Mercedes 1999 Annual Report Download - page 108

OTHER NOTES
102
1998
At December 31,
Guarantees
Notes payable
Contractual guarantees
Pledges of indebtedness of others
3,564 2,449
33 103
303 500
373 307
4,273 3,359
1999
OTHER NOTES
27. LITIGATION AND CLAIMS
Various claims and legal proceedings have been asserted or insti-
tuted against the Group, including some purporting to be class ac-
tions, and some which demand large monetary damages or other
relief which could result in significant expenditures. Litigation is
subject to many uncertainties, and the outcome of individual mat-
ters is not predictable with assurance. It is reasonably possible
that the final resolution of some of these matters may require the
Group to make expenditures, in excess of established reserves,
over an extended period of time and in a range of amounts that
cannot 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 likely. Although
the final resolution of any such matters could have a material ef-
fect on the Group’s consolidated operating results for the particu-
lar reporting period in which an adjustment of the estimated re-
serve is recorded, the Group believes that any resulting adjust-
ment should not materially affect its consolidated financial posi-
tion.
28. COMMITMENTS AND CONTINGENCIES
Commitments and contingencies are presented at their contractual
values and include the following:
Contingent liabilities principally represent guarantees of indebted-
ness of non-consolidated affiliated companies and third parties and
commitments by Group companies as to contractual performance
by joint venture companies and certain non-incorporated compa-
nies, partnerships and project groups.
DaimlerChrysler is subject to potential liability under government
regulations and various claims and legal actions which are pend-
ing or may be asserted against DaimlerChrysler concerning envi-
ronmental matters. Estimates of future costs of such environmen-
tal matters are inevitably imprecise due to numerous uncertain-
ties, including the enactment of new laws and regulations, the de-
velopment and application of new technologies, the identification
of new sites for which DaimlerChrysler may have remediation re-
sponsibility and the apportionment and collectibility of
remediation costs among responsible parties.
DaimlerChrysler establishes reserves for these environmental mat-
ters when a loss is probable and reasonably estimable. It is reason-
ably possible that the final resolution of some of these matters
may require DaimlerChrysler to make expenditures, in excess of
established reserves, over an extended period of time and in a
range of amounts that cannot be reasonably estimated. Although
the final resolution of any such matters could have a material ef-
fect on DaimlerChrysler’s consolidated operating results for the
particular reporting period in which an adjustment of the esti-
mated reserve is recorded, DaimlerChrysler believes that any re-
sulting adjustment should not materially affect its consolidated fi-
nancial position.
DaimlerChrysler periodically initiates voluntary service actions
and recall actions to address various customer satisfaction, safety
and emissions issues related to vehicles it sells. DaimlerChrysler
establishes reserves for product warranty, including the estimated
cost of these service and recall actions, when the related sale is
recognized. The estimated future costs of these actions are based
primarily on prior experience. Estimates of the future costs of
these actions are inevitably imprecise due to numerous uncertain-
ties, including the enactment of new laws and regulations, the
number of vehicles affected by a service or recall action, and the
nature of the corrective action which may result in adjustments to
the established reserves. It is reasonably possible that the ultimate
cost of these service and recall actions may require
DaimlerChrysler to make expenditures, in excess of established re-
serves, over an extended period of time and in a range of amounts
that cannot be reasonably estimated. Although the ultimate cost of
these service and recall actions could have a material effect on
DaimlerChrysler’s consolidated operating results for the particular
reporting period in which an adjustment of the estimated reserve
is recorded, DaimlerChrysler believes that any such adjustment
should not materially affect its consolidated financial position.
In connection with the development of aircraft, DaimlerChrysler
Aerospace Airbus GmbH (“DA”) is committed to Airbus Industrie to
incur future development costs. At December 31, 1999, the remain-
ing commitment not recorded in the financial statements aggre-
gated approximately €342.
Airbus Industrie G.I.E. (“Airbus consortium”) has given a perform-
ance guarantee to Agence Executive, the French government
agency overseeing Airbus. This performance guarantee has been
assumed by DA to the extent of its 37.9 % participation in the Air-
bus consortium.
At December 31, 1999, in connection with DA’s participation in the
Airbus consortium, DA was contingently liable related to the Air-
bus consortium’s irrevocable financing commitments in respect of
aircraft on order, including options, for delivery in the future. In
addition, DA was also contingently liable related to credit guaran-
tees and participations in financing receivables of the Airbus con-