Chrysler 2007 Annual Report Download - page 189

Credit risk
The maximum credit risk to which the Group is theoretically exposed at December 31, 2007 is represented by the carrying amounts
stated for financial assets in the balance sheet and the nominal value of the guarantees provided on liabilities or commitments to
third parties as discussed in Note 32.
Dealers and final customers are subject to specific assessments of their creditworthiness under a detailed scoring system; in
addition to carrying out this screening process, the Group also obtains financial and non-financial guarantees for credit granted for
the sale of cars, commercial vehicles and Agricultural and Construction equipment. These guarantees are further strengthened
where possible by reserve of title clauses on financed vehicle sales to the sales network and on vehicles assigned under finance
leasing agreements.
Balances which are objectively uncollectible either in part or for the whole amount are written down on a specific basis if they are
individually significant. The amount of the write-down takes into account an estimate of the recoverable cash flows and the date of
receipt, the costs of recovery and the fair value of any guarantees received. General provisions are made for receivables which are
not written down on a specific basis, determined on the basis of historical experience and statistical information.
Out of Receivables for financing activities amounting to 12,268 million euros at December 31, 2007 (11,743 million euros at
December 31, 2006), balances totalling 89 million euros (159 million euros at December 31, 2006) have been written down on an
individual basis. Of the remainder, balances totalling 174 million euros (93 million euros at December 31, 2006) are past due up to
one month, while balances totalling 277 million euros are past due by more than one month (360 million euros at December 31,
2006). In the event of instalment payments, even if only one instalment is overdue, the whole amount of the receivable is classified
as such.
Out of Trade receivables and Other receivables totalling 7,587 million euros at December 31, 2007 (7,783 million euros at December
31, 2006), balances totalling 94 million euros (118 million euros at December 31, 2006) have been written down on an individual
basis. Of the remainder, balances totalling 367 million euros (406 million euros at December 31, 2006) are past due up to one
month, while balances totalling 476 million euros (554 million euros at December 31, 2006) are past due by more than one month.
Banco CNH Capital S.A. participates in various agricultural development/subsidy programs of the Brazilian government, provided
through the Banco Nacional de Desenvolvimento Economico e Social (“BNDES”). Under such programs BNDES provides credit
lines to Banco CNH, at subsidized interest rates, such that Banco CNH can provide subsidized financing to farmers for purchases of
agricultural equipment. In 2005 and 2006, in support of the struggling agricultural sector, the Brazilian government granted a
payment moratorium extending the loan payment terms by one year and rescheduling, at the same time, the maturity of payments
due on the credit lines provided to Banco CNH and all other financial services participants in the program.
In 2007, the Brazilian government announced a new debt relief program that allowed an additional extension of credit terms and
granted a 15% “bonus credit” to the farmers, subject to the payment of at least 15% of the amount due in 2007. As in previous
moratorium, Banco CNH and other financial institutions participating in the program would receive a proportionate extension of
amounts due to BNDES. BNDES would also grant a corresponding relief on the debt of Banco CNH in relation to the 15% bonus
credit. As of December 31, 2007, the total remaining value of the outstanding financings and credit lines that was rescheduled
under all renegotiation programs, was approximately 2.3 billion Reais (0.9 billion euros).
Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes188