Note 25 - Contingent liabilities

The main part of the total amount of guarantees and other commitments on behalf of external counterparties is related to US sales to dealers financed through external finance companies with a regulated buy-back obligation of the products in case of dealer’s bankruptcy.

In addition to the above contingent liabilities, guarantees for fulfillment of contractual undertakings are given as part of the Group’s normal course of business. There was no indication at year-end that payment will be required in connection with any contractual guarantees.

Asbestos litigation in the US

Litigation and claims related to asbestos are pending against the Group in the US. Almost all of the cases refer to externally supplied components used in industrial products manufactured by discontinued operations prior to the early 1970s. The cases involve plaintiffs who have made identical allegations against other defendants who are not part of the Electrolux Group.

As of December 31, 2011, the Group had a total of 2,714 (2,800) cases pending, representing approximately 2,843 (approximately 3,050) plaintiffs. During 2011, 1,005 new cases with 1,006 plaintiffs were filed and 1,091 pending cases with approximately 1,211 plaintiffs were resolved.

The Group reached an agreement in 2007 with many of the insurance carriers that issued general liability insurance to certain predecessors of the Group who manufactured industrial products, some of which are alleged to have contained asbestos. Under this agreement, the insurance carriers have agreed to reimburse the Group for a portion of the past and future costs incurred in connection with asbestos-related lawsuits for such products. The term of the agreement is indefinite but subject to termination upon 60 days notice. If terminated, all parties would be restored to all of their rights and obligations under the affected insurance policies.

Additional lawsuits may be filed against Electrolux in the future. It is not possible to predict either the number of future claims or the number of plaintiffs that any future claims may represent. In addition, the outcome of asbestos claims is inherently uncertain and always difficult to predict and Electrolux cannot provide any assurances that the resolution of these types of claims will not have a material adverse effect on its business or on results of operations in the future.

Electrolux insurer to Husqvarna Belgium S.A.

In July 2004, a gas explosion occurred on Husqvarna Belgium S.A.’s (“Husqvarna”) property in Ghislenghien, Belgium, resulting in the loss of 24 lives, more than 100 personal injuries and substantial property damage. The accident was caused by the bursting of a sub-surface industrial gas pipe. The Husqvarna group was spun-off from Electrolux to Electrolux shareholders in 2006.

In June 2011, after several years of legal proceedings, the Court of Appeal in Mons, Belgium, ruled that Husqvarna together with five other parties were found liable for the accident and jointly and severally liable for the damages resulting from it. Husqvarna has appealed the verdict to the Belgian Supreme Court, which is expected to rule on the matter during 2012.

At this stage a sufficiently reliable estimate of the total damages from the accident cannot be made. As a former subsidiary to Electrolux, Husqvarna is covered by Electrolux liability insurance program for 2004. This program is reinsured by external insurance companies. Electrolux believes that losses which Husqvarna may have cover for under Electrolux insurance program will be correspondingly covered by the external reinsurance program.