Mercedes 1998 Annual Report Download - page 108

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
104
In 1989, the Group acquired Messerschmitt-Bölkow-Blohm
GmbH (“MBB”), which included DaimlerChrysler Aerospace
Airbus GmbH (then known as Deutsche Airbus GmbH) which
was and continues to be the German participant in Airbus
Industrie. In connection with this acquisition, the Government
of the Federal Republic of Germany undertook responsibility
for certain financial obligations of MBB and DaimlerChrysler
Aerospace Airbus GmbH and agreed to provide certain
ongoing limited financial assistance for development programs
and other items. Such undertakings, advances and assistance
were to be repaid by DaimlerChrysler Aerospace Airbus GmbH
on a contingent basis equal to 40% of the prior year’s pretax
profit, as defined in the agreement with the Government,
beginning in 2001, and royalty payments based on sales of
aircraft.
During 1998 and 1997, DaimlerChrysler Aerospace Airbus
GmbH settled these contingent obligations with the Federal
Republic of Germany for payments of € 895 and € 716,
respectively. The 1998 settlement, which resulted in the
complete discharge of all remaining obligations to the German
Federal Government, related to the Airbus A300/310 and
A330/340 series aircraft as well as to financial assistance not
related to development, while the 1997 settlement related
primarily to the A320 aircraft and derivatives. Of the
foregoing settlement payments, € 229 and € 369 were
expensed in 1998 and 1997, respectively. The remainder of the
settlement payments were capitalized and are being amortized
over those aircraft to be delivered in the future to which the
settlements related.
In connection with certain production programs the Group has
committed to certain levels of outsourced manufactured parts
and components over extended periods at market prices. The
Group may be required to compensate suppliers in the event
the committed volumes are not purchased.
In the normal course of business, the Group sells to third
parties certain of its receivables from financial services.
During the year ended December 31, 1998 the Group sold
financial receivables for proceeds of € 40,863 (1997: € 44,336).
In connection with such sales, the Group remained liable under
recourse provisions for € 182 (1997: € 161).
The Group is jointly and severally liable for certain non-
incorporated companies, partnerships, and project groups.
Total rentals under operating leases, charged as an expense in
the statement of income, amounted to € 984 (1997: € 910;
1996: € 826). Future minimum lease payments under rental
and lease agreements which have initial or remaining terms in
excess of one year at December 31, 1998 are as follows:
Operating
leases
1999 543
2000 371
2001 283
2002 218
2003 168
thereafter 870