Chrysler 2001 Annual Report Download - page 33
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33
Report on Operations – Analysis of the financial position and operating results of the Fiat Group and Fiat S.p.A.
Result for the Fiscal Year
The loss before taxes for the whole year totaled 497 million
euros, against income of 1,050 million euros in the previous year.
This result reflected the decrease in operating income, worse
performance by equity investments, including writedowns in
the value of the securities portfolio held by Group insurance
companies to reflect lower stock market valuations, and a
significantly lower contribution by extraordinary items.
More specifically, the Group posted net investment expenses
of 149 million euros, against net income of 304 million euros
in 2000. The higher level of costs is mainly due to:
❚writedowns in the value of the securities portfolio held by
Group insurance companies to reflect lower stock market
valuations (-355 million euros) which were partly compensated
by higher income from securities included in financial
income;
❚worse performance by associated companies exposed to
the unfavorable effect of the devaluation of the Turkish lira
(-64 million euros);
❚the Group’s interest in the net loss of Italenergia (-34 million
euros), generated by the financial expenses and amortization
of goodwill resulting from acquisition of the Montedison
Group.
Net financial expenses (1,025 million euros) remained stable
with respect to the previous year, as lower interest rates in the
US dollar area and higher financial income at the insurance
companies were offset by higher corporate spread on the
financial markets and higher debt service costs in Argentina.
The balance of extraordinary income and expenses for the
year was a positive 359 million euros, significantly lower than
the 914 million euros in extraordinary income for 2000.
Extraordinary income in 2001 totaled 1,645 million euros,
due in large measure to the capital gains realized during the
year (totaling 1,515 million euros) upon sale of the Magneti
Marelli Climate Control Division to Denso Corporation (329
million euros), the residual 49% of Alstom Ferroviaria (107
million euros), and the activities of Fenice to Electricité de
France (481 million euros).
Capital gains were also realized through the contribution of
ITS and GSA activities to the Global Value joint venture with
IBM (165 million euros), electric power generation plants in
connection with the formation of Italenergia (255 million euros),
and activities by Fiat Auto to Leasys, the new joint venture
with Sei S.p.A. (Enel Group) in fleet leasing (71 million euros).
Against these extraordinary capital gains, the Group
sustained extraordinary expenses of 1,286 million euros,
largely connected (more than 850 million euros) with the
industrial streamlining and restructuring program that it
undertook in the second half of the year. This program
provides for: in the Automobile Sector, further cutbacks in its
industrial presence in Argentina and streamlining in Europe;
at CNH, extension of the restructuring program already
underway; and at Iveco the closure of several plants outside
Italy, including its activities in Argentina.
This item also includes other expenses and provisions for
future risks and charges and extraordinary incentives not
connected with the aforementioned program.
In fiscal 2000, extraordinary income stemmed primarily from
the capital gain realized through the transaction that led to
the creation of the strategic industrial alliance with General
Motors, the capital gains realized upon disposal of Telexis,
the Lubricants and Rearview Mirror Division of Magneti Marelli,
and 51% of Fiat Ferroviaria, net of extraordinary expenses
for industrial restructuring and reorganization in various Group
Sectors.
Income taxes declined from 472 million euros in 2000 to 294
million euros in 2001, due to lower taxable income. Income
taxes for the 2001 fiscal year included 138 million euros in
current and deferred taxes (269 million euros in 2000) and
156 million euros for IRAP, the regional tax on production
activity in Italy (203 million euros in 2000).
The consolidated net loss before minority interest was 791
million euros (against net income of 578 million euros in 2000).
The Group’s interest in net loss was 445 million euros,
compared with net income of 664 million euros in the previous
year.
As a result of the Group’s interest in net loss, there was a net
loss per share of 0.841 euros, compared with net income per
share of 1.186 euros in 2000.
Net Income (Loss)
(in millions of euros)
200120001999
Minority
Group
153
578
664
(86) (445)
(791)
(346)
353
506