Mercedes 2002 Annual Report Download - page 138

132 |Other Notes
31. Commitments and Contingencies
Obligations from issuing guarantees as a guarantor
(excluding product warranties) are as follows:
Guarantees for third party liabilities principally represent
guarantees of indebtedness of non-consolidated affiliated
companies and third parties and commitments by Group
companies as to contractual performance by joint venture
companies and certain non-incorporated companies,
partnerships, and project groups. The term under these
arrangements generally cover the range of the related
indebtedness of the non-consolidated affiliated companies
and third parties or the contractual performance period of
joint venture companies, non-incorporated companies,
partnerships, and project groups. The parent company of the
Group (DaimlerChrysler AG) provides guarantees to third
parties of certain obligations of its consolidated subsidiaries.
At December 31, 2002, these guarantees amounted to 151.7
billion. To a lesser extent, consolidated subsidiaries provide
guarantees to third parties of obligations of other consolidated
subsidiaries. All intercompany guarantees are eliminated
in consolidation and therefore are not reflected in the above
table.
Guarantees under buy-back commitments principally repre-
sent arrangements whereby the Group guarantees specified
trade-in values for assets or products sold to non-consolidated
affiliated companies and third parties. Such guarantees
provide the holder with the right to return purchased assets
or products back to the Group in connection with a future
purchase of products or services. The table above excludes
residual value guarantees related to arrangements for which
revenue recognition is precluded due to the Group’s obligation
to repurchase assets sold to unrelated guaranteed parties.
Performance guarantees principally represent pledges or
indemnifications related to the quality or timing of perform-
ance by third parties or participations in performance gua-
rantees of consortiums. Performance guarantees typically pro-
vide the purchaser of goods or services with the right to be
reimbursed for losses incurred or other penalties if the third
party or the consortium fails to perform. Amounts accrued
under performance guarantees reflect estimates of probable
losses resulting from a third party’s failure to perform under
obligating agreements.
DaimlerChrysler Services, Deutsche Telekom, and Compagnie
Financiere et Industrielle des Autoroutes S.A. (“Cofiroute”),
(individually, the “partners;” collectively, the “consortium”),
entered into an agreement with the Federal Republic
of Germany (“FRG”) to develop and operate a toll collection
system for the use of German roadways by commercial vehicles
over 12 tons (gross vehicle weight). DaimlerChrysler Services
and Deutsche Telekom each represent 45% of the consortium
and Cofiroute represents the remaining 10%.
Pursuant to the agreement, the partners have guaranteed
the successful completion of the toll system, in phases with
applicable late penalties, with ultimate completion scheduled
for August 2003. The partners have also guaranteed the
successful operation of the toll system. In the event the toll
system is not developed on schedule or does not operate
effectively upon completion, the consortium will be obligated to
pay penalties which cannot be presently estimated. These
guarantees have not been included in the table above since
they relate, in part, to the Group’s own future performance.
The Group is subject to potential liability under certain gov-
ernment regulations and various claims and legal actions that
are pending or may be asserted against DaimlerChrysler con-
cerning environmental matters. The maximum potential future
obligation related to certain environmental guarantees cannot
be estimated due to numerous uncertainties including the
enactment of new laws and regulations, the development and
application of new technologies, the identification of new sites
for which the Group may have remediation responsibility and
the apportionment and collectibility of remediation costs when
other parties are involved.
When circumstances indicate that payment is probable,
guarantees made by the Group are recognized as a liability in
the consolidated balance sheet with an offsetting amount
recorded as an expense.
(in millions of 3)
At December 31,
Amount recognized
as a liability
Maximum potential
future obligation
Guarantees for third party
liabilities
Guarantees under
buy-back commitments
Performance guarantees
and environmental risks
Other
2,119
3,232
581
830
6,762
2,839
3,280
608
616
7,343
370
609
370
246
1,595
317
673
200
231
1,421
2001200220012002