Mercedes 1998 Annual Report Download - page 95

Unrealized gain (loss) on securities:
Unrelialized holding gain (loss) 659 (354) 305 439 (230) 209 105 (60) 45
Reclassification adjustments (103) 57 (46) (106) 54 (52) (13) 6 (7)
Net unrealized gain (loss) 556 (297) 259 333 (176) 157 92 (54) 38
Foreign currency translation adjustment (1,402) – (1,402) 1,865 – 1,865 1,034 – 1,034
Minimum pension liability adjustment (2) 1 (1) 1 (.) 1 26 (10) 16
Other comprehensive income (loss) (848) (296) (1,144) 2,199 (176) 2,023 1,152 (64) 1,088 91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In June 1997, DaimlerChrysler issued 5.75% subordinated
mandatory convertible notes due June 14, 2002 with a
nominal amount of € 66.83 per note. These convertible notes
represent a nominal amount of € 508 including 7,600,000
notes which may be converted (adjusted for the Merger) into
0.86631 newly issuable shares before June 4, 2002. Notes not
converted by this date will be mandatorily converted at a
conversion rate between 0.86631 and 1.25625 Ordinary
Shares per note to be determined on the basis of the average
market price for the shares during the last 20 trading days
before June 8, 2002. During 1998, 3,713 (1997: 156) Daimler-
Benz Ordinary Shares were issued upon exercise.
Comprehensive income
The changes in the components of other comprehensive income
(loss) are as follows:
Miscellaneous
Minority stockholders of Dornier GmbH have the right to
exchange their interest in Dornier for holdings of equal value
in Daimler-Benz Luft- und Raumfahrt Holding AG or Ordinary
Shares of DaimlerChrysler AG and such options are
exercisable at any time.
Under the German corporation law (Aktiengesetz), the amount
of dividends available for distribution to shareholders is based
upon the earnings of DaimlerChrysler AG (parent company
only) as reported in its statutory financial statements
determined in accordance with the German commercial code
(Handelsgesetzbuch). For the year ended December 31, 1998,
DaimlerChrysler management has proposed a distribution of
€ 2,356 ( € 2.35 per share) of the 1998 earnings of
DaimlerChrysler AG as a dividend to the stockholders.
21. STOCK-BASED COMPENSATION
The Group currently has variable stock option plans, which
were originally approved by Daimler-Benz and have been
converted to options for DaimlerChrysler Ordinary Shares and
a Stock Appreciation Rights plan. Prior to the Merger, Chrysler
had both fixed stock option and performance-based stock
compensation plans. These plans were terminated as a result
of the Merger and all outstanding options and awards were
vested and converted to DaimlerChrysler Ordinary Shares. The
Group accounts for all stock-based compensation plans in
accordance with APB Opinion No. 25 and related
interpretations.
Variable Stock Option Plans
DaimlerChrysler established the 1998, 1997 and 1996 Stock
Option Plans, which provide for the granting of options (“Stock
Options”) for the purchase of DaimlerChrysler Ordinary Shares
to certain members of management, based on the share-
holders’ approvals of 1996 and 1997. The options granted
under the Plan are evidenced by non-transferable convertible
bonds with a principal amount of € 511 per bond due ten years
after issuance. During certain specified periods each year,
each convertible bond may be converted into 201
DaimlerChrysler Ordinary Shares, if the market price per
share on the day of conversion is at least 15 % higher than the
predetermined conversion price and the options have been
held for a 24 month waiting period. The specific terms of these
plans (adjusted for the Merger) are as follows:
Year ended December 31,
1998 1997 1996
Tax Tax Tax
Pretax Effect Net Pretax Effect Net Pretax Effect Net