Chrysler 2002 Annual Report Download - page 27

25 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A.
1,392 million euros reported at the end of 2001. Changes in
the scope of consolidation and payment of the balance of
assets and liabilities contributed by Fiat Auto to the Fiat-GM
Powertrain joint venture caused an aggregate increase of 447
million euros. On a comparable basis, the reduction in working
capital would have been 1,828 million euros. This decrease
mainly stemmed from cutbacks in inventories and, to a lesser
extent, positive exchange rate effects.
The following table illustrates the composition of working
capital during the two fiscal years:
(in millions of euros) At 12/31/2002 At 12/31/2001 Change
Net inventories 7,050 8,375 (1,325)
Trade receivables 5,784 6,466 (682)
Trade payables (13,267)(13,520) 253
Other receivables (payables) (2,340)(2,713) 373
Working capital (2,773)(1,392) (1,381)
An analysis of the changes affecting the main components
of working capital is provided below.
Inventories (raw materials, finished products, and work in
progress), net of advances received for contract work in
progress, totaled 7,050 million euros, against 8,375 million euros
at the end of 2001. This decrease is principally attributable to
the effects of finished product inventory reductions carried out
by Fiat Auto and CNH.
Trade receivables totaled 5,784 million euros, 682 million euros
less than the 6,466 million euros reported at the end of 2001.
This decrease reflects the lower levels of activity and reduction
in receivables from the Fiat Auto dealer network, associated
with cutbacks in dealership inventories. The change in the
scope of consolidation entailed a reduction of 259 million euros.
Trade payables totaled 13,267 million euros, 253 million euros
less than the 13,520 million euros reported at the end of 2001.
The change is due to the lower level of activity at Fiat Auto
and changes in the scope of consolidation, which resulted in
areduction of 149 million euros.
Other receivables (payables), which also include trade accruals
and deferrals, improved from -2,713 million euros at the end
of 2001 to -2,340 million euros, largely due to the payment of
approximately 450 million euros for the balance of assets and
liabilities contributed by Fiat Auto to the Fiat-GM Powertrain
joint venture.
Net Invested Capital
Net invested capital totaled 12,459 million euros,
compared with 19,642 million euros at the end of 2001.
The decrease of 7,183 million euros is attributable to the
reduction in working capital, the previously mentioned
divestitures of business assets and investments, writedowns
during the year and changes in exchange rates due to
appreciation of the euro.
The following table illustrates the composition of net invested
capital at the end of 2002 and 2001:
(in millions of euros) At 12/31/2002 At 12/31/2001 Change
Intangible fixed assets 5,200 6,535 (1,335)
Property, plant and equipment 12,106 13,887 (1,781)
Financial fixed assets 6,638 10,190 (3,552)
Investments on behalf
of policyholders who bear
the risk and those related to
pension plan management 6,930 6,177 753
Financial assets not
held as fixed assets 6,094 5,620 474
Net deferred tax assets 2,263 1,595 668
Reserves (16,999)(16,734) (265)
Policy liabilities and accruals
where the investment risk
is borne by policyholders
and those related to
pension plan management (7,000)(6,236) (764)
Working capital (2,773)(1,392) (1,381)
Net invested capital 12,459 19,642 (7,183)
Net Financial Position of the Group
The net financial position (cash, marketable securities, financial
receivables net of short and medium-long term payables and
related accruals and deferrals) at the end of December 2002
showed net debt of 3,780 million euros, 2,255 million euros less
than at the end of 2001 (6,035 million euros).
The improvement mainly resulted from the divestiture 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, the net
financial position, illustrated in the following table, shows an