BMW 2007 Annual Report Download - page 43

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Crisis on US credit market has impact on
world’s stock exchanges
The world’s stock markets were in general highly
volatile in 2007. During the first half of the year, market
prices benefited sharply from good corporate figures.
In the second half, however, the markets were influ-
enced by the credit crisis in the USA. The weakness
of the US dollar against the euro also had an increas-
ingly adverse impact on the share prices of European
exporting companies.
The US dollar lost 9.5 % in value against the
euro during the period, closing at US dollar 1.46 to
the euro on the last day of trading (29 December
2006: US dollar 1.32 to the euro). In November 2007,
the US dollar even dropped to US dollar 1.50 to the
euro, thus reaching its record low value since intro-
duction of the common European currency in 2002.
As the subprime crisis took hold in the USA,
some of the gains recorded by the world’s stock mar-
kets during the first half of the year were lost. On the
last day of trading in 2007, the leading German stock
index, the DAX, closed at 8,067.32 points, 22.3 %
ahead for the year, but short of its record high level
of 8,151 points in July 2007. The Dow Jones EURO
STOXX 50 ended the year with a gain of 6.8 %.
The Prime Automobile sector index performed very
strongly over the year, gaining 37.9 % after closing
at 785.54 points.
BMW common stock stood at euro 42.35 on
the last day of trading, compared to a price of euro
43.51 one year earlier. With this 2.7 % drop, BMW
common stock was unable in 2007 to repeat the
gains made in preceding years. During the year un-
der report, BMW preferred stock lost sharply in value,
finishing the year 16.6 % lower at euro 36.30. The
change in the price of preferred stock reflects a high
degree of market price speculation during 2006 and
2007. According to media reports, one major Ger-
man bank took up large-scale positions in BMW
preferred stock, resulting in a sharp market price
increase (+ 34.3 %) in 2006. The bank unwound these
positions in 2007, thus significantly influencing the
market price of BMW preferred stock in 2007.
Precious metal prices rose during the year, in
some cases quite sharply. For the first time since
1980, the price of gold went above US dollar 800
per ounce, closing at the end of the year at US dollar
834.00 per ounce (+ 30.9 %). Oil prices developed
similarly. The price for one barrel of Brent Crude
at 31 December 2007 was US 94.33, well above
(+ 61.2 %) its level one year earlier.
Programme to buy back shares of common
stock
Following on from the buy-back and withdrawal from
circulation of treasury shares in 2005 and 2006, a
new authorisation was passed at the Annual General
Meeting on 15 May 2007. On that date, the share-
holders authorised the Board of Management to ac-
quire up to a maximum of 10 % of the share capital
in place at the date of the reso lution and to withdraw
these shares from circulation without any further res-
olution by the Annual General Meeting. At the same
time, the authorisation from 16 May 2006 to acquire
treasury shares was rescinded. The authorisation
from 15 May 2007 is valid until 14 November 2008.
There are currently no plans to exercise the authori-
sation. The option of a share buy-back does, however,
remain open to BMW AG.
Buy-back of shares of preferred stock for
employee stock plan
BMW AG has allowed employees to participate in
its success for more than 30 years. In this context,
employee participation was changed back in 1989
to an employee share scheme. In conjunction with
this scheme, BMW AG purchased a total of 660,305
shares of preferred stock in 2007 via the stock ex-
change at an average price of euro 45.48 and issued
these to employees.
BMW Stock and Bonds in 2007
Development of BMW stock compared to stock exchange indices
(Index: 30.12.1997 = 100)
350
300
250
200
150
100
50
0
BMW preferred stock BMW common stock Prime Automobile DAX
98 99 00 01 02 03 04 05 06 07