Mercedes 2008 Annual Report Download - page 193

Consolidated Financial Statements |Notes to Consolidated Financial Statements |189
22. Provisions for other risks
The development of provisions for other risks is summarized
as follows:
Product warranties. Daimler issues various types of product
guarantees, under which it generally guarantees the performance
of products delivered and services rendered for a certain period
or term. The provision for these product warranties covers expect-
ed costs for legal and contractual warranty claims, as well as
expected costs for policy coverage, recall campaigns and buyback
commitments. The provision for buyback commitments repre-
sents the expected costs related to the Group’s obligation, under
certain conditions, to repurchase a vehicle from a customer.
Buybacks may occur for a number of reasons including litigation,
compliance with laws and regulations in a particular region
and customer satisfaction issues. The utilization date of product
warranties depends on the incidence of the warranty claims
and can span the entire term of the product warranties.
Sales incentives. The provisions for sales incentives relate to
obligations for expected reductions in revenue already recognized.
These include bonuses, discounts and other price reduction com-
mitments, which are entered into with contractual partners in the
reporting period or in previous periods, but will not be
paid until subsequent periods.
Personnel and social costs. Provisions for personnel and social
costs primarily comprise expected expenses of the Group for
employee anniversary bonuses, profit sharing arrangements, man-
agement bonuses as well as early retirement and partial retire-
ment plans. The additions recorded to the provisions for profit
sharing and management bonuses in the reporting year usually
result in cash outflows in the following year.
Other. Provisions for other risks comprise, among others, expect-
ed costs in connection with liability and litigation risks, obliga-
tions under the EU End-of-Life Vehicles Directive and environ-
mental protection risks. In addition, they also include provisions
for other taxes and various other risks.
TotalOther
Personnel
and social
costs
Sales
incentives
Product
warranties
6,598
3,103
3,495
2,262
(3,024)
(221)
284
27
5,926
3,025
2,901
830
819
11
709
(566)
(46)
.
(40)
887
887
.
3,028
1,419
1,609
817
(1,275)
(289)
83
(14)
2,350
1,031
1,319
2,945
1,931
1,014
1,447
(931)
(665)
62
(281)
2,577
1,887
690
13,401
7,272
6,129
5,235
(5,796)
(1,221)
429
(308)
11, 74 0
6,830
4,910
Balance at December 31, 2007
Thereof current
Thereof non-current
Additions
Utilizations
Reversals
Addition of accrued interest and effects of changes in discount rates
Currency translation and other changes
Balance at December 31, 2008
Thereof current
Thereof non-current
in millions of €