Pallet-Management-Services - AFM

| ANNUAL REPORT 2006 | IFCO SYSTEMS N.V. |
Management share incentive plan
In January 2003, the Board adopted the 2003 Management
Share Incentive Plan (MSIP), pursuant to which IFCO SYSTEMS
granted options to purchase an aggregate of 2.3 million ordinary
shares of IFCO SYSTEMS to certain Executive Managers.
The share awards were allocated in three tranches, each with
different vesting terms. One third of these options vested
immediately and the remaining options vested based upon future
equity value targets of IFCO SYSTEMS. During August 2004,
the Executive Managers exercised approximately 1.1 million
vested MSIP options. IFCO SYSTEMS’ principal shareholder,
Island LP, agreed to purchase the shares resulting from this
option exercise at €2.75 per share. The Executive Management
team used the net proceeds from these transactions, along
with private funds, to acquire an investment in Island LP, which
represents an aggregate indirect shareholding of approximately
8.4% of the share capital of IFCO SYSTEMS as of December
31, 2006. The remaining unexercised 1.2 million stock options
under the MSIP were cancelled. During 2006 and 2005,
IFCO SYSTEMS recorded total stock based compensation
expense of US $0.5 million and US $1.1 million, respectively.
Fair value was estimated using the Black-Scholes option-pricing
model.
Employee benefi t plan
IFCO SYSTEMS North America sponsors a defined contribution
profit-sharing plan (the Plan). Eligible employees may contribute
up to the maximum amount permitted under Internal Revenue
Service regulations to their account. The Company matches
the contributions of participating employees on the basis of the
percentages specified in the Plan. The employee and Company
matching contributions are invested at the direction of the
individual employee. Employer contributions to the plan were
US $0.9 million during each of 2006 and 2005.
German annuity assurance
The Company has paid and expensed US $0.9 million during
2006 and US $0.9 million during 2005 for German annuity
assurance.
96
13. Business segments
The Company has adopted IAS 14, ‘Segment Reporting’. The
Company is organized based on the products and services
that it offers. Under this organization structure, the Company’s
continuing operations includes two primary business segments:
the RPC-Management-Services operations (RPC-Management-
Services) and the Pallet-Management-Services operations
(Pallet-Management-Services). The RPC-Management-Services
segment rent RPCs primarily for use in agricultural markets.
The Pallet-Management-Services segment recycles wooden
pallets in the United States. The Corporate column contains
corporate related items not allocated to reportable segments.
The Pallet Pooling segment, which leased pallets in Canada
primarily for use in agricultural and industrial markets, is shown
as a discontinued operation, as it was sold during 2005.
As a result, all group level income statement and cash flow
information included herein has been restated to present the
results of continuing operations only. Prior period balance sheet
information has not been restated to reflect the disposal of the
Pallet Pooling segment.
The accounting policies for the segments are the same as those
described in Notes-Summary of significant accounting policies.