Mercedes 1999 Annual Report Download - page 68

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ANALYSIS OF THE FINANCIAL SITUATION
62
99 99
€US $ €
98
Reconciliation to
Operating Profit
in millions
Income before financial
income, income taxes and
extraordinary items
+ Interest cost of pensions, net
+ Operating income from
affiliated, associated and
related companies
+ Gains on unallocated
financial instruments
+ Gain on disposal of
debitel shares
+ Miscellaneous (principally
merger costs in 1998)
Operating profit
9,389 9,324 7,330
382 379 688
17 17 (15)
2 2 (156)
1,148 1,140 –
151 150 746
11,089 11,012 8,593
99 99
€US $ €
98
Consolidated Statements
of Income
in millions
Revenues
Cost of sales
Selling, administrative
and other expenses
Research and development
Other income
Merger costs
Income before financial
income, income taxes and
extraordinary items
Financial income, net
Income before income taxes
and extraordinary items
Effects of changes in
German tax law
Other income taxes
Total income taxes
Minority interests
Income before
extraordinary items
Gains on disposals of a business,
net of taxes
Losses on early extinguishment
of debt, net of taxes
Extraordinary items
Net income
Net income excluding
non-recurring items1)
151,035 149,985 131,782
(119,046) (118,219) (103,666)
(17,655) (17,532) (16,229)
(5,777) (5,737) (4,971)
832 827 1,099
– – (685)
9,389 9,324 7,330
335 333 763
9,724 9,657 8,093
(818) (812) –
(3,747) (3,721) (3,014)
(4,565) (4,533) (3,014)
(18) (18) (130)
5,141 5,106 4,949
664 659 –
(20) (19) (129)
644 640 (129)
5,785 5,746 4,820
6,270 6,226 5,350
1) 1999: Disposal of 42.4% of the shares of debitel AG, restructuring
measures at Adtranz, charge for lump-sum retiree payments related
to the UAW collective bargaining agreement, charge related to prior
period securitization transactions, early extinguishment of debt,
effects of changes in German tax law
1998: Merger costs, settlement of obligations relating to the Airbus
program, goodwill impairment at Adtranz, gains on disposals of
various businesses, early extinguishment of debt
DISTINCT IMPROVEMENT IN NET INCOME. Net income of
€5.7 billion is reported in the statement of income – 19%
higher than the previous year’s result. However, the figures
for both years were considerably affected by extraordinary
and other one-time items and are therefore not entirely
comparable. In 1998, merger costs and the loss on early
extinguishment of long-term, high-yielding debt had a nega-
tive impact on net income in the amount of €401 million
and €129 million, (after taxes) respectively. On the other
hand, in 1999 the reduction of our stake in debitel AG from
52.4% to 10.0% (due to the initial public offering and the
sale of shares to Swisscom) yielded after-tax income of €659
million, which is shown as an extraordinary item. In con-
trast there arose negative one-time effects relating to prior
period securitization transactions, the lump-sum retiree
payments related to the collective bargaining agreement
negotiated with the United Auto Workers’ labor union in
September and the restructuring measures initiated by
Adtranz. In addition, the tax reform passed by the German
parliament in 1999 resulted in a one-time tax burden of
€812 million for the DaimlerChrysler Group. Since the
Group’s German companies together record a considerable
net deferred tax asset position, the benefits resulting from
the reduction of the corporation tax rate from 45 to 40%
were offset by a one-time tax charge for the decreased
valuation of these deferred tax assets. Moreover, there was