Mercedes 1998 Annual Report Download - page 83

Cash flow information 19971998
Year ended December 31,
Cash flows from:
Operating activities (130) 72 (231)
Investing activities (84) (12) 64
Financing activities 161 (50) 41
Effect of foreign exchange on cash (2) . 4
Change in cash (up to 3 months) (55) 10 (122)
Cash (up to 3 months) at beginning of period 155 145 268
Cash (up to 3 months) at end of period 100 155 146
1996
Cash up to 3 months includes € 30 (1997: € 51; 1996: € 59)
held by DaimlerChrysler AG in connection with internal cash
concentration procedures.
The Group and ABB entered into an option agreement, in
connection with the formation of Adtranz, whereby, for certain
periods during 1998 through 2005, the Group has the right
(call option) to purchase ABB’s 50% interest in Adtranz for U.S.
$1,800 plus a premium calculated on the basis of Adtranz’s
meeting or exceeding certain future earnings thresholds. In
addition, for certain periods during 1998 through 2005, ABB
has the right (put option) to require the Group to purchase
ABB’s 50% interest in Adtranz at prices calculated in accord-
ance with the same criteria except that the price for the put
option is lower than the price for the call option assuming the
same future earnings.
In January 1999, DaimlerChrysler agreed to acquire ABB‘s 50%
interest in Adtranz for $472. The acquisition cancels the call
and put option discussed above. The transaction is expected to
be completed in the second quarter of 1999. Consummation of
the merger is subject to various conditions, including among
others, approval of certain governmental authorities.
4. ACQUISITIONS AND DISPOSITIONS
In March 1998, the Group‘s semiconductor business was sold
to an American company, Vishay Intertechnology, Inc., for a
gain of € 143 (before taxes). Moreover, during 1998 the Group
sold further interests, including the sale of 30% of its interests
in LFK-Lenkflugkörpersysteme GmbH and 100% of its interests
in CMS, Inc. and two real-estate-project-companies for a total
gain of approximately € 153.
In January 1997, DaimlerChrysler sold its interests in AEG
Electrocom GmbH and AEG ElectroCom International, Inc.
(sorting and recognition systems) to Siemens AG resulting in a
gain of € 110 (before taxes).
In July 1997, debis AG, a subsidiary of DaimlerChrysler,
terminated its strategic relationship with Cap Gemini Sogeti
S.A. through the sale of its 24.4% interest resulting in a gain
of € 420.
During December 1997, DaimlerChrysler completed an initial
public offering (“IPO”) of its common stock in Dollar Thrifty
Automotive Group, Inc. (“DTAG”), formerly Pentastar
Transportation Group, Inc., for net proceeds of € 343 ($387).
The IPO of the common stock interest resulted in a pretax and
after-tax gain of € 65 ($73). The gain was deferred and will be
recognized over the remaining term of the vehicle supply
agreements with DTAG, which end in 2001. The tax effect on
this transaction reflects the difference between the book and
tax basis of the Group’s stock interest in DTAG for which
deferred taxes were not provided, in accordance with SFAS
109, “Accounting for Income Taxes.” In addition, the 1997
earnings include the recognition of € 86 ($97) (€ 53 or $60
after taxes) of previously deferred profits from the sale of
vehicles from DaimlerChrysler to DTAG.
In 1996, the Group committed to a plan of disposal for Thrifty,
a subsidiary of DTAG, and recognized a € 50 ($65) pretax loss
(€ 77 or $100 after taxes) to write down Thrifty’s carrying
value to estimated fair value less costs to sell. The after tax
loss includes the effect of not being able to claim a tax
deduction for the capital loss on DaimlerChrysler’s investment
in Thrifty.
In January 1996, DaimlerChrysler announced that it would
discontinue financial support for NV Koninklijke Nederlandse
Vliegtuigenfabriek (“Fokker”), a Dutch aircraft manufacturer.
Subsequent to the announcement, Fokker requested and
received, in accordance with Dutch law, protection from its
creditors. In connection therewith, control of Fokker was
placed with a third-party administrator. On March 15, 1996,
Fokker formally filed for bankruptcy under the laws of The
Netherlands. The Group recorded a charge in the 1995
statement of income for discontinuing such investment.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS