Mercedes 2001 Annual Report Download - page 111

Other Notes 107
Other Notes
28. Litigation and Claims
A number of shareholder lawsuits, including a class ac-
tion lawsuit, are pending in the United States against
DaimlerChrysler and certain members of its Supervi-
sory Board and Board of Management. The lawsuits
allege that the defendants violated U.S. securities law
and committed fraud in obtaining approval from
Chrysler stockholders for the business combination
between Chrysler and Daimler-Benz AG in 1998. The
class action lawsuit also alleges that DaimlerChrysler
made false and misleading statements in 1999 and
2000 regarding its prospects for the year 2000. The
complaints seek relief ranging from substantial mon-
etary damages to rescinding the business combination.
DaimlerChrysler believes that these claims are without
merit and is defending itself against them vigorously.
Motions to dismiss all lawsuits are pending before the
court.
Various other claims and legal proceedings have
been asserted or instituted against the Group, including
product liability and other lawsuits, some of which
purport to be class actions. In the event of adverse deci-
sions in these proceedings, DaimlerChrysler could be
required to pay substantial compensatory and punitive
damages, or undertake service actions, recall cam-
paigns or other costly actions. 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 mat-
ters 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 rea-
sonably estimated. The term “reasonably possible” is
used herein to mean that the chance of a future trans-
action or event occurring is more than remote but less
than likely. Although the final resolution of any such
matters could have a material effect on the Group’s con-
solidated operating results for the particular reporting
period in which an adjustment of the estimated reserve
is recorded, the Group believes that any resulting
adjustment should not materially affect its consolidated
financial position.
29. Commitments and Contingencies
Contingent liabilities not recognized on the consoli-
dated balance sheets are presented at their contractual
values and include the following:
Contingent liabilities principally represent guaran-
tees of indebtedness of non-consolidated affiliated com-
panies and third parties and commitments by Group
companies as to contractual performance by joint ven-
ture 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 pending or may be asserted
against DaimlerChrysler concerning environmental
matters. Estimates of future costs of such environmen-
tal matters are inevitably imprecise due 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
DaimlerChrysler may have remediation responsibility
and the apportionment and collectibility of remediation
costs among responsible parties.
DaimlerChrysler establishes reserves for these
environmental matters when a loss is probable and
reasonably estimable. It is reasonably possible that the
final resolution of some of these matters may require
DaimlerChrysler to make expenditures, in excess of es-
tablished reserves, over an extended period of time and
in a range of amounts that cannot be reasonably esti-
mated. Although the final resolution of any such mat-
ters could have a material effect on DaimlerChrysler’s
consolidated operating results for the particular report-
ing period in which an adjustment of the estimated
reserve is recorded, DaimlerChrysler believes that any
resulting adjustment should not materially affect its
consolidated financial 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 re-
lated 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 inevi-
tably imprecise due to numerous uncertainties, includ-
ing the enactment of new laws and regulations, the
number of vehicles affected by a service or recall ac-
tion, 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 ser-
vice and recall actions 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 ultimate cost of these service and recall actions
could have a material effect on DaimlerChrysler’s con-
solidated operating results for the particular reporting
2000
Guarantees
Notes payable
Contractual guarantees
Pledges of indebtedness of others
3,669 8,018
32 21
408 354
430 455
4,539 8,848
2001
At December 31,
(in millions of €)