Mercedes 1998 Annual Report Download - page 82

Revenues 1,658 1,631 1,450
Operating loss1) (322) (222) (69)
Net loss (316) (154) (49)
In addition, 7 (1997: 7) companies administering pension funds
whose assets are subject to restrictions have not been included
in the consolidated financial statements. The consolidated
financial statements include 127 associated companies. At
December 31, 1998, 17 associated companies are accounted for
in the consolidated financial statements using the equity
method of accounting. The remaining associated companies are
recorded under investments in related companies in as much
as these companies are not material for the respective
presentation of the financial position, results of operations and
cash flows of the Group.
Investment in Adtranz — The Group accounts for its
investment in Adtranz, a rail systems joint venture between
the Group and Asea Brown Boveri Ltd. (“ABB”), including its
65 (1997: 63) subsidiaries, using the proportionate method of
consolidation. Accordingly, DaimlerChrysler reports its 50%
interest of the assets and liabilities, revenues and expenses
and cash flows in Adtranz. The Group believes that such
method of financial statement presentation, which is permitted
by the regulations of the Seventh Directive of the European
Community and represents a benchmark treatment
encouraged by the Standards of the International Accounting
Standards Committee, better illustrates its consolidated
financial position, results of operations and cash flows to the
readers of the Group’s consolidated financial statements.
Under U.S. GAAP, DaimlerChrysler’s investment in Adtranz is
required to be accounted for using the equity method of
accounting. The differences in accounting treatment between
the proportionate and equity methods would not affect
reported stockholders’ equity or net income of Daimler-
Chrysler. Under the equity method of accounting, Daimler-
Chrysler’s net investment in Adtranz would be included
within investments in the balance sheet and its share of the
net income or loss of Adtranz together with the amortization
of the excess of the cost of its investment over its share of the
investment’s net assets would be reported as a net amount in
financial income, net in the Group’s statement of income.
Additionally, Adtranz impacted on the Group’s reported cash
flows only to the extent of the investing cash outflow in 1998 of
€ 159 resulting from a capital contribution by DaimlerChrysler.
For purposes of its United States financial reporting obligation,
DaimlerChrysler has requested and received permission
from the United States Securities and Exchange Commission to
prepare its consolidated financial statements with this
departure from U.S. GAAP.
Summarized consolidated financial information of Adtranz
follows. The amounts represent those used in the Daimler-
Chrysler consolidation, including goodwill resulting from the
formation of Adtranz. Other companies included in the conso-
lidation according to the proportionate method are not material.
Balance sheet information 19971998
At December 31,
Statement of income information 19971998
Year ended December 31,
1) Includes net goodwill resulting from the formation of Adtranz of € 348
and € 435 in 1998 and 1997, respectively.
Fixed assets1) 728 808
Current assets 842 941
Total assets 1,570 1,749
Stockholders’ equity 385 712
Minority interests 76
Accrued liabilities 542 496
Liabilities 636 535
Total liabilities and stockholders’ equity 1,570 1,749
1996
1) The operating losses for 1998 and 1997 include impairment charges on
goodwill of € 64 and € 61, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
78