Chrysler 2014 Annual Report Download - page 230

228 2014 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
The Legal proceedings and disputes provision represents management’s best estimate of the liability to be recognized
by the Group with regard to legal proceedings arising in the ordinary course of business with dealers, customers,
suppliers or regulators (such as contractual or patent disputes), legal proceedings involving claims with active and
former employees and legal proceedings involving different tax authorities. None of these provisions are individually
significant. Each Group company recognizes a provision for legal proceedings when it is deemed probable that
the proceedings will result in an outflow of resources. In determining their best estimate of the liability, each Group
company evaluates their legal proceedings on a case-by-case basis to estimate the probable losses that typically arise
from events of the type giving rise to the liability. Their estimate takes into account, as applicable, the views of legal
counsel and other experts, the experience of the Group and others in similar situations and the Group’s intentions
with regard to further action in each proceeding. Group’s consolidated provision combines these individual provisions
established by each of the Group’s companies.
Commercial risks arise in connection with the sale of products and services such as maintenance contracts. An
accrual is recorded when the expected costs to complete the services under these contracts exceed the revenues
expected to be realized.
The Group’s restructuring programs primarily relate to restructuring and rationalization activities in the NAFTA and
EMEA segments. The restructuring provision at December 31, 2014 consists of termination benefits of €72 million
(€106 million at December 31, 2013) payable to employees in connection with restructuring plans, manufacturing
rationalization costs of €9 million (€15 million at December 31, 2013) and other costs of €50 million (€70 million at
December 31, 2013). These provisions are related to the EMEA segment €41 million (€53 million at December 31,
2013), the NAFTA segment €36 million (€41 million at December 31, 2013), the Components segment €15 million
(€28 million at December 31, 2013), publishing activities €13 million (€31 million at December 31, 2013) and other
minor activities €26 million (€38 million at December 31, 2013).
Indemnities are estimated by the Group in connection with divestitures. These liabilities primarily arise from indemnities
relating to contingent liabilities in existence at the time of the sale, as well as those covering any possible breach of the
representations and warranties provided in the contract and, in certain instances, environmental or tax matters. These
provisions were determined estimating the amount of the expected outflow of resources, taking into consideration the
relevant level of probability of occurrence.
The environmental risks provision represents management’s best estimate of the Group’s probable environmental
obligations. Amounts included in the estimate include direct costs to be incurred by the Group in connection with
environmental obligations associated with current or formerly owned facilities and sites. This provision also includes
costs related to claims on environmental matters.
Other risks includes, among other items: provisions for disputes with suppliers related to supply contracts or other
matters that are not subject to legal proceedings, provisions for product liabilities arising from personal injuries
including wrongful death and potential exemplary or punitive damages alleged to be the result of product defects,
and disputes with other parties relating to contracts or other matters not subject to legal proceedings. The valuation
of these provisions is determined based on, among other factors, claims incurred and our historical experiences
regarding similar disputes.