Mercedes 2002 Annual Report Download - page 111

Notes to Consolidated Financial Statements |105
On October 18, 2000, DaimlerChrysler acquired a 34% equity
interest in MMC for approximately 12,200 million. At the
closing date of the transaction, the Group also purchased
MMC bonds with an aggregate face value of JPY19,200 million
and a stated interest rate of 1.7% for 1206 million, which are
convertible into shares of MMC stock. The bonds are only
convertible by DaimlerChrysler in the event that its ownership
percentage would be diluted below 34% upon conversion
of previously issued convertible bonds. To the extent not con-
verted, the bonds and accrued interest are due on April 30,
2003. In June 2001, Volvo AB sold its 3.3% interest in MMC,
plus its operational contracts with MMC, to DaimlerChrysler
for $297 million (1343 million) increasing DaimlerChrysler’s
interest in MMC to 37.3%. In November 2002, a rights offering
at MMC reduced the Group’s interest to 37.1%.
In August 2000, DaimlerChrysler signed a sale and purchase
agreement with the Canadian company Bombardier Inc. for
the sale of DaimlerChrysler Rail Systems GmbH (“Adtranz”).
With the closing of the transaction on April 30, 2001, control
over the operations of Adtranz was transferred to Bombardier
on May 1, 2001. Accordingly, the operating results of Adtranz
are included in the consolidated financial statements of
DaimlerChrysler through April 30, 2001. The sales price of
$725 million was received during 2001. On July 5, 2002,
Bombardier filed a request for arbitration with the International
Chamber of Commerce, Paris, and thereby raised claims for
sales price adjustments under the terms of the sale and pur-
chase agreement as well as claims for alleged breaches of
contract and misrepresentation, and seeks total damages of
approximately 1960 million. The sale and purchase agreement
limits the amount of such price adjustments to 1150 million,
and, to the extent legally permissible, the amount of other
claims to an additional 1150 million. DaimlerChrysler believes
the complaints are without merit and is defending itself vigor-
ously against such claims in the current arbitration proceed-
ings. Due to uncertainties with respect to the ultimate out-
come of these proceedings, the Group has recognized a par-
tial after-tax gain of 1237 million on the sale of Adtranz in the
fourth quarter of 2001, representing the maximum possible
adjustment to the sales price and the aforementioned maxi-
mum amount with respect to any further claims in accordance
with the sale and purchase agreement.
In April 2001, DaimlerChrysler completed the sale of 60% of
the interest in TEMIC to Continental AG for 1398 million,
resulting in a pretax gain of 1209 million. In April 2002,
DaimlerChrysler exercised its option to sell to Continental AG
the Group’s 40% interest in Conti Temic microelectronic for
proceeds of 1215 million, resulting in a pretax gain of 1128
million.
In October 2000, DaimlerChrysler acquired all the remai-
ning outstanding shares of Detroit Diesel Corporation for
approximately 1500 million. The acquisition of the remaining
78.6% interest in Detroit Diesel was accounted for using the
purchase method of accounting and resulted in goodwill of
approximately 1310 million, which was being amortized on a
straight-line basis using an useful life of 20 years until
December 31, 2001. After December 31, 2001, goodwill will
no longer be amortized, but instead tested for impairment
at least annually, as a result of adopting SFAS 142.
In October 2000, DaimlerChrysler Services AG and
Deutsche Telekom AG formed a joint venture in the area of
information technology. In accordance with the agreement,
Deutsche Telekom received a 50.1% interest in T-Systems ITS
through an investment of approximately 14,571 million for
new shares of T-Systems ITS (see Note 11). In January 2002,
DaimlerChrysler exercised its option to sell to Deutsche
Telekom the Group’s 49.9% interest in T-Systems ITS for pro-
ceeds of 14,694 million. The sale was consummated in March
2002 with the termination of the joint venture, resulting in
a gain of 12,484 million.
In September 2000, DaimlerChrysler acquired 100% of the
outstanding shares of the Canadian company Western Star
Trucks Holdings Ltd. for approximately 1500 million. The
acquisition was accounted for using the purchase method of
accounting and resulted in goodwill of approximately 1380
million, which was being amortized on a straight-line basis
using a useful life of 20 years until December 31, 2001. After
December 31, 2001, goodwill will no longer be amortized,
but instead tested for impairment at least annually, as
a result of adopting SFAS 142.
Information on the exchange of the Group’s controlling
interest in DaimlerChrysler Aerospace for shares of EADS
and the related initial public offering of EADS in July 2000 is
included in Note 11.