Mercedes 2006 Annual Report Download - page 194

Exchange rate effects on the components of other comprehen-
sive loss are shown principally within changes of the cumulative
translation adjustment.
Adjusted for currency translation effects, the first-time adoption
of SFAS 158 lead to a decrease of other comprehensive
income/loss in 2006 of €7,415 million. As of December 31, 2006,
unrecognized pension and healthcare obligations amounted
up to €(10,566) million, of which €(7,802) million applied to pen-
sion obligations (unrecognized net actuarial losses: €(6,204)
million, unrecognized prior service cost €(1,598) million) and
€(2,764) million to healthcare obligations (unrecognized net
actuarial losses: €(2,980) million, unrecognized prior service cost
€216 million).
Effective October 1, 2004, the Chrysler Group prospectively
changed the functional currency of DaimlerChrysler Canada Inc.
(“DCCI”), its Canadian subsidiary, from the US dollar to the
Canadian dollar. This change resulted from several significant
economic and operational changes within DCCI, including a
reduction of US sourced components. The initial implementation
of this change in functional currency had the effect of increas-
ing the value of the net assets of the Group and the accumulated
other comprehensive income/(loss) by €179 million in 2004.
Miscellaneous. Under the German Stock Corporation Act
(Aktiengesetz), the amount of dividends available for distribution
to shareholders is based upon the unappropriated accumulated
earnings of DaimlerChrysler AG (parent company only) as report-
ed in its statutory financial statements prepared in accordance
with the German Commercial Code (Handelsgesetzbuch). For the
year ended December 31, 2006, the DaimlerChrysler manage-
ment will propose to the Annual Meeting that €1,542 million
(€1.50 per share) of the unappropriated accumulated earnings of
DaimlerChrysler AG is distributed as a dividend to the stock-
holders.
23. Stock-Based Compensation
As of December 31, 2006, the Group has awards outstanding
that were issued under a variety of plans including (1) the 2006
and 2005 Performance Phantom Share Plans (“PSP”), (2) the
2000 Stock Option Plan (“SOP”), (3) various stock appreciation
rights (“SARs”) plans and (4) the medium-term incentive awards
(“MTI”).
As discussed in Note 1, as of January 1, 2006, DaimlerChrysler
adopted SFAS 123R, which replaces SFAS 123 and supersedes
APB Option 25 and related interpretations. SFAS 123R requires
companies to recognize stock-based compensation expense with
certain exceptions based on fair value. Due to the adoption of
the fair value measurement provisions of SFAS 123 on January 1,
2003 for all awards granted after December 31, 2002, the adop-
tion of SFAS 123R, including the remeasurement to fair value
of liability classified awards, did not have a material impact on
DaimlerChrysler’s Consolidated Financial Statements.
Performance Phantom Share Plans. In 2006, the Group adopt-
ed similar to 2005 the “Performance Phantom Share Plan”,
under which virtual shares (phantom shares) are granted to eligi-
ble employees entitling them to receive cash paid out after
four years. The amount of cash paid to eligible employees is based
on the number of phantom shares that vest (determined over a
three-year performance period) multiplied by the quoted price of
DaimlerChrysler’s ordinary shares (determined as an average
price over a specified period at the end of the four-year service).
The number of phantom shares that vest will depend on
the achievement of Group performance goals as compared with
competitive and internal benchmarks (return on net assets
and return on sales). The Group will not issue any common shares
in connection with the Performance Phantom Share Plan.
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