Chrysler 1999 Annual Report Download

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Report on Operations
Consolidated and Statutory Financial Statements
The Fiat Group in 1999

Table of contents

  • Page 1
    The Fiat Group in 1999 Consolidated and Statutory Financial Statements Report on Operations

  • Page 2
    ...and Operating Results of the Fiat Group and Fiat S.p.A. Other Holding Companies Significant Events Occurring since the End of the Fiscal Year and Business Outlook Products and Services of the Group Financial Highlights by Sector Automobiles Commercial Vehicles Agricultural and Construction Equipment...

  • Page 3
    ... Case Group acquired at the end of 1999 and valued at cost. Statistical data by geographical region number Companies Employees Facilities Research and development Centers Number of Employees 237,426 237,865 242,322 220,549 221,319 Italy Europe excluding Italy Mercosur North America Other regions...

  • Page 4
    ... June 2, 3 and 5, 2000 Agenda 1. Financial Statements at December 31, 1999, Report on Operations and Motion for Allocation of the 1999 Net Income; 2. Motion to purchase treasury shares and modalities of their disposition; 3. Resolutions concerning the Board of Directors and determination of the...

  • Page 5
    Honorary Chairman Giovanni Agnelli Board of Directors Chairman Chief Executive Officer Paolo Fresco Paolo Cantarella Directors Franco Bernabè Carl Ludwig von Boehm-Bezing John Philip Elkann Gabriele Galateri di Genola Franzo Grande Stevens* Gianfranco Gutty Virgilio Marrone Franck Riboud John...

  • Page 6
    Report on Operations Paolo Fresco Chairman of Fiat S.p.A. Paolo Cantarella Chief Executive Officer of Fiat S.p.A.

  • Page 7
    ... overall results are the net effect of the different levels of performance achieved by the individual Sectors, with certain Group businesses posting truly remarkable results. The loss reported by Fiat Auto in 1999 reflects the negative impact that the renewal of its product line (with the removal...

  • Page 8
    ... the new Daily, a light commercial vehicle that will help the Sector reaffirm its leadership in this market segment, and introduced the Cursor 10, the second engine in a family of powerplants that has provided renewed momentum to the sales of Iveco's heavy-load vehicles. The purchase of Pico...

  • Page 9
    ... represents a key tool in lengthening the value chain, creating new business opportunities and fostering the development of innovative work modalities. In 1999, CIAOHOLDING, a joint venture owned in equal shares by Fiat and Ifil, launched a wide-ranging Internet initiative. This new company, which...

  • Page 10
    ... development of this type of management culture and we will continue to pursue this goal in the future. In 1999, in order to strengthen management's relationship with all stockholders and make sure that its actions are consistent with the goal of value creation, the Group introduced a stock option...

  • Page 11
    ... of its value creation goals. The synergies will have a direct impact on the most significant components of the Sector's industrial costs: powertrain and purchasing represent about 80% of all production costs. If Fiat Auto's and General Motors' market shares in Europe and South America are combined...

  • Page 12
    ...H E FIAT Other Industrial Sectors (17%) 15% Services (*) G R O U P Revenues by Sector Commercial Vehicles (14%) Ferrari and Maserati (2%) Automobiles (45%) Main acquisitions/agreements strengthening the Group competitiveness Leadership Globalization Lengthening the value chain VALUES STRATEGIES...

  • Page 13
    ... Region of Origin Europe excluding Italy (22%) Italy (61%) Other regions (17%) Revenues by Region of Destination Europe excluding Italy (41%) Italy (38%) Other regions (21%) Sales trend of the last ten years in millions of euros 48,123 Abroad 46,257 45,769 40,244 40,000 Italy 39,092 34...

  • Page 14
    ... is owned in equal shares by Fiat and Ifil) which has among its purposes the creation of an online channel to promote the products and services offered by the Fiat Group, Ifil and their sales organizations. At the same time, CiaoWeb collaborates with external partners who can help it increase the...

  • Page 15
    1899 - 1999 Centennial Celebration As part of the celebrations organized on the occasion of its centennial, Fiat sponsored a series of events and shows in Turin and other cities. The distinctive symbol that was used in all these projects was Fiat's historical logo, which was refurbished graphically ...

  • Page 16
    ... Website: www.fiatgroup.com E-mail addresses: [email protected] [email protected] For holders of ADRs: Toll-free telephone number in the United States or Canada: 1-800-997-8970 Website: www.adr.com Changes to the Capital Stock in 1999 On August 23, 1999, Fiat's shares...

  • Page 17
    ... of its values and policies. Particularly noteworthy programs include: ❚ The testing of a "People Satisfaction Survey," which polled 2,800 professionals (executives and middle managers) in 1999 and will be expanded in 2000. The findings it produced helped management develop programs specifically...

  • Page 18
    ... the recruiting, training and management of college graduates. It hired 70 new engineers (a total of about 400 recent graduates were hired by the Group in 1999) from 12 countries where Fiat has a significant industrial presence. This program, which is carried out by a special Company founded in...

  • Page 19
    ...the main provider of professional development services to Group companies. However, Isvor Fiat has successfully reached out to clients outside the Group, who now account for 13% of its revenues. In 1999, Isvor Fiat provided more than 40,000 man-days of training (22,000 to Group companies), including...

  • Page 20
    ... programs that promoted highway education, correct mobility and a culture of safety; a total of 6 million elementary, junior high and high school students had followed these programs. A special kit prepared in 1999, on the occasion of Fiat's Centennial, combines tools and material that help...

  • Page 21
    ... Policy adopted by the Company, which is based on sustainable development models, underscores the central role that environmental concerns play in the development of corporate strategies, setting forth principles and guidelines that are followed by all Group companies. The Environmental Report...

  • Page 22
    ... role within Fiat's development strategies and plans. The product innovation efforts of the various Sectors are supported by leading-edge, horizontal research conducted by the Fiat Research Center (FRC) and by Elasis, where more than 14,500 persons work at 131 engineering and innovation centers in...

  • Page 23
    ...it had purchased from Midas (quick repair centers). At the same time, it sold to Denso of Japan an 80% interest in its Rotary Devices Business Unit, continued to divest the nonstrategic product lines of the Cofap Group in Brazil and deconsolidated the Fuel Supply Division, which is in the process of...

  • Page 24
    ... real. The Sector shipped a total of 2,328,000 vehicles, compared with 2,397,000 the previous year. Weak sales in South America account for most of this 2.9% decline. Volumes were up slightly in Italy (+0.4%), where customers purchased 955,000 Fiat Auto vehicles. Sales held steady in Western...

  • Page 25
    ... the Group's insurance operations, which are characterized by a structurally negative operating performance, the return on sales of the industrial activities was 1.9% (2.2% in 1998). (in millions of euros) 1999 Revenues 1998 Revenues % change Automobiles (Fiat Auto) Commercial Vehicles (Iveco...

  • Page 26
    ... The main negative factors were: continued intense price competition in the Group's principal markets, a persistent crisis affecting the economies of the Mercosur countries (Fiat Auto); and weak demand in North America (CNH). However, owing in part to the introduction of new models, there were signs...

  • Page 27
    ... less favorable average financial position that developed as the Group deployed substantial resources to fund the acquisitions completed during the year. It also reflects a decrease in the net financial income earned by the Group's insurance companies, which found lower investment yields available...

  • Page 28
    ...of Case Corporation by New Holland, which was booked at cost, and the higher value of the securities held by the insurance companies as coverage for their technical reserves. 1997 1998 1999 Report on Operations - Analysis of the Financial Position and Operating Results of the Fiat Group and Fiat...

  • Page 29
    ... to average net invested capital, was about 7%, falling short of the 10% needed to create stockholder value in 1999. As a result, value creation was a negative 480 million euros, as compared with a negative 714 million euros in 1998, which was calculated using a rate of return of 12%. Net Financial...

  • Page 30
    ... in working capital Investments in fixed assets Cash flow Dividends paid by Fiat S.p.A. Dividends paid by other companies Acquisitions and capital contributions Other changes Total changes Net financial position at December 31, 1999 A breakdown of acquisitions and capitalizations is provided...

  • Page 31
    ... above account for most of this change. An analysis of financial flows is provided at the end of the Notes of Fiat S.p.A. Financial Statements. Fixed assets consist mainly of investments in the Group's principal companies. The total value at December 31, 1999 was 6,967 million euros, for a net...

  • Page 32
    ... in 1999 and 1998 is provided in the Notes of Fiat S.p.A. Financial Statements. The main component of writedowns was the charge of 209 million euros against the carrying value of Fiat Auto S.p.A., which, as mentioned above, was taken to reflect a corresponding change in the net worth of this company...

  • Page 33
    ... engaged in providing the foreign companies of the Fiat Group with financial support. Its investment portfolio, consisting mainly of shares in Iveco N.V., Fiat France S.A. and Fiat Finance Corporation B.V., amounted to 2,992 million Swiss francs at the end of 1999. Net income came to 67 million...

  • Page 34
    ... their stock market price at the time of the award. The group's Stock Option Plans are described in detail in the pertinent section of this Report on Operations. ❚ As allowed under a Resolution approved at the Stockholders' Meeting of June 23, 1999, it purchased 971,800 ordinary Fiat S.p.A. shares...

  • Page 35
    ... to achieve market leadership and excel in customer satisfaction, the Group engages in the areas of automobiles, commercial vehicles, agricultural and construction equipment, components, production systems, aviation, rolling stock and railway systems, insurance and financial services, and publishing...

  • Page 36
    ... SERVICES Lengthening the Value Chain The Group devotes significant attention to lengthening its value chain by developing services and solutions that are linked to the products it sells: financial and insurance services and mobility services for Fiat Auto, Iveco and CNH Global; aftermarket services...

  • Page 37
    ... (in millions of euros) Net invested capital 1999 (in millions of euros) 1998 (in millions of euros) Number of employees 1999 1998 Automobiles (Fiat Auto) Commercial Vehicles (Iveco) Agricultural and Construction Equipment (CNH Global) Metallurgical Products (Teksid) Components (Magneti Marelli...

  • Page 38
    AUTOMOBILES - FIAT AUTO Highlights (in millions of euros) 1999 1998 1997 Net revenues Operating income (loss) As a % of revenues Income (loss) before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees 24,101 (121) (0.5) (493) 855 1,...

  • Page 39
    ... Fiat Auto Egypt Industrial with the Seoudy Group. This joint venture, in which the Sector holds a 51% interest, will manufacture and distribute world car models. ❚ In India, it launched the Siena, which joined the Uno in the local product line. ❚ In Turkey, where the market has become extremely...

  • Page 40
    ... 3.9%. This volume of business supported the sale of 1,088,600 units (+8.7% over 1998 on a comparable basis), equivalent to 37.4% of all vehicles sold by Fiat Auto (33% in 1998). In particular, financing was provided for 331,068 units in Italy, for a share of 36.2% of sales, or 2.8 percentage points...

  • Page 41
    ... interest in Ikarus, a Hungarian bus manufacturer. Highlights (in millions of euros) 1999 1998 1997 Net revenues Operating income As a % of revenues Income before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees 7,387 311 4.2 180...

  • Page 42
    ... the value chain by offering customers a global service, Iveco acquired a controlling interest in the Fraikin Group, the unchallenged leader in the French market for longterm leases of commercial vehicles, with a strong presence in the areas of vehicles rental and fleet management. Established...

  • Page 43
    ... American markets could not offset the sharp decline in North America. Highlights (in millions of euros) 1999 1998 1997 Net revenues Operating income As a % of revenues Income before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees...

  • Page 44
    ... net income had a direct impact on cash flow, which fell to 333 million euros (624 million euros in 1998). Again in 1999, the achieved rate of return on invested capital allowed for a positive value creation. PRODUCT INNOVATION In 1999 the Company continued the efforts to renovate its product lines...

  • Page 45
    ... of the level required to create value. Highlights (in millions of euros) 1999 1998 1997 Net revenues Operating income As a % of revenues Income before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees 1,682 76 4.5 26 123 182 23...

  • Page 46
    ... a % of revenues Income before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees 4,062 108 2.7 107 310 209 185 1,289 25,613 3,793 56 1.5 21 254 222 195 1,270 29,398 3,451 99 2.9 78 271 207 167 991 24,352 GROWTH STRATEGIES 1999 was...

  • Page 47
    ... and Pico resulted in the creation of value in 1999. GROWTH STRATEGIES The acquisitions completed in 1999 with the goal of supporting the growth strategy pursued by the Production Systems Sector in its core business segments (bodywork and maintenance services) include the following: ❚ The most...

  • Page 48
    ... Research and development Net invested capital Number of employees 1,361 109 8.0 61 145 42 128 163 5,590 1,361 60 4.4 79 167 36 99 159 5,962 1,263 56 4.5 18 112 37 119 244 6,505 GROWTH STRATEGIES The Aircraft Business Unit continued to streamline its manufacturing operations, creating excellence...

  • Page 49
    ROLLING STOCK AND RAILWAY SYSTEMS - FIAT FERROVIARIA Highlights (in millions of euros) 1999 1998 1997 Net revenues Operating income As a % of revenues Income (loss) before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees 375 13 3.5...

  • Page 50
    ... invested capital Number of employees 413 17 4.1 11 19 8 25 934 437 19 4.3 - 11 9 21 1,473 406 11 2.7 2 13 7 33 1,505 GROWTH STRATEGIES During 1999, sales of Italian newspapers were slightly higher than in the previous year, rising to an average circulation of six million copies a day. The print...

  • Page 51
    ... its effort to create value. Highlights (in millions of euros) 1999 1998 1997 Consolidated premiums Premiums earned Income before taxes Net income before minority interests Technical reserves Investments in financial assets and real estate Stockholders' equity Number of employees 4,088 3,922 178...

  • Page 52
    ...: ❚ It sold 1,538 cars, triple the number shipped in 1998, underscoring the success of the efforts made by the Group during the last two years to reenergize the Maserati brand. With 1,186 units shipped, the 3200 GT accounts for the lion's share of the cars sold to end customers. Sales were up in...

  • Page 53
    ...both directly and through the CAV.E.T and CAVTO-MI consortia. Counting the contracts signed by foreign companies, new orders booked in 1999 totaled 275 million euros, including 163 million euros from Fiat Group companies and 112 million euros from external customers. At December 31, 1999, the order...

  • Page 54
    ... negotiations, the development and enhancement of its human resources and the optimization of its financial resources. ❚ Notwithstanding the ample powers granted to them, the Chairman and the Chief Executive Officer must regularly submit for approval to the Board of Directors all transactions that...

  • Page 55
    ...individual investors. In particular, it organizes regular meetings with Italian and foreign representatives of the financial community. The Board of Directors will make every effort to regularly update the Company's corporate governance model, keeping it in tune with the changing needs of the market...

  • Page 56
    ... affecting the Company's capital stock, shall be paid in cash upon purchase of the underlying shares. The Plan approved in March 1999 awarded 1,248,000 options, giving the right to purchase ordinary Fiat shares at a price of 28.45 euros per share. This figure corresponds to the average price for the...

  • Page 57
    ..., money market claims and billets de trésorerie by New Holland Credit Company LLC, Fiat Finance Canada Ltd., Fiat Finance and Trade Ltd. and Fiat France S.A., to secure bank loans obtained by Fiat Auto S.p.A., FiatAvio S.p.A., Iveco S.p.A., Teksid S.p.A. and other Group companies, and lease payment...

  • Page 58
    ...by Fiat Auto S.p.A., Iveco S.p.A. and Sevel S.p.A. of their activities specialized in the maintenance of machinery and equipment at their Italian factories for a total consideration of 2 million euros. ❚ Purchase by Ingest S.p.A. of buildings belonging to Fiat Auto S.p.A. and other Group companies...

  • Page 59
    ... The Board of Directors submits to the Stockholders' Meeting for approval the financial statements for the 1999 fiscal year and proposes that the net income for the fiscal year of 396,098,804 euros be allocated as follows: ❚ to the Stockholders a dividend of: ❙ euros 0.620 on ordinary shares...

  • Page 60
    ...Spain Iveco Portugal Ltda. Portugal Naveco Ltd China (*) Fiat Sava S.p.A. Italy Fidis S.p.A. Italy Sava-Leasing S.p.A. Italy Savarent S.p.A. Italy Targa Services S.r.l. a S.U. Italy Banco Fiat S.A. Brazil Fiat Auto Contracts Ltd Great Britain Fiat Auto Financial Services Ltd Great Britain Fiat Bank...

  • Page 61
    ...Comau Argentina S.A. Argentina Comau Deutschland GmbH Germany Comau do Brasil Ind. e Com. Ltda Brazil Comau Estil UK Unlimited Great Britain Comau France S.A. France Comau India Pvt. Ltd. India Comau Poland Sp. zo.o. Poland Comau Sciaky S.A. France Mecaner S.A. Spain Pico Holdings Corporation United...

  • Page 62
    ... La Stampa S.p.A. Italy Publikompass S.p.A. Italy Miscellaneous and Holding Companies Fiat Engineering S.p.A. Italy IPI S.p.A. Italy Sicind S.p.A. Italy Fiat Argentina S.A. Argentina Fiat Deutschland GmbH Germany Fiat do Brasil S.A. Brazil Aviation FiatAvio S.p.A. Italy Sepa S.p.A. Italy FiatAvio...

  • Page 63
    The Fiat Group in 1999 Report on Operations Published by: Fiat Information & Communication Services Editorial Coordination: Micrograf - Turin, Italy Design by: Fantinel & Associati - Turin, Italy On the cover: Oil on canvas, 100x25 cm by Roberto Bergonzo - Turin, Italy Printed by: Puntografico - ...