Chrysler 2004 Annual Report Download - page 38

December 31, 2004, a 17-million-dollar loan is still outstanding
(approximately 13 million euros).
At December 31, 2004, gross indebtedness included, among
other things, the mandatory convertible facility agreement
(3 billion euros) and the loan by Citigroup (lead manager of a
restricted pool of banks), secured by the agreements with EDF
as part of the Italenergia Bis transaction (approximately 1,150
million euros).
The net financial position – net indebtedness minus financial
receivables – totaled a negative 4,961 million euros at
December 31, 2004, reflecting an increase from the negative
3,028 million euros recorded at December 31, 2003.
This change stemmed principally from the operating
requirements of the period, particularly the loss posted for the
year, the increase in working capital and lower sales of trade
receivables.
For a more detailed analysis of the above items, and more
specifically as regards bonds, please see the Notes to the
Consolidated Financial Statements.
Financial receivables and lease contracts receivable at
December 31, 2004 include financial receivables from the
dealer network totaling 1,220 million euros (2,020 million
euros at December 31, 2003).
The aggregate total of Group receivables from the dealer
network is illustrated as follows.
(in millions of euros) At 12.31.2004 At 12.31.2003 Change
Trade receivables 1,286 1,208 78
Financial receivables 1,220 2,020 (800)
Total receivables from the dealer network 2,506 3,228 (722)
Receivables from the dealer network are typically generated
by sales of vehicles and are generally managed under dealer
network financing programs as a typical component of the
portfolio of the financial services companies. These receivables
are interest bearing, with the exception of an initial limited,
non-interest bearing installment payment period. On the
consolidated balance sheet, the interest-bearing portion of
the receivables is classified as a financial receivable and thus
included in the net financial position, while the non-interest
bearing portion is classified as a trade receivable (and thus
excluded from the net financial position).
The contractual terms governing the relationships with the
dealer networks vary from Sector to Sector and from country
to country. However, these receivables are collected in
approximately two to four months on average.
The receivables from the dealer network illustrated in the
preceding table are net of allowances for doubtful accounts
totaling 408 million euros at December 31, 2004 (313 million
euros at December 31, 2003), computed on the basis of
historical statistical analyses and updated according to
evolutions in market trends. During 2004, 137 million euros
(27 million euros in 2003) were allocated to reserves, and 94
million euros (46 million euros in 2003) were used. At December
31, 2004, the Group held guarantees totaling more than 2 billion
euros as security for these receivables.
The receivables illustrated in the preceding table are net of sale
with or without recourse, as follows:
REPORT ON
OPERATIONS
01
36
At 12.31.2004 At 12.31.2003 Change
Trade Financial Trade Financial Trade Financial
(in millions of euros) receivables receivables Total receivables receivables Total receivables receivables Total
With recourse 937 59 996 1,387 – 1,387 (450) 59 (391)
Without recourse 2,927 852 3,779 2,598 740 3,338 329 112 441
At December 31, 2004, gross indebtedness totaled 19.2 billion
euros and continued to be within the targets agreed upon with
the Lending Banks under the Mandatory Convertible Facility
Agreement (23.6 billion euros), while the pro-forma net financial
position (computed, as envisaged in the facility agreement,
by subtracting from the net financial position the Citigroup loan
of approximately 1,150 million euros but not the receipt of the
1,550 million euros as a result of the agreement reached with
General Motors on February 13, 2005) exceeded the limit of
3.6 billion euros contractually agreed for this parameter. The
Lending Banks therefore have the right according to contractual
terms and conditions, to proceed with the conversion of the
facility for an amount up to 2 billion euros in principal.