a. Litigation

Various legal actions and claims are pending or may be asserted in the future against Group companies from litigations and claims incidental to the ordinary course of business. These mainly include matters relating to warranties and infringement on intellectual property rights. Related risks have been analysed as to likelihood of occurrence. Although the outcome of these matters cannot always be ascertained with precision the Managing Board believes that no material liabilities are likely to result.

Andritz Inc., a subsidiary of the Company, is one of many defendants in a total of 61 asbestos cases in the US.  Nearly all of these cases involve claims by multiple plaintiffs against multiple defendants.  In aggregate the cases involve a total of approximately 18,082 plaintiffs.  Andritz Inc. does not believe it should be found liable in connection with any of these claims and plans to vigorously defend each claim. Predecessors of Andritz Inc. supplied to certain worksites equipment that contained gaskets and/or packing purchased from third-party suppliers that may have contained encapsulated asbestos thereby preventing the release of asbestos fibers. In certain cases, the plaintiffs have alleged exposure to asbestos at some of these worksites. As the claims against Andritz Inc. in most cases have not as yet been stated with specificity and it is not possible for Andritz Inc. to assess the full extent of its potential exposure to asbestos litigation, which could be significant. Andritz Inc. has not settled any asbestos claims or had a judgment of liability rendered against it in connection with an asbestos claim.  It is possible that the final adjudication or settlement of such proceedings could have a material adverse effect on the Company’s business, results of operations and financial condition.  The Group believes it has several potential sources of recovery including insurance and/or contractual indemnities from the previous owners of the relevant businesses of Andritz Inc.  Whether any indemnities and/or insurance will apply depends on the particular facts of each plaintiff’s claim. Because the claims against Andritz in most cases have not as yet been stated with specificity and for the reasons set forth below, it is not possible for the Group to assess the sufficiency of its sources of recovery.  Moreover, certain indemnitors or insurers have contested and others may contest the applicability of the indemnity or insurance in question, and there can be no assurance that the Group will prevail in any dispute relating to the applicability of such insurance or indemnity to existing or future claims against a Group company.