Mercedes 2004 Annual Report Download - page 126

On December 31, 2003, as part of the Group’s ongoing strategy
to focus on its core automotive business, DaimlerChrysler sold
its 100% equity interest in MTU Aero Engines GmbH (“MTU Aero
Engines”) to Kohlberg, Kravis and Roberts & Co. Ltd. (“KKR”), an
investment company. The sales price for the operative business
of MTU Aero Engines amounted to €1,450 million. Excluding
cash, cash equivalents and debts, which remain at MTU Aero
Engines, the net sales price amounted to €1,052 million. Consid-
eration received by DaimlerChrysler included a note receivable
from KKR and cash of €877 million. As a result of this transac-
tion, DaimlerChrysler paid a compensation of $250 million to
United Technologies Corporation, the parent company of Pratt &
Whitney, in January 2004. In 2003, DaimlerChrysler realized a
gain of €882 million from this sale, net of taxes of €149 million.
The operating results and cash flows from MTU Aero Engines’
business are included in DaimlerChrysler’s consolidated financial
statements through December 31, 2003. However the operating
results and gain are presented as discontinued operations in
accordance with SFAS 144 (see Note 10). The following classes
of assets and liabilities were part of this disposal group in 2003:
€366 million fixed assets, €805 million current assets, €378
million liabilities and €863 million accrued liabilities.
In November 2003, as part of the Group’s ongoing strategy to
focus on its core automotive business, DaimlerChrysler sold a
60% interest in Mercedes-Benz Lenkungen GmbH, its 100% inter-
est in Mercedes-Benz Lenkungen U.S. LLC and its 100% interest
in the steering activities of DaimlerChrysler do Brasil Ltda. to
ThyssenKrupp Automotive AG (“ThyssenKrupp”) for €42 million in
cash. DaimlerChrysler’s remaining 40% interest in Mercedes-
Benz Lenkungen GmbH is subject to put and call options held by
DaimlerChrysler and ThyssenKrupp, respectively, of approximate-
ly €28 million. The sales resulted in an aggregate pretax gain of
€11 million which is included in other income of the Commercial
Vehicles segment. DaimlerChrysler’s remaining 40% interest in
Mercedes-Benz Lenkungen GmbH is accounted for using the
equity method. The following assets and liabilities were part of
this disposal group in 2003: €30.3 million fixed assets, €114.9
million current assets, €33.2 million liabilities and €63.2 million
accrued liabilities.
In September 2003, as part of the Group’s ongoing strategy to
focus on its core automotive business, DaimlerChrysler sold its
50% interest in CTS Fahrzeug-Dachsysteme GmbH to Porsche AG
for €55 million in cash, resulting in a pretax gain of €50 million
which is included in financial income (expense), net, of the
Mercedes Car Group segment. Prior to the sale, DaimlerChrysler
accounted for CTS Fahrzeug-Dachsysteme GmbH using the
cost method.
In the fourth quarter of 2002, as part of the Group’s ongoing
strategy to focus on its core automotive business, Daimler-
Chrysler entered into an agreement to sell a 51% controlling
interest in VM Motori S.p.A. and its 100% ownership interest in
Detroit Diesel Motores do Brasil Ltda., both wholly-owned sub-
sidiaries of DaimlerChrysler. The transactions were completed by
the fourth quarter of 2003. Based on the agreed purchase price
of €26 million, DaimlerChrysler recorded an impairment charge
in 2002 for long-lived assets and goodwill related to the disposal
groups and long-lived assets and goodwill to be retained. The
total asset impairment and goodwill impairment charges recog-
nized in 2002 were €1 million and €40 million, respectively,
which are included in other expenses of the Other Activities seg-
ment. DaimlerChrysler accounts for its remaining 49% interest
in VM Motori S.p.A. using the equity method.
In April 2002, DaimlerChrysler exercised its option to sell to
Continental AG the Group’s remaining 40% interest in Conti
Temic microelectronic GmbH (Automotive Electronics activities),
which had been accounted for using the equity method, for €215
million in cash. The sale resulted in a pretax gain of €128 million
that is included in financial income (expense), net, of the Other
Activities segment.
In January 2002, DaimlerChrysler exercised its option to sell to
Deutsche Telekom the Group’s 49.9% interest in T-Systems ITS,
which had been accounted for using the equity method, for
€4,694 million in cash. The sale, which was part of Daimler-
Chrysler’s ongoing strategy to focus on its core automotive busi-
ness, was consummated in March 2002 with the termination
of the information technology joint venture, resulting in a pretax
gain of €2,484 million that is included in the financial income
of the Services segment.
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