Mercedes 2010 Annual Report Download - page 221

Consolidated Financial Statements | Notes to the Consolidated Financial Statements | 217
23. Provisions for other risks
The development of provisions for other risks is summarized
as follows:
Product
warranties
Sales
incentives
Personnel and
social costs Other Total
In millions of euros
Balance at December 31, 2009 5,489 914 2,054 2,550 11,007
Thereof current 2,874 914 803 1,720 6,311
Thereof non-current 2,615 – 1,251 830 4,696
Additions 2,682 1,079 1,816 1,280 6,857
Utilizations -2,628 -705 -793 -782 -4,908
Reversals -131 -76 -75 -674 -956
Addition of accrued interest and effects of changes in discount rates 119 175 45 240
Currency translation and other changes 109 54 40 97 300
Balance at December 31, 2010 5,640 1,267 3 ,117 2,516 12,540
Thereof current 2,783 1,265 1,693 1, 251 6,992
Thereof non-current 2,857 21,424 1,265 5,548
Product warranties. Daimler issues various types of product
warranties, under which it generally guarantees the perfor-
mance of products delivered and services rendered for a certain
period or term. The provision for these product warranties
covers expected costs for legal and contractual warranty claims,
as well as expected costs for policy coverage, recall campaigns
and buyback commitments. The provision for buyback commit-
ments represents the expected costs related to the Group’s
obligation, under certain conditions, to repurchase a vehicle from
a customer. Buy-backs may occur for a number of reasons in-
cluding litigation, compliance with laws and regulations in a partic-
ular 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 recog-
nized. These include bonuses, discounts and other price reduction
commitments, 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,
management bonuses as well as early retirement and partial
retirement 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,
expected costs in connection with liability and litigation risks,
obligations under the EU End-of-Life Vehicles Directive and
environmental protection risks. They also include provisions for
other taxes and various other risks.