Commitments and risks

For accounting purposes, leases and rental contracts are classified as operating when:

• a significant part of the risks and benefits associated with ownership are retained by the lessor;
• there are no purchase options at prices that do not represent the presumable market value of the asset being leased at the end of the period;
• the lease term is not for the major part of the useful life of the asset leased or rented.

Operating lease instalment payments are booked to the Income Statement in line with the underlying contracts.

The main operating leases existing as of December 31, 2011 regard the following subsidiaries:

• Allevard Federn GmbH for the rental of the production plant in Volklingen.
  The contract expires in May 2020. At December 31, 2011, the remaining payments amount to Euro 3,206 thousand, Euro 366 thousand of which due by the end of the year.
  The Group has not given any guarantees for this contract;

• Mark IV Air Intake Systems Corp. for the rental of the production plant in Montreal. The contract expires in December 2015 and the remaining payments at December 31, 2011 amount to CAD 4,057 thousand, CAD 970 thousand of which due by the end of the year.
  The Group has not given any guarantees for this contract;

• Filtrauto S.A. for the rental of the production plant in Guyancourt. The contract expires in December 2016 and the remaining payments at December 31, 2011 amount to Euro 2,611 thousand, Euro 870 thousand of which due by the end of the year.
  The Group has not given any guarantees for this contract;

• Shanghai Sogefi Auto Parts Co., Ltd. for the rental of a production plan in Shanghai. The contract expires in August 2023. At December 31, 2011, total remaining payments amount to CNY 18,110 thousand, CNY 1,646 thousand of which due by the end of the year. The Group has not given any guarantees for this contract;

• Allevard Sogefi U.S.A. Inc. for the rental of the production plant in Prichard (West Virginia).
  The contract expires in May 2019, the remaining payments at December 31, 2011 amount to USD 2,942 thousand, of which USD 397 thousand due by the end of the year.
  For this contract Sogefi S.p.A. provided a guarantee equal to 58% of the residual instalments still to fall due. The guarantee is renewed at the end of each year according to the residual amount.
  There are no restrictions of any kind on this type of lease and at the end of the contract the US company will be able to purchase the building at its market value.

Future lease payments under operating leases outstanding as of December 31, 2011 are as follows:

(in thousands of Euro)	2011	2010
Within 12 months	6,336	4,957
Between 1 and 5 years	14,796	9,359
Beyond 5 years	4,139	2,961
TOTAL	25,271	17,277

 

At December 31, 2011, Group companies have binding commitments for investments relating to the purchase of property, plant and equipment for Euro 2,460 thousand, Euro 4,266 thousand at the end of the previous year, as already disclosed in the explanatory notes regarding tangible fixed assets.

Details of guarantees are as follows:

(in thousands of Euro)	12.31.2011	12.31.2010
PERSONAL GUARANTEES GIVEN
a) Sureties to third parties	1,340	1,021
b) Other personal guarantees in favour of third parties	9,714	9,714
TOTAL PERSONAL GUARANTEES GIVEN	11,054	10,735
REAL GUARANTEES GIVEN a) Against liabilities shown in the financial statements	1,738	556
TOTAL REAL GUARANTEES GIVEN	1,738	556

The guarantees given in favour of third parties relate to guarantees given to certain customers and to operating lease contracts; guarantees are shown at a value equal to the outstanding commitment at the reporting period. These accounts indicate risks, commitments and guarantees provided by Group companies to third parties.
The “Other personal guarantees in favour of third parties” relate to the commitment of the subsidiary LPDN GmbH to the employee pension fund for the two business lines at the time it was acquired in 1996; this commitment is covered by the contractual obligations of the seller, who is a leading German operator.

“Real guarantees given” refer exclusively to the Indian subsidiaries Sogefi M.N.R. Filtration India Private Ltd and Allevard IAI Suspensions Private Ltd, which have real guarantees on tangible fixed assets, inventories and trade receivables to secure loans obtained from financial institutions.
 

As of December 31, 2011, the Group had third-party goods and materials held at Group companies worth Euro 5,417 thousand (Euro 5,180 thousand as of December 31, 2010).

Sogefi Group is managing environmental issues in some production plants. No relevant costs are expected.

In 2004, the subsidiary Sogefi Filtration Ltd purchased the assets and liabilities of Filtrauto UK Ltd, thus taking charge of employer as regards the pension funds of Filtrauto UK Ltd’s Staff Pension Scheme and Filtrauto UK Ltd’s Works Pension Scheme. Said funds are defined-benefit plans.
Between 1990 and 2006, the employer and the pension fund trustees received professional advices from leading consulting companies to equalise the conditions of the pension funds, as required by amended legislation.
It shows that the above equalisation may not have been correctly applied.
Sogefi Filtration Ltd has therefore submitted a protective claim to the Birmingham High Court.
The Court could conclude that the equalisation was correctly applied, or that an adjustment could be possible, or even that there is a potential liability. In the latter case, we are confident that almost the entire amount of any liability can be recovered from the consultants.
An initial valuation of the maximum potential liability, before its likely recovery from the consultants amounts to around Euro 1.9 million.

Subsidiary Systèmes Moteurs S.A.S. is conducting in-depth technical investigations of the quality of the products supplied before the acquisition by the Sogefi Group with some customers.
Potential economic impact cannot be estimated at present.
However, we believe that any cost as may be incurred by Systèmes Moteurs S.A.S. after full or partial insurance compensation (if any) will be repaid by the seller of the shares of Systèmes Moteurs S.A.S., which Sogefi S.p.A. purchased in July 2011.

Pursuant to Consob Communication dated July 28, 2006, it is specified that the Group did not implement any atypical and/or unusual transactions during 2011.