Mercedes 2001 Annual Report Download - page 96

92 Notes to Consolidated Statements of Income (Loss)
11. Extraordinary Items
In October 2000, Adtranz sold its fixed installations
business which primarily focuses on rail electrification
and traction power to Balfour Beatty for €153 million
resulting in an extraordinary after-tax gain of €89 mil-
lion (net of income tax expense of €52 million).
In October 2000, DaimlerChrysler and Deutsche
Telekom combined their information technology activi-
ties in a joint venture. In accordance with an agreement
announced on March 27, 2000, Deutsche Telekom re-
ceived a 50.1% interest in T-Systems ITS through an in-
vestment of approximately €4.6 billion for new shares
of T-Systems ITS. In 2000, the transaction resulted in
an extraordinary after-tax gain of €2,345 million. The
agreements also confer on Deutsche Telekom the op-
tion to acquire from the Group, and on DaimlerChrysler
the option to sell to Deutsche Telekom, the Group’s
49.9% interest in T-Systems ITS. DaimlerChrysler
accounts for its interest in T-System using the equity
method. The DaimlerChrysler option was exercised in
January 2002 (see Note 34).
In July 2000, the Group exchanged its controlling
interest in DaimlerChrysler Aerospace for shares of
EADS, which subsequently completed its initial public
offering. EADS is a global aerospace and defense
company which was established through a merger of
Aerospatiale Matra S.A., DaimlerChrysler Aerospace
AG and Construcciones Aeronauticas S.A. (“CASA”).
DaimlerChrysler accounted for the shares of EADS
received in the exchange at their fair value on that date
and recorded an extraordinary gain of €3,009 million.
The Group accounts for its 33% interest in EADS using
the equity method of accounting. DaimlerChrysler has
the right to sell all of its ownership interest in EADS to
certain French shareholders. This put option may be
exercised immediately in the event of a voting deadlock
on certain matters or at certain times after three years.
The price is based on the average closing mid-market
price of EADS shares during the 30 trading days prior
to the exercise of the put option.
In 2000, Ballard Power Systems Inc., a developer
of fuel cells and related power generation systems, is-
sued additional common shares to its shareholders.
DaimlerChrysler elected not to purchase additional
shares thereby reducing its ownership interest. The
dilution of its ownership interest resulted in an extra-
ordinary gain of €73 million.
In March 1999, DaimlerChrysler Services AG sold
a portion of its interests in debitel AG in an initial pub-
lic offering of its ordinary shares for proceeds of €274
million. In September 1999, DaimlerChrysler Services
AG sold an additional portion of its remaining interests
in debitel AG to Swisscom for proceeds of €924 million.
The sales resulted in an extraordinary after-tax gain of
€659 million (net of income tax expense of €481 mil-
lion) and reduced DaimlerChrysler Services AG’s inter-
est in debitel to 10%. See Note 4 for the sale of the
remaining 10% interest in 2001.
The gains from each of the foregoing transactions
are reported as extraordinary items in the consolidated
statements of income (loss) for the years 1999 and
2000 because U.S. GAAP requires such presentation
when a significant disposition of assets or businesses
occurs within two years subsequent to accounting for a
business combination using the pooling-of-interests
method.
In 1999 the Group extinguished €51 million of
long-term debt resulting in an extraordinary after tax
loss of €19 million (net of income tax benefit of €11
million).