Mercedes 2003 Annual Report Download - page 110
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Please find page 110 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Financial Reporting |Overview | Analysis of the Financial Situation | Statement by the Board of Management | Independent Auditors’ Report | Financial Statements
As a member of a consortium that has agreed to develop, install
and operate a toll collection system for German highways, the
affiliate of DaimlerChrysler, DaimlerChrysler Services and the other
consortium members have received a claim for damages from the
Federal Republic of Germany. The government is seeking
reimbursement of revenues lost due to the delay in completion of
the system. The Federal Republic of Germany is claiming €156
million per month from September 1 through December 31, 2003
and €180 million per month thereafter. The Federal Republic of
Germany is also seeking contractual penalties of approximately
€680 million, based on a claim that the consortium members did
not obtain the government’s consent before entering into several
sub-suppliers contracts. In addition, the Federal Republic of
Germany is claiming other time-dependent contractual penalties.
DaimlerChrysler believes the government’s claims are without
merit and DaimlerChrysler intends to defend itself vigorously
against these claims. The agreement between the consortium
members and the Federal Republic of Germany calls for
submission of all disputes related to the toll collection system to
arbitration. The Federal Republic of Germany has clearly indicated
that it will submit these claims for arbitration.
As reported in DaimlerChrysler’s Annual Report as of December
31, 2002 Freightliner LLC, DaimlerChrysler’s North American
commercial vehicles subsidiary, acquired in September 2000
Western Star Trucks Holdings Ltd., a Canadian company engaged
in the design, assembly, and distribution of heavy duty trucks and
transit buses. Prior to its acquisition by Freightliner, Western Star
had completed the sale of ERF (Holdings) plc, a company organized
in England and Wales and engaged in the assembly and sale of
heavy duty trucks, to MAN AG and MAN Nutzfahrzeuge AG for
CAD195 million. In September 2002, MAN filed a claim against
Freightliner Ltd. (formerly Western Star) with the London
Commercial Court for breach of representations and warranties in
the share purchase agreement, alleging that ERF’s accounts and
financial statements were misstated. MAN seeks damages in
excess of GBP300 million. Freightliner Ltd. intends to defend itself
vigorously against such claims and has filed a contribution claim
against Ernst & Young, ERF’s auditors, with the London Commercial
Court in the second quarter of 2003.
As previously reported, on April 30, 2001, we sold our subsidiary,
DaimlerChrysler Rail Systems GmbH (also known as Adtranz), to
Bombardier, Inc., for cash consideration of $725 million. In July
2002, Bombardier filed a request for arbitration with the
International Chamber of Commerce in Paris, and asserted claims
for sales price adjustments under the terms of the sale and
purchase agreement as well as claims for alleged breaches of
contract and misrepresentations. Bombardier seeks total damages
of approximately €960 million. The agreement limits the amount of
such price adjustments to €150 million, and, to the extent legally
permissible, the amount of other claims to an additional €150
million. DaimlerChrysler continues defending against such claims
vigorously.
In the fourth quarter of 2000, Tracinda Corporation filed a lawsuit
in the United States District Court for the District of Delaware
against DaimlerChrysler AG and some of the members of its
supervisory board and board of management (Messrs. Kopper,
Prof. Schrempp and Gentz). Shortly thereafter, other plaintiffs filed
a number of actions against the same defendants, making claims
similar to those in the Tracinda complaint. Two individual lawsuits
and one consolidated class action lawsuit were originally pending.
The plaintiffs, current or former DaimlerChrysler shareholders,
alleged that the defendants violated US securities law and
committed fraud in obtaining approval from Chrysler stockholders
of the business combination between Chrysler and Daimler-Benz in
1998. The consolidated class action complaint contained
additional allegations that were later dismissed. In March 2003,
the Court granted Mr. Kopper’s motion to dismiss each of the
complaints against him on the ground that the Court lacked
jurisdiction over him. In February 2003, the DaimlerChrysler
defendants filed motions seeking summary judgment on all claims
in the cases on several grounds, including that the claims are
barred by the statute of limitations. In June 2003, the Court denied
defendants’ motion relating to the statute of limitations. In August
2003, DaimlerChrysler agreed to settle the consolidated class
action case for $300 million (approximately €240 million adjusted
for currency effects), and shortly thereafter, DaimlerChrysler
concluded a settlement with Glickenhaus, one of the two individual
plaintiffs. On February 5, 2004, the Court issued a final order
approving the settlement of the consolidated class action case and
ordering its dismissal. The settlements did not affect the case
brought by Tracinda, which claims to have suffered damages in the
range of $856 million to $1.28 billion. In November 2003, the
Court denied the remaining aspects of defendants’ motion for
summary judgment. The Tracinda case went to trial in December
2003 and continued for approximately two weeks. Trial of the case
was suspended with approximately two days of trial time remaining
while the parties addressed a discovery issue in a separate
hearing. The trial reconvened on February 9, 2004, and was
completed February 11, 2004. It is difficult to predict when the
Court might render a decision, although DaimlerChrysler doubts it
will be before the fourth quarter of 2004.