Mercedes 2006 Annual Report Download - page 175

Consolidated Financial Statements | Basis of Presentation | 159
The following table presents summarized US GAAP financial
information for Toll Collect, which was the basis for applying the
equity method in the Group's consolidated financial statements:
During the construction period of the toll collection system, the
most significant assumptions used in accounting for the investment
in Toll Collect related to the launch date of the toll collection
system, the estimated cost to design and construct the system,
and the operation of the system.
According to the operating agreement, the toll collection system
was to be operational no later than August 31, 2003. After a
delay of the launch date of the toll collection system, which resulted
in a loss of revenue for Toll Collect and in payments of contractual
penalties for delays, the toll collection system was introduced on
January 1, 2005, with on-board units that allowed for slightly less
than full technical performance in accordance with the technical
specification (phase 1). On January 1, 2006, the toll collection sys-
tem was installed and started to operate with full effectiveness as
specified in the operating agreement (phase 2). On December 20,
2005, Toll Collect GmbH received a preliminary operating permit
as specified in the operating agreement. The failure to obtain
the final operating permit by December 20, 2006, may lead to
termination of the operating agreement by the Federal Republic
of Germany. Toll Collect GmbH expects to receive the final
operating permit, and continues to operate the toll collection
system under the preliminary operating permit in the interim.
Failure to perform various obligations under the operating agree-
ment may result in penalties, additional revenue reductions and
damage claims that could become significant over time. However,
penalties and revenue reductions are capped at €75 million per
year until September 30, 2006, at €150 million per year thereafter
until the final operating permit has been issued, and at €100
million per year following issuance of the final operating permit.
These cap amounts are subject to a 3% increase for every year
of operation.
Beginning in June 2006, the Federal Republic of Germany began
reducing monthly payments to Toll Collect GmbH by €8 million
in partial set-off against amounts claimed in the arbitration pro-
ceeding referred to below. This offsetting, which Toll Collect
GmbH is contesting, may require the consortium members to
provide additional operating funds to Toll Collect GmbH.
The operating agreement calls for submission of all disputes related
to the toll collection system to arbitration. The Federal Republic
of Germany has initiated arbitration proceedings against Daimler-
Chrysler Financial Services AG, Deutsche Telekom AG and
the consortium. According to the statement of claims received
in August 2005, the Federal Republic of Germany is seeking
damages, including contractual penalties and reimbursement
of lost revenues that allegedly arose from delays in the
operability of the toll collection system. See Note 30 for additional
information.
Each of the consortium members (including DaimlerChrysler
Financial Services AG) have provided guarantees supporting the
obligations of Toll Collect GmbH towards the Federal Republic
of Germany relating to the completion and operation of the toll
collection system, which are subject to specific triggering
events. In addition, DaimlerChrysler AG has guaranteed bank
loans obtained by Toll Collect GmbH. The guarantees are
described in detail below:
– Guarantee of bank loans. DaimlerChrysler AG issued a guarantee
to third parties up to a maximum amount of €230 million
for bank loans which could be obtained by Toll Collect GmbH.
This amount represents the Group’s 50% share of Toll Collect
GmbH’s external financing guaranteed by its shareholders. In
2006, bank loans previously obtained by the consortium and
guaranteed by DaimlerChrysler AG up to a maximum amount of
€600 million were replaced by bank loans guaranteed by
DaimlerChrysler AG up to a maximum amount of €230 million.
Associated with this loan repayment, the Group participated
with 50% (€393 million) in a capital increase at Toll Collect GbR
in 2006.
– Guarantee of obligations. Towards the Federal Republic of
Germany the consortium members have jointly and severally
guaranteed the obligations of Toll Collect GmbH resulting
from the operating agreement concerning the delivery and
operation of the toll collection system. This guarantee
expired on December 31, 2006.
(in millions of €)
Toll Collect
2006 2005 2004
–
(1,071)
522
(143)
517
21
457
467
924
458
77
535
392
502
894
(789)
38
1,675
924
(934)
1,173
296
535
17
461
416
894
Income statement information for the year
Revenues
Net income (loss)
Balance sheet information as of December 31
Noncurrent assets
Current assets
Total assets
Equity
Noncurrent liabilities
Current liabilities
Total liabilities and equity