Mercedes 2010 Annual Report Download - page 95

Management Report | Liquidity and Capital Resources | 91
Cash flows from financing activities resulted in a net cash out-
flow of €7.6 billion, which almost solely reflects the repayment
of financing liabilities. To a lower extent, there were opposing cash
inflows from the issue of new shares in connection with the
exercise of stock options (€0.2 billion). The net cash inflow of
€1.1 billion in the prior year mainly reflects the capital increase
from the issue of new shares (€1.95 billion), reduced by the pay-
ment of the dividend for the year 2008 (€0.6 billion).
Cash and cash equivalents increased compared with December
31, 2009 by €1.1 billion, after taking currency translation into
account. Total liquidity, which also includes deposits and market-
able debt securities, was reduced by €3.1 billion to €13.0 billion.
The free cash flow of the industrial business, which is the
parameter used by Daimler to measure the Group’s financing
capability, increased by a significant €2.7 billion to €5.4 billion.
The main reason for the increase in the free cash flow was the
substantial improvement in the divisions’ profit contributions,
which more than offset the negative effects of inventory develop-
ments and higher investments in property, plant and equipment
and intangible assets. The sale of the shares in Tata Motors also
had a positive impact on the free cash flow.
Free cash flow of the industrial business
2010 2009 10/09
In millions of euros Change
Cash provided by
operating activities
10,066
6,544 3,522
Cash used for investing activities -741 -7,716 6,975
Change in cash (> 3 months)
and marketable debt securities
included in liquidity
-3,893
3,878 -7,771
Free cash flow of the industrial
business
5,432
2,706 2,726
Net liquidity of the industrial business
Dec. 31,
2010
Dec. 31,
2009 10/09
In millions of euros Change
Cash 9,535 6,735 2,800
Marketable debt securities
and term deposits
1,258
5,073 -3,815
Liquidity 10,793 11,808 -1,015
Financing liabilities 1,358 -5,516 6,874
Market valuation and currency
hedges for financing liabilities
-213
993 -1,206
Financing liabilities (nominal) 1,145 -4,523 5,668
Net liquidity 11,93 8 7,285 4,653
The net liquidity of the industrial business is calculated as the
amount of cash, cash equivalents, marketable debt securities and
other financial investments included in liquidity management,
less the currency-hedged nominal amount of the financing liabilities.
To the extent that the Group’s internal refinancing of the financial
services business is provided by the companies of the industrial
business, it is deducted for the calculation of the debt of the indus-
trial business. At December 31, 2010, due to the application
of the funds of the industrial business, the Group’s internal refi-
nancing was larger than the financing liabilities originally entered
into by the industrial business. This resulted in a positive value
for the financing liabilities of the industrial business, and there-
fore a positive component of net liquidity.
Compared with a year earlier, the net liquidity of the industrial
business increased by €4.7 billion to €11.9 billion.
The increase was primarily due to the positive free cash flow.