Chrysler 2002 Annual Report Download

Download and view the complete annual report

Please find the complete 2002 Chrysler annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 63

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63

97th Fiscal Year
Consolidated and Statutory Financial Statements
at December 31, 2002

Table of contents

  • Page 1
    Consolidated and Statutory Financial Statements at December 31, 2002 97th Fiscal Year

  • Page 2
    ... Highlights by Sector Stockholders Customers and Products Innovation and Technology Environment Human Resources Analysis of the Financial Position and Operating Results of the Fiat Group and Fiat S.p.A. Corporate Governance and Stock Option Plans Transactions among Group Companies and with Related...

  • Page 3
    ... 1. Financial Statements at December 31, 2002 and Report on Operations; pertinent and related resolutions. 2. Motion to purchase treasury shares and modalities of their disposition. 3. Appointment of the Board of Directors after determining the number of its Members and their fees. 4. Appointment...

  • Page 4
    ...Company's history, providing a constant point of reference not only for Fiat's stockholders and employees, but also for its industrial, financial and commercial partners. During these long years, he used his charisma and his wisdom to help Fiat play a key role in the arenas of international business...

  • Page 5
    Board of Directors and Control Bodies Board of Directors Chairman Vice Chairman Chief Executive Officer Umberto Agnelli (1) Alessandro Barberis (1) Giuseppe Morchio (1) Directors Angelo Benessia (2) Luca Cordero di Montezemolo Flavio Cotti (2) John Philip Elkann (1) Gabriele Galateri di Genola ...

  • Page 6
    ...agreements with the lending banks, the Group used capital increases, asset divestitures and a decrease in working capital requirements to achieve a substantial reduction in net borrowings. At a meeting held on February 28, 2003, the Board of Directors accepted the resignation of Group Chairman Paolo...

  • Page 7
    ... impact of the current restructuring process, in accordance with the Framework Agreement signed with the Italian Government. To that end, we will use all available tools. Staff downsizing is a painful necessity that must be undertaken to enable the Group to cope with changing market conditions and...

  • Page 8

  • Page 9
    ... provides financing services to its dealers and suppliers and offers motorists a comprehensive line of mobility services. Ferrari and Maserati are also part of the Fiat Group. They produce luxury sports cars that excel for their exclusive characteristics, technology and performance. 2 - Agricultural...

  • Page 10
    ... and amortization) Capital expenditures Research and development Operating result/net revenues (ROS) Operating result/average net invested capital (ROI) Net result before minority interest/net revenues Net result/Group interest in average stockholders' equity (ROE) Number of employees 55,649...

  • Page 11
    ... of euros) Net invested capital 2002 (in millions of euros) 2001 (in millions of euros) Number of employees 2002 2001 Automobiles (Fiat Auto Holdings) Agricultural and Construction Equipment (CNH Global) Commercial Vehicles (Iveco) Ferrari Components (Magneti Marelli) Production Systems (Comau...

  • Page 12
    ...direct contact between the financial community and the Group's top management. Stockholders according to country of domicile 2002 10.0% 2001 2000 8.0% (estimate) 6.0% For holders of Fiat shares: Toll-free telephone number in Italy: 800-804027 Website: www.fiatgroup.com E-mail addresses: investor...

  • Page 13
    .../02 06/02 07/02 08/02 09/02 10/02 11/02 12/02 12 10 8 6 4 2 Fiat savings shares N.B.: The holdings of Italian and international institutional investors have been estimated on the basis of surveys commissioned by the Company. 0 01/02 02/02 03/02 04/02 05/02 06/02 07/02 08/02 09...

  • Page 14
    ... motorists the following options: roadside assistance, car repair, scheduled maintenance, and rent-a-car services. Business customers are offered the following services: satellite monitoring of corporate fleets, credit card management, database management, and market research. The third and final...

  • Page 15
    .... New Holland introduced the innovative CR combine, based on twin rotor technology, and the CS, conceived expressly to address the needs of farmers who also work in the livestock sector. CNH agricultural equipment received many awards in both Europe and America. A renewed line of products was...

  • Page 16
    ... Group companies, while also developing a new skills center for process engineering. Its design work was concentrated on the new compact model for the Alfa Romeo Business Unit, a new vehicle for the FIAT Commercial Vehicles Business Unit, and structural design of the aluminum space frame to be used...

  • Page 17
    ... Fiat Group. This Web site illustrates the new principles applicable to environmentally compatible transportation and describes corporate initiatives in the field of research, environmental protection and safety. Overview of the main environmental achievements of the Fiat Group's Italian industrial...

  • Page 18
    ... 2002, the Group hired about 900 recent college graduates from all over the world. These new employees are being offered special programs designed to encourage their career and professional development. Leadership. The process of assessing the leadership skills of the top managers of the Fiat Group...

  • Page 19
    ... a pre-retirement mobility allowance and will apply to all those employees who will reach retirement age during their benefit period. Among the Fiat Group companies operating outside Italy, Fiat Auto Argentina SA and the trade unions signed a staff reduction agreement. Iveco completed the closing of...

  • Page 20
    ... The sale generated net proceeds of 548 million euros. ❚ The 40% interest in Europ Assistance Holding was sold to the Generali Group. ❚ The Teksid Aluminum Business Unit was sold to a pool of investors comprised by the Questor Management Company, JPMorgan Partners, and a Private Equity partner...

  • Page 21
    ... market contraction. The improved results reported by the Magnesium Business Unit reflected increased use of this metal in SUV vehicles, particularly in the USA. (in millions of euros) 2002 2001 Change Net revenues Cost of sales Gross operating result Overhead Research and development Operating...

  • Page 22
    ... the loss reported by Fiat Auto. Certain Sectors were also compelled to set aside greater provisions in operating reserves, due in part to stiffer market conditions, such as extension of vehicle warranties and lower prices for used cars. The major commitment to realization of cost savings, including...

  • Page 23
    ... of Maserati models and improved prices for Ferrari models. These benefits were partially reduced by increased investments in research and development activities for new products and the costs of reintroducing Maserati on the North American market. ❚ Magneti Marelli reported an operating loss of...

  • Page 24
    ... sold as part of the Italenergia transaction) and lower prices caused by partial transfer of efficiency gains to customers, which were partially offset by improvements realized in the property management area. ❚ Itedi reported operating income of 3 million euros in 2002, against an operating loss...

  • Page 25
    ...pages provide the information necessary for correlation with the principal items of the schemes used in previous years, such as working capital and net invested capital. As illustrated in the Notes to the Consolidated Financial Statements, the investments managed by the insurance companies on behalf...

  • Page 26
    ... 31, 2002 December 31, 2001 Change ❚ ASSETS Intangible fixed assets Property, plant and equipment Financial fixed assets Investments on behalf of policy holders who bear the risk and those related to pension plan management Financial receivables held as fixed assets Financial leasing of Group...

  • Page 27
    ... of business lines and investments (3,231 million euros), capital increases during the year (1,215 million euros), and the reduction in working capital. These positive effects were partially offset by liquidity absorbed by operating activities. As a result of the Group's financial restructuring plan...

  • Page 28
    ... in 2001. Financing activities absorbed 1,793 million euros (compared with a benefit of 718 million euros in 2001). Newly obtained loans, net of repayments, generated cash flow of 2,655 million euros, up from the 2,504 million euros reported in 2001, and the capital increases at Fiat S.p.A. and CNH...

  • Page 29
    27 Report on Operations Analysis of the Financial Position and Operating Results of the Fiat Group and Fiat S.p.A. Consolidated Statement of cash flows (in millions of euros) 2002 2001 2000 A) Cash at January 1 B) Cash flows provided by (used in) operating activities: Net result before minority ...

  • Page 30
    ... cash management activities, i.e. that raise financial resources on the market and finance Group companies, without providing financial services to others. Operating Performance by Activity Segment Industrial Activities The net revenues for Industrial Activities, including changes in contract work...

  • Page 31
    ...attributable to the divestiture of lines of business and investments, capital increases, and lower requirements for working capital, net of the effects of operating performance during the period. Financial Activities Financial payables net of intersegment activities decreased by 1,889 million euros...

  • Page 32
    ... Activities Insurance Activities ❚ ASSETS Intangible fixed assets Net property, plant and equipment Financial fixed assets Investments on behalf of policy holders who bear the risk and those related to pension plan management Financial receivables held as fixed assets Financial leasing of Group...

  • Page 33
    ... employees). Revenues totaled 95 million euros, in line with the previous fiscal year. They included royalties from the right to use the Fiat trademark, computed as a percentage of the sales of the individual Group companies, and fees for services rendered by management personnel. Net extraordinary...

  • Page 34
    32 Report on Operations Corporate Governance and Stock Option Plans CORPORATE GOVERNANCE The Fiat Group adopted and abides by the Code of Conduct for Listed Companies in Italy that was revised in July 2002 by the Corporate Governance Committee and is mentioned as a model in the regulations issued ...

  • Page 35
    ..., the Company, which had already published a Code of Ethics several years earlier, adopted an Internal Control System based on a model derived from the COSO Report. The Board of Directors then decided to disseminate an Internal Control System policy and establish an Audit Committee. In 2002 a more...

  • Page 36
    ...Board of Statutory Auditors. At present, the Supervisors of the Internal Control System are the General Counsel and the Chief Accounting Officer. They rely on input from the Internal Audit function, which is performed for the entire Group by Fiat Revi, a highly skilled and capable consortium company...

  • Page 37
    ...and uses its Web site (www.fiatgroup.com) to disseminate publicly and in real time the material discussed on those occasions. The Web site is also used to disseminate corporate, operating and financial information on a regular basis as well as to present news of special transactions. The schedule of...

  • Page 38
    36 Report on Operations Corporate Governance and Stock Option Plans of employment, a total of 3,558,700 shares could be issued through a specially reserved capital increase that has already been approved by the Board of Directors. Another 12,223,000 shares represent treasury stock to be assigned ...

  • Page 39
    ... building rental contracts (Ingest Facility S.p.A., Fiat Auto S.p.A., Isvor Fiat S.p.A., Editrice La Stampa S.p.A., Fiat Automobil Verter GmbH, International Metropolitan Automotive Promotion - France - S.A., Fiat Motor Sales Ltd. and other Group companies), and payment obligations under financial...

  • Page 40
    38 Report on Operations Transactions among Group Companies and with Related Parties Aftermarket S.p.A., and Magneti Marelli Services S.p.A. to Magneti Marelli Holding S.p.A. and its interest in Magneti Marelli Holding S.p.A. to Fiat S.p.A. ❚ Corporate income tax credits were transferred within ...

  • Page 41
    ... 2002, at the end of March Fiat finalized the sale of the retail financing business of Fiat Auto Holdings in Brazil to the Itaú Group, a leading Brazilian financial institution. ❚ The following new products were introduced during the first quarter of 2003: - Fiat Auto chose the 73rd International...

  • Page 42

  • Page 43
    41 Report on Operations Operating Performance - Sectors of Activity

  • Page 44
    42 Report on Operations Automobiles - Fiat Auto Holdings Highlights (in millions of euros) 2002 2001 2000 Net revenues Operating result EBIT Net result before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees 22,147 (1,343) (2,...

  • Page 45
    ... adopted a new structure based on five Business Units, each with full responsibility for its operating and financial performance and business development. They are: Fiat, Lancia & Light Commercial Vehicles B.U., Alfa Romeo B.U., International Developments B.U., Fiat Auto Consumer Services B.U. and...

  • Page 46
    ... fleets) and Savarent (management of small and medium-size fleets through the Fiat Auto sales network) - was on increasing the profitability of new contracts. The Sector's rental fleet numbered 123,000 vehicles, or 14% more than in 2001. For Fiat Auto's operations in the area of mobility services...

  • Page 47
    ... number of units shipped, offset in part by an improvement in the quality of its sales, and the additional provisions booked to cover a lengthening of the contractual warranty period to two years. Research and development outlays totaled 861 million euros, about the same as in 2001, but advertising...

  • Page 48
    46 Report on Operations Agricultural and Construction Equipment - CNH Global Highlights (in millions of euros) 2002 2001 2000 Net revenues Operating result EBIT Net result before minority interest Cash flow Capital expenditures Research and development Net invested capital Number of employees ...

  • Page 49
    ... on new products, some positive Financial activities During 2002, CNH and the BNP Paribas Lease Group (BPLG) formed CNH Capital Europe S.A.S., a retail financing partnership that operates across Europe. CNH Capital Europe, which holds the retail financing portfolio, covers all brands and commercial...

  • Page 50
    48 Report on Operations CNH Global pricing on agricultural equipment and efficiency improvements had a positive impact on the bottom line. The Sector's increasingly successful integration and industrial streamlining plan, which was undertaken after the merger, resulted in profit improvements of ...

  • Page 51
    ...Operations Commercial Vehicles - Iveco Highlights (in millions of euros) 2002 2001 2000 Net revenues Operating result EBIT Net result before minority interest Cash flow Capital expenditures (*) Research and development Net invested capital Number of employees (*) Vehicles under long-term rentals...

  • Page 52
    ...the finance companies of the Iveco Finance Group, which provide financing and leasing services to support the sales of Iveco products, enjoyed a growth rate comparable with that in 2001. They signed about 34,000 contracts to finance sales of new commercial vehicles and about 6,000 contracts for used...

  • Page 53
    ... the F1A line of low horsepower engines, which are expected to generate an increase in production due to their suitability for new applications. aggressive reserve policy implemented in the second half of the year in response to a product recall and greater writedowns of the value of used vehicles...

  • Page 54
    ... whose performance and quality surpass the competition. The commercial targets achieved and the creation of a motivated, cohesive team operating in a people-first work environment have taken Maserati to the first place in the list of best companies to work for, prepared by Il Sole 24 Ore, an Italian...

  • Page 55
    ...price positioning of Ferrari models. Capital spending amounted to 176 million euros (125 million euros in 2001) and research and development outlays totaled 94 million euros (81 million euros the previous year), confirming the brands' commitment to product and process development and innovation. Net...

  • Page 56
    ... 148 Research and development 162 Net invested capital 524 Number of employees 20,716 4,073 (74) 208 82 289 240 227 1,073 24,228 4,451 55 292 139 353 231 213 1,131 25,975 of the phases for the launch of new products (new generation Diesel Common Rail System and variable light beam headlights), as...

  • Page 57
    ... flow (238) Capital expenditures 20 Research and development 17 Net invested capital 163 Number of employees 18,186 2,218 60 30 (36) 27 38 22 378 17,243 2,440 87 77 6 63 36 20 486 17,636 4% was booked in Brazil and on new markets (South Africa and China). Fiat Group customers accounted for 17% of...

  • Page 58
    ... out, which will allow to improve, within the time frame of the plan, production saturation with the acquisition of new orders. On the American market, Brazil performed a primary role, enhancing its portfolio with 40 new components for local clients, Pegasus block and cylinder head for CDC Cummins...

  • Page 59
    ... total number of 12 LM2500 Turbines). The first "Power by the Hour" contract for services integrated with the ISIS (In Service Information System), was signed with the Italian Air Force. Positive developments in the Commercial Engine Overhaul Division included agreements reached for the maintenance...

  • Page 60
    ...from French customers for insurance products that are primarily financial in nature. Two major life insurance products were launched in 2002: Toro Rendimento Più, a capitalization policy with guaranteed return, and Toro Index Five, an indexed policy linked to the stock market that offers guaranteed...

  • Page 61
    ...Fiat Group real estate assets and operating the lift facilities at the Via Lattea ski resort. Revenues by business unit 34% Human Resources 4% Property, Engineering & Facility Management Administration and Procurement Services I.C.T. - Information and Communication Technology Diversified Services...

  • Page 62
    ... basis). Operating performance In 2002, sales of Italian newspapers averaged about 5.9 million copies a day, or 2.8% less than in 2001. Demand for print advertising was also down, contracting for the second consecutive year. The decline experienced in 2002 affected all segments of the market and...

  • Page 63
    61 Report on Operations Motion to Cover the Loss for Fiscal 2002 Stockholders, The Financial Statements at December 31, 2002 show a loss of 2,052,620,996 euros. We propose that this loss be fully covered through recourse to Additional paid-in capital, which will show a balance of 274,498,032 euros...