Mercedes 2002 Annual Report Download - page 110

104 |Notes to Consolidated Financial Statements
4. Acquisitions and Dispositions
DaimlerChrysler signed contracts to sell a controlling (51%)
interest in VM Motori S.p.A. and its 100% ownership interest
in Detroit Diesel Motores do Brasil Ltda, both wholly-owned
subsidiaries of DaimlerChrysler, in the fourth quarter of 2002.
The sales of these ownership interests are expected to be
concluded in the first quarter of 2003. The expected losses
from the sales of these ownership interests has been allocat-
ed to impairment losses on (1) long-lived assets in the dispos-
al groups held for sale, (2) goodwill in the disposal groups held
for sale, (3) long-lived assets to be retained and (4) goodwill to
be retained. The total goodwill impairment charge recognized
in 2002 amounted to 140 million and is included in other
expenses of the Commercial Vehicles segment (see Note 5).
Within the consolidated balance sheet, 1122 million of total
assets and 1102 million total liabilities have been classified as
held for sale at December 31, 2002. DaimlerChrysler will
account for the remaining 49% of VM Motori S.p.A. using the
equity method.
On January 6, 2003, MMC spun off its “Fuso Truck and Bus”
division, creating Mitsubishi Fuso Truck and Bus Corporation
(“MFTBC”). Pursuant to a share sale and purchase agreement
with MMC dated September 20, 2002, DaimlerChrysler agreed
to purchase from MMC a non-controlling (43%) interest of
MFTBC’s shares for approximately 1760 million in cash. Ten
Mitsubishi Group companies, including Mitsubishi Corporation,
Mitsubishi Heavy Industries and Bank of Tokyo-Mitsubishi,
entered into a separate share sale and purchase agreement
with MMC pursuant to which they agreed to purchase from
MMC a total minority interest of 15% of MFTBC’s shares for
approximately 1265 million in cash. DaimlerChrysler and the
Mitsubishi Group purchasers expect to consummate their
respective transactions in March 2003. After the transactions
are executed, MMC will hold a non-controlling (42%) interest
in MFTBC. DaimlerChrysler will account for its investment in
MFTBC using the equity method with the excess of the pur-
chase price of DaimlerChrysler’s share of the underlying net
assets of MFTBC allocated to any identifiable tangible and
intangible assets based on estimated fair values. Any remaining
excess purchase price will be allocated to investor-level
goodwill.
In June 2001, DaimlerChrysler entered into a commercial
vehicle joint venture agreement with Hyundai Motor Company
(“HMC”). In a first phase, the Group and HMC established
DaimlerHyundai Truck Corporation (“DHTC”). The Group
acquired a non-controlling (50%) interest in DHTC. DHTC was
formed to produce and/or distribute engines and engine
parts. The commercial vehicle joint venture agreement with
HMC also included an option for the Group to acquire 50% of
the commercial vehicle business of HMC. Pursuant to this
option, which DaimlerChrysler exercised in December 2002,
HMC is in the process of contributing its entire commercial
vehicle business to a new legal entity. Subject to receiving all
necessary governmental approvals, DaimlerChrysler currently
plans to acquire a 50% interest in that entity from HMC for
1400 million at the end of February 2003. DaimlerChrysler will
account for its investment in the commercial vehicle business
using the equity method with the excess of the purchase price
of DaimlerChrysler’s share of the underlying net assets allo-
cated to any identifiable tangible and intangible assets based
on estimated fair values. Any remaining excess purchase price
will be allocated to investor-level goodwill. The purpose of the
new commercial vehicle joint venture is to design, produce
and distribute commercial vehicles above 4t gross vehicle
weight (GVW), including buses, as well as components for
those vehicles. DaimlerChrysler and HMC intend to combine
their commercial vehicle and engine joint ventures in the first
half of 2003. The Group continues to hold a 10% equity
interest in HMC, which was acquired in two installments in
September 2000 and in March 2001 for approximately 1484
million and is accounted for as an available-for-sale security.
During 2002, in separate transactions, the Group acquired
various dealerships in Europe and completed certain other
acquisitions, none of which were material. The aggregate
purchase price paid in these separate acquisitions resulted
in additions to goodwill of approximately 1132 million.