Mercedes 1998 Annual Report Download - page 78

1998 1997 1996
(unaudited)
Nine months
ended
September 30,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
1. THE COMPANY AND THE MERGER
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
74
DaimlerChrysler AG (“DaimlerChrysler” or the “Group”) was
formed through the merger of Daimler-Benz Aktiengesellschaft
(“Daimler-Benz”) and Chrysler Corporation (“Chrysler”)
in November 1998 (“Merger”). The consolidated financial
statements of DaimlerChrysler have been prepared in
accordance with United States Generally Accepted Accounting
Principles (“U.S. GAAP”), except that the Group has accounted
for certain joint ventures in accordance with the proportionate
method of consolidation (see Note 3). DaimlerChrysler has
previously prepared and reported its consolidated financial
statements in Deutsche Marks (“DM”). With the introduction
of the Euro (“€”) on January 1, 1999, DaimlerChrysler has
elected to present the accompanying consolidated financial
statements in Euro. Accordingly, the Deutsche Mark
consolidated financial statements for each period presented
have been restated into Euro using the Deutsche Mark/Euro
exchange rate as of January 1, 1999 of € 1 = DM 1.95583.
DaimlerChrysler`s restated Euro financial statements depict
the same trends as would have been presented if it had
continued to present its consolidated financial statements in
Deutsche Marks. The Group’s consolidated financial
statements will, however, not be comparable to the Euro
financial statements of other companies that previously
reported their financial information in a currency other than
Deutsche Marks. All amounts herein are shown in millions of
Euros (“€”) and for the year 1998 are also presented in U.S.
dollars (“$”), the latter being unaudited and presented solely
for the convenience of the reader at the rate of DM 1.6670 =
$1, the Noon Buying Rate of the Federal Reserve Bank of New
York on December 31, 1998.
Pursuant to the amended and restated business combination
agreement dated May 7, 1998, 1.005 Ordinary Shares, no par
value (“DaimlerChrysler Ordinary Share”), of DaimlerChrysler
were issued for each outstanding Ordinary Share of Daimler-
Benz and .6235 DaimlerChrysler Ordinary Shares were issued
for each outstanding share of Chrysler common stock, stock
options and performance shares. DaimlerChrysler issued
1,001.7 million Ordinary Shares in connection with these
transactions.
The Merger was accounted for as a pooling of interests and
accordingly, the historical results of Daimler-Benz and
Chrysler have been restated as if the companies had been
combined for all periods presented. Adjustments were made to
the restated consolidated financial statements to record the tax
effects of anticipated earnings distributions from the Group’s
foreign subsidiaries. Certain reclassifications were made to
Chrysler’s financial statements to conform them with
DaimlerChrysler’s presentation. Prior to the Merger, there
were no material transactions between Daimler-Benz and
Chrysler.
The following information reconciles total revenues, income
before taxes and extraordinary item and net income for the
separate companies with amounts presented in the
accompanying consolidated statements of income for the years
ended December 31, 1997 and 1996, and for the nine months
ended September 30, 1998 (the operating period of Daimler-
Benz and Chrysler prior to the Merger).
Year ended December 31,
Revenues:
Daimler-Benz 52,61063,426 54,371
Chrysler 44,364 54,14647,044
Total 96,974117,572 101,415
Income before income taxes and extraordinary item:
Daimler-Benz 3,2512,173 1,002
Chrysler 3,988 4,059 4,710
Restatement for exchange rate effects
of withholding taxes 26 (52) (19)
Total 7,265 6,180 5,693
Net income:
Daimler-Benz 1,678 4,112 1,412
Chrysler 2,507 2,487 2,715
Restatement for withholding taxes 26 (52) (105)
Total 4,211 6,547 4,022