Chrysler 2015 Annual Report Download - page 208

208 2015 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
The discount rates used for the measurement of the Italian TFR obligation are based on yields of high-quality (AA
rated) fixed income securities for which the timing and amounts of maturities match the timing and amounts of the
projected benefit payments. For this plan, the single weighted average discount rate that reflects the estimated timing
and amount of the scheme future benefit payments for 2015 is equal to 1.6 percent (1.7 percent in 2014). The average
duration of the Italian TFR is approximately 7 years. Retirement or employee leaving rates are developed to reflect
actual and projected Group experience and law requirements for retirement in Italy.
Other provisions for employees and liabilities for share-based payments
At December31, 2015, Other provisions for employees and liabilities for share-based payments consisted of other
long term benefits obligations for €384 million (€376 million at December31, 2014), representing the expected
obligation for benefits, which include a bonus for tenure at the Company and long term disability benefits granted to
certain employees.
22. Other provisions
Changes in Other provisions were as follows:
At
December
31,
2014
Additional
provisions Settlements
Unused
amounts
Translation
differences
Transfer to
Liabilities
held for
distribution
Changes in
the scope of
consolidation
and other
changes
At
December
31,
2015
(€ million)
Product warranty and
recall campaigns provision 4,845 4,710 (3,303) — 325 (80) (26) 6,471
Sales incentives 3,695 12,711 (11,472) (20) 282 — — 5,196
Legal proceedings and
disputes 575 103 (89) (29) (30) (47) 17 500
Commercial risks 381 288 (207) (31) 6 (9) (107) 321
Restructuring provision 131 32 (42) (20) 3 — (5) 99
Other risks 1,153 342 (157) (119) 43 (10) (47) 1,205
Total Other provisions 10,780 18,186 (15,270) (219) 629 (146) (168) 13,792
Product warranty and recall campaigns provision at December 31, 2015 included the change in estimate for estimated
future recall campaign costs for the U.S. and Canada of €761 million related to vehicles sold in periods prior to the
third quarter of 2015 as well as additional warranty costs in the second half of 2015 related to the increase in the
accrual rate per vehicle. Translation differences primarily related to the foreign currency translation from U.S.$ to Euro.
None of the provisions within the total Legal proceedings and disputes provision are individually significant. As
described within the section —Use of Estimates above, a provision for legal proceedings is recognized when it is
deemed probable that the proceedings will result in an outflow of resources.
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.
Other risks include, 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,
disputes with other parties relating to contracts or other matters not subject to legal proceedings and management’s
best estimate of the Group’s probable environmental obligations which also includes costs related to claims on
environmental matters.