Chrysler 2003 Annual Report Download - page 29

❚borrowings from banks for a total of 9,384 million euros. This
amount includes, among others, the mandatory convertible
facility (3 billion euros) and the loan by Citigroup (lead
manager of a restricted pool of banks), secured by the
agreements with EDF as part of the Italenergia Bis transaction
(approximately 1,150 million euros).
For a more detailed analysis of the above items, and more
specifically as regards bonds, please see the Notes to the
Consolidated Financial Statements.
Financial receivables and lease contracts receivable at
December 31, 2003 include financial receivables from the
dealer network totaling 2,020 million euros (1,904 million
euros at December 31, 2002).
The aggregate total of Group receivables from the dealer
network is illustrated as follows.
(in millions of euros) At 12.31.2003 At 12.31.2002
Trade receivables 1,208 1,818
Financial receivables 2,020 1,904
Total receivables from the dealer network 3,228 3,722
Receivables from the dealer network are typically generated
by sales of vehicles and are generally managed under dealer
network financing programs as a typical component of
the portfolio of the financial services companies. These
receivables are interest bearing, with the exception of
an initial limited, non-interest bearing installment payment
period. On the consolidated financial statements, the
interest-bearing portion of the receivables is classified as
a financial receivable and thus included in the net financial
position, while the non-interest bearing portion is classified
as a trade receivable (and thus excluded from the net
financial position).
The contractual terms governing the relationships with
the dealer networks vary from Sector to Sector and from
country to country. However, these receivables are collected
in approximately two to four months on average.
The receivables from the dealer network illustrated in
the preceding table are net of allowances for doubtful
accounts totaling 313 million euros at December 31, 2003
(333 million euros at December 31, 2002), computed on the
basis of historical statistical analyses and updated according
to evolutions in market trends. During 2003, 27 million euros
were allocated to reserves, and 46 million euros were used.
At December 31, 2003, the Group held guarantees totaling
over 2 billion euros as security for these receivables.
The receivables illustrated in the preceding table are net of sale
with or without recourse, as follows:
At 12.31.2003 At 12.31.2002
Trade Financial Trade Financial
(in millions of euros) receivables receivables Total receivables receivables Total
With recourse 1,387 – 1,387 1,686 – 1,686
Without recourse 2,598 740 3,338 2,767 306 3,073
* * *
The Group is continuing to operate in compliance with the
targets agreed upon with the lending banks under the
mandatory convertible facility agreement in terms of reducing
its net financial position to 3 billion euros and reducing gross
indebtedness to 23.6 billion euros.
At December 31, 2003, gross indebtedness totaled 22.5 billion
euros, while net financial position (approximately 3,028 million
euros) was substantially in line with the agreed target without
using, as allowed by the agreements with the lending banks,
the previously mentioned Citigroup loan (approximately 1,150
million euros) to reduce the net financial position itself.
At December 31, 2003 the rating assigned to the Fiat Group
by the leading rating agencies was “non investment grade”.
Therefore, if this situation persists, in July 2004 the banks may
proceed in advance with the conversion of the debt into
capital for an amount up to 2 billion euros.
Consolidated Statement of Cash Flows
At December 31, 2003, the Group had 3,211 million euros
in cash and bank deposits, or 278 million euros less than the
3,489 million euros at the end of 2002.
Securities that represent temporary investments rose from
1,507 million euros to 3,789 million euros; it therefore resulted
that Group investments immediately disposable rose by
approximately 2,004 million euros to 7,000 million euros.
The cash flows used in operating activities in 2003 totaled
1,947 million euros (compared with the cash flows of 1,053
million euros provided in fiscal 2002).
Cash flow during 2003 principally reflected an increase in
working capital that, on a comparable consolidation basis,
absorbed a total of 872 million euros in cash, compared
with a decrease, and consequent generation of cash flows,
of 1,828 million euros in 2002.
28 Report on Operations Analysis of the Financial Position and Operating Results
of the Fiat Group and Fiat S.p.A