Mercedes 2003 Annual Report Download - page 161
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Please find page 161 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, on April 30, 2001, DaimlerChrysler sold its
subsidiary, DaimlerChrysler Rail Systems GmbH, (also known as
Adtranz), to Bombardier, Inc., for cash consideration of $725 mil-
lion. 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 con-
tract 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 mil-
lion. The Group continues defending against such claims vigorously
(see Note 4).
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 super-
visory 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 U.S. securities law and com-
mitted fraud in obtaining approval from Chrysler stockholders of
the business combination between Chrysler and Daimler-Benz in
1998. The consolidated class action complaint contained addition-
al 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, Daimler-
Chrysler agreed to settle the consolidated class action case for
$300 million (approximately €240 million adjusted for currency
effects), and shortly thereafter, DaimlerChrysler concluded a set-
tlement with Glickenhaus, one of the two individual plaintiffs. On
February 5, 2004, the Court issued a final order approving the set-
tlement of the consolidated class action case and ordering its dis-
missal. The settlements did not affect the case brought by Tracin-
da, 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 recon-
vened 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 quar-
ter of 2004.
As previously reported, in 2002 several lawsuits were filed assert-
ing claims relating to the practice of apartheid in South Africa
before 1994. More specifically, on November 11, 2002, the Khu-
lumani Support Group (which purports to represent 32,700 individ-
uals) and several individual plaintiffs filed a lawsuit captioned Khu-
lumani v. Barclays National Bank Ltd., Civ. A. No. 02-5952
(E.D.N.Y.) in the United States District Court for the Eastern Dis-
trict of New York against 22 American, European, and Japanese
companies, including DaimlerChrysler AG and Daimler-Benz Indus-
trie. The lawsuit purports to relate to the period from 1960 to
1993. On November 19, 2002, another putative class action law-
suit, 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 pretri-
al 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 Dis-
trict 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. Khu-
lumani 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 benefited financially
from such cooperation. Plaintiffs’ legal theories include conspiracy,
aiding and abetting violations of international law, unjust enrich-
ment, 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.” The
plaintiffs 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. DaimlerChrysler intends to
continue to defend itself vigorously in these suits.
Litigation is subject to many uncertainties, and DaimlerChrysler
cannot predict the outcome of individual matters with assurance.
It is reasonably possible that the final resolution of some of these
matters could require the Group to make expenditures, in excess of
established reserves, over an extended period of time and in a
range of amounts that DaimlerChrysler cannot reasonably esti-
mate. Although the final resolution of any such matters could have
a material effect on the Group’s consolidated operating results for
a particular reporting period, DaimlerChrysler believes that it
should not materially affect its consolidated financial position.
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