Chrysler 2005 Annual Report Download - page 113

112 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated Financial Statements
02 Fiat Group
The decrease of 1,525 million euros in Receivables from financing activities with respect to the balance at D ecember 31, 2004 is principally due
to the combined effect of the following matters:
a decrease of approximately 2.4 billion euros as a result of the sale by the Iveco Sector of part of its financial services activities, and the
creation of the joint venture Iveco Finance Holdings Limited with Barclays;
positive translation differences of approximately 1.4 billion euros, principally arising from the receivables of CN H;
a decrease of approximately 500 million euros in Supplier financing;
a decrease of 560 million euros in Financial receivables from companies under joint control, associates and unconsolidated subsidiaries,
mainly as a result of the acquisition of 100% control of Leasys and the resulting inclusion of that company in the scope of consolidation.
Receivables from financing activities are shown net of an allowance for doubtful accounts determined on the basis of specific insolvency risks.
At December 31, 2005 the allowance amounts to 523 million euros (559 million euros at December 31, 2004). Movements in the allowance
accounts during the year are as follows:
At Change in At
December Use and other the scope of D ecember
(in millions of euros) 31, 2004 Provisions changes consolidation 31, 2005
Allowance for receivables regarding:
Retail financing 185 41 (24) (5) 197
Finance leases 108 17 (22) (5) 98
Dealer financing 75 38 (11) – 102
Supplier financing 22 6 – – 28
Receivables from banking activities 39 6 (6) – 39
Financial receivables from companies under joint control,
associates and unconsolidated subsidiaries – – – – –
O ther 130 12 (83) – 59
Total allowance on Receivables from financing activities 559 120 (146) (10) 523
Finance lease receivables relate almost entirely to Fiat Auto, Commercial Vehicles and Agricultural and Construction Equipment leased out
under finance lease arrangements and may be analysed as follows stated gross of an allowance of 98 million euros at D ecember 31, 2005 (108
million euros at D ecember 31, 2004):
At December 31, 2005 At December 31, 2004
due due between due due due between due
within one and beyond within one and beyond
(in millions of euros) one year five years five years Total one year five years five years Total
Receivables for future minimum lease payments 433 456 36 925 894 1,553 39 2,486
Less:unrealised interest income (51) (56) (4) (111) (89) (164) (5) (258)
Present value of future minimum lease payments 382 400 32 814 805 1,389 34 2,228
There are no contingent rents as finance lease recognised income during 2005 or 2004.
Unguaranteed residual values at December 31, 2005 and 2004 are not significant.
The interest rate implicit in the lease is determined at the commencement of the lease for the whole lease term.The average interest rate
implicit in total finance lease receivables vary depending on prevailing market interest rates.
Receivables for dealer financing are typically generated by sales of vehicles and are generally managed under dealer network financing programs
as a component of the portfolio of the financial services companies.These receivables are interest bearing, with the exception of an initial
limited, non-interest bearing period.The contractual terms governing the relationships with the dealer networks vary from Sector to Sector
and from country to country, although these receivables are collected in approximately two to four months on average.