Pallet-Management-Services - AFM

Receivable factoring
In 2006, a subsidiary of IFCO SYSTEMS Europe entered into
non-recourse factoring agreement under which this European
subsidiary may offer all of their trade receivables to third-party
factoring companies. Under the factoring agreement, the sales
price is the nominal value of the receivable less a factoring
fee. The third-party factoring companies have the right to
collect the receivables and bear the collection risk. Under these
agreements, there is a factoring fee ranging from 0.10% to
0.25% of the nominal value of the factored receivables and the
interest rate on cash advances relating to factored receivables
at rates ranging from 4.73% to 5.23% as of December 31,
2006. The Company’s European subsidiaries incurred factoring
charges and factoring-related interest charges of
US $0.4 million and US $0.3 million during 2006 and 2005,
respectively, which are shown as factoring charges in the
accompanying consolidated statements of income.
Finance lease obligations
The Company has entered into leases with unaffiliated third
parties principally for RPCs in Europe that are accounted for as
finance leases. The RPC finance leases are part of
sale-leaseback transactions in which the Company has sold
the RPCs to third parties, which then leases them back to the
Company. The RPC finance leases cover approximately 10.2
million RPCs as of December 31, 2006. Upon termination
of certain of these leases, the Company has the option to
repurchase the RPCs. All of these lease agreements require
the Company to repurchase the leased RPCs on the lessor’s
demand.
The Company has also entered in finance leases covering
certain operating equipment. These contracts have bargain
purchase options at the end of the lease period, which the
Company intends to exercise.
The present value of minimum lease payments was as follows as
of December 31, 2006:
| FINANCIAL REPORTING | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
US $ in thousands 1 year 2-3 years 4-5 years 5+ years Total
Total future minimum lease payments 16,154 19,800 446 – 36,400
Less amounts representing interest at 4.00%-10.50% (1,626) (965) (25) – (2,616)
14,528 18,835 421 – 33,784
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