17 Contingencies / Other Obligations

Contingencies are potential obligations based on past events of which the existence will not be confirmed until the occurrence of one or more uncertain future events which are beyond the Group’s influence. Present obligations, moreover, can likewise be contingencies if the likelihood of an outflow of resources is not strong enough to justify the formation of a provision and/or the amount of the obligations cannot be estimated with sufficient reliability. The values assigned to contingencies correspond to the degree of liability that exists on the statement of financial position date.

The contingencies and other obligations shown below are nominal values.

The guarantees essentially concern the external financing of joint ventures. In addition, there are guarantees for customers’ advance payments to former subsidiaries or joint ventures from which WACKER was released by the purchaser and of which the transfer is contractually agreed.

In view of the present financial situation of the companies for which WACKER has taken on guarantees, utilization of these guarantees is unlikely.

There are no conditional lease payments from finance leases.

There is a finance lease for the headquarters building in Munich which is used by the Group. The contract with the lessor expires in 2012. After that, WACKER’s pension fund or some company specified by it shall have the right to purchase the building at a price that has already been fixed. Wacker Chemie AG has also capitalized a finance lease for the leased CCGT (combined-cycle gas turbine) power station at its Burghausen site. The lease for the power station is due to expire in 2016 at the latest, although it can be terminated prematurely. In either case, WACKER has the right to acquire the power station at a price that reflects the carrying amounts in accordance with German commercial law. If WACKER acquires this power station, it may not be sold to a third party for five years.

The lease agreements serve to simplify the procurement and financing of production facilities and fixed assets. The long-term commitment that they involve, however, leads to a constant future outflow of cash from which the company cannot extract itself.

Operating leases are used in particular for motor vehicles and IT equipment. These leases generally have terms of between three and five years. Tenancy agreements for office space, etc. have considerably longer terms.

WACKER has also signed an agreement with the joint-venture partners Dow Corning and Samsung to make investments in future years and provide necessary equity funds and/or loans. In addition, the Group has undertaken to provide guarantees for borrowed funds at a joint venture amounting to around US$ 250 million. Of this total, guarantees for approximately €110 million have already been given. These are already included in the disclosure of guarantees/obligations to make additional contributions.

The Group receives government subsidies for investment activities. These subsidies are granted on condition that a certain number of jobs are created or maintained at certain sites. If these contractual commitments are not fulfilled, any funding received must be paid back either in full or in part. The period for which the Group has to fulfill its contractual commitments is limited.

In order to safeguard the supply of the raw material ethylene at the Burghausen site, Wacker Chemie AG has acquired a stake in EPS Ethylen-Pipeline-Süd GmbH & Co. KG, Munich. The capital contribution obligations that this investment involves amount to approximately €1 million and are likely to fall due in 2010.