Chrysler 2002 Annual Report Download - page 28

improvement in its composition, with a reduction in short-term
debt by 6,098 million euros, only partially offset by an increase
of 2,324 million euros in “long-term debt.”
(in millions of euros) Dec. 31, 2002 Dec. 31, 2001
Cash 3,489 2,133
Marketable securities 1,507 2,000
Financial receivables
and leased assets 21,406 24,686
Accrued financial income 543 560
Deferred financial income (1,135)(2,057)
Total financial assets (A) 25,810 27,322
Short-term debt (8,310)(14,408)
Long-term debt (20,613)(18,289)
Accrued financial expenses (785)(797)
Prepaid financial expenses 118 137
Total financial liabilities (B) (29,590)(33,357)
Net financial position (A-B) (3,780)(6,035)
The new long-term loans provided in 2002 include the 3 billion
euro mandatory convertible facility, the loan from Citigroup
(lead manager of a restricted pool of banks) secured by the
agreements with EDF in connection with the Italenergia Bis
transaction (1,150 million euros), and the loan cum warrant
for General Motors shares (2,229 million euros).
The Group fully realized its target of reducing pro-forma net
debt to 3 billion euros, as agreed with the banks. In fact,
these agreements expressly state that for the computation
of fulfillment of such target, the net debt (3,780 million euros)
will include the proceeds deriving from binding agreements,
even if they have not yet been executed, and the proceeds
collected in consequence of the Italenergia Bis transaction,
including the aforementioned Citigroup loan (1,150 million
euros).
It is also expected that the target of reducing gross
indebtedness to 23.6 billion euros will be achieved upon
conclusion of the sale of 51% of Fidis Retail Italia to Capitalia,
Banca Intesa, Sanpaolo IMI, and Unicredito, as stated in the
agreement.
Between December 2002 and March 2003, the leading rating
agencies lowered their rating of Fiat to below investment grade.
Therefore, if this situation persists, in July 2004 the banks may
convert up to 2 billion euros of the principal loaned into equity.
Consolidated statement of cash flows
The Group’s cash increased by 1,356 million euros, rising from
2,133 million euros at the end of 2001 to 3,489 million euros
at December 31, 2002 as a result of cash flow generated by
operating and investment activities, which was partially offset
by financing activities to reduce the level of financial debt.
The Group’s liquidity generated by operating activities totaled
1,053 million euros (compared with 2,435 million euros
generated in 2001).
Liquidity during the year was affected by the negative effect
of the net loss plus amortization and depreciation totaling 534
million euros, net of the balance of gains and losses realized
from divestitures and expenses for writedowns that did not
involve cash outlays (compared with positive cash flow of 340
million euros in 2001). Positive cash flow was generated by the
positive change in working capital that, on a comparable basis,
produced a benefit of 1,828 million euros (with respect to a
benefit of 2,633 million euros in 2001).
Investment activities generated cash flow of 2,096 million euros
in 2002 (compared with investment flows of 3,017 million euros
in 2001).
Investment flows during the year resulted from disposals of
assets and investments that, net of acquisitions, totaled 2,668
million euros, compared with a positive balance of 1,128 million
euros in 2001. The net reduction in financial receivables which
reflected, in particular, slowdown in activity of certain financial
companies and portfolio disposals, generated 2,456 million
euros in available funds, as compared with applications of 189
million euros in 2001.
The principal applications of funds during the year consisted
of 2,771 million euros in property, plant, and equipment,
including investments in vehicles to be leased on a long-
term basis, and 518 million euros in intangible fixed assets,
down from the aggregate total of 3,911 million euros
reported 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 Global N.V., which generated 1,215 million euros,
were absorbed by the reduction in short-term debt, which
decreased by 5,358 million euros (compared with a reduction
of 1,140 million euros in 2001).
26 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A.
Flow generated by
operating activities
during the year
(10,000)
20012000 (in millions of euros) 2002
Flow generated by
investment activity
Flow generated by
financing activity
(8,000)
(6,000)
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000