Mercedes 2003 Annual Report Download - page 111
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Please find page 111 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.As previously reported, in 2002 several lawsuits were filed
asserting claims relating to the practice of apartheid in South
Africa before 1994. More specifically, on November 11, 2002, the
Khulumani Support Group (which purports to represent 32,700
individuals) and several individual plaintiffs filed a lawsuit
captioned Khulumani v. Barclays National Bank Ltd., Civ. A. No. 02-
5952 (E.D.N.Y.) in the United States District Court for the Eastern
District of New York against 22 American, European, and Japanese
companies, including DaimlerChrysler AG and Daimler-Benz
Industrie. The lawsuit purports to relate to the period from 1960 to
1993. On November 19, 2002, another putative class action
lawsuit, Ntsebeza v. Holcim Ltd., No. 02-74604 (RWS) (E.D. Mich.),
was filed in the United States District Court for the Eastern District
of Michigan against four American and European companies,
including DaimlerChrysler Corporation, and purports to cover the
period from 1948 to 1993. Both cases were consolidated for
pretrial purposes with several other putative class action lawsuits,
including Digwamaje v. Bank of America, No. 02-CV-6218 (RCC)
(S.D.N.Y.), which had been previously filed in the United States
District Court for the Southern District of New York. The
Digwamaje plaintiffs originally named DaimlerChrysler AG as a
defendant, but later voluntarily dismissed DaimlerChrysler from the
suit. Khulumani and Ntsebeza allege, in essence, that the
defendants knew about or participated in human rights violations
and other abuses of the South African apartheid regime,
cooperated with the apartheid government during that period, and
benefitted financially from such cooperation. Plaintiffs’ legal
theories include conspiracy, aiding and abetting violations of
international law, unjust enrichment, and unfair and discriminatory
labor practices. The plaintiffs seek, among other things,
declaratory relief, compensatory and punitive damages, attorneys’
fees and costs, the disgorgement of purported illicit profits, an
accounting, restitution of the value of defendants’ purported unjust
enrichment, a constructive trust, and the establishment of an
“independent historic commission”. They do not quantify damages.
On July 14, 2003, a group of defendants named in one or more of
the consolidated lawsuits, including Khulumani and Ntsebeza, filed
a motion to dismiss the complaints. The motion was argued on
November 6, 2003 and is currently pending before the Court. We
intend to continue to defend ourselves vigorously in these suits.
Litigation is subject to many uncertainties, and we cannot predict
the outcome of individual matters with assurance. It is reasonably
possible that the final resolution of some of these matters could
require us to make expenditures, in excess of established reserves,
over an extended period of time and in a range of amounts that we
cannot reasonably estimate. Although the final resolution of any
such matters could have a material effect on our consolidated
operating results for a particular reporting period, we believe that it
should not materially affect our consolidated financial position.
Overall risk. There are no discernible risks that could jeopardize
the continued existence of the company.
5. Events after the End of the 2003 Financial Year
On January 15, 2004, DaimlerChrysler entered into a purchase
agreement with MMC to acquire an additional 22% interest in
MFTBC for anticipated €0.4 billion in cash. This transaction is
dependant on the approval of the individual governmental and
antitrust authorities of the countries concerned. The Group
expects the transaction to be consummated in March 2004 and to
consolidate MFTBC at that time.
On January 27, 2004, the Toll Collect consortium, in which
DaimlerChrysler holds a 45% equity interest, presented to the
Federal Minister of Transport, Building and Housing a revised
proposal for the completion and operation of an electronic toll
collection system for commercial vehicles over 12 t GVW in
Germany. In intensive negotiations with representatives from the
Federal Ministry of Transport, Building and Housing, the parties
could not reach a final agreement with respect to the offer
submitted. Negotiations between the parties were primarily
focused on contract terms pertaining to contractual commitments
and possible future contract termination options as well as matters
regarding the technical risks associated with the toll collection
system. On February 17, 2004, the Federal Minister of Transport,
Building and Housing announced that the consortium should
formally receive notification of termination of the operating agree-
ment. To avoid contract termination, the consortium has the
possibility to reach agreement with the Federal Ministry of Trans-
port, Building and Housing within a time period of two months
following the receipt of the notification of termination of
the operating agreement. A contract termination could have a
substantial negative impact on the Group’s operating results and
financial condition.
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