Chrysler 2014 Annual Report Download - page 174

172 2014 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
Other contingent liabilities
The Group records provisions in connection with pending or threatened disputes or legal proceedings when it is
considered probable that there will be an outflow of funds and when the amount can be reasonably estimated. If an
outflow of funds becomes possible but the amount cannot be estimated, the matter is disclosed in the notes to the
Consolidated financial statements. The Group is the subject of legal and tax proceedings covering a wide range of
matters in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the outflow of
funds that could result from such disputes with any certainty. Moreover, the cases and claims against the Group are
often derived from complex legal issues which are subject to a differing degrees of uncertainty, including the facts
and circumstances of each particular case, the manner in which the applicable law is likely to be interpreted and
applied and the jurisdiction and the different laws involved. The Group monitors the status of pending legal procedures
and consults with experts on legal and tax matters on a regular basis. As such, the provisions for the Group’s legal
proceedings and litigation may vary as a result of future developments in pending matters.
Litigation
Various legal proceedings, claims and governmental investigations are pending against the Group on a wide range
of topics, including vehicle safety, emissions and fuel economy, dealer, supplier and other contractual relationships,
intellectual property rights, product warranties and environmental matters. Some of these proceedings allege defects
in specific component parts or systems (including airbags, seats, seat belts, brakes, ball joints, transmissions, engines
and fuel systems) in various vehicle models or allege general design defects relating to vehicle handling and stability,
sudden unintended movement or crashworthiness. These proceedings seek recovery for damage to property,
personal injuries or wrongful death and in some cases include a claim for exemplary or punitive damages. Adverse
decisions in one or more of these proceedings could require the Group to pay substantial damages, or undertake
service actions, recall campaigns or other costly actions.
Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. An
accrual is established in connection with pending or threatened litigation if a loss is probable and a reliable estimate
can be made. Since these accruals represent estimates, it is reasonably possible that the resolution of some of these
matters could require the Group to make payments in excess of the amounts accrued. It is also reasonably possible
that the resolution of some of the matters for which accruals could not be made may require the Group to make
payments in an amount or range of amounts that could not be reasonably estimated.
The term “reasonably possible” is used herein to mean that the chance of a future transaction or event occurring is
more than remote but less than probable. Although the final resolution of any such matters could have a material effect
on the Group’s operating results for the particular reporting period in which an adjustment of the estimated reserve is
recorded, it is believed that any resulting adjustment would not materially affect the Consolidated statement of financial
position or Consolidated statement of cash flows.
Environmental Matters
The Group is subject to potential liability under government regulations and various claims and legal actions that are
pending or may be asserted against the Group concerning environmental matters. Estimates of future costs of such
environmental matters are subject to numerous uncertainties, including the enactment of new laws and regulations,
the development and application of new technologies, the identification of new sites for which the Group may have
remediation responsibility and the apportionment and collectability of remediation costs among responsible parties.
The Group establishes provisions for these environmental matters when a loss is probable and a reliable estimate
can be made. It is reasonably possible that the final resolution of some of these matters may require the Group to
make expenditures, in excess of established provisions, over an extended period of time and in a range of amounts
that cannot be reliably estimated. Although the final resolution of any such matters could have a material effect on
the Group’s operating results for the particular reporting period in which an adjustment to the estimated provision is
recorded, it is believed that any resulting adjustment would not materially affect the Consolidated statement of financial
position or the Consolidated statement of cash flows.