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Annual Report 2012.

Table of contents

  • Page 1
    Annual Report 2012.

  • Page 2
    Key Figures Daimler Group 2012 Amounts in millions 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 Free cash flow...

  • Page 3
    ... 2012 Amounts in millions of euros Mercedes-Benz Cars EBIT Revenue Return on sales (in %) Investment in property, plant and equipment Research and development expenditure thereof capitalized Unit sales Employees (December 31) Daimler Trucks EBIT Revenue Return on sales (in %) Investment in property...

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

  • Page 5
    ... new markets and attract additional groups of customers. Our goal is to lead our industry in terms of unit sales, revenue and profitability - and to do so in all the businesses in which we are active. In this way, we want to create lasting added value - for our shareholders, customers and employees...

  • Page 6
    ... global leaders in all of our businesses. Booming growth markets in Asia, ground-breaking strategic alliances, attractive jobs and development opportunities, and pioneering new assistance systems in our vehicles - these are some of the topics you can read about on pages 30 - 75 of this Annual Report...

  • Page 7
    A-Class All inclusive Antos Actros Assistance systems Always on A matter of integrity Avant-garde Alternative drive Apprenticeship Alliances Americas Attractive Asia

  • Page 8
    ... - 29 To Our Shareholders Important Events in 2012 Chairman's Letter The Board of Management Report of the Supervisory Board The Supervisory Board Daimler Shares 76 - 139 Management Report Business and General Conditions Profitability Liquidity and Capital Resources Financial Position Daimler AG...

  • Page 9
    ... Code Corporate Governance Report 276 - 286 Further Information Responsibility Statement Independent Auditors' Report Ten Year Summary Glossary Index List of Charts and Tables International Representative Offices Internet | Information | Addresses Daimler Worldwide Financial Calendar 2013...

  • Page 10
    ...rst new Mercedes-Benz A-Class rolls off the assembly line at the Mercedes-Benz plant in Rastatt on July 16, 2012. This production start is a further milestone in Daimler's product strategy. The A-Class stands for our offensive in the compact segment. It is the second model of our new compact cars...

  • Page 11
    ... key content using the specially developed Digital DriveStyle app in combination with Drive Kit Plus. World premiere of the A-Class. The focus of the MercedesBenz stand at the Geneva Motor Show is the new A-Class, which features an emotive design, technical innovations and convincing inner values...

  • Page 12
    ... diesel engines. The sale&care distribution system allows customers to buy, finance or lease the car for an attractive price, and to rent the battery for a monthly fee. Presentation of the new Citan city van. The new Citan model completes the range of vehicles supplied by Mercedes-Benz Vans. Like...

  • Page 13
    ... between autumn 2012 and 2015. The customer is the public transport company SBS Transit, which operates more than 250 bus lines in the metropolis of five million inhabitants. Expansion of production capacities for the A-Class. Due to the excellent response to the new Mercedes-Benz A-Class, Daimler...

  • Page 14
    ... in 2012. The Mercedes-Benz F 125! research vehicle is awarded the first prize in the Concept Car category. Agreement on new Integrity Code. The management and the employee representatives sign the new Integrity Code. Feedback was utilized from several thousand employees who participated in a Group...

  • Page 15
    ...Board will propose the distribution of a dividend at last year's high level of 2.20 euros per share so that you continue to benefit from the Daimler Group's success. What were the most important developments at our divisions? At Mercedes-Benz Cars, we achieved record sales in 2012. Our new products...

  • Page 16
    1 | To Our Shareholders | Chairman's Letter " Doing business efficiently and growing profitably - those are two sides of the same coin." 13

  • Page 17
    ... different modes of transportation. That all goes to make one thing clear: 2012 was a year of many successes. But it's also true that not all of our goals have yet been achieved. We can do much more - and we'll prove that in the coming years. Although growth forecasts for key markets in 2013 are...

  • Page 18
    ... guidelines serve as important "safety belts," they cannot replace the "inner compass" that keeps us on course and acting responsibly, even where there are no clear rules. In any case, the same goes for our corporate culture as it does for all of the Daimler Group: We are on the right track and will...

  • Page 19
    ... pacemakers for clean and safe vehicles. for our future success." To the benefit of all road users." Bodo Uebber | 53, Finance & Controlling, Daimler Financial Services, appointed until December 2014 Thomas Weber | 58, Group Research & Mercedes-Benz Cars Development, appointed until December 2016...

  • Page 20
    ... Board was regularly informed by the Chairman of the Board of Management about all significant operating developments as well as personnel changes and appointments. Daimler's business activities continued to develop successfully during the year 2012. The Group's unit sales and revenue increased...

  • Page 21
    ...markets as well as developments in the area of financial services. The Supervisory Board also dealt with safeguarding the Group's long-term profitability, fundamental questions of corporate planning including financial, investment, sales and human resources planning, developments in the companies...

  • Page 22
    ...member of the Board of Management with responsibility for Manufacturing and Procurement MercedesBenz Cars & Mercedes-Benz Vans for a further five years as of March 1, 2013. The Supervisory Board also dealt with the course of business and results of the first quarter, as well as with status reports...

  • Page 23
    ... design of Mercedes-Benz cars, connectivity in vehicles, autonomous driving and digital life at the Group, - the implementation of flexible production and procurement networks as well as plant expansion and new sites, - employment developments, personnel planning and recruitment worldwide, - current...

  • Page 24
    ... Board's proposals to the Annual Shareholders' Meeting 2013 on candidates for election. The election proposal gives due consideration not only to the defined qualifications for the specific position, but also to the recommendations of the German Corporate Governance Code. As in previous years...

  • Page 25
    ...and Head of Mercedes­Benz Cars. Also in this meeting, Prof. Dr. Thomas Weber was appointed for a further three years as of January 1, 2014 as Member of the Board of Management of Daimler AG responsible for Group Research & Mercedes­Benz Cars Development. As of April 1, 2013, Andreas Renschler will...

  • Page 26
    ... General Manager of the Networks Business Group of Nokia Corporation Other supervisory board memberships/directorships: F­Secure Corporation Fortum OYj ­ Chairwoman Deutsche Telekom AG AkzoNobel N.V. Dr. Clemens Börsig Frankfurt am Main Former Chairman of the Supervisory Board of Deutsche Bank AG...

  • Page 27
    ...Our Shareholders | The Supervisory Board Jürgen Langer* Frankfurt am Main Chairman of the Works Council of the Frankfurt/Offenbach Dealership, Daimler AG Ansgar Osseforth* Sindelfingen Manager Mercedes­Benz Research and Development, Daimler AG Valter Sanches* São Paulo Director of Communications...

  • Page 28
    ... banks. Daimler's share price gains 22% over the year. The Board of Management and the Supervisory Board propose a dividend of â,¬2.20 per share. We offer investors and analysts a wide range of investor­relations services. 1.01 Development of Daimler's share price and major indices End of 2012 End...

  • Page 29
    ... â,¬2.20 per share, our shareholders had an increase in value of 28%. In the first several weeks of the year 2013, Daimler's share price again climbed significantly. Dividend of â,¬2.20.  1.02 The Board of Management and the Supervisory Board will propose to the Annual Shareholders' Meeting to be...

  • Page 30
    ... and Stuttgart. Stock­exchange trading in Germany in the year 2012 amounted to 1,421 million shares (2011: 1,728 million). In addition, Daimler shares are increasingly traded on mul­ tilateral trading platforms and in the over­the­counter market. Good participation in employee share program. In...

  • Page 31
    ... two capital­market days. In late March, the Board of Management presented the strategies, main thrusts and key goals of the Mercedes­Benz Cars division on the occasion of opening our new car plant in Kecskemét, Hungary. In late June, the management team of Daimler Trucks provided information on...

  • Page 32
    A for ... Attack Always on Antos, Actros Assistance systems Alliances All inclusive Asia, the Americas Attractive A matter of integrity Avant-garde 32 - 37 38 - 41 42 - 47 52 - 55 56 - 59 66 - 69 74 - 75 30 48 - 51 60 - 65 70 - 73

  • Page 33
    ... and Antos trucks, but also for our global strategy. By offering outstanding products, pioneering technologies, and innovative mobility services, we are enhancing our leading position worldwide. In markets such as Asia and the Americas, we aim to continue growing. As an appealing employer, we want...

  • Page 34
    ... segment is speeding up. After the successful launch of the new B-Class, we're upping the pace. With the launch of the young, progressive and sporty A-Class, we're increasing the dynamism of the Mercedes-Benz premium brand. The breathtaking CLA four-door coupe is also already winning the hearts...

  • Page 35
    ... is a clear statement about the dynamism of Mercedes­Benz. Completely new down to the last detail, it's setting the benchmarks for design and technology in its segment. 34 The rear of the model also displays expressive design combined with outstanding aerodynamics. For example, the tail lights...

  • Page 36
    ... to take new markets and customers by storm. Automobile designers don't often get the chance to start afresh with a blank page. But the designers and engineers from Daimler had this opportunity and used it impressively. With the new A­Class, Mercedes­Benz is revitalizing the model range in ways...

  • Page 37
    ... 2013" prize from the ADAC, which is presented to Germany's favorite car. In order to keep up with the enormous demand, the Mercedes­Benz plant in Rastatt has hired 500 additional employees working in three shifts to produce the new model. We are creating additional capacity for A­Class production...

  • Page 38
    2 | A for Attack The next star in the compact-car segment is eagerly awaited. The avant-garde four-door coupe from Mercedes-Benz, the CLA, will celebrate its market launch in spring 2013. 37

  • Page 39
    ... automaker to completely integrate the iPhone into its cars. Drivers can now continue their digital lifestyles while on the move with a feature that appeals not only to the Facebook generation. Online services in networked vehicles are also making our car2go mobility concept and electric mobility...

  • Page 40
    ...a means of transportation. For example, Mercedes-Benz apps enable drivers to safely and conveniently access multimedia content such as music, news, weather reports, stock prices, and Facebook and Google websites while on the move. The telematics systems from Mercedes-Benz provide the associated data...

  • Page 41
    ... the development of intelligent networks for urban mobility. By doing so, it is enabling us to use resources more efficiently." Wilfried Steffen, Head of Daimler Business Innovation The innovative moovel mobility platform can be accessed easily from many smartphones via an app or a mobile website...

  • Page 42
    ... lowest fuel consumption in its class. The success story is now being continued at Mercedes-Benz with the Antos - a completely new truck series for heavy-duty distribution transportation. We deliver innovations that make a difference. Antos Actros The new Antos and Actros from Mercedes­Benz were...

  • Page 43
    The Antos cab is available in three versions, all of which make a big impression with comfortable entry and outstanding ergonomics and interior arrangements. 44

  • Page 44
    ... most successful heavy­duty truck - the Mercedes­Benz Actros - the new Antos is in a class of its own. This truck makes Mercedes­Benz the first manufacturer to specifically address the needs of the heavy­duty distribution transportation sector. This sector requires easy­to­operate, economical...

  • Page 45
    ... technology in Predictive Powertrain Control system of the new Actros helps conserve fuel and can be easily operated by drivers. "Predictive Powertrain Control fully utilizes its knowledge of the road ahead in hilly terrain, thereby helping vehicle operators achieve the most economical driving...

  • Page 46
    ... new Mercedes-Benz Actros and optional in the Antos) reduces fuel consumption by a further three percent. The satellite-assisted system monitors the vehicle and the road ahead, including all uphill and downhill grades. The intelligent cruise control can therefore adjust speed and gear-shifting times...

  • Page 47
    ...relief and support to drivers, Mercedes-Benz assistance systems protect drivers and pedestrians alike. Such systems have been available in the S-Class for quite some time. Now they are also included in the new E-Class and the new compact-car models from Mercedes-Benz. We set standards for safety. 48

  • Page 48
    2 | A for Assistance systems 49

  • Page 49
    ... is the new Traffic Sign Assist feature, which can recognize "No Entry" signs and issue visual and acoustic warnings to prevent dangerous wrong-way driving. "6D Vision is a milestone. The sensors detect activity in their surroundings much faster than people can. This technology will definitely...

  • Page 50
    ... as active partners that can assist drivers in an increasing number of situations. These assistance systems use state­of­the­art sensor technology to continually monitor the area around the vehicle and, if necessary, support drivers in line with the current traffic situation. The new systems...

  • Page 51
    Alliances 52

  • Page 52
    ...produce or sell vehicles only in cooperation with a local partner. Optimal planning of costs and investments. In view of ever shorter product lifecycles and higher levels of investment, cooperative partnerships are becoming increasingly important. Through joint development and production activities...

  • Page 53
    ... produce one of the new compact cars models for the Chinese market. In a shared new en­ gine plant, it will also build four­cylinder gasoline engines starting in 2013. The construction of a research and develop­ ment center in China is now in full swing. Daimler Trucks and Foton are successful...

  • Page 54
    ...A for Alliances Europe The Citan is the youngest member of the Mercedes-Benz van family - and the first vehicle to result from the strategic partnership of Daimler and Renault-Nissan. With this city van, Mercedes-Benz is entering new and traditional markets alike. Russia At the end of 2011, Kamaz...

  • Page 55
    ... hop in. Daimler Financial Services (DFS) plays a major role in supporting our vehicle sales by offering customized financial services for everything related to automobiles. The comprehensive range of financing, leasing, insurance, fleet management, banking and mobility services makes it easier for...

  • Page 56
    ... their vehicle will be repaired at an authorized service center with genuine brand parts. 57 Daimler Financial Services offers a com­ plete range of convincing arguments for choosing its financing, leasing, and insur­ ance products - and customers who opt to purchase a new Mercedes­Benz A­Class...

  • Page 57
    ..." Stuttgart since November 2012. The carsharing company is now operating 300 battery­ powered smart electric drive vehicles "car2go enables me to rent a vehicle on the spur of the moment. I don't have to return the car to a rental agency and I don't have to pay for parking. But the best thing...

  • Page 58
    2 | A for All inclusive 59

  • Page 59
    ...of the Americas, Japan and Europe. We are also exploiting the outstanding prospects offered by the emerging markets of Brazil, Russia, India and China. New production capacities, cooperative projects and local brands are powering our growth in the BRIC countries. We are going places worldwide. 60 61

  • Page 60
    ... my country, India, and 'Benz' denotes the state-of-the-art technologies from Daimler." Omprakash Singh, Head of Corporate Human Resources, Daimler India Commercial Vehicles Pvt. Ltd. w www5.mercedes-benz.com/en/vehicles/buses/ w daimler-indiacv.com w daimler.com/company/daimler-worldwide Asia 62

  • Page 61
    ... on the Mercedes-Benz Citaro - the most successful city bus of all time. Passengers in Singapore appreciate the special comfort of these buses, which are the first-ever low- ï¬,oor buses to operate in Southeast Asia. Daimler is putting high-quality, reliable and fuel-efficient BharatBenz trucks on...

  • Page 62
    ... 2,400-mile test drive, the new heavy-duty truck's fuel consumption was up to 7% lower than that of the current model. Systematically expanding its presence in the core markets. In its traditional markets as well, Daimler is engaging in new projects in order to satisfy customers' growing desire for...

  • Page 63
    ....com/company/daimler-worldwide Whether it's used as a travel van or a ï¬,eet vehicle, the Sprinter is continuing to speed ahead in the United States. This successful van is sold as a Mercedes-Benz and Freightliner vehicle. Its state-of-the-art motorization and low fuel consumption make it extremely...

  • Page 64
    ... motivated young employees, expanded training programs and new courses in "green technology," the Mercedes-Benz plant in Rastatt is steering its activities toward a bright future. Powered by talent. As an attractive employer, Daimler offers outstanding opportunities to careers starters, trainees...

  • Page 65
    ... who are currently not available, guidelines for managers, company day­care centers, regionally adjusted flexible worktime models, and healthcare programs. The aim of all of these services is to ensure that the employees can responsibly manage their individual resources. The employer of choice...

  • Page 66
    2 | A for Attractive Well­qualified and dedicated employees are the engine of our automotive innovations. 69

  • Page 67
    ... way. The same high standards that characterize our products are also applied to the way we conduct business. By joining the UN Global Compact, we committed ourselves to upholding and actively pro­ moting its principles with regard to human rights, labor standards, environmental protection and anti...

  • Page 68
    ... into Daimler's new Integrity Code. The new Daimler Integrity Code. In October 2012, the Board of Management and the employee representatives signed the new Integrity Code, which incorporates employee feedback in order to ensure that it is based on a shared system of values. The code is based on...

  • Page 69
    2 | A for A matter of integrity Since 2011, the Group-wide "fairplay" campaign has provided our employees with information about integrity and compliance in 19 languages and in more than 40 countries. 73

  • Page 70
    ... our success. As laboratories on wheels, the legendary research vehicles from Mercedes-Benz not only make it possible to experience our technology and the fascination of the brand at first hand, but also open up visionary horizons. The unique products that bear the Mercedes star have always set the...

  • Page 71
    Management Report Daimler continued along its growth path in 2012. Revenue increased by 7% to â,¬114.3 billion. EBIT of â,¬8.6 billion did not quite reach the high prior­year level due to difficult conditions in important markets. With substantial expenditure to secure our future success, we ...

  • Page 72
    ...to acquisitions Strategy New Board of Management position for "Greater China" Economy and markets Business development 114 - 116 Daimler AG (Condensed version according to HGB) 117 - 118 Overall Assessment of the Economic Situation 118 Events after the End of the 2012 Financial Year 119 - 124...

  • Page 73
    ...Group. In the year 2012, Daimler increased its revenue by 7% to â,¬114.3 billion. The individual divisions contributed to this total as follows: MercedesBenz Cars 52%, Daimler Trucks 26%, Mercedes-Benz Vans 8%, Daimler Buses 3% and Daimler Financial Services 11%. At the end of 2012, Daimler employed...

  • Page 74
    ... the Mercedes­Benz Sprinter will be produced under license also by our partner GAZ in Russia. The most important markets for vans are in Europe, which accounts for 75% of unit sales. As part of the "Vans goes global" business strategy, we are also increasingly developing the growth markets of South...

  • Page 75
    ... Daimler shares with a part of their Plan income and to hold them for the duration of their employment at the Daimler Group. On April 7, 2010, Daimler AG and the Renault­Nissan Alliance signed a master cooperation agreement on wide­ranging strategic cooperation and a cross­shareholding. Renault...

  • Page 76
    ... Annual Shareholders' Meeting held on April 8, 2009, the Board of Management was authorized with the consent of the Supervisory Board to increase the share capital of Daimler AG by up to â,¬1 billion during the period until April 7, 2014 by issuing new registered shares of no par value in exchange...

  • Page 77
    ... the right to acquire the shares of that party in the jointly held company at appropriate conditions at the time of the change of control. - An agreement relating to a joint venture with BAIC Motor Co. Ltd. for the production and distribution of cars of the Mercedes-Benz brand in China, by which...

  • Page 78
    ... and business success are two sides of the same coin. That is why we want to lead the competition also in terms of integrity. We are working hard to get there. Clear claim to leadership in all businesses. With the "Mercedes-Benz 2020" growth strategy, our Mercedes-Benz Cars division strives...

  • Page 79
    ... developed a global production network with great ï¬,exibility. With the new Antos, the first truck model series developed specifically for heavy­ duty distribution transport, we are continuing our model offensive in the area of trucks and are once again setting trends in terms of economy, safety...

  • Page 80
    ...a new engine plant for four­cylinder engines will be opened in 2013. At the same time, we are expanding our sales network in China and reorganizing the distribution system. With medium and heavy trucks, we are focusing on the cooperation with our partner Foton in China. Mercedes­Benz Vans produces...

  • Page 81
    ... of our growth strategy. Beijing Mercedes-Benz Sales Service Co., Ltd. is a 50:50 joint venture with our strategic partner Beijing Automotive Group (BAIC). The new company combines the functions of sales and marketing, aftersales, dealer network development, used-car and ï¬,eet-car sales, and dealer...

  • Page 82
    ... pound, the euro closed the year with a slight depreciation of 2%, after rather less volatile movements towards the end of the year. 3.04 Economic growth Gross domestic product, growth rates in % 5 4 3 2 1 0 -1 Total Western Europe NAFTA Asia South America Eastern Europe 2011 2012 Source: IHS...

  • Page 83
    ...financial crisis, appro­ ximately three million fewer cars were sold in Western Europe last year, which is roughly equivalent to the number of new cars registered in Germany in 2012. In the large emerging markets, however, the growth trend continued also outside China. In India, car sales increased...

  • Page 84
    ... successful in the United States, Canada, Japan and see pages 144 ff China. Daimler Trucks was able to increase its unit sales by 9% in 2012, although the market environment worsened significantly in the second half of the year. In total, we shipped 462,000 heavy­, medium­ and light­duty trucks...

  • Page 85
    ... development of unit sales was also very positive in Indone­ sia (+10%). In India, we shipped the first trucks of the new BharatBenz brand in September; 1.100 vehicles had already see pages 148 ff been sold by the end of the year. E 3.08 Market share1 2012 In % Mercedes-Benz Cars Western Europe...

  • Page 86
    ...lower than in the prior year, although we adjusted production volumes to the reduced demand in the second half of the year. 3.10 Revenue by division 2012 In millions of euros Daimler Group Mercedes­Benz Cars Daimler Trucks Mercedes­Benz Vans Daimler Buses Daimler Financial Services 114,297 61,660...

  • Page 87
    ... at Mercedes-Benz Cars and the current product offensive at Daimler Trucks also had an impact on Group EBIT. In addition, Mercedes-Benz Vans incurred expenses in connection with the impairment of the Chinese joint venture Fujian Benz Automotive Corporation. Daimler Financial Services achieved...

  • Page 88
    ...'s return on sales was 6.0%, compared with 9.1% in the prior year.  3.14 The decrease in earnings was partially related to lower levels of unit sales, especially caused by the significantly weaker market in Western Europe. Good product quality was reflected by lower warranty costs. Exchange-rate...

  • Page 89
    ... 0 Daimler Financial Services 2009 2010 2011 2012 Daimler Buses posted EBIT for the year of minus â,¬232 million (2011: plus â,¬162 million). The division's return on sales was minus 5.9% (2011: plus 3.7%).  3.14 The decrease in earnings was primarily the result of lower sales of bus chassis due...

  • Page 90
    ... business; the expected returns on liquidity and plan assets of the pension funds of the industrial business are considered with the opposite sign. The cost of equity is calculated according to the capital asset pricing model (CAPM), using the interest rate for long-term risk-free securities...

  • Page 91
    3.19 Value added 2012 In millions of euros Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services 4,185 2,716 396 387 -369 526 3,726 3,775 796 690 23 643 2011 12/11 % change +12 -28 -50 -44 . -18 Value added The Group's value added increased by ...

  • Page 92
    ... of revenue is "Business development" section of this provided in the Management Report.  3.23 3.22 Net assets of the Daimler Group at year-end 2012 In millions of euros Net assets of the industrial business Intangible assets Property, plant and equipment Leased assets Inventories Trade...

  • Page 93
    ... 164 ff E Key factors for the market success of our vehicles are the expertise, creativity and motivation of our employees in research and development. At the end of the year 2012, 21,100 persons were employed in Daimler's research and development departments around the world (end of 2011: 23,200...

  • Page 94
    ...(a new Mercedes­Benz construction­site truck), the Antos (specially developed for heavy­duty distribution transport), new medium and heavy­duty engines, and successor generations of existing products. The focus of R&D expenditure at Mercedes­Benz Vans was on the successor models of the Vito and...

  • Page 95
    ...the current model. This was measured and independently confirmed in a one-week test drive across the United States. Our new buses also deliver impressive fuel consumption figures. In the Record Run Buses 2012, the new Mercedes-Benz Citaro city bus and the new Setra ComfortClass 500 coach with Euro...

  • Page 96
    ... paid to each eligible employee of Daimler AG. This is a clear sign of recognition of our employees' hard work and commitment. 3.28 Employees by division Daimler Group Mercedes­Benz Cars Daimler Trucks Mercedes­Benz Vans Daimler Buses Sales Organization Daimler Financial Services Other 275,087 98...

  • Page 97
    ...soon as the Board of Management and the Group Works Council have decided on criteria for the performance participation bonus with long­term validity. The payout is planned for April 2013 as usual. Average age at prior-year level. The average age of our employees worldwide in 2012 was 41.9 (2011: 41...

  • Page 98
    ... organization (Information Technology Management - ITM) has approximately 5,000 employees worldwide and is involved in nearly all of the Group's business processes - from product development to vehicle production to sales and financing work­ flows. In addition, it is playing an increasingly central...

  • Page 99
    ...currencies. Liquidity management secures the Group's ability to meet its payment obligations at any time. For this purpose, liquidity planning provides information about all cash ï¬,ows from operating and financial activities in a rolling plan. The resulting financial requirements are covered by the...

  • Page 100
    ... billion; 2011: â,¬2.0 billion). 3.29 Condensed consolidated statement of cash ï¬,ows 2012 In millions of euros Cash and cash equivalents at beginning of year Net cash from operating activities Net cash used in investing activities Net cash from financing activities Effect of exchange-rate changes...

  • Page 101
    ... as the net change in inventories, trade receivables and trade payables, with a total amount of â,¬0.8 billion. Positive effects resulted from the sale of trade receivables of companies in the industrial business to Daimler Financial Services. High investments in property, plant and equipment and...

  • Page 102
    ... Trucks in % of revenue Mercedes-Benz Vans in % of revenue Daimler Buses in % of revenue Daimler Financial Services in % of revenue At Mercedes­Benz Cars, investment in property, plant and equipment increased by 28% to â,¬3.5 billion in 2012.  3.34 One focus was on the expansion of production...

  • Page 103
    ... at Mercedes-Benz Bank and the securitization of receivables from customers in the financial services business (asset backed securities, ABS) serve as additional sources of refinancing. Various issue programs are available for raising longer­term funds in the capital market. They include the Euro...

  • Page 104
    ... hand, Daimler Trucks will profit from the new products launched since the year 2011. DBRS, the Canadian rating agency, confirmed its long­term rating for Daimler and its subsidiaries on October 25, 2012 at A (low) with a stable trend. DBRS is of the opinion that with its current financial profile...

  • Page 105
    ... property, plant and equipment to increase to â,¬20.6 billion (December 31, 2011: â,¬19.2 billion). In 2012, a total of â,¬4.8 billion was invested in the launch of new products, the expansion of production capacities, and modernization - mainly at the sites in Germany. Equipment on operating leases...

  • Page 106
    ...Management Report | Financial Position Investments accounted for using the equity method of â,¬4.6 billion primarily comprise the carrying amounts of our equity interests in EADS, Engine Holding, the two Chinese joint ventures (Beijing Foton Daimler Automotive in the truck business and Beijing Benz...

  • Page 107
    ... plans, the term of that guarantee expired in August 2012. Another financial guarantee of â,¬0.1 billion relates to bank loans of Toll Collect GmbH, the operator company of the toll-collection system for trucks in Germany. E E Funded status of pension obligations The funded status of the Group...

  • Page 108
    ... or services, or which lease production facilities to us. Buyback obligations arise for the Group from agreements under which we guarantee to customers certain trade-in or resale values for sold vehicles. Most of these guarantees provide the holder with the right to return purchased vehicles to...

  • Page 109
    ... is the parent company of the Daimler Group and is domiciled in Stuttgart. Its principal business activities comprise 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...

  • Page 110
    3 | Management Report | Daimler AG Selling expenses increased to â,¬5.9 billion in 2012 (2011: â,¬5.7 billion). The increase was caused by the higher volume of business and the related higher expenses for purchased services, as well as higher shipping and IT costs. General administrative expenses ...

  • Page 111
    ... the result of investment in property, plant and equipment and financial assets. The cash ï¬,ow from financing activities resulted in a net cash inflow of â,¬2.4 billion in 2012 (2011: net cash outflow of â,¬0.5 billion). The payment of the dividend for the year 2011 accounts for a cash outflow...

  • Page 112
    ... in 16 cities of Europe and North America. We also made very good progress with the development of our worldwide production network. In India, we have been producing trucks under the BharatBenz brand since June 2012, and our new car plant in Kecskemét, Hungary, started production in April 2012. In...

  • Page 113
    ... the End of the 2012 Financial Year With the goal of placing our growth strategy on a sound financial foundation, we have initiated far-reaching programs to improve our efficiency and competitiveness in all divisions. Those programs include "Fit for Leadership" at Mercedes-Benz Cars, "Trucks#1" at...

  • Page 114
    ... | Events after the End of the 2012 Financial Year | Remuneration Report Remuneration Report The Remuneration Report summarizes the principles that are applied to determine the remuneration of the Board of Management of Daimler AG, and explains both the level and the structure of its members...

  • Page 115
    ... annually in relation to a market comparison; for 2012, approximately 1.3 to 1.6 times the base salary. Range of target achievement: 0 to 200%, that is, the plan has an upper limit. It may also be zero. Value of the phantom shares on payout: In line with the calculated share price and the number...

  • Page 116
    ...remuneration in 2012. The total remuneration granted by Group companies to the members of the Board of Management of Daimler AG is calculated as the total of the amounts of - the base salary in 2012, - the half of the annual bonus for 2012 payable in 2013, - the half of the medium­term share­based...

  • Page 117
    ... to Dr. Hohmann-Dennhardt for the year 2011. The granting of non-cash benefits in kind, primarily the reimbursement of expenses for security precautions and the provision of company cars, resulted in taxable benefits for the members of the Board of Management in 2012 as shown in the table.  3.44...

  • Page 118
    ... Code on the so­called severance­payment cap, to double the annual remuneration and may not exceed the total remuneration for the remaining period of the service contract. Sideline activities of Board of Management members. The members of the Board of Management should accept management board...

  • Page 119
    ... services, except for the remuneration paid to the members of the Supervisory Board representing the employees in accordance with their contracts of employment. The remuneration of all the activities of the members of the Supervisory Board of Daimler AG in the year 2012 was thus â,¬3.0 million (2011...

  • Page 120
    ... part of the strategy process, long-term opportunities for further profitable growth are identified and included in the decision process. Entrepreneurial opportunities are not reported within our risk management system; they are identified in the context of strategic and medium-term planning and...

  • Page 121
    ... exposed. But responsibility for operational risk management for risks threatening the existence of the Group and for the control and risk management processes with regard to the corporate accounting process remains directly with the corporate areas, companies and central functions. The measures...

  • Page 122
    ... by euro member states, would have a massive impact on the global economy and thus also on the US economy. These could have negative effects for the passenger cars and the truck market demand. A lasting growth slump in China would be of strategic importance for Daimler. It already became clear...

  • Page 123
    ... global economic developments, it could lead to the increased application of salespromoting financing offers and other incentives. That 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 124
    ... the Mercedes-Benz Vans division, especially in the long term. Legislation on reducing the greenhouse-gas emissions and fuel consumption of heavy commercial vehicles has also been passed or is under discussion. We therefore have to assume that the statutory limits will be very difficult to meet in...

  • Page 125
    ... risk management, regular reporting dates are set for suppliers depending on our assessment of them, in which key performance indicators are reported to Daimler and any required support actions are decided upon. Information technology risks and unforeseeable events. Production and business processes...

  • Page 126
    ... market information. Any market-sensitive instruments held in pension funds and other postretirement pension plans, including equity and interest-bearing securities, are not included in the following analysis. Exchange rate risks. The Daimler Group's global reach means that its business operations...

  • Page 127
    ... course of business, we make use of bonds, commercial papers and securitized transactions as well as bank credits in various currencies, primarily to refinance the leasing and sales-financing business. A negative development of the capital markets could increase the Group's financing costs. More...

  • Page 128
    ... Board in December 2012 for the years 2013 and 2014. This planning is based on premises regarding the economic situation, which are derived from assessments made by renowned eco­ nomic institutions, and on the targets set by our divisions. The prospects for our future business development...

  • Page 129
    ... production sites and flexibility, as well as the requirements of differing customers in a global market. Another factor is the continuing and increas­ ing need to invest in fuel­efficient and future-oriented technologies and to develop and supply innovative and sustainable mobility and transport...

  • Page 130
    ... market segment of small vans makes us a full­ range supplier and thus gives us additional growth potential in Europe. As of mid­2013, there will be demand stimulus from the new­generation Sprinter. As part of our "Vans goes global" strategy, we are increasingly developing markets outside Europe...

  • Page 131
    ...innovative mobility service packages. World­ wide, we want to gain larger numbers of young customers, who Daimler will increasingly attract with its new models in the compact class and who are particularly open­minded with regard to financing and leasing offers. For the new Mercedes­Benz A­Class...

  • Page 132
    ... 9% across market and product cycles. This is based on target returns on sales for the individual divisions: 10% for Mercedes­Benz Cars, 8% for Daimler Trucks, 9% for Mercedes­Benz Vans and 6% for Daimler Buses. For the Daimler Financial Services division, we have set a target return on equity of...

  • Page 133
    ... Investment in property, plant and equipment 2011 In billions of euros Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services 4.2 2.7 1.2 0.1 0.1 0.02 4.8 3.5 1.0 0.2 0.1 0.02 10.2 7.3 2.0 0.7 0.2 0.03 2012 2013-2014 Capital expenditure In order...

  • Page 134
    ... 2011 and 2012. Research and development expenditure at Mercedes-Benz Cars of â,¬7.6 billion will be in the magnitude of the two previous years. Key projects are the successor models to the C- and E-Class and the new smart models. We are also investing substantial sums in new, low-emission and fuel...

  • Page 135
    4 | The Divisions The Divisions Electrifying. Mercedes-Benz SLS AMG Coupe Electric Drive - the world's most powerful electric super sports car. 140 141

  • Page 136
    ... well in an increasingly difficult market environment. Further growth was achieved at Mercedes-Benz Cars and Daimler Trucks, while the unit sales of Mercedes-Benz Vans and Daimler Buses decreased. The business volume of Daimler Financial Services increased significantly. In order to achieve our...

  • Page 137
    ... long term Launch of new Antos for heavy-duty distribution transport Production and sales start of BharatBenz brand and start of operation of new production plant in India Joint venture in China starts production Numerous additional innovative products presented New engines reduce fuel consumption...

  • Page 138
    ... to include a new key component: Fit for Leadership. 4.01 Mercedes-Benz Cars 2012 Amounts in millions of euros EBIT Revenue Return on sales (in %) Investment in property, plant, and equipment Research and development expenditure thereof capitalized Production Unit sales Employees (December 31...

  • Page 139
    ... Germany. Total unit sales of 300,100 vehicles exceeded the prior-year level by nearly 5% despite weak markets in the countries of Southern Europe. Sales in the United States reached a new record level of 289,300 vehicles (+17%); this development was primarily a result of the success of our new SUVs...

  • Page 140
    ... A total of â,¬800 million has been invested in the Kecskemét plant, which meanwhile employs more than 3,000 people. Production of the B­Class started there after the plant was opened, followed by the new four­door compact coupe CLA in January 2013. The production network for our new compact cars...

  • Page 141
    ...automobile association. Focusing on younger customer groups. In 2012, we added new chapters to the success story of the Mercedes-Benz brand. For example, we enhanced the fascination and appeal of the Mercedes star with a comprehensive product and communication offensive whose activities centered on...

  • Page 142
    ...Despite higher unit sales, EBIT was lower than in 2011. 4.03 Daimler Trucks 2012 Amounts in millions of euros EBIT Revenue Return on sales (in %) Investment in property, plant, and equipment Research and development expenditure thereof capitalized Production Unit sales Employees (December 31) 1,714...

  • Page 143
    ..., Daimler Trucks was able to maintain its good position. In both Western Europe as a whole and Germany, its home market, Mercedes­Benz strengthened its market leadership by further increasing its market share in the medium and heavy segments. In the year under review, our market share was 22...

  • Page 144
    ... with a market share of 43.7% (2011: 48.7%). One of the high points of 2012 was the start of the production and sales of BharatBenz brand vehicles in India. We put a new production plant into operation in India last April after a record set­up time of only about 24 months. 85% of the parts and...

  • Page 145
    ... units of a commercial vehicle engine series meet the future Euro VI emissions standard without exception. The new engines are tailored to meet the requirements associated with light, medium, and heavy­duty distribution transportation; light and medium­duty construction site work; long­haul opera...

  • Page 146
    ... the division and increasing its international scope. 4.05 Mercedes-Benz Vans 2012 Amounts in millions of euros EBIT Revenue Return on sales (in %) Investment in property, plant, and equipment Research and development expenditure thereof capitalized Production Unit sales Employees (December 31) 541...

  • Page 147
    ...already been demonstrated by the van's steadily increasing sales figures in the second half of 2012. We plan to invest more than â,¬80 million in the production of new van models at the Buenos Aires plant over the next few years. In the process, we will create 700 new jobs there. We have also taken...

  • Page 148
    ... further growth at Daimler Buses. 4.07 Daimler Buses 2012 Amounts in millions of euros EBIT Revenue Return on sales (in %) Investment in property, plant, and equipment Research and development expenditure thereof capitalized Production Unit sales Employees (December 31) -232 3,929 -5.9 82 222 23 31...

  • Page 149
    ... in 2013. New Mercedes-Benz Citaro named "Bus of the Year 2013." The new Citaro with its Euro VI-compliant engine greatly impressed the international jury of experts who selected the winner of the "Bus of the Year 2013" award. The new Citaro - the first series­produced regular­service bus to...

  • Page 150
    ... Financial Services once again received awards in the areas of customer satisfaction, dealer satisfaction and employer attractiveness. 4.09 Daimler Financial Services 2012 Amounts in millions of euros EBIT Revenue New business Contract volume Investment in property, plant, and equipment Employees...

  • Page 151
    ... Services is increasingly supplement­ ing its automotive financial services operations with activities in the rapidly growing market for mobility services. The division's innovative car2go car­sharing concept is now up and running in 18 cities in Europe and North America. As a result, the number...

  • Page 152
    5 | Sustainability Sustainability The new Mercedes-Benz Vito E-CELL wagon: the first seven-seater with a locally emission-free drive system. 158 159

  • Page 153
    Daimler is committed to the principle of sustainability and has a holistic view of this topic. So for us, economic, social and environmental responsibility are inseparable from each other. 160

  • Page 154
    ... economical large sedan Vehicles with alternative drive systems in series production Fuel­efficient trucks and buses New technologies for greater safety In 2013, the new Sustainability Report will be available as of early April in time for the Annual Shareholders' Meeting. Further information on...

  • Page 155
    ... strategy. We want to enhance the value of our company over the long term. And we can do that only if we define value creation holistically and measure the success of our business operations not only in terms of financial metrics, but also in relation to their social acceptance. In order...

  • Page 156
    ..., 2012. Daimler employees, shareholders, customers and suppliers as well as representatives of associations, environmental and human rights organizations, politicians, and interested members of the public all took part. This survey, which is new in terms of its scope and openness, serves to make the...

  • Page 157
    ... our cars and commercial vehicles as part of our "Road to Emission-free Driving" strategy. In doing so, we are focusing on the following areas: 1. We are continuing to develop and further optimize our vehicles with state­of­the­art combustion engines in order to achieve significantly lower fuel...

  • Page 158
    ... from the combustion engine and the vehicle's climate control system remains fully operational in the start/stop mode. The E 300 BlueTEC HYBRID has been available for delivery to customers in both a sedan and a station wagon version since June 2012. Environmentally friendly drive systems for the...

  • Page 159
    ... that meet a range of demands. They include the new Mercedes-Benz E 300 BlueTEC HYBRID. Hybrid technology also offers major advantages for distribution transportation involving light trucks. For example, the new Fuso Canter Eco Hybrid, which is now also manufactured in Portugal for sale in Europe...

  • Page 160
    ... and developing C2X communication systems in the United States, where the Group is equipping vehicles with C2X systems and carrying out tests at its site in Palo Alto, California. These activities in the USA enable Daimler, as a major global car maker, to take account of the American market's unique...

  • Page 161
    ... employs such models in order to meet the company's business requirements - and also to help employees balance their professional and private lives. 5.01 Human resources 2012 Employees (December 31) Daimler Group Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Sales & Marketing...

  • Page 162
    ... of activities as part of our diversity management initiative. They range from diversity workshops and mentoring programs to the establishment of employee networks. Our commitment to such activities underscores our determination to make diversity a value factor in our human resources processes and...

  • Page 163
    ... Responsibility In 2012, we spent a total of â,¬58 million supporting nonprofit institutions and socially beneficial projects. As a good corporate citizen, we want to go beyond our business operations and create socially beneficial added value in the communities near our company locations, while...

  • Page 164
    ...-roof" cars from the 1960s. life and also offering educational opportunities to our employees and their families. Last year, we also intensified our partner­ ships with leading art institutions and events at our international business locations. Examples include the Art Beijing trade show in China...

  • Page 165
    6 | Corporate Governance Corporate Governance The new Setra ComfortClass 500: convincing in terms of economy, safety and comfort. 172 173

  • Page 166
    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. 174

  • Page 167
    ... mode of operation of the Board of Management, the Supervisory Board and its committees - Shareholders and Annual Shareholders' Meeting - Shares held by the Board of Management and the Supervisory Board, directors' dealings - Risk management and financial reporting - Corporate governance statement...

  • Page 168
    ... answer supplementary questions and to provide additional information, the Audit Committee examined and discussed 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 2011, which had...

  • Page 169
    ... for the 2012 Annual Shareholders' Meeting and the annual audit plan of the Internal Auditing department. In the meetings during the year 2012 relating to the quarterly results, the Audit Committee discussed the interim financial reports before their publication with the Board of Management, dealt...

  • Page 170
    ... results of their audit, the Audit Committee dealt with the annual company financial state­ ments, the annual consolidated financial statements and the combined management report for Daimler AG and the Daimler Group for the year 2012, which had been issued with an unqualified audit opinion by the...

  • Page 171
    ..., by respectable means. Integrity is therefore one of our four corporate values, which form the foundation for our business activities. We are convinced that doing business decently brings us sustained success, and is also good for society as a whole. As a group with global operations, we accept...

  • Page 172
    ... lie with the management of each business unit. This is supported by the Group Compliance department. Further development of the compliance processes. The focus of compliance activities in 2012 was on examining our business partners in the sales process (sales business partner due diligence). We...

  • Page 173
    ... with the members of the Board of Management, whose compen­ sation consists of fixed and performance bonus components. Specific objectives for the composition of the Supervisory Board (Clause 5.4.1 para 2 German Corporate Governance Code in the version of May 15, 2012). In its meeting held on...

  • Page 174
    ... Code as amended on May 15, 2012 with just one exception: Deviating from the suggestions in Clause 2.3.4 of the German Corporate Governance Code, the Annual Shareholders' Meeting is not transmitted in its entirety on the Internet, but only until the end of the report by the Board of Management...

  • Page 175
    ... Annual Meeting. The other half comprises members who are elected by the Company's employees who work in Germany. Information on the individual members of the Supervisory Board is available on the Internet at daimler.com/dai/supervisoryboard and on pages 24 and 25 of this Annual Report. The members...

  • Page 176
    ... to its management of the Company. At regular intervals, the Supervisory Board receives reports from the Board of Management on the Group's strategy, corpo­ rate planning, revenue development, profitability, business development and general situation, as well as on the internal control system, the...

  • Page 177
    ... our website at as well as information on the current composition of these daimler.com/dai/sbc, which is also available committees page 25 of this Annual Report. on The Presidential Committee makes recommendations to the Supervisory Board on the appointment of members of the Board of Management and...

  • Page 178
    ... Corporate Governance Code, the Annual Shareholders' Meeting is not transmitted in its entirety on the Internet, but only until the end of the report by the Board of Management. We maintain close contacts with our shareholders in the context of comprehensive investor relations and public relations...

  • Page 179
    ... Commercial Code (HGB) is simultaneously published along with the Annual Report including the Corporate Governance Report at daimler.com/corpgov/en and can be accessed there. w 6.03 Directors' dealings (pursuant to Section 15a of the German Securities Trading Act (WpHG)) in the year 2012 Date...

  • Page 180
    |Consolidated Financial Statements Consolidated Financial Statements Sports car with baggage space. With the completely new CLS Shooting Brake, Mercedes-Benz launches yet another highlight in a long line of innovative luxury automobiles. 188 189

  • Page 181
    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). 190

  • Page 182
    ...9. Income taxes 10. Intangible assets 11. Property, plant and equipment 12. Equipment on operating leases 13. Investments accounted for using the equity method 14. Receivables from financial services 15. Marketable debt securities 16. Other financial assets 17. Other assets 18. Inventories 19. Trade...

  • Page 183
    Consolidated Statement of Income 7.01 Consolidated Industrial Business (unaudited additional information) Year ended December 31, 2011 2012 Daimler Financial Services (unaudited additional information) Year ended December 31, 2011 2012 Note In millions of euros Revenue Cost of sales Gross profit ...

  • Page 184
    ... financial instruments Unrealized gains/losses from investments accounted for using the equity method Other comprehensive income/loss, net of taxes Thereof income/loss attributable to non­controlling interest Thereof income/loss attributable to shareholders of Daimler AG Total comprehensive income...

  • Page 185
    ... 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 Inventories Trade receivables...

  • Page 186
    ... share­ holders of Daimler AG Non­ controlling interest Total equity In millions of euros Balance at January 1, 2011 Net profit Unrealized gains/losses Deferred taxes on unrealized gains/losses Total comprehensive income/loss Dividends Share­based payment Capital increase/ Issue of new shares...

  • Page 187
    ... Change in operating assets and liabilities Inventories Trade receivables Trade payables Receivables from financial services Vehicles on operating leases Other operating assets and liabilities Income taxes paid Cash provided by/used for operating activities Additions to property, plant and equipment...

  • Page 188
    ... make use of the possibility of earlier application. Daimler is currently in the process of determining the effects of these new standards on the Group's consolidated financial statements. In May 2011, the IASB also published IFRS 13 Fair Value Measurement. The new standard replaces the fair value...

  • Page 189
    ... exercise significant influence over the financial and operating policies of the investee (associated companies) and entities over whose activities Daimler has joint control with a partner (joint ventures) are generally included in the consolidated financial statements using the equity method. 198

  • Page 190
    .... The transferred financial assets remain in Daimler's consolidated statement of financial position. Investments in associated companies and joint ventures. Associated companies and joint ventures are generally accounted for using the equity method. At the acquisition date, the excess of the cost of...

  • Page 191
    ... increases by its investees accounted for using the equity method in which the Group or other shareholders do not participate are recognized in share of profit/loss from investments accounted for using the equity method, net. In the special event that the financial statements of associated companies...

  • Page 192
    ... Consolidated Financial Statements Sales in which the Group guarantees the minimum resale value of the product, such as sales to certain rental car companies, are accounted for similar to an operating lease. The guaran­ tee of the resale value may take the form of an obligation by Daimler to pay...

  • Page 193
    ... 10 years). Amortization of capitalized develop­ ment costs is an element of the manufacturing costs and is allocated to those vehicles and components by which they were generated and is included in cost of sales when the inventory (vehicles) is sold. Property, plant and equipment. Property, plant...

  • Page 194
    ...current market expectations. In calculating the risk-adjusted interest rate for impairment test purposes, specific peer group information for beta factors, capital structure data and for cost of debt are used. Periods not covered by the forecast are taken into account by recognizing a residual value...

  • Page 195
    ... the fair value of an unquoted equity instru­ ment, such as an investment in a German limited liability company, cannot be made, this instrument is measured at cost (less any impairment losses). Interest earned on available­ for­sale financial assets is generally reported as interest income using...

  • Page 196
    ... 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 197
    ...by the average remain­ ing service period of active employees expected to receive benefits under the plan. Plan assets invested to cover defined pension benefit obligations and other post­employment benefit obligations (medical care) are measured at fair value and offset against the corresponding...

  • Page 198
    .... 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 are initiated. Based on historical warranty claim...

  • Page 199
    ... â,¬48 million and a gain before income taxes of â,¬10 million in 2012. These amounts are primarily allocated to the Mercedes-Benz Cars segment. Since conclusion of the transaction, the remaining equity interest in MBtech Group is accounted for using the equity method. The assets and liabilities of...

  • Page 200
    ... investment volumes of public transportation companies, the ongoing reduced demand for city buses and the negative outlook, Daimler 7.10 Cost of sales 2012 In millions of euros Expense of goods sold Depreciation of equipment on operating leases Refinancing costs at Daimler Financial Services...

  • Page 201
    ... December 31, 2012. 7.12 Personnel expenses and number of employees 2012 In millions of euros and number of people employed Personnel expenses Average number of people employed Mercedes-Benz Cars Daimler Trucks Mercedes-Benz Vans Daimler Buses Daimler Financial Services Sales and Marketing Other 98...

  • Page 202
    ... under insurance policies Rental income, other than income relating to financial services Other miscellaneous income 122 90 44 44 1,207 1,507 115 108 133 41 984 1,381 2011 7.14 Other operating expense 2012 In millions of euros Loss on sales of property, plant and equipment Other miscellaneous...

  • Page 203
    ...449 2011 9. Income taxes Profit before income taxes is comprised as shown in table  7.17. Profit before income taxes in Germany includes the income/ loss from investments accounted for using the equity method if the shares of those companies are held by German companies. Table  7.18 shows the...

  • Page 204
    ...tax assets and liabilities before offset At December 31, 2011 2012 In millions of euros 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...

  • Page 205
    ... 7.24 Tax expense in equity 2012 In millions of euros Income tax expense Income tax expense (benefit) recorded in other reserves Income tax expense for deduction in excess of remuneration expense for equity­settled employee stock option plans -1,223 -309 -2,420 205 2011 - -1,532 ­1 ­2,216 214

  • Page 206
    ... Consolidated Financial Statements 10. Intangible assets Intangible assets developed as shown in table  7.25. At December 31, 2012, goodwill of â,¬429 million (2011: â,¬435 million) relates to the Daimler Trucks segment and â,¬197 million (2011: â,¬197 million) relates to the Mercedes­Benz Cars...

  • Page 207
    ... for intangible assets in the consolidated statement of income 2012 In millions of euros Cost of sales Selling expenses General administrative expenses Research and non­capitalized development costs 1,117 32 26 5 1,180 935 31 32 5 1,003 2011 7.27 Property, plant and equipment Land, leasehold...

  • Page 208
    ...related only to capitalized development costs. In 2012, borrowing costs in the amount of â,¬21 million (2011: â,¬20 million) were capital­ ized. The base for the calculation of borrowing costs was an average cost of debt of 1.5% (2011: 2.8%). 7.28 Equipment on operating leases In millions of euros...

  • Page 209
    ... effect. In return, Rolls-Royce has granted Daimler the right to exercise a put option on the shares it holds in Engine Holding at a price which generally hedges Daimler's investment in Engine Holding. Starting on January 1, 2013, the put option has a duration of six years. Part of the cost for the...

  • Page 210
    ... Daimler Trucks segment. 7.30 Key financial figures of investments accounted for using the equity method EADS Amounts in millions of euros December 31, 2012 Equity interest (in %) Market value (based on listed share prices)2 Equity investment3 Equity result (2012)3 December 31, 2011 Equity interest...

  • Page 211
    ... the terms of a shareholder agreement, the Group can exercise a significant influence on Tesla. Therefore, the Group accounts for its equity interest 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...

  • Page 212
    ...513 ­946 45,567 At December 31, 2012 Non­current Total Current At December 31, 2011 Non­current Total 7.33 Changes in the allowance account for receivables from financial services 2012 In millions of euros Balance at January 1 Charged to costs and expenses Amounts written off Reversals Currency...

  • Page 213
    ... 31, 2012, current and non­current marketable debt securities with a carrying amount of â,¬5,598 million in total are presented separately in the consolidated statement of financial position (2011: â,¬2,281 million). The marketable debt securities are part of the Group's liquidity management and...

  • Page 214
    ... Financial Statements | Notes to the Consolidated Financial Statements 7.36 Other financial assets At December 31, 2012 Current Non­current Total In millions of euros Available­for­sale financial assets Thereof equity instruments recognized at fair value through profit or loss Thereof equity...

  • Page 215
    ... months amounted to â,¬691 million at December 31, 2012 (2011: â,¬726 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 of â,¬584 million...

  • Page 216
    ... AEG shareholders Shares repurchased in the share buyback program and not cancelled (previous years) Reissued shares to employees in the employee share purchase plan Creation of new shares by exercise of stock options Shares outstanding/issued on December 31 1,066 . 1,066 . 1,066 . 1,066 . 2011...

  • Page 217
    ...the German Stock Corporation Act (AktG), the dividend is paid out of the distributable profit reported in the annual financial statements of Daimler AG (parent company only) in accordance with the German Commercial Code (HGB). For the year ended December 31, 2012, the Daimler management will propose...

  • Page 218
    .... 10 10 43 . . ­7 36 7.45 Effects of share-based payment Remuneration expense 2011 Provision at December 31, 2011 2012 In millions of euros PPSP SOP Medium­term component of annual bonus of the members of the Board of Management -121 -1 -4 -126 2012 ­85 4 ­6 ­87 214 - 10 224 141 - 6 147...

  • Page 219
    ...the year­end quoted price of Daimler ordinary shares and the estimated target achievement. Stock Option Plans. In April 2000, the Group's shareholders approved the Daimler Stock Option Plan (SOP), which grants stock options for the purchase of Daimler ordinary shares to eligible employees. Options...

  • Page 220
    ... Statements | Notes to the Consolidated Financial Statements 7.46 Expenses in the consolidated statement of income resulting from share-based payments of current members of the Board of Management Dr. Dieter Zetsche 2011 2012 In millions of euros PPSP SOP Medium­term component of the annual...

  • Page 221
    ... to the current members of the Board of Management Dr. Dieter Zetsche Number of stock options in millions Balance at beginning of year Exercised Disposals/Forfeited Outstanding at year-end Exercisable at year-end Weighted maturity 0.4 -0.3 - 0.1 0.1 2012 Average exercise price euros per share 37.84...

  • Page 222
    ...Forfeited Outstanding at year­end Exercisable at year­end Weighted maturity 1 For number of stock options partially no disclosure due to rounding. - - - - - 2012 Average exercise price euros per share Number of stock options in millions1 . - . - - 2011 Average exercise price euros per share 66.96...

  • Page 223
    ... the consolidated statement of financial position for defined benefit pension plans. 7.51 Key data for other post-employment benefits 2012 In millions of euros Present value of defined benefit obligations Fair value of plan assets and reimbursement rights Funded status Net periodic cost/income for...

  • Page 224
    ... Financial Statements 7.52 Development of the funded status At December 31, 2012 German Non­German plans plans At December 31, 2011 German Non­German plans plans At December 31, 2010 German Non­German plans plans Total In millions of euros Present value of defined benefit obligations...

  • Page 225
    ... 2011 Non­German plans 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 exchange­rate...

  • Page 226
    ... measurement date for the Group's net periodic pension cost is generally January 1. The assumptions used to calculate the projected benefit obligations together with the expectations regarding long­term rates of return on plan assets vary according to the economic conditions of the country in which...

  • Page 227
    ... 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 maintained by more than one employer. The Group accounts for several of these plans in its consolidated financial statements as...

  • Page 228
    ... most non­German plans, expected increases in cost of living are not a part of the benefit formula. 7.59 Components of net period pension cost 2012 Non­German plans 2011 Non­German plans Total In millions of euros Current service cost Interest cost Expected return on plan assets Amortization of...

  • Page 229
    ...in hedge accounting. Further information on other financial liabilities is provided in Note 30. 7.62 Financing liabilities At December 31, 2012 Non­current Total At December 31, 2011 Non­current Total Current In millions of euros Notes/bonds Commercial paper Liabilities to financial institutions...

  • Page 230
    ... hedging the currency risks of financial liabilities. In 2012, cash used for financing activities includes payments for the reduction of the outstanding finance lease liabilities of â,¬105 million (2011: â,¬109 million). 27. Consolidated statement of cash ï¬,ows Calculating funds. As of December 31...

  • Page 231
    ... and its subsidiaries on a wide range of topics, including vehicle safety, emissions, fuel economy, financial services, dealer, supplier and other contractual relationships, intellectual prop­ erty rights, product warranties, environmental matters, and shareholder matters. Some of these proceedings...

  • Page 232
    7 | Consolidated Financial Statements | Notes to the Consolidated Financial Statements As already reported in Annual Report 2011 the DOJ and Daimler AG have discussed a possible extension of the term of the deferred­prosecution agreement to align the deferred­prose­ cution agreements' provisions...

  • Page 233
    ... trade­in 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 234
    ...the consortium members (including Daimler 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...

  • Page 235
    ... 31, 2012 Carrying amount Fair value In millions of euros Financial assets Receivables from financial services Trade receivables Cash and cash equivalents Marketable debt securities Available­for­sale financial assets Other financial assets Available­for­sale financial assets1 Financial assets...

  • Page 236
    ... 2011. Trade receivables and cash and cash equivalents. Due to the short terms of these financial instruments, it is assumed that their fair values are equal to the carrying amounts. Marketable debt securities and other financial assets. Financial assets available for sale include: - debt and equity...

  • Page 237
    ... market data. 7.72 Development of financial assets recognized at fair value through profit or loss classified as level 3 2012 In millions of euros Balance at January 1 Gains recognized in other financial income/expense, net Purchases Balance at December 31 Gains of period relating to financial...

  • Page 238
    ... 31, 2011 2012 In millions of euros Assets Receivables from financial services1 Trade receivables Other receivables and assets Loans and receivables Marketable debt securities Other financial assets Available­for­sale financial assets Financial assets recognized at fair value through profit...

  • Page 239
    ...31, 2011 2012 In millions of euros Fair value hedges Cash flow hedges 648 96 321 -1,047 Use of derivatives. The Group uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or refinancing activities. These are mainly interest rate risks...

  • Page 240
    ... of exchange rate risks, interest rate risks and commodity price risks can be found in Note 31 in the sub­item "Finance market risk." 7.80 Nominal values of derivative financial instruments December 31, 2012 Maturity > 1 Jahr December 31, 2011 Nominal values Nominal values In millions of euros...

  • Page 241
    ... financial activities, settlement, accounting and the related controlling. The guide­ lines upon which the Group's risk management processes are based are designed to identify and analyze these risks throughout the Group, to set appropriate risk limits and controls and to monitor the risks by means...

  • Page 242
    ... the total portfolio. With respect to its financing and lease activities, the Group holds collateral for customer transactions. The value of collateral generally depends on the amount of the financed assets. Usually, the financed vehicles serve as collateral. Furthermore, Daimler Financial Services...

  • Page 243
    ... issues commercial paper, bonds and financial instruments secured by receivables in various currencies. In 2012, Daimler had good access to the money and capital markets. Credit lines are also used to cover financing requirements. In addition, customer deposits at Mercedes­Benz Bank have been...

  • Page 244
    ...capital contributions to Engine Holding and the joint venture of Daimler Trucks in China. Cash inflows resulted from selling shares of the European Aeronautic Defence and Space Company EADS N.V. (EADS) (see Note 13). At year-end 2012 the Group had short-term and long-term credit lines totaling â,¬33...

  • Page 245
    ... the Mercedes-Benz Cars and Daimler Trucks segments. In addition, the Group is indirectly exposed to transaction risk from its equity-method investments. Cash inflows and outflows of the business segments are offset if they are denominated in the same currency. This means that the exchange rate risk...

  • Page 246
    ...­ national financial institutions. Risk Controlling regularly informs the Board of Management of the actions taken by Corporate Treasury based on the FXCo's decisions. The Group's targeted hedge ratios for forecasted operating cash flows in foreign currency are indicated by a reference model. On...

  • Page 247
    ... committee consisting of members of the Daimler Financial Services segment, the Corporate Treasury department and 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...

  • Page 248
    7 | Consolidated Financial Statements | Notes to the Consolidated Financial Statements 7.83 Value at risk for exchange rate risk 2012 Average 2011 Average Period­end In millions of euros Exchange rate risk (from derivative financial instruments) High Low Period­end High Low 510 821 510 ...

  • Page 249
    ... Buses produces and sells bus chassis. The vehicle segments also sell related spare parts and accessories. The Daimler Financial Services segment supports the sales of the Group's vehicle segments worldwide. Its product portfolio mainly comprises tailored financing and leasing packages for customers...

  • Page 250
    ... | Notes to the Consolidated Financial Statements 7.86 Segment information Mercedes­ Benz Cars In millions of euros 2012 Revenue Intersegment revenue Total revenue Segment profit (EBIT) thereof share of profit/loss from investments accounted for using the equity method thereof expenses from...

  • Page 251
    ... was already cash effective (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 by the end of 2012. In 2012, cash out flows of â,¬30 million resulted from...

  • Page 252
    ... Germany United States Other countries 29,889 13,889 11,764 55,542 27,272 12,168 10,810 50,250 2011 7.90 Average net assets 2012 In millions of euros Mercedes­Benz Cars Daimler Trucks Mercedes­Benz Vans Daimler Buses Daimler Financial Services1 Net assets of the segments Investments accounted...

  • Page 253
    ... 2012, the joint venture company Beijing Mercedes­Benz Sales Services Co., Ltd. (BMBS) was established by Daimler and its strategic partner Beijing Automotive Group (BAIC). The new car sales company bundles as a Management­ Company all sales activities for imported and locally produced Mercedes...

  • Page 254
    ... Financial Statements The joint ventures Mercedes­Benz Trucks Vostok OAO and Fuso Kamaz Trucks Rus Ltd., which have been established with Kamaz OAO, another of the Group's associated companies, commenced most of their business activities in 2010. These joint ventures produce and distribute trucks...

  • Page 255
    ... Board 2012 In millions of euros Remuneration granted to the members of the Board of Management Fixed remuneration Short­term variable remuneration Mid­term variable remuneration Variable remuneration with a long­term incentive effect Post-employment benefits (service cost) Termination benefits...

  • Page 256
    ...on national consolidated financial statements for the year ended March 31, 2012. Information on investments. The statement of investments of Daimler AG pursuant to Sections 285 and 313 of the German on pages 266 ff. Commercial Code (HGB) is presented  7.96 Information on equity and earnings is...

  • Page 257
    ... UK Ltd. CARS Technik & Logistik GmbH Chrysler do Brasil Ltda. CLIDET NO 1048 (Proprietary) Limited Comercial Mercedes­Benz, S.A. Commercial Vehicles of South Florida Inc. Conemaugh Hydroelectric Projects, Inc. Coventry Lane Holdings, L.L.C. DAF Investments, Ltd. Daimler AC Leasing, d.o.o. Daimler...

  • Page 258
    .... Daimler Trucks North America LLC Daimler Trucks Remarketing Corporation Daimler Trust Holdings LLC Daimler Trust Leasing Conduit LLC Daimler Trust Leasing LLC Daimler UK Ltd. Daimler Vans Hong Kong Limited Daimler Vans Manufacturing, LLC Daimler Vans USA, LLC Daimler Vehicle Innovations USA, LLC...

  • Page 259
    ... S.A. Koppieview Property (Pty) Ltd. Masterdrive Commercial Ltd. Masterdrive Group Unlimited Masterdrive Ltd. Masterdrive Management Ltd. MBarc Credit Canada Inc. MDC Power GmbH MDC Technology GmbH Mercedes AMG High Performance Powertrains Ltd. Mercedes­AMG GmbH Mercedes­Benz - Aluguer...

  • Page 260
    ... Services Rus OOO Mercedes­Benz Financial Services Schweiz AG Mercedes­Benz Financial Services Singapore Ltd. Mercedes­Benz Financial Services Slovakia s.r.o. Wilmington, USA Wilmington, USA Wilmington, USA Wilmington, USA Wilmington, USA Wilmington, USA Wilmington, USA Stuttgart, Germany...

  • Page 261
    ... New Zealand Ltd. Mercedes­Benz Ninove N.V. Mercedes­Benz Paris SAS Mercedes­Benz Polska Sp. z.o.o Mercedes­Benz Portugal, S.A. Mercedes­Benz Renting, S.A. Mercedes­Benz Research & Development North America, Inc. Mercedes­Benz Retail Group UK Limited Mercedes­Benz Risk Solutions South Africa...

  • Page 262
    ... Car smart North N.V./S.A. Mitsubishi Fuso Truck and Bus Corporation Mitsubishi Fuso Truck Europe - Sociedade Europeia de Automòveis, S. A. Mitsubishi Fuso Truck of America, Inc. Multistate LIHTC Holdings III Limited Partnership MVSA COMPANY, INC. N.V. Mercedes­Benz Aalst N.V. Mercedes­Benz...

  • Page 263
    ... Daimler Group Services Philippines, Inc. Daimler International Assignment Services USA, LLC Daimler IT Retail GmbH Daimler Mitarbeiter Wohnfinanz GmbH Daimler Parts Brand GmbH Daimler Protics GmbH Daimler Purchasing Coordination Corp. Daimler Services GmbH i.L. Daimler Starmark A/S Daimler Trucks...

  • Page 264
    ... Mercedes­Benz Customer Assistance Center Maastricht N.V. Mercedes­Benz Egypt S.A.E. Mercedes­Benz GastroService GmbH Mercedes­Benz Insurance Services Korea Ltd. Mercedes­Benz Museum GmbH Mercedes­Benz Project Consult GmbH Mercedes­Benz Research and Development India Private Limited Mercedes...

  • Page 265
    ...GmbH II. Companies not accounted for at-equity5 BDF IP Holdings Ltd. Beijing Mercedes­Benz Sales Service Co., Ltd. Bishop Technology Group Ltd. (Australia) car2go Hamburg GmbH carpooling.com GmbH CONTRAC GmbH Maschinen und Anlagen Stuttgart, Germany Schlieren, Switzerland Charlotte, USA São Paulo...

  • Page 266
    ... German Stock Corporation Act (AktG) Joint venture Control due to economic circumstances In liquidation As the impact of these companies is not material for the consolidated financial statements, they were not accounted for using the equity method of accounting or not consolidated EBRD holds 4% of...

  • Page 267
    8 | Further Information Further Information Hybrid nation Japan: Playing a pioneering role with green innovations is a strategic cornerstone of the "Fuso 2015" program for the future. 276 277

  • Page 268
    ... the WpHG (German Securities Trading Act) in conjunction with Section 297 (2), 4 and Section 315 (1), 6 of the HGB (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...

  • Page 269
    ... § 315a Abs. 1 HGB and give a true and fair view of the net assets and financial position of the Group as at December 31, 2012 as well as the results of operations for the business year then ended, in accordance with these requirements. Report on the Combined Management Report. We have audited the...

  • Page 270
    ... 2008 2009 2010 2011 2012 From the balance sheets Property, plant and equipment Leased equipment Other non­current assets Inventories Liquid assets Other current assets Total assets Shareholders' equity thereof share capital Equity ratio Group (%) Equity ratio industrial business (%) Non­current...

  • Page 271
    ... Year Summary 2003 Amounts in millions of euros From the statements of cash ï¬,ows2 Investments in property, plant and equipment Depreciation and amortization Cash provided by (used for) operating activities investing activities financing activities Free cash ï¬,ow of the industrial business 6,614...

  • Page 272
    ... which can be operated separately or together depending on the type of vehicle and driving situation. IFRS - International Financial Reporting Standards. The IFRS are a set of standards and interpretations for companies' external accounting and financial reporting developed by an independent private...

  • Page 273
    ... the Group's operating performance after taxes. Rating. An assessment of a company's creditworthiness issued by a rating agency. ROE - return on equity. The profitability of Daimler Financial Services is measured by return on equity. ROE is defined as the quotient of EBIT and shareholders' equity...

  • Page 274
    ... of Mercedes-Benz Cars Unit sales structure of Daimler Trucks Market share Consolidated revenue by region Revenue by division 79 83 84 87 88 89 89 90 91 91 Liquidity and Capital Resources 3.29 Condensed consolidated statement of cash flows 3.30 Free cash flow of the industrial business 3.31...

  • Page 275
    ... 6.01 Members of Daimler AG's Advisory Board for Integrity and Corporate Responsibility 6.02 Governance structure 6.03 Directors' dealings (pursuant to Section 15a of the German Securities Trading Act (WpHG)) in the year 2012 179 183 123 124 187 Outlook 3.47 Investment in property, plant and...

  • Page 276
    ...Tel. +603 2246 8811 Fax +603 2246 8812 Mexico, Mexico City Tel. +52 55 4155 2540 Fax +52 55 4155 2495 ... Ljubljana Tel. +386 1588 3849 Fax +386 1588 3210 South Africa, Pretoria Tel. +27 12 677 1502 Fax +27 12...+97 14 8075 202 Fax +97 14 8833 201 USA, Washington Tel. +1 202 649 4501 Fax +1 202 ...

  • Page 277
    ...'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. w w daimler.com/investors Publications for our shareholders: - Annual Report...

  • Page 278
    .../Oceania Production locations Sales outlets Revenue (in millions of euros) Employees - - 1,201 - 2 - 16,987 - 1 - 1,691 5,024 - - 614 - 1 - 14,358 3,258 11 - 26,669 89,738 Daimler Mercedes­Benz Trucks Vans Daimler Buses Sales Organization Automotive Businesses Daimler Financial Services...

  • Page 279
    ... Q2 2013 July 24, 2013 Interim Report Q3 2013 October 24, 2013 As we cannot rule out changes of dates, we recommend checking them on the Internet at daimler.com/ir/calendar. w The paper used for this Annual Report was produced from cellulose sourced from certified forestry companies that operate...

  • Page 280
    Daimler AG Stuttgart, Germany www.daimler.com www.daimler.mobi