Chrysler 2003 Annual Report Download - page 28

27 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A
On a comparable consolidation basis, the change of 614 million
euros is mainly attributable to higher receivables from Tax
Authorities and to the payment made in favor of the CAV.TO.MI
Consortium for reimbursement of the cash collateral of 250
million euros that the Consortium had paid to Fiat S.p.A. in 2002
while waiting for the issuance of the contractual suretyships,
which were subsequently issued.
Reserves
Reserves totaled 6,481 million euros, compared with 16,999
million euros at December 31, 2002. The net reduction stems
from the disposals carried out during the year, particularly the
deconsolidation of insurance policy liabilities and accruals (9,508
million euros) and of the reserve for employee severance
indemnities of companies that were sold in 2003. The decrease
of this reserve is also attributable to the utilization connected to
staff reductions resulting from restructuring plans.
At December 31, 2003, the reserves mainly included: income tax
reserves (98 million euros), warranty reserves (791 million euros),
restructuring reserves (471 million euros), reserves for pensions
(1,503 million euros), reserves for employee severance
indemnities (1,313 million euros), and reserves for other risks and
charges (2.216 million euros).
Net Invested Capital
Net invested capital totaled 10,522 million euros, compared
with 12,459 million euros at December 31, 2002. About half of
the 1,937-million-euro decrease was due to the previously
mentioned disposals of lines of business. On a comparable
basis, the reduction is mainly attributable to a decrease in fixed
assets (foreign exchange effect and writedowns) which was
partially offset by the abovementioned increase in working
capital.
The following table illustrates the composition of net invested
capital at the end of 2003 and 2002:
(in millions of euros) At 12.31.2003 At 12.31.2002 Change
Intangible fixed assets 3,724 5,200 (1,476)
Property, plant and equipment 9,675 12,106 (2,431)
Financial fixed assets 3,950 6,638 (2,688)
Investments on behalf of life insurance
policyholders who bear the risk –6,930 (6,930)
Financial assets not held as fixed assets 120 6,094 (5,974)
Deferred tax assets 1,879 3,499 (1,620)
Reserves (6,692) (18,235) 11,543
Policy liabilities and accruals where the
investment risk is borne by policyholders –(7,000) 7,000
Working capital (2,134) (2,773) 639
Net invested capital 10,522 12,459 (1,937)
Stockholders’ Equity
Consolidated stockholders’ equity totaled 7,494 million euros
(8,679 million euros at December 31, 2002). The reduction
reflects the net loss for the period (1,948 million euros),
distributed dividends (15 million euros), and the decrease
caused by changes in foreign exchange rates (decrease of
862 million euros), which were only partially offset by the capital
increases carried out (1,860 million euros). The remaining
decrease of 220 million euros was mainly due to the sale of
IPI and the Toro Assicurazioni Group corresponding to the
minority interest.
The stockholders’ equity of the Group was 6,793 million euros,
against 7,641 million euros at December 31, 2002.
Net Financial Position
The net financial position, i.e. net indebtedness (financial
payables and related accruals and deferrals, net of cash and
securities) minus financial receivables, totaled -3,028 million
euros at December 31, 2003, reflecting an improvement of 752
million euros compared with the negative net financial position
of 3,780 million euros at December 31, 2002.
During the fiscal year, the net resources generated by disposals
and the capital increase concluded in August more than offset
the financial and operating requirements (loss for the fiscal year
and increase in working capital).
(in millions of euros) At 12.31.2003 At 12.31.2002 Change
Financial payables (22,034) (28,923) 6,889
Accrued financial expenses (593) (785) 192
Prepaid financial expenses 85 118 (33)
Cash 3,211 3,489 (278)
Securities 3,789 1,507 2,282
Net Indebtedness (15,542) (24,594) 9,052
Financial receivables and lease
contracts receivable 12,576 21,406 (8,830)
Accrued financial income 301 543 (242)
Deferred financial income (363) (1,135) 772
Net Financial Position (3,028) (3,780) 752
At December 31, 2003 the financial payables included:
❚bonds for 9,610 million euros;
❚the five-year-bond issued at the beginning of 2002 and
exchangeable for 32,053,422 General Motors shares ($2,229
million – equal to 1,765 million euros). It should be noted,
however, that each bondholder has the right to request early
reimbursement, with payment on July 9, 2004, of all or part
of his bonds pursuant to the terms and conditions envisaged
in the issue prospectus.