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34. Capital commitments
The Company’s capital expenditures include projects
to improve the Company’s operations and productivity,
replacement projects and ongoing environmental
35. Contingencies
Guarantees
The following table outlines the Company’s off-balance sheet credit-related guarantees and business-related
guarantees for the benefit of third parties as of December 31, 2010 and 2009:
Business-related
guarantees
Credit-related
guarantees Letters of credit Total
2010
Total amounts committed: 63,563 254 5,080 68,897
Less than 1 year 41,209 254 303 41,766
2–5 years 5,170 – – 5,170
After 5 years
2009
17,184 – 4,777 21,961
Total amounts committed: 49,735 552 5,215 55,502
Less than 1 year 19,966 552 438 20,956
2–5 years 15,377 – – 15,377
After 5 years 14,392 – 4,777 19,169
In the normal course of business, the Company has
provided indemnifications in various commercial
agreements which may require payment by the Company
for breach of contractual terms of the agreement.
Counterparties to these agreements provide the Company
with comparable indemnifications. The indemnification
period generally covers, at maximum, the period of the
applicable agreement plus the applicable limitations
period under law. The maximum potential amount of
future payments that the Company would be required
to make under these indemnification agreements is
not reasonably quantifiable as certain indemnifications
are not subject to limitation. However, the Company
enters into indemnification agreements only when an
assessment of the business circumstances would indicate
that the risk of loss is remote.
As discussed in note 28, the Engineering Systems Division
had an obligation for personnel expenses relating to its
investment site in Berlin. The State of Berlin required
that at least 70 permanent jobs be maintained at the site
by the end of 2007 and an additional 80 by the end of 2008
with 150 of these permanent jobs being maintained until
the end of 2009. In the event of a breach of this contract,
the Company would be required to pay a penalty of
150,000 multiplied by the number of jobs less than 150
at the site at that time. There were 157 employees at the
Berlin site as of December 31, 2009 and therefore, the
obligation has been fulfilled and the contingency has been
effectively eliminated.
requirements (which are in addition to expenditures
discussed in note 27). As of December 31, 2010, the
Company had committed to capital requirements in the
amount of $6,269 (2009: $17,769).
The Company has agreed to indemnify its current and
former directors and officers to the extent permitted by
law against any and all charges, costs, expenses, amounts
paid in settlement and damages incurred by the directors
and officers as a result of any lawsuit or any other judicial
administrative or investigative proceeding in which the
directors and officers are sued as a result of their service.
These indemnification claims will be subject to any
statutory or other legal limitation period. The nature of
such indemnification prevents the Company from making
a reasonable estimate of the maximum potential amount it
could be required to pay to counter parties. The Company
has $75,000 in directors’ and officers’ liability insurance
coverage.
Environmental
As discussed in note 27, a US subsidiary of the Company
entered into a fixed price remediation contract with
an environmental consultant, whereby that consultant
became primarily responsible for certain aspects of
the environmental remediation. This subsidiary of the
Company is still a secondary obligor for this remediation,
in the event that the consultant does not perform.
The Company has other contingent liabilities related to
certain environmental regulations at certain locations.
A UK subsidiary may be subject to certain regulations
on accidents and hazardous substances with which the
site does not currently comply. These regulations could
impose compliance costs over a five-year period in the
range of $500–$2,000. Environmental regulations in France
Notes to Consolidated Financial Statements 133