Scania Annual Report 2011

95
Product obligations
Scania’s product obligations are mainly related to vehicle warranties
in the form of a one-year “factory warranty” plus extended warrantie s
and, in some cases, special quality campaigns. For each vehicle sold,
Scania makes a warranty provision. For extended warranties and
campaigns, a provision is made at the time of the decision. Provisions
are dependent on the estimated quality situation and the degree of
utilisation in the case of campaigns. An essential change in the qualit y
situatio n may require an adjustment in earlier provisions. Scania’s
product obligations can be seen in Note 18, “Other provisions” and
amounted to SEK 1,462 m. (1,193) on 31 December 2011.
Legal and tax risks
On 31 December 2011, provisions for legal and tax risks amounted
to SEK 1,650 m. (1,841). See Note 18, “Other provisions”.
Tax risks
The Group is party to tax proceedings. Scania’s management has
made the assessment, based on individual examination, that the final
outcome of these proceedings will not have any material impact on the
financial position of the Group, beyond the recognised reserves.
Significant judgements are made in order to determine both current
and deferred tax liabilities/assets. As for deferred tax assets, Scania
must assess the likelihood that deferred tax assets will be utilised to
offset future taxable profits. The actual result may diverge from these
judgements, among other things due to future changes in business
climate, altered tax rules or the outcome of still uncompleted examinations
of filed tax returns by authorities or tax courts. The judgements
that have been made may affect income both negatively and positively.
Legal risks
Demands and claims aimed at the Group, including demands and
claims that lead to legal proceedings, may be related to infringements
of intellectual property rights, faults and deficiencies in products that
have been delivered, including product liability, or other legal liability
for the companies in the Group.
The Group is party to legal proceedings and related claims that are
normal in its operations. In addition, there are demands and claims
normal to the Group’s operations that do not lead to legal proceedings.
In the best judgement of Scania’s management, such demands and
claims will not have any material impact on the financial position of the
Group, beyond the reserves that have been set aside.
During 2010 Scania became a subject of an investigation being
carried out by a British public authority, the Office of Fair Trading (OFT),
and during 2011 of an investigation being carried out by the European
Commission, concerning alleged inappropriate cooperation. This
type of investigation normally lasts for several years. It is still too early
to judge whether there is any risk of claims against Scania based on
these investigations.
financial reports Scania 2011