Contingent Liabilities

The values assigned to contingent liabilities correspond to the extent of liability that exists on the reporting date. At WACKER, contingent liabilities primarily concern incurred guarantees totaling €0.5 million, versus €0.6 million in the prior year. It is unlikely that the guarantees will be utilized.

Other Financial Obligations and Other Risks

The Group leases property, plant and equipment, motor vehicles and IT equipment by way of rental agreements and operating leases. These leases generally have terms of between three and five years. Tenancy agreements for office space, property, plant and equipment, etc. have considerably longer terms. Due to regulatory requirements, the Group is also leasing the land on which its production facilities in Singapore were built.

Obligations from orders for planned investment projects (commitments) amount to €121.3 million, after €205.0 million in the prior year, and concern the operating segments.

The Group ensures capacity utilization at its joint venture company with Dow Corning via long-term purchasing commitments of some €90.0 million annually, versus €100 million in the prior year. The contractually agreed transfer prices led to creation of a provision for onerous contracts, included in other provisions.

As regards raw-material supplies, WACKER has entered into long-term agreements to purchase strategic raw materials, electricity and gas. Accordingly, in net terms the company had other financial obligations arising from major minimum purchasing obligations in the amount of €1.32 billion in the reporting period, after €1.58 billion the year before. The agreements have terms of between one and seven years. The Group has an obligation to accept delivery in the amount of €8.9 million (€13.6 million a year earlier) to take back stock from consignment warehouses.

The Group receives government incentives and allowances for investing activities. These incentives are granted on condition that a certain number of jobs be 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.

WACKER is occasionally involved in legal or arbitration proceedings as well as official investigations and actions. Pending proceedings can have a negative impact on WACKER’s earnings, net assets or financial position. At the present time, WACKER does not expect any significant negative effects from pending proceedings.