Chrysler 2010 Annual Report Download - page 243

FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2010
NOTES
242
The consideration to be paid for the exercise of these options is determined on the basis of a defined market-based EBITDA multiple (average multiple of
reference automakers, not to exceed the then Fiat multiple), applied to Chrysler reported “Modified EBITDA” for the most recent four quarters, less Net
Industrial Debt. In the event that at the time of exercise Chrysler is a listed company, such consideration will be based on a volume-weighted average price
per share of Chrysler common stock. The Incremental Equity Call Option is recognised in the Consolidated statement of financial position on a fair value
basis at zero, as the exercise price is not fixed but rather will be based on market values of underlying assets at exercise.
Iveco Finance Holdings Limited
Since 2005, Financial Services activities for Iveco in Western Europe have been managed by Iveco Finance Holdings Limited (IFHL), the joint venture with
Barclays Group in which Iveco holds a 49% stake and Barclays a 51% stake. This joint venture provides support for the sector’s European sales activities
through dealer and end customer financing in France, Germany, Italy and the United Kingdom, and Barclays provides funding up to a maximum of
€3.5 billion. The agreements relating to this joint venture contain provisions that are standard for such contracts in relation to management of the company,
covenants and default clauses. Under the agreements signed in 2010, the parties stipulated that the joint venture would terminate on 31 May 2012.
As is usual for contracts of this type, on that date Iveco will acquire from Barclays Group, and Barclays Group will sell, the interest it holds in that joint venture
for a consideration based on the book value of equity. In addition, Iveco is responsible for ensuring repayment of any funding provided to the joint venture
by Barclays which is outstanding at that date (which could take place through replacement funding from one or more new lenders or other mechanism).
Iveco is evaluating strategic options in relation to this joint venture, including the potential selection of new partners.
Sales of receivables
The Group has discounted receivables and bills without recourse having due dates after 31 December 2010 and classified as Continuing Operations
amounting to €3,524 million, which refer to trade receivables and other receivables for €2,761 million and receivables from financing for €763 million.
These amounts include receivables, mainly from the sales network, sold to jointly-controlled financial services companies (FGA Capital) for €2,376 million.
With respect to Discontinued Operations, the Group has discounted receivables and bills without recourse having due dates after 31 December 2010
amounting to €1,100 million, of which trade receivables and other receivables for €882 million and receivables from financing for €218 million. These
amounts include receivables, mainly from the sales network, sold to associated financial service companies (Iveco Finance Holdings Limited, controlled by
Barclays) for €390 million.
At 31 December 2009, the Fiat Group had discounted receivables and bills without recourse having due dates after that date for a total of € 4,611 million.
Of this, €3,679 million related to trade receivables and other receivables and €932 million related to receivables from financing. These amounts included
receivables, mainly from the sales network, sold to jointly-controlled financial services companies (FGA Capital) for €2,530 million and receivables, mainly
from the sales network, sold to associated financial service companies (Iveco Finance Holdings, controlled by Barclays) for €440 million.
Operating lease contracts
The Group has entered operating lease contracts for the right to use industrial buildings and equipment with an average term of 10-20 years and 3-5 years,
respectively. At 31 December 2010 the total future minimum lease payments under non-cancellable lease contracts are as follows:
Continuing Operations Discontinued Operations
due between due due between due
due within one and beyond due within one and beyond
(€ million) one year five years five years Total one year five years five years Total
Future minimum lease payments under operating lease agreements 34 91 99 224 41 71 46 158
The total future minimum lease payments under non-cancellable lease contracts at 31 December 2009 were as follows:
At 31 December 2009
due between due
due within one and beyond
(€ million) one year five years five years Total
Future minimum lease payments under operating lease agreements 77 171 154 402