Mercedes 1999 Annual Report Download - page 94

NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME
88
Deferred tax assets
Deferred tax liabilities
Deferred tax assets
(liabilities), net
Total
3,806 2,937 5,016 3,979
(5,192) (4,689) (4,165) (2,884)
(1,386) (1,752) 851 1,095
December 31, 1999
Total thereof
non-current
December 31, 1998
thereof
non-current
9. EXTRAORDINARY ITEMS
In March 1999, debis AG, a wholly-owned subsidiary of
DaimlerChrysler, sold a portion of its interests in debitel AG in an
initial public offering of its ordinary shares for proceeds of €274.
In September 1999, debis AG sold an additional portion of its re-
maining interests in debitel AG to Swisscom for proceeds of €924.
The sales resulted in an extraordinary after-tax gain of €659 (net
of income tax expense of €481) and reduced debis’ remaining in-
terest in debitel to 10 percent. U.S. GAAP requires that when a sig-
nificant disposition of assets or businesses occurs within two years
subsequent to accounting for a business combination using the
pooling-of-interests method of accounting that the gain or loss be
reported as an extraordinary item. Due to the significance of the
September 1999 transaction, the gains from both the March and
September dispositions have been reported in the accompanying
consolidated statements of income as extraordinary items, net of
taxes.
In 1999 the Group extinguished €51 of long-term debt resulting in
an extraordinary after tax loss of €19 (net of income tax benefit of
€11).
In December 1998, DaimlerChrysler extinguished €257 of the out-
standing principal amount of its Auburn Hills Trust Guaranteed
Exchangeable Certificates due 2020 (the “Certificates”) at a cost of
€454. The extinguishment of the Certificates resulted in an ex-
traordinary after tax loss of €129 (net of income tax benefit of
€78).
Net deferred income tax assets and liabilities in the consolidated
balance sheets are as follows:
DaimlerChrysler provided foreign withholding taxes of €343
(1998: €297) on €6,868 (1998: €5,948) in cumulative undistributed
earnings of foreign subsidiaries because these earnings are not in-
tended to be permanently reinvested in those operations. In addi-
tion, beginning in1999, the German tax law requires that deduct-
ible expenses are reduced by 5% of foreign dividends received. The
additional German tax of €177 on the future payout of these for-
eign dividends was recognized in 1999 and included in “Effects of
changes in 1999 German tax laws.” The Group did not provide in-
come taxes or foreign withholding taxes on €13,224 (1998: €6,016)
in cumulative earnings of foreign subsidiaries because these earn-
ings are intended to be indefinitely reinvested in those operations.
It is not practicable to estimate the amount of unrecognized de-
ferred tax liabilities for these undistributed foreign earnings.
Including the items charged or credited directly to related compo-
nents of stockholders’ equity, the expense (benefit) for income
taxes consists of the following:
Expense (benefit) for income taxes
before extraordinary items
Income tax expense (benefit) of
extraordinary items
Stockholders’ equity for employee
stock option expense in excess
of amounts recognized for financial
purposes
Stockholders’ equity for items of other
comprehensive income
1997
Year ended December 31,
4,533 3,014 (517)
470 (78) –
(31) (212) (39)
(155) 296 176
4,817 3,020 (380)
19981999