Mercedes 2008 Annual Report Download - page 178

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Finance leases. Finance leases consist of sales-types leases
of vehicles to the Group’s direct retail customers and of direct-
financing leases of vehicles to customers of the Group’s inde-
pendent dealers including leveraged leases of non-automotive
assets to third parties.
Maturities of the finance lease contracts are comprised of the
following:
Leveraged leases. Leveraged leases which are included in the
above table also involve those leveraged lease arrangements
which are recorded net of non-recourse debt and are designed
to achieve tax advantages for the investor that are shared with
its contracting partner. Daimler’s risk of loss from these arrange-
ments is limited to the equity investment. Revenue is recognized
based on the effective interest method using the implicit rate of
return that considers the net cash flows underlying the trans-
actions.
The investments in these leveraged leases consist of power plants,
sewage treatment plants, vessels and railroad rolling stock;
the contractual maturities range from 27 to 52 years. The carrying
amount of leveraged leases as of December 31, 2008 and
December 31, 2007 was €1,304 million and €1,271 million, respec-
tively. Daimler recognized income of €36 million (2007: €38
million; 2006: €41 million) relating to these transactions, which
is included in revenue.
Sale of receivables. Based on market conditions and liquidity
needs, Daimler may sell portfolios of retail and wholesale
receivables to third parties (i.e. special purpose entities). At
the time of the sale, Daimler determines whether the legally
transferred receivables meet the criteria for derecognition
in conformity with the appropriate provisions. If the criteria are
not met, the receivables continue to be recognized in the
Group’s consolidated balance sheets.
As of December 31, 2008, the carrying amount of receivables
from financial services sold, but not derecognized for accounting
purposes amounted to €697 million (2007: €1,409 million). The
associated risks and rewards are similar to those with respect to
receivables from financial services that have not been trans-
ferred. For information on the related total liabilities associated
with these receivables sold, but not derecognized, see Note
23. These receivables are pledged as collateral for the related
financial liabilities.
At December 31, 2007
Total
> 5 years
1 year up to
5 years< 1 year
At December 31, 2008
Total> 5 years
1 year up to
5 years< 1 year
18,802
713
19,515
(3,681)
15,834
(532)
15,302
3,824
260
4,084
(1,325)
2,759
(4)
2,755
9,825
331
10,156
(1,626)
8,530
(393)
8,137
5,153
122
5,275
(730)
4,545
(135)
4,410
17,675
822
18,497
(4,096)
14,401
(238)
14,163
4,933
278
5,211
(1,857)
3,354
(1)
3,353
8,570
387
8,957
(1,612)
7,345
(145)
7,200
4,172
157
4,329
(627)
3,702
(92)
3,610
Contractual future lease payments
Unguaranteed residual values
Gross investment
Unearned finance income
Gross carrying amount
Allowances for doubtful accounts
Carrying amount, net
in millions of €