Honda 2008 Annual Report Download - page 63

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A n n u a l R e p o r t 2 0 0 8 6 1
Legal Proceedings
Various legal proceedings are pending against us. We
believe that such proceedings constitute ordinary routine
litigation incidental to our business. With respect to product
liability, personal injury claims or lawsuits, we believe that any
judgment that may be recovered by any plaintiff for general
and special damages and court costs will be adequately
covered by our insurance and accrued liabilities. Punitive
damages are claimed in certain of these lawsuits. We are
also subject to potential liability under other various lawsuits
and claims including 74 purported class actions in the United
States.
In accordance with Statement of Financial Accounting
Standards (SFAS) No. 5, “Accounting for Contingencies”,
Honda has recorded a contingent liability when it is probable
that an obligation has been incurred and the amount of loss
can be reasonably estimated. Honda reviews these pending
lawsuits and claims periodically and adjusts the amounts
recorded for these contingent liabilities, if necessary, by
considering the nature of lawsuits and claims, the progress
of the case and the opinions of legal counsel. Honda does
not record liabilities for lawsuits or potential claims that it
believes will not result in an unfavorable outcome or when a
reasonable estimate of the amount of probable loss cannot be
determined. After consultation with legal counsel, and taking
into account all known factors pertaining to existing lawsuits
and claims, Honda believes that the ultimate outcome of such
lawsuits and pending claims including 74 purported class
actions in the United States should not result in liability to
Honda that would be likely to have an adverse material effect
on its consolidated financial position, results of operations or
cash flows.