Mercedes 2006 Annual Report Download - page 174

In January 2007, DaimlerChrysler settled the forward
transaction contracted in April 2006 by transferring its 7.5%
interest in EADS for cash proceeds of €1,994 million.
On February 9, 2007, a subsidiary of DaimlerChrysler agreed to
issue equity interests to investors in exchange for €1.5 billion
of cash. The newly issued equity interest can be converted by
DaimlerChrysler on or after July 1, 2010 into a 7.5% interest in
EADS or into cash equal to the then fair value of that interest in
EADS. The transaction will not result in the derecognition of
the EADS shares upon issuance of the equity interests or gain
recognition upon closing.
DaimlerChrysler’s equity in the income of EADS was €275 million,
€324 million and €249 million in 2006, 2005 and 2004, respec-
tively, including investor-level adjustments. DaimlerChrysler’s
equity in the income of EADS is shown in the Group’s consolidated
statements of income within “financial income (expense), net.”
The carrying amount of DaimlerChrysler’s investment in EADS
at December 31, 2006 and 2005 was €3,561 million and €3,564
million, respectively. DaimlerChrysler’s share of the underlying
reported net assets of EADS exceeded the carrying value of
DaimlerChrysler’s investment at December 31, 2006 by €1,899
million, primarily as a result of an other-than-temporary impairment
charge recognized in 2003. At December 31, 2006, the market
value of DaimlerChrysler's investment in EADS on a 33%-basis
based on quoted market prices was €6,960 million.
The following table presents summarized US GAAP financial
information for EADS, which was the basis for applying the equity
method in the Group’s consolidated financial statements:
MMC. Through June 29, 2004, the Group accounted for its invest-
ment in Mitsubishi Motors Corporation (“MMC”) using the
equity method of accounting. After that date through November 17,
2005, when the Group disposed of its remaining investment in
MMC, the Group accounted for MMC shares as an available-for-sale
marketable security at fair value.
The Group’s proportionate share in the results of MMC
through June 29, 2004 was €(655) million and is reflected in
DaimlerChrysler’s consolidated statement of income in the
line item “financial income (expense), net”. This amount includes
the effects from a dilution of the Group’s interest in MMC of
€(135) million and related realized gains from currency hedging
of the net investment of €195 million (after tax €120 million).
In November 2005, DaimlerChrysler sold all of its remaining MMC
shares for €970 million in cash. Due to the gain on that sale,
DaimlerChrysler’s financial income and net income for 2005
increased by €681 million and €502 million, respectively.
Toll Collect. In 2002, our subsidiary DaimlerChrysler Financial
Services AG, Deutsche Telekom AG and Compagnie Financiere
et Industrielle des Autoroutes S.A. (Cofiroute) entered into a
consortium agreement in order to jointly develop, install, and
operate under a contract with the Federal Republic of Germany
(operating agreement) a system for the electronic collection of
tolls for all commercial vehicles over 12t GVW using German
highways. DaimlerChrysler Financial Services AG and Deutsche
Telekom AG each hold a 45% equity interest and Cofiroute
holds the remaining 10% equity interest in both the consortium
(Toll Collect GbR) and the joint venture company (Toll Collect
GmbH) (together “Toll Collect”). DaimlerChrysler accounts for its
45% ownership interest in Toll Collect using the equity method
of accounting. The Group has a significant variable interest in Toll
Collect, a variable interest entity, but determined that it is not
the primary beneficiary and therefore not required to consolidate
Toll Collect.
158
(in millions of €)
EADS
30,977
753
32,542
980
32,462
36,935
69,397
16,557
1,811
10,825
40,204
69,397
36,962
833
33,140
38,563
71,703
16,546
1,814
10,809
42,534
71,703
2006 2005
Income statement information 1
Revenues
Net income
Balance sheet information 2
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.
2004