.

  • Page 65
    ... 87 88 Profitability EBIT Financial performance measures Value added Statement of income/loss Dividend Research and development, environmental protection Employment Procurement Information technology 104 - 113 Risk Report 104 104 106 108 112 113 113 Risks and opportunities Risk management systems...

  • Page 66
    ... American markets. Daimler Trucks' product range includes light-, medium- and heavy-duty trucks for local and long-distance deliveries and construction sites, as well as special vehicles for municipal applications. Due to close links in terms of production technology, the division's product range...

  • Page 67
    ... of the 15 production sites are in Germany, Turkey, Latin America, France, Spain and the NAFTA region. In 2010, 45% of Daimler Buses' revenue was generated in Western Europe, 12% in the NAFTA markets and 27% in Latin America (excluding Mexico). While we mainly sell complete buses in Europe and the...

  • Page 68
    .... Authorization to buy back shares, approved and conditional capital. On April 14, 2010, the Annual Shareholders' Meeting revoked the authorization to acquire own shares that had been granted in the prior year to the extent that it had not yet been utilized. At the same time, the Company was again...

  • Page 69
    ... of design, safety, comfort, perceived value, reliability and environmental compatibility; - commercial vehicles that are the best in their respective competitive environment; - outstanding service packages related to those products; and - new mobility solutions, oriented towards the needs of our...

  • Page 70
    ... with applicable law. Excellent products offering superior customer experience form the basis for our success. Through the constant search for the best solution and in line with the lifecycles of our products, we are launching 16 new models at Mercedes-Benz Cars in the years 2010 and 2011 alone...

  • Page 71
    ...-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses. Our target for the Daimler Financial Services division is a return on equity of 17%. Portfolio changes. With the goal of strengthening our core business and utilizing new growth potential, we further developed...

  • Page 72
    ..., this relates to a new, shared architecture for small cars, the shared use of fuel-efficient three- and four-cylinder engines and cooperation in the field of light commercial vehicles. In addition, a crossshareholding was agreed upon: The Renault-Nissan Alliance received a 3.1% equity interest in...

  • Page 73
    ...growth Gross domestic product, growth rates in % 10 8 6 4 2 0 -2 -4 -6 -8 Total NAFTA region Western Europe Japan Asia excl. Japan Other markets 2009 2010 Source: Global Insight The new Board of Management function is a logical step in the further development of the corporate structure and culture...

  • Page 74
    ... rates 2010/2009 in % 45 30 15 0 -15 Total Western Europe Japan USA1, 2 South America 2 China 1 Cars segment includes light-trucks 2 Medium- and heavy-duty trucks Source: German Association of the Automotive Industry (VDA), various institutions Passenger cars Commercial vehicles Automotive markets...

  • Page 75
    ... unit sales by 37% in 2010. In total, we shipped 355,300 heavy-, medium- and light-duty trucks as well as buses of the Thomas Built Buses and Fuso brands last year, meaning we continue to be the biggest globally active manufacturer of trucks above 6 tons gross vehicle weight. All of our main markets...

  • Page 76
    ...23,200 units. As a result, Daimler Buses was able to expand its market share in Latin America to 47.1% (2009: 44.7%). While the Mexican market recovered slightly, unit sales declined in the USA/Canada region (see pages 132 f). Market share 2010 In % Mercedes-Benz Cars Western Europe thereof Germany...

  • Page 77
    ... slump in 2009. At Mercedes-Benz Cars, orders returned to the high levels of the years before the economic and financial crisis. This upturn was partially caused by the market success of the new E-Class models and strong demand in China and other emerging markets. At Daimler Trucks, the recovery...

  • Page 78
    Profitability EBIT Daimler achieved EBIT of â,¬7.3 billion in 2010 and thus concluded the financial year very successfully (2009: minus â,¬1.5 billion). EBIT by segment 2010 In millions of euros Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services ...

  • Page 79
    Development of earnings In billions of euros 10 8 6 4 2 0 -2 -4 2006 2007 2008 2009 2010 EBIT Net profit (loss) The Mercedes-Benz-Cars division posted EBIT for 2010 of â,¬4,656 million, an improvement of â,¬5.2 billion compared with the prior-year result. The division's return on sales was 8.7% (...

  • Page 80
    Return on sales In % 9 6 3 0 -3 -6 Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses 2007 2008 2009 2010 Return on equity In % 25 20 15 10 5 0 Daimler Financial Services 2007 2008 2009 2010 In the year 2010, Mercedes-Benz Vans also achieved significant earnings growth with EBIT of...

  • Page 81
    ... revenue growth strategy provides the basis for a positive development of value added. Value added shows to which extent the Group and its divisions achieve or exceed the minimum return requirements of the shareholders and creditors, thus creating additional value. Management Report | Profitability...

  • Page 82
    ... offset by an increase in equity. Cost of capital 2010 In percent Group, after taxes Industrial divisions, before taxes Daimler Financial Services, before taxes 8 12 13 8 12 13 2009 Return on sales. As one of the main drivers of value added, the return on sales (ROS) is of particular importance...

  • Page 83
    ... -181 36 -599 2009 10/09 % change ...+97 . Reconciliation to net operating profit/loss 2010 In millions of euros Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services EBIT of the divisions Income taxes 1 Other reconciliation Net operating profit (loss) 4,656...

  • Page 84
    ... -55 +4 +2 2009 10/09 % change Consolidated statement of income/loss 2010 In millions of euros 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 85
    ...; 2009: expense of â,¬1.0 billion). In addition, the Group realized a gain of â,¬0.3 billion on the sale of its shares in Tata Motors. In the prior year, other financial expense included expenses of â,¬0.3 billion relating to the agreements concluded with Chrysler. Management Report | Profitability...

  • Page 86
    ... higher expenses relating to pension and health-care obligations. Further information on interest income and expense is provided in Note 8 of the Notes to the Consolidated Financial Statements. The income-tax expense of â,¬2.0 billion recorded in 2010 (2009: â,¬0.3 billion) is mainly a reflection of...

  • Page 87
    ... Research and Mercedes-Benz Cars Development, 5,400 at the Daimler Trucks division, 900 at the Mercedes-Benz Vans division and 1,100 at Daimler Buses. More than 4,000 research and development personnel were employed outside Germany. The most important sites in our research and development network...

  • Page 88
    ... Total research and development expenditure at Mercedes-Benz Cars amounted to â,¬3.1 billion last year (2009: â,¬2.7 billion). Daimler Trucks spent â,¬1.3 billion on research and development (2009: â,¬1.1 billion). The main areas there were alternative drive systems, new engines for medium and heavy...

  • Page 89
    ... publication of the new Sustainability Report in April 2011. We make use of comprehensive environmental management systems in our efforts to make further progress in the field of environmental protection. More than 98% of our employees worldwide work in plants whose environmental management systems...

  • Page 90
    ... business development in 2009, no profit-sharing bonus could be granted for that year. Nonetheless, the employees of Daimler AG paid according to wage-tariff agreements received a special one-time bonus of 500 euros in April 2010. This was intended to show the Board of Management's recognition...

  • Page 91
    ... effective supplier network. The Daimler Group's procurement organization consists of three departments - Procurement Mercedes-Benz Cars and Vans, Procurement Daimler Trucks and Buses, and International Procurement Services for non-production materials - and is present at more than 50 locations all...

  • Page 92
    ... allows customers to electronically sign documents directly on the iPad display. Since the beginning of 2010, Mercedes-Benz Financial's IT services also include a website created solely for smartphone users. Integrated system solution for commercial-vehicle sales. Following a successful start in...

  • Page 93
    ...management (e.g. bank credit, commercial paper, notes); liquidity surpluses are invested in the money market or the capital market to optimize risk and return. The goal is to ensure the level of liquidity regarded as necessary at optimal costs. Besides operational liquidity, Daimler keeps additional...

  • Page 94
    ...services companies in risk countries. Additional information on the management of market price risks, credit defaults and liquidity risks is provided in Note 31 of the Notes to the Consolidated Financial Statements. Cash flows Condensed consolidated statement of cash flows 2010 In millions of euros...

  • Page 95
    ... flow of the industrial business 2010 In millions of euros Cash provided by operating activities Cash used for investing activities Change in cash (> 3 months) and marketable debt securities included in liquidity Free cash flow of the industrial business 2009 10/09 Change 10,066 -741 6,544 -7,716...

  • Page 96
    ... and equipment to â,¬3.7 billion in 2010 (2009: â,¬2.4 billion). The focus was on investments in new vehicle models and new drive systems. â,¬2.1 billion of the total volume of capital expenditure was in Germany. At Mercedes-Benz Cars, investments in property, plant and equipment increased by 52% to...

  • Page 97
    ... than in 2009. To a very small extent, funds were also raised by issuing commercial paper. Furthermore, the still high level of customer deposits at Mercedes-Benz Bank was used as an additional source of finance. For raising longer-term capital in the capital market, various programs are available...

  • Page 98
    ... 31, 2010. These other financial commitments primarily relate to purchasing commitments and commitments to invest in replacement and expansion of property, plant and equipment. The Group has also committed to make payments in connection with rental and leasing agreements for the use of production...

  • Page 99
    ...'s profitability, in particular at Mercedes-Benz Cars. Another factor is that the recovery of worldwide demand for motor vehicles last year was stronger than most of the rating agencies had expected. But in view of uncertainty about the ongoing development of the automotive industry and additional...

  • Page 100
    ... the truck plants in Germany, Brazil and India. Equipment on operating leases and receivables from financial services increased primarily due to exchange-rate effects by â,¬3.9 billion to a total of â,¬61.0 billion. The increase adjusted for exchange-rate effects was due to the higher volume of new...

  • Page 101
    ... obligations. Financing liabilities decreased by â,¬4.6 billion to â,¬53.7 billion. The decrease adjusted for currency effects of â,¬6.9 billion is mainly related to bonds and liabilities arising from customers' deposits in Mercedes-Benz Bank's direct banking business. Trade payables increased...

  • Page 102
    ...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 domestic and foreign subsidiaries, and by producers of special vehicles...

  • Page 103
    ... (33%) and Sprinter (50%) model series. Condensed statement of income of Daimler AG Dec. 31, 2010 In millions of euros Revenue Cost of sales (including R&D expenses) Selling expenses Administrative expenses Other operating income/expense Financial income/expense Profit/loss on ordinary activities...

  • Page 104
    ... billion) mainly constituted investment for the production of the new SLK, CLS and C-Class coupe, as well as investment in engine and transmission projects for both cars and commercial vehicles. Equity Provisions for pensions and similar obligations Other provisions Total provisions Trade payables...

  • Page 105
    ...the statements in the Outlook chapter, which also largely reflect our expectations for the parent company. Daimler AG expects to post a significant profit in the year 2011 but lower than in 2010. Further increases in annual earnings are anticipated in the medium term. Management Report | Daimler AG...

  • Page 106
    ... result, we now have a large number of new and attractive products and pioneering technologies to offer our customers. In addition, our long-term and wide-ranging involvement in markets such as China, India, Brazil and Russia started to pay off significantly in the year under review. This is due not...

  • Page 107
    ... into account in the consolidated financial statements or otherwise reported on that are of major significance for Daimler. The course of business in the first two months of 2011 confirms the statements made in the Outlook section of this Annual Report. Management Report | Overall Assessment of the...

  • Page 108
    ...in the annual operational planning and followed up during the year in the context of periodical corporate reporting. The divisions are directly responsible for the early identification of opportunities and their utilization. Within the framework of the strategy process, longer-term opportunities for...

  • Page 109
    ...internal control and risk management system with regard to the corporate accounting process. At first, there is a risk analysis and a definition of control. Significant risks are identified relating to the process of corporate accounting and financial reporting in the main legal entities and central...

  • Page 110
    ... the world economy to return to a phase of recession if several of those factors actually occurred. This means that there are still considerable economic risks for Daimler's financial position, cash flows and profitability. One important topic in the year 2010 was levels of public debt in the triad...

  • Page 111
    With few exceptions, such as Germany or Sweden, economic recovery in Western Europe has been rather moderate so far. The biggest risks for the ongoing development are to be seen in the financial markets and the consolidation of budget deficits. The countries of the euro zone in particular could come...

  • Page 112
    ... developments, this could lead to the increased application of sales-promoting financing offers and other incentives once again. This would not only reduce revenues in the new-vehicle business, but would also lead to lower price levels in used-vehicle markets and thus to falling residual values...

  • Page 113
    ...levels of prices, factors such as brand image, design and product quality play an important role, as well as additional technical features resulting from our innovative research and development. Convincing solutions, for example supporting accidentfree driving or further improving our vehicles' fuel...

  • Page 114
    ... supply agreements, which make short-term risks for material supplies and the effects of price fluctuations more calculable. Furthermore, in connection with some metals, we make use of derivative price hedging instruments. Supplier risk management aims to identify suppliers' potential financial...

  • Page 115
    .... Our employees profit for example from the range of courses offered by the Daimler Corporate Academy and from the transparency created by LEAD, our uniform worldwide performance and potential management system. Because of demographic developments, the Group has to cope with the changes relating to...

  • Page 116
    ... financial instruments. As part of the risk management process, Daimler regularly assesses these risks by considering changes in key economic indicators and market information. Any market-sensitive instruments held in pension funds and other postretirement pension benefit plans, including equity...

  • Page 117
    ... a negative impact on the funded status of our benefit plans. Higher obligations and lower yields from the plan assets could also increase the net expenses relating to the benefit plans in the coming years. Further information on financial market risks, risk-minimizing actions and the management of...

  • Page 118
    ... for the German premium manufacturers will continue increasing this year. But the outlook remains mixed for the triad markets of Western Europe, the United States and Japan. The US market should continue its recovery, while the best that can be expected for car sales in Western Europe is that they...

  • Page 119
    ... as numerous model changes and new products, Mercedes-Benz Cars anticipates further growth in unit sales by the Mercedes-Benz brand. Thanks to our up-to-date and competitive model range, we will profit also in the year 2011 from the strong demand for our E-Class models and from the market success of...

  • Page 120
    ... new products. We expect to achieve unit sales in the years 2011 and 2012 similar to the high levels of 2010. But due to the probable development of our key markets of Western Europe and Latin America, scope for growth is rather limited. Daimler Financial Services anticipates further growth in 2011...

  • Page 121
    ...-Benz Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for Daimler Buses. For the Daimler Financial Services division, we have set a target return on equity of 17%. The years 2011 and 2012 will feature high expenditure for new products and technologies and to penetrate new markets...

  • Page 122
    ... at Daimler Buses are advance expenditure for new models, future emission technologies and alternative drive systems. Investment in property, plant and equipment 2009 In billions of euros Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services...

  • Page 123
    ... road traffic. Research and development expenditure 2009 In billions of euros Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses 4.2 2.7 1.1 0.2 0.2 4.8 3.1 1.3 0.3 0.2 10.3 6.4 2.7 0.8 0.4 2010 2011-2012 Forward-looking statements in this annual report: This document...

  • Page 124
    All of Daimler's divisions profited from the global economic upswing and from their attractive product ranges. In terms of unit sales and revenue, mainly double-digit growth rates were achieved. We were able to further improve our market position in many product areas.

  • Page 125
    ...America Positive development of market share in key markets Attractive product portfolio with pioneering drive technologies EBIT of â,¬215 million 134 - 135 Daimler Financial Services 126 - 129 Daimler Trucks - - - - Strong growth in unit sales in all major markets Global product offensive with new...

  • Page 126
    ... year under review. In addition, our new engines are now demonstrating that efficiency and performance are no longer mutually exclusive. Mercedes-Benz Cars 2010 Amounts in millions of euros EBIT Revenue Return on sales Investment in property, plant and equipment Research and development expenditure...

  • Page 127
    ...,000 vehicles in Germany, thereby reaching the sales level recorded in the prior year (2009: 265,500), allowing us to increase our market share and maintain our leading position in the premium segment. Mercedes-Benz sales in other Western European countries rose by 9% to 290,500 units (2009: 267,200...

  • Page 128
    ... A total of 1,500 smart fortwo electric drive cars will have been leased to selected customers in Berlin and major European and US cities by the end of 2011. Half of those vehicles had already been delivered by the end of 2010. We are now manufacturing 200 Mercedes-Benz B-Class F-CELL cars with fuel...

  • Page 129
    .... McLaren race cars equipped with Mercedes-Benz engines captured four Grand Prix victories during the season. Our Formula 1 team is working hard to develop a competitive vehicle that will allow it to battle for success in both the Constructors' and Drivers' Championships in 2011. The 2010 German...

  • Page 130
    ..., Zetros and Unimog models offered by the Mercedes-Benz Special Trucks unit. One year after experiencing a sharp decline in unit sales, Trucks Europe/Latin America profited from the global economic recovery during 2010 and unit sales increased by 41% to 135,200 vehicles. With a market share of 24...

  • Page 131
    Trucks Europe/Latin America - the focus was on the market launch of the new Mercedes-Benz Atego and the new Mercedes-Benz Axor. Continuous investment in the further development of the product range and the expansion of our plants contributes towards safeguarding our long-term competitiveness. Some ...

  • Page 132
    ...focused manufacturer of commercial vehicles. In addition to producing a successful range of models in the light to heavy-duty segments, Mitsubishi Fuso Truck and Bus Corporation (MFTBC) is also the competence center for light-duty trucks and state-of-the-art hybrid technology from Daimler Trucks. At...

  • Page 133
    ... this contract, Mercedes-Benz is opening up a new area of business and generating additional sales potential for vehicle components. The contract involves the delivery of Mercedes-Benz Actros cabs, engines, and transmissions for 200 to 400 vehicles each year. Heavy-duty Polar Truck models will be...

  • Page 134
    ...2010. By starting local production, we have created the right conditions to quickly and successfully participate in one of the world's largest and fastest-growing automotive markets. Unit sales 2010 2009 10/09 % change Total Western Europe thereof: Germany Eastern Europe United States Latin America...

  • Page 135
    ... collaboration on light-duty commercial vehicles. This partnership is an important step for Mercedes-Benz Vans with regard to future projects and the expansion of its product range. In this context, we will add a completely new city delivery vehicle for commercial customers to our product lineup in...

  • Page 136
    ...the prior year (2009: â,¬183 million), with the increase mainly due to the positive sales development in Latin America. Positive development of market share in key markets. In Western Europe, the Daimler Buses brands Mercedes-Benz and Setra offer the complete range of city buses, intercity buses and...

  • Page 137
    .... Our unit sales in the region therefore returned to their pre-crisis level, enabling Daimler Buses to increase its market share in the region to 47.1% (2009: 44.7%). Daimler Buses resolutely continues to forge ahead with alternative drive technologies. A total of 16 Mercedes-Benz Citaro G BlueTec...

  • Page 138
    ... Financial Services 2010 Amounts in millions of euros EBIT Revenue New business Contract volume Investment in property, plant and equipment Employees (December 31) 831 12,788 29,267 63,725 12 6,742 9 11,996 25,066 58,350 14 6,800 2009 10/09 % change . +7 +17 +9 -14 -1 In Germany, Mercedes-Benz Bank...

  • Page 139
    ... utilization of business opportunities in growth markets such as China and the increased brokerage of insurance products to cash buyers. In 2010, Daimler Financial Services concluded further partnership agreements with international insurance companies. For example, it signed a framework agreement...

  • Page 140
    Daimler is committed to the principle of sustainability and has a holistic view of this issue. So for us, economic, social and ecological responsibility are inseparable from each other.

  • Page 141
    ... invested in research and development - Further reductions in fuel consumption and CO2 emissions - Fuel-efficient and environmentally friendly engines for cars and commercial vehicles - Four zero-emission vehicles in series production - Innovative concepts for urban mobility - New technologies for...

  • Page 142
    ... and networking our established sustainability management structures and supporting the divisions in their implementation of measures that promote sustainability. In May 2009, Dr. Thomas Weber, the Daimler Board of Management member responsible for Group Research and Mercedes-Benz Cars Development...

  • Page 143
    ... to a style of management oriented towards success and values compatible with the social market economy. According to this mission statement, competition is essential but profits may not be achieved by illegally harming third parties. In addition, the companies see it as a duty to continually search...

  • Page 144
    ... a total of â,¬4.8 billion in research and development in 2010 (2009: â,¬4.2 billion). At the end of 2010, approximately 22,100 men and women were employed at Corporate Research and in the development departments of Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses. Patents...

  • Page 145
    ... trucks and buses. BLUETEC is not only one of Daimler's key technologies, but also a synonym for diesel engines for cars and commercial vehicles with low pollutant emissions and enhanced fuel economy. Back in 2005, we introduced the first Mercedes-Benz Actros heavy-duty truck with BLUETEC technology...

  • Page 146
    ...is setting benchmarks worldwide. The Mercedes-Benz Atego's innovative hybrid drive marks the first time that Daimler is offering this especially low-emission technology in Europe ex works. Parallel hybrid drive reduces fuel consumption and exhaust emissions by up to 15% and also makes it possible to...

  • Page 147
    ...or more trunk lines with regular service buses traveling at frequent intervals and fed by several feeder lines coming from all parts of a city. Separate bus lanes with their own traffic-light settings enable the vehicles to make quick progress even during rush hour. In addition, the system is easily...

  • Page 148
    ... employees with high potential. Human Resources 2010 Employees (December 31) Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Sales & Marketing Organization Daimler Financial Services Other 256,407 93,572 70,699 15,226 17,188 47,625 6,800 5,297 2009 10/09 % change...

  • Page 149
    ... sales and service) worldwide. Diversity management. In its commitment to a varied workforce and diversity management, Daimler is promoting employee diversity, creating networks and making the company fit for the future. This is because diversity management is a success factor not only from a social...

  • Page 150
    ... contacts with local communities and social institutions. Transparent management. We set high quality standards for our social involvement and we have created transparent structures and clear lines of responsibility for our distribution of financial aid. Our Donations and Sponsorship Committee makes...

  • Page 151
    ... in 2010. During the Day of Caring, which Daimler Financial Services organized once again at 15 locations all over the world last year, a total of approximately 2,000 employees donated their time and skills to help socially disadvantaged people. Support through foundations. In a number of countries...

  • Page 152
    Daimler's Board of Management and Supervisory Board are committed to the principles of good corporate governance. All of our activities are based on the principles of responsible, transparent and sustainable management and supervision.

  • Page 153
    ... conditions - Daimler's corporate bodies - Shares held by the Board of Management and the Supervisory Board - Directors' dealings - Risk management, financial reporting and transparency - Integrity 152 - 157 Remuneration Report - Principles of Board of Management remuneration - Board of Management...

  • Page 154
    ... 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 2009, each of which had been issued with an unqualified audit opinion by the external auditors. In preparation, the members of...

  • Page 155
    ... the annual company financial statements for 2010 and the annual consolidated financial statements for 2010 together with the combined management report for Daimler AG and the Daimler Group and the proposal made by the Board of Management on the appropriation of profits. In preparation, the members...

  • Page 156
    ... German Corporate Government Code through its link to the share price and to additional challenging comparative parameters, and takes account of both positive and negative developments. The details of the system are as follows: The base salary is fixed cash remuneration relating to the entire year...

  • Page 157
    ..., and optionally to other key figures and targets (for 2010: total shareholder return and compliance) as well as the individual performance of the Board of Management members in the past financial year. Reference parameters: - 50% relates to a comparison of actual EBIT in 2010 with EBIT targeted for...

  • Page 158
    ...by 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 2010 (Performance Phantom Share Plan - PPSP...

  • Page 159
    ... member is credited with a capital component each year. This capital component comprises an amount equal to 15% of the sum of the Board of Management member's fixed base salary and the annual bonus that was actually achieved, multiplied by an age factor equivalent to a certain rate of return...

  • Page 160
    ..., service costs and present values for Board of Management pension plans in 2009/2010 Annual pension (as regulated until 2005) as of age 60 In thousands of euros Dr. Dieter Zetsche Dr. Wolfgang Bernhard Wilfried Porth Andreas Renschler Bodo Uebber Dr. Thomas Weber Total 2010 2009 2010 2010 2009 2010...

  • Page 161
    ... Company's Articles of Incorporation. The new regulations for Supervisory Board remuneration approved by the Annual Shareholders' Meeting in April 2008 specify that the members of the Supervisory Board receive, in addition to the refund of their expenses and the cost of any value-added tax incurred...

  • Page 162
    ... inform the Audit Committee of the Supervisory Board of his activities. Systematic compliance risk management. The Corporate Compliance Operations department (CCO) defines the annual anti-corruption program and supports its implementation worldwide. In a systematic risk analysis, all companies...

  • Page 163
    ...-promotion activities. Only those employees who consistently orient their decisions and processes towards applicable rules and regulations can be given additional responsibility. In addition, we set specific compliance targets for chief executives, heads of finance, sales managers and after-sales...

  • Page 164
    ...who work in Germany. The members representing the shareholders and the members representing the employees are equally obliged by law to act in the Company's best interests. The Supervisory Board has given itself a set of rules of procedure, which regulate not only its duties and responsibilities and...

  • Page 165
    ...so. In addition to courses already offered, Daimler AG will make appropriate offers to the members of its Supervisory Board as required also in the future. The contents of such courses could include the subjects of technological and economic developments, accounting and financial reporting, internal...

  • Page 166
    ... the annual company financial statements and the annual consolidated financial statements and discusses them with the external auditors. It makes a proposal to the Supervisory Board on the appropriation of profits and on the adoption of the annual company financial statements of Daimler AG and...

  • Page 167
    .... The Board of Management prepares the consolidated interim reports, the annual company financial statements of Daimler AG and the annual consolidated financial statements. It has established a risk management system and monitors that system. In addition, the Board of Management is responsible for...

  • Page 168
    ...Member of the Board of Management Member of the Board of Management Member of the Board of Management Member of the Board of Management Member of the Board of Management Closely related natural person Type and place of transaction Acquisition of shares by exercise of options (off-market) Sale of new...

  • Page 169
    ... communicated to financial analysts and institutional investors are simultaneously also made available to all shareholders and the interested public. If any information is made public outside Germany as a result of the regulations governing capital markets in the respective countries, we also make...

  • Page 170
    ...breach of duty amounting to 50% of the respective remuneration. Since the remuneration structure of the Supervisory Board is limited to a fixed remuneration without success-related components the setting of a deductible for members of the Supervisory Board of one and a half times of the fixed annual...

  • Page 171
    ... per se subordinated to a transmission interest. For this reason the company will go on not to broadcast the entire Annual Meeting. 2. Variable compensation of the Supervisory Board relating to the company's long-term success (Code Clause 5.4.6 Paragraph 2, Sentence 2). We refer to the comments on...

  • Page 172
    The Consolidated Financial Statements presented as follows have been prepared in accordance with the International Financial Reporting Standards (IFRS). They also include additional requirements set forth in Section 315a (1) of the German Commercial Code (HGB).

  • Page 173
    ... 30. Financial instruments 31. Risk management 32. Segment reporting 33. Capital management 34. Earnings/loss per share 35. Related party relationships 36. Remuneration of the members of the Board of Management and the Supervisory Board 37. Principal accountant fees 38. Additional information 189...

  • Page 174
    ... (German Commercial Law) To the best of our knowledge, and in accordance 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, which...

  • Page 175
    .... The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development. Stuttgart, February 28, 2011 KPMG AG Wirtschaftsprüfungsgesellschaft Prof...

  • Page 176
    ... of euros 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 equity method, net Other financial income/expense...

  • Page 177
    ...shareholders of Daimler AG 1 For other information regarding comprehensive income/loss, see Note 20. 4,674 1,200 -121 -484 -449 146 -86 232 4,820 90 4,730 -2,644 267 247 -308 195 401 103 298 -2,243 99 -2,342 2009 The accompanying notes are an integral part of these consolidated financial statements...

  • Page 178
    ... In millions of euros Assets Intangible assets Property, plant and equipment Equipment on operating leases Investments accounted for using the equity method Receivables from financial services Marketable debt securities Other financial assets Deferred tax assets Other assets Total non-current assets...

  • Page 179
    ... holders of shares Daimler AG Share capital Capital reserves Retained earnings Currency translation adjustment Financial assets availablefor-sale Minority interest Total equity In millions of euros Balance at January 1, 2009 Net loss Unrealized gains/losses Deferred taxes on unrealized...

  • Page 180
    ... additional information) 2010 2009 Daimler Financial Services (unaudited additional information) 2010 2009 2010 In millions of euros Net profit/loss adjusted for Depreciation and amortization Other non-cash expense and income Gains (-)/losses on disposals of assets Change in operating assets...

  • Page 181
    ... of income/ loss is presented using the cost-of-sales method. Commercial practices with respect to certain products manufactured by the Group necessitate that sales financing, including leasing alternatives, be made available to the Group's customers. Accordingly, the Group's consolidated financial...

  • Page 182
    ...-for-sale financial assets, form part of the Group's liquidity management function and were previously reported within "Other financial assets." The prior-year presentation has been adjusted accordingly (for further information see Note 15). Measurement. The consolidated financial statements have...

  • Page 183
    ... 1.3362 2009 1â,¬= 1.4406 1.3029 1.3632 1.4303 1.4785 Accounting policies Revenue recognition. Revenue from sales of vehicles, service parts and other related products is recognized when the risks and rewards of ownership of the goods are transferred to the customer, the amount of revenue can be...

  • Page 184
    ...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 185
    ...are calculated by dividing profit or loss attributable to shareholders of Daimler AG by the weighted average number of shares outstanding. Diluted earnings/loss per share additionally reflect the potential dilution that would occur if all stock option plans were exercised. Goodwill. For acquisitions...

  • Page 186
    ... value is the estimated selling price less any remaining costs to sell. The cost of inventories is based on the average cost principle and includes costs incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work...

  • Page 187
    ... 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 interest method. Dividends are recognized in profit or loss when the right of payment has...

  • Page 188
    ... 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 189
    ... plan that has either commenced implementation or been announced. Provisions are regularly reviewed and adjusted as further information develop or circumstances change. The provision for expected warranty costs is established when the product is sold, upon lease inception, or when a new warranty...

  • Page 190
    ... expected future cash flows of that financial investment. See Note 13 for the presentation of carrying values and fair values of equity-method financial investments in listed companies. Equipment on operating leases. Daimler regularly reviews the factors determining the values of its leased vehicles...

  • Page 191
    ... warranties is generally connected with estimates. The Group provides various types of product warranties depending on the type of product and market conditions. Provisions for product warranties are generally recognized when vehicles are sold, upon lease inception, or when new warranty programs...

  • Page 192
    ...Note 20 for information on the number of treasury shares used. Dispositions Daimler Financial Services. Most of the non-automotive assets subject to finance leases that were presented separately as held for sale in the consolidated statement of financial position at December 31, 2009 (â,¬310 million...

  • Page 193
    ...following: 2010 In millions of euros Sales of goods Rental and leasing business Interest from the financial services business at Daimler Financial Services Sales of services 84,573 9,971 2,862 355 97,761 2009 66,772 8,886 2,885 381 78,924 Amortization expense of capitalized development costs are...

  • Page 194
    ... are included in the following line items within the consolidated statement of income/loss: 2010 In millions of euros Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs Other operating expense 4 -12 -117 3 - -122 2009 -72 -159 -91 -14...

  • Page 195
    ... Other operating income consists of the following: 7. Other financial income/expense, net 2010 In millions of euros 2010 Gains on sales of property, plant and equipment Government grants and subsidies Rental income, other than income relating to financial services Reimbursements under insurance...

  • Page 196
    ... using the equity method if the shares of those companies are held by German companies. 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...

  • Page 197
    ... -44 -1,954 2009 In millions of euros 685 74 40 -2 -695 -509 61 -346 Intangible assets Property, plant and equipment Equipment on operating leases Inventories Investments accounted for using the equity method Receivables from financial services Other financial assets Tax loss and tax credit carry...

  • Page 198
    ... in excess of remuneration expense for equity-settled employee stock option plans -1,954 427 2009 At December 31, 2010, the valuation allowance on deferred tax assets relates, among other things, to capital losses (â,¬1,335 million), to corporate tax net operating losses (â,¬1,107 million) and to...

  • Page 199
    ... in the consolidated statement of income/loss in the following line items: 2010 In millions of euros Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs 810 37 35 5 887 2009 735 39 50 4 828 Consolidated Financial Statements | Notes to the...

  • Page 200
    ... equipment developed as follows: Land, leasehold improvements and buildings including buildings on land owned by others In millions of euros Acquisition or manufacturing costs Balance at January 1, 2009 Additions due to business combinations Other additions Reclassifications Disposals Other changes...

  • Page 201
    ... on operating leases Equipment on operating leases developed as follows: Minimum lease payments. Non-cancelable future lease payments to Daimler for equipment on operating leases are due as follows: In millions of euros Acquisition or manufacturing costs Balance at January 1, 2009 Additions due...

  • Page 202
    ... 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 euros Income statement information 2 2010 Sales Net profit/loss 2009 Sales Net profit/loss Balance sheet information 3 2010 Total assets Equity...

  • Page 203
    ...in Tesla using the equity method; the investment and the proportionate share in the results of Tesla are allocated to the Mercedes-Benz Cars segment. 14. Receivables from financial services Receivables from financial services are comprised of the following: Current In millions of euros Receivables...

  • Page 204
    ...for operating activities in the consolidated statement of cash flows. Allowances. Changes in the allowance account for receivables from financial services were as follows: The total expense relating to impairment losses on receivables from financial services amounted to â,¬536 million in 2010 (2009...

  • Page 205
    ...2009 > 5 years Total 1,807 209 2,016 -334 1,682 -6 1,676 12,371 1,924 14,295 -2,123 12,172 -481 11,691 Sale of receivables. Based on market conditions and liquidity needs, Daimler may sell portfolios of retail and wholesale receivables to third parties (i.e. special purpose entities). At the time...

  • Page 206
    ... more than twelve months amounted to â,¬718 million at December 31, 2010 (2009: â,¬634 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 AG in an amount...

  • Page 207
    ... after more than one year (2009: â,¬8 million). Allowances. Changes in the allowance account for trade receivables were as follows: 30 to 59 days 60 to 89 days 90 to 119 days 120 days or more Total Receivables impaired individually Carrying amount, net 2010 In millions of euros Balance at January...

  • Page 208
    ... also the consolidated statements of changes in equity. The share capital is divided into no par value shares. All shares are fully paid up. Each share grants the right to one vote at the Annual Meeting of Daimler AG and, if applicable, with the exception of any new shares potentially not entitled...

  • Page 209
    ... the annual financial statements of Daimler AG (parent company only) in accordance with the German Commercial Code (HGB). For the year ended December 31, 2010, the Daimler management will propose to the shareholders at the Annual Meeting to distribute â,¬1,971 million (â,¬1.85 per no-par-value share...

  • Page 210
    ...for using the equity method," the amounts of 2010 include the following components (amounts attributable to shareholders of Daimler AG only): unrealized gains from currency translation adjustments before taxes and net of taxes of â,¬40 million (2009: unrealized gains before taxes and net of taxes of...

  • Page 211
    ... years of service). For the plans granted in 2009 and 2010, the quoted price of Daimler's ordinary shares to be used for the payout is limited to 2.5 times the Daimler share price at the date of grant. The number of phantom shares that vest will depend on the achievement of corporate performance...

  • Page 212
    ... Disposals/Forfeited Outstanding at year-end Exercisable at year-end 22.4 - -4.5 -6.8 11.1 11.1 2010 Average exercise price euros per share 56.57 - 45.04 70.07 52.90 52.90 Number of stock options in millions 24.3 - -0.2 -1.7 22.4 22.4 2009 Average exercise price euros per share 56.61 - 34.40...

  • Page 213
    ... disclosure due to rounding. . - ...2010 Average exercise price euros per share 65.40 - 51.52 74.76 66.96 66.96 0.3 years Number of stock options in millions 2009 Average exercise price euros per share 65.40 - - - 65.40 65.40 1.0 years Consolidated Financial Statements | Notes to the Consolidated...

  • Page 214
    ...no disclosure due to rounding. 0.2 - . . 0.2 0.2 2010 Average exercise price euros per share 43.61 - 51.52 74.76 40.56 40.56 2.1 years Number of stock options in millions 0.2 - - - 0.2 0.2 2009 Average exercise price euros per share 43.61 - - - 43.61 43.61 2.8 years With regard to the figures shown...

  • Page 215
    ... plans. Net periodic cost/income for other-postemployment benefits As a result of the adjustment of defined health care and pension benefits at our subsidiary Daimler Trucks North America, the Group recorded a pre-tax gain of â,¬160 million in 2010. The gain is mainly included in cost of sales...

  • Page 216
    ...The reconciliation of the funded status to the net amounts of defined benefit pension plans recognized in the consolidated statement of financial position is as follows: Total In millions of euros Funded status Unrecognized actuarial net losses Unrecognized past service cost Net amounts recognized...

  • Page 217
    ...: Total In millions of euros Present value of the defined benefit obligation at January 1 Current service cost Interest cost Contributions by plan participants Actuarial losses Past service cost/income (-) Curtailments Settlements Pension benefits paid Currency exchange-rate and other changes...

  • Page 218
    ... 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. The Group used the following...

  • Page 219
    ... pension fund. In addition, Daimler considers long-term actual plan assets' results and historical market returns in its evaluation in order to reflect the long-term character of the plan assets. Multi-employer plans. Daimler participates in some collectively bargained defined benefit pension plans...

  • Page 220
    ... in the following line items within the consolidated statements of income/loss: 2010 In millions of euros Cost of sales Selling expenses General administrative expenses Research and non-capitalized development costs Interest income Interest expense -197 -51 -32 -33 609 -938 -642 2009 -172 -70 -37...

  • Page 221
    ...term of the product warranties. Sales incentives. The provisions for sales incentives relate to obligations for expected reductions in revenue already recognized. These include bonuses, discounts and other price reduction commitments, which are entered into with contractual partners in the reporting...

  • Page 222
    ... 12,598 1,292 397 736 58,294 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, 2010, liabilities relating to these transactions, which do not meet all the...

  • Page 223
    ... In millions of euros Income tax liabilities Miscellaneous other liabilities 169 1,376 1,545 At December 31, 2010 Non-current Total Current At December 31, 2009 Non-current Total 73 6 79 242 1,382 1,624 56 1,018 1,074 74 1 75 130 1,019 1,149 Consolidated Financial Statements | Notes to the...

  • Page 224
    ... against Daimler AG and its subsidiaries on a wide range of topics, including vehicle safety, emissions, fuel economy, financial services, dealer, supplier and other contractual relationships, intellectual property rights, product warranties, environmental matters, and shareholder matters. Some...

  • Page 225
    ... a two-count criminal information against DNEA. In addition, a Russia-based subsidiary, Mercedes-Benz Russia S.R.O. (MB Russia), and a Germany-based subsidiary, Daimler Export and Trade Finance GmbH (ETF), each entered into plea agreements with the DOJ with a three-year probation period under which...

  • Page 226
    ...specified trade-in or resale values for sold vehicles. Such guarantees provide the holder with the right to return purchased vehicles to the Group, the right being primarily contingent on the future purchase of vehicles or services. Residual value guarantees related to arrangements for which revenue...

  • Page 227
    ... 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 228
    ... of production facilities. Amounts under the latter arrangements represent commitments to purchase plant or equipment in the future. As of December 31, 2010, total other financial commitments amounted to â,¬7.4 billion (2009: â,¬4.5 billion). The Group has also entered into operating leases for...

  • Page 229
    ...only be viewed as indicators of the prices that may actually be achieved on the market. At December 31, 2010 Carrying amount Fair value In millions of euros Financial assets Receivables from financial services Trade receivables Cash and cash equivalents Marketable debt securities Available-for-sale...

  • Page 230
    ... of bonds, loans and deposits in the direct banking business are calculated as the present values of the estimated future cash flows. Market interest rates for the appropriate terms are used for discounting. On account of the short terms of commercial papers it is assumed that the carrying amounts...

  • Page 231
    ... measured at fair value Financial liabilities recognized at fair value through profit or loss Derivative financial instruments used in hedge accounting 1,150 858 2,008 Level 1 1 At December 31, 2010 Level 2 2 Level 3 3 Total Level 1 1 At December 31, 2009 Level 2 2 Level 3 3 2,150 - - 2,150...

  • Page 232
    ... in the consolidated statement of income/ loss (not including derivative financial instruments used in hedge accounting): At December 31, 2009 2010 In millions of euros Assets Receivables from financial services 1 Trade receivables Other receivables and assets Loans and receivables Marketable debt...

  • Page 233
    ... -282 425 441 2010 In millions of euros 2009 Reclassifications of pre-tax gains/losses from equity to the statement of income/loss are as follows: Fair value hedges. The Group uses fair value hedges primarily for hedging interest rate risks. Revenue Cost of sales Interest income Interest expense...

  • Page 234
    ... which are accounted for using the equity method (see Note 20 for further information). The consolidated net loss for 2010 includes net gains (before income taxes) of â,¬2 million (2009: net losses of â,¬1 million) from the valuation of derivative financial instruments which were ineffective...

  • Page 235
    ... management General information on financial risk As a result of its businesses and the global nature of operations, 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...

  • Page 236
    ... of the financed assets. Usually, the financed vehicles serve as collateral, secured by certificate of ownership. Furthermore, Daimler Financial Services mitigates the credit risk from financing and lease activities, for example through advance payments from customers. Scoring systems are applied...

  • Page 237
    .... Depending on funding requirements and market conditions, Daimler issues commercial paper, bonds and financial instruments secured by receivables in various currencies. Credit lines are also used to cover financing requirements. In addition, customer deposits at Mercedes-Benz Bank have been used as...

  • Page 238
    ... of Daimler AG with 5 year tenor which was signed in October 2010. This syndicated facility serves as a back-up for commercial paper drawings and provides funds for general corporate purposes. At the end of 2010, this facility was unused. From an operating point of view, the management of the...

  • Page 239
    ... global production network. The Mercedes-Benz Vans and Daimler Buses segments are also directly exposed to transaction risk, but only to a minor degree compared to the Mercedes-Benz Cars and Daimler Trucks segments. In addition, through its proportionate share in the results of its equity investment...

  • Page 240
    ...) manages the Group's exchange rate risk and its hedging transactions through currency derivatives. The FXCo consists of the Chief Financial Officer, the head of the Investor Relations & Treasury, and the heads of the Controlling departments of the relevant segments as well as Corporate Controlling...

  • Page 241
    ... the Corporate Controlling department manages the interest rate risk relating to Daimler's leasing and financing activities by setting targets for the interest rate risk position. The Treasury Risk Management department and the local Daimler Financial Services companies are jointly responsible for...

  • Page 242
    ...the risk of changes in raw material prices in connection with procuring raw materials and manufacturing supplies used in production. Some of the raw material price risk, primarily relating to forecasted procuring of certain metals, is mitigated with the use of derivative financial instruments. These...

  • Page 243
    ... in our management and reporting system. EBIT is the measure of segment profit/loss used in segment reporting and comprises gross profit, selling and general administrative expenses, research and non-capitalized development costs, other operating income and expense, and our share of profit/loss from...

  • Page 244
    Segment information as of and for the years ended December 31, 2010 and 2009: MercedesBenz Cars In millions of euros 2010 Revenue Intersegment revenue Total revenue Segment profit/loss (EBIT) Thereof share of profit/loss from investments accounted for using the equity method Segment assets Thereof ...

  • Page 245
    ...million relate to non-cash charges, respectively. For further information on these optimization programs, see also Note 5. Daimler Financial Services. In 2010, the Board of Management decided to restructure the business activities of Daimler Financial Services AG and Mercedes-Benz Bank AG in Germany...

  • Page 246
    ... included in this line item. In 2009, other corporate items reflect Chrysler-related expenses totaling â,¬294 million. 2010 In millions of euros Total segments' profit/loss (EBIT) Share of profit/loss from investments accounted for using the equity method 1 Other corporate items Eliminations Group...

  • Page 247
    ... of euros Profit/loss attributable to shareholders of Daimler AG 2009 4,498 - 4,498 -2,640 - -2,640 2010 In millions of euros Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services 1 Net assets of the segments Investments accounted for using the equity...

  • Page 248
    ... the line "Associated companies." Therein included is a gain before income taxes of â,¬0.1 billion in connection with the legal transfer of Chrysler's international sales activities to Chrysler in the first quarter of 2009. In addition, the Group has agreed to pay US$600 million in total to Chrysler...

  • Page 249
    ..., with respect to some truck lines, the assembly of Mercedes-Benz and Fuso trucks and the sale of Mercedes-Benz and Setra buses in Russia. These two joint ventures started large parts of their business activities in 2010. In addition, at the end of 2010, Daimler signed a memorandum of understanding...

  • Page 250
    ... the German Commercial Code (HGB) the overall remuneration granted to the members of the Board of Management, excluding service cost resulting from entitlements to post-employment benefits, amounted to â,¬25.8 million (2009: â,¬11.8 million). For additional information on share-based payment of the...

  • Page 251
    ... their annual financial statements or from the requirement to prepare a management report or notes to the financial statements. The respective companies are indicated in the statement of investments. German Corporate Governance Code. The Board of Management and the Supervisory Board of Daimler AG...

  • Page 252
    ... in millions of euros From the statements of income Revenue Personnel expenses 2 Research and development expenditure thereof capitalized Operating profit (loss)/EBIT Operating margin Income (loss) before income taxes and extraordinary items Net operating income/ Net operating profit (loss) as % of...

  • Page 253
    2001 Amounts in millions of euros From the statements of cash flows 2 Investments in property, plant and equipment Depreciation and amortization Cash provided by (used for) operating activities investing activities financing activities Free cash flow of the industrial business 8,896 - 15,944 -13,287...

  • Page 254
    ...market legislation. Cost of capital. The cost of capital is the product of the average amount of capital employed and the cost-of-capital rate. The cost-of-capital rate is derived from the investors' required rate of return (see pages 77 ff). CSR - corporate social responsibility. A collective term...

  • Page 255
    ...report Integrity Code Investor Relations Liabilities Net assets Net profit Pension obligations Portfolio changes Profitability Ratings Remuneration system Revenue ROE - return on equity ROS - return on sales Segment reporting Shareholders' equity Shares Strategy Sustainability Unit sales Value added...

  • Page 256
    ...Offices...23 5400 Fax +33 1 39 23 5442 Germany, Berlin Tel. +49 30 2594 1100 Fax...887 7002 Fax +36 1 887 7001 India, Pune Tel. +91 2135 673 800... 2246 8811 Fax +603 2246 8812 Mexico, Mexico City Tel. +52 55 4155 2540 Fax +52 55... 2492 94900 Fax +42 1 2492 94904 South Africa, Pretoria Tel. +27 12 677 1502 Fax...

  • Page 257
    ... in the "Investor Relations" section of our website. It includes the Group's annual and interim reports and the company financial statements of Daimler AG. You can also find topical reports, presentations, an overview of various key figures, information on our share price, and other services. www...

  • Page 258
    .../Oceania Production locations Sales outlets Revenue in millions of euros Employees - - 994 - 4 - 13,964 533 1 - 1,727 4,710 1 - 614 874 1 - 10,645 3,028 10 - 25,486 87,136 Daimler Trucks Mercedes-Benz Vans Daimler Buses Sales Organization Automotive Businesses Daimler Financial Services...

  • Page 259
    Financial Calendar 2011 Annual Press Conference February 16, 2011 Analysts' and Investors' Conference Call February 16, 2011 Presentation of the Annual Report 2010 March 2, 2011 Annual Meeting April 13, 2011 10:00 a.m. CEST | 4:00 a.m. EST Messe Berlin Interim Report Q1 2011 April 29, 2011 Interim ...

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    Daimler AG Stuttgart, Germany www.daimler.com www.daimler.mobi