Mercedes 2004 Annual Report Download - page 121

The following table presents summarized U.S. GAAP financial
information for EADS, which are the basis for applying the equity
method in the Group’s consolidated financial statements:
MMC. On April 22, 2004, the Board of Management and the
Supervisory Board of DaimlerChrysler AG decided to withdraw
from providing any financial support to Mitsubishi Motors Corpo-
ration (“MMC”) and not to participate in a recapitalization of
MMC anticipated to occur in July 2004. At the time of this deci-
sion, DaimlerChrysler held 37% of MMC’s voting stock and 3
of the 8 members of MMC’s board of directors (approximately
38% representations) were its representatives.
Between DaimlerChrysler’s Board vote on April 22, 2004, and the
MMC shareholder meeting on June 29, 2004, MMC worked with
its other significant shareholders, lenders and potential investors
on a restructuring plan that included a recapitalization of MMC
which was presented for vote at the June 29 shareholder meet-
ing. DaimlerChrysler was not party to those discussions nor did
DaimlerChrysler participate in any of the measures set forth
in the restructuring plan; however, DaimlerChrysler’s concurrence
to the measures was required as its ownership level at such
time provided it with veto powers.
On June 29, 2004, the shareholders of MMC approved the
restructuring plan which resulted in a new investor obtaining a
33.3% interest in MMC’s voting stock, thereby becoming MMC’s
largest shareholder, and in the issuance of three classes of
convertible preferred instruments to other investors and some
existing MMC shareholders (not including DaimlerChrysler).
The new investor that acquired a 33.3% voting interest entered
into a contractual agreement with MMC that awarded it the uni-
lateral right to make significant operating decisions. In addition,
the new shareholder has acted in concert with other large institu-
tional shareholders who together with the new shareholder own
a majority of the voting stock. Accordingly, such Japanese share-
holder groups who acted in concert in the recapitalization are
in a position to control MMC.
The MMC board of directors includes 12 board members in total,
with the DaimlerChrysler’s representation down to 2 board
members (16.7% representations) which does no longer enable
DaimlerChrysler to block or veto any matters coming to a vote
at board level.
DaimlerChrysler’s ownership interest in voting stock was diluted
from 37.0% to 24.7%. The dilution below one-third is significant
because Japanese laws require a one-third minimum quorum to
afford a shareholder protective rights, e.g. in cases of the disso-
lution of the company, the sale of all or substantial part of the
business of the company, or agreements to merge with other
companies. As a result, DaimlerChrysler no longer has the block-
ing and veto rights that DaimlerChrysler believes are an essential
factor in exercising significant influence by ownership interest.
DaimlerChrysler surrendered significant rights by agreeing not to
oppose the restructuring plan. Upon conversion of the mandatory
convertible preferred instruments issued to other MMC investors,
DaimlerChrysler’s interest in MMC’s voting stock will be further
diluted to below 11%.
Furthermore, all executive officers appointed by DaimlerChrysler
resigned and all other DaimlerChrysler expatriates, in total more
than 50 managers that were assigned to our investee, left MMC
prior to June 30, 2004, and returned to DaimlerChrysler. Even pri-
or to the June 29, 2004 shareholder meeting, an announcement
was made on May 24, 2004 informing MMC employees that our
assignees were released from their managerial responsibilities
and have delegated their responsibilities to other managers, none
of whom is our representative.
Based on the factors outlined above, DaimlerChrysler lost its abil-
ity to significantly influence MMC’s operating and financial poli-
cies. Consequently, as of the annual shareholders‘ meeting of
MMC on June 29, 2004, DaimlerChrysler ceased to account for
its investment in MMC using the equity method and has since
accounted for MMC shares as a marketable security at fair value
(see Note 20).
117
Income statement information 1
EADS
27,650
348
28,769
521
30,977
753
2004 2003 2002
Balance sheet information 2
16,611
1,717
8,055
25,726
52,109
27,305
24,804
52,109
XX
XX
XX
29,331
26,099
55,430
17,434
1,971
9,299
26,726
55,430
Revenues
Net income
Fixed assets
Non-fixed assets
Total assets
Stockholders’ equity
Minority interests
Accrued liabilities
Other liabilities
Total liabilities and stockholders’ equity
1 For the period October 1 to September 30.
2 Balance sheet information as of September 30.
(in millions of €)