Mercedes 2009 Annual Report Download - page 231

Consolidated Financial Statements |Notes to Consolidated Financial Statements |227
Litigation is subject to many uncertainties and Daimler cannot
predict the outcome of individual matters with assurance.
The Group establishes provisions in connection with pending or
threatened litigation if a loss is probable and can be reasonably
estimated. Since these provisions, which are reflected in the
Group’s consolidated financial statements, represent estimates,
it is reasonably possible that the resolution of some of these mat-
ters could require us to make payments in excess of the amounts
accrued in an amount or range of amounts that could not be rea-
sonably estimated at December 31, 2009. It is also reasonably
possible that the resolution of some of the matters for which
provisions could not be made may require the Group to make
payments in an amount or range of amounts that could not be
reasonably estimated at December 31, 2009. Although the final
resolution of any such matters could have a material effect
on Daimler’s operating results and cash flows for a particular
reporting period, Daimler believes that it should not materially
affect the Group’s financial position.
28. Guarantees and other financial commitments
Guarantees. The following table shows the amounts of provisions
and liabilities at December 31 which have been established
by the Group in connection with its issued guarantees (excluding
product warranties):
Financial guarantees. Financial guarantees principally represent
guarantees that require the Group to make certain payments if
guarantee holders fail to meet their financial obligations. The maxi-
mum potential obligation resulting from these guarantees
amounted to €1,493 million at December 31, 2009 (December 31,
2008: €1,857 million). These amounts include guarantees,
which the Group issued for the benefit of Chrysler in connection
with the Chrysler transactions entered into in 2007 and 2009.
These guarantees relate to Chrysler’s pension obligations and cer-
tain other financial obligations of Chrysler. For a portion of these
financial guarantees, Chrysler provided collateral to an escrow
account. See Note 2 for the amounts and further information.
Guarantees under buy-back commitments. Guarantees under
buy-back commitments represent arrangements whereby the
Group guarantees specified trade-in or resale values for sold
vehicles. Such guarantees provide the holder with the right to
return purchased vehicles to the Group, the right being primarily
contingent on the future purchase of vehicles or services. As
of December 31, 2009, the maximum potential obligation result-
ing from these buy-back guarantees was €690 million (2008:
€715
million). Residual value guarantees related to arrangements
for which revenue recognition is precluded due to the Group’s
ob ligation to repurchase assets sold to unrelated guaranteed par-
ties are not included in those amounts.
Other guarantees. Other guarantees principally comprise
pledges or indemnifications related to the quality or timing of
performance by third parties or participations in performance
guarantees of consortiums. As of December 31, 2009, the best
estimate for obligations under other guarantees for which no pro-
visions had yet been recorded was €95 million (2008: €61 million).
In 2002, our subsidiary Daimler Financial Services AG, Deutsche
Telekom AG and Compagnie Financière et Industrielle des
Autoroutes S.A. (Cofiroute) entered into a consortium agreement in
order to jointly develop, install, and operate under a contract
with the Federal Republic of Germany (operating agreement)
a system for the electronic collection of tolls for all commer-
cial vehicles over 12 tons GVW using German highways. Daimler
Financial Services AG and Deutsche Telekom AG each hold a
45% equity interest and Cofiroute holds the remaining 10% equity
interest in both the consortium (Toll Collect GbR) and the
joint venture company (Toll Collect GmbH) (together Toll Collect).
According to the operating agreement, the toll collection
system had to be operational no later than August 31, 2003.
After a delay of the launch date of the toll collection system,
which resulted in a loss of revenue for Toll Collect and in payments
of contractual penalties for delays, the toll collection system was
introduced on January 1, 2005 with on-board units that allowed for
slightly less than full technical performance in accordance with
the technical specification (phase 1). On January 1, 2006, the toll
collection system was installed and started to operate with full
effectiveness as specified in the operating agreement (phase 2).
On December 20, 2005, Toll Collect GmbH received a preliminary
operating permit as specified in the operating agreement.
Toll Collect GmbH expects to receive the final operating permit,
and continues to operate the toll collection system under
the preliminary operating permit in the interim.
Amount recognized
as a liability
At December 31,
20082009
262
62
132
456
183
66
105
354
in millions of €
Financial guarantees
Guarantees under buy-back commitments
Other guarantees