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87
Finance subsidiaries of the Company periodically sell finance
receivables. Finance subsidiaries sold retail finance receiv-
ables subject to limited recourse provisions totaling approxi-
mately ¥731,508 million, ¥930,629 million and ¥562,488
million ($4,765 million) to investors in fiscal years 2005, 2006
and 2007, respectively. Pre-tax net gains or losses on such
sales resulted in losses of ¥4,291 million, ¥11,849 million and
a gain of ¥1,175 million ($10 million) in fiscal years 2005,
2006 and 2007, respectively, which are included in loss on
sale of receivables.
Finance subsidiaries sold direct financing lease receiv-
ables subject to limited recourse provisions totaling approxi-
mately ¥100,374 million in fiscal year 2006. Pre-tax net gains
or losses on such sales resulted in a net gain of ¥483 million
is included in loss on sale of receivables for fiscal year 2006.
The leases sold during fiscal year 2006 had 100% insurance
coverage of the residual value of the vehicles collateralizing
those leases. Finance subsidiaries did not sell any direct
financing lease receivable in fiscal year 2007.
Retained interests in securitizations were comprised of the following at March 31 2006 and 2007:
U.S. dollars
Yen (millions)
(millions) (note 2)
2006 2007 2007
Subordinated certificates ¥52,572 ¥44,198 $374
Residual interests 42,062 43,912 372
Total ¥94,634 ¥88,110 $746
Key economic assumptions used in initially estimating the fair values at the date of the securitizations during each of the
years in the three-year period ended March 31, 2007 are as follows:
2005 2006 2007
Weighted average life (years) 1.64 to 1.77 1.60 to 1.75 1.66 to 1.77
Prepayment speed 1.25% to 1.30% 1.00% to 1.30% 1.25% to 1.30%
Expected credit losses 0.30% to 0.70% 0.35% to 0.55% 0.23% to 0.27%
Residual cash flows discount rate 6.55% to 12.00% 6.53% to 12.00% 5.43% to 12.00%
At March 31, 2007, the significant assumptions used in estimating the retained interest in the sold pools of finance
receivables are as follows:
Weighted average
assumption
Prepayment speed 1.27%
Expected credit losses 0.24%
Residual cash flows discount rate 8.80%
The sensitivity of the current fair value to immediate 10% and 20% adverse changes from expected levels for each significant
assumption above mentioned were immaterial.
The following illustration presents quantitative information about balances of outstanding securitized portfolios as of March 31,
2006 and 2007.
U.S. dollars
Yen (millions)
(millions) (note 2)
2006 2007 2007
Securitized receivables
Retail ¥1,402,552 ¥1,208,409 $10,236
Direct finance leases 97,711 67,758 574
Total securitized receivables ¥1,500,263 ¥1,276,167 $10,810